The jurisdiction of the CMM in deciding questions of tenancy or possession, the procedural nature of orders under Section 14, and the erroneous reliance on case law were central legal points established in the judgment.

ORDER

[VIA VIDEO CONFERENCING]

CM No. 36706/2021 (for exemption) in CM(M) 716/2021

CM No. 36858/2021 (for exemption) in CM(M) 721/2021

1. Allowed, subject to all just exceptions.

2. The applications are disposed of.

CM(M) 716/2021 & CM(M) 721/2021

3. The present petitions under Article 227 of the Constitution of India have been filed, pressing for the following reliefs:

(i) Setting aside of Order dated 25.09.2021 passed by Chief Metropolitan Magistrate (CMM) (West District), Tis Hazari Courts, Delhi in Case No. ID No. 758 of 2021 and Case No. ID No. 759 of 2021;

(ii) Direction to the CMM to pass an order appointing the Receiver to take the physical possession of the secured assets;

(iii) Passing of appropriate directions to the CMM to upload the orders passed in the matters pertaining to Section- 14 of the SARFAESI Act, 2002 (Act) in terms of decisions in the matter of Sanser Pal Singh Vs. Union of India & Ors. bearing W.P.(C) No.1983 of 2021; and

(iv) Passing of appropriate directions to the Courts of CMM to various districts of New Delhi to follow uniform procedure while adjudicating Applications under Section-14 of the Act, in terms of Section 14 of the Act.

4. Brief facts leading to the filing of the present petition are as follows:

(i) The respondents, who are borrowers within the meaning of Section 2(f) of the Act, availed financial assistance from the petitioner and created security interest under Section 2(zb) of the Act by way of equitable mortgage in relation to immovable properties.

(ii) Consequent to defaults in repayment of dues by the respondents, the accounts of the respondents were declared Non-Performing Assets (NPA) within the meaning of Section 2(o) of the Act.

(iii) Thereafter, on 5th October, 2020, the petitioner issued Demand Notices under Section 13(2) of the Act whereby the petitioner demanded the total outstanding amounts in the loan account as well as the details of the secured assets. The said Demand Notices were sent to the respondents on 10th October, 2020.

(iv) Upon receiving no objection or representation in reply to the aforesaid Demand Notices, the petitioner filed applications under Section 14 of the Act on 15th June, 2021 in order to enforce the security interest and take physical possession of the properties in question.

5. Vide impugned orders dated 25th September, 2021 passed in the applications filed under Section 14 of the Act, the CMM, while directing the petitioner to file an affidavit regarding the current status of the possession of the properties in question, observed/held that (i) the petitioner was required to disclose on affidavit whether the properties in question were in possession of a tenant or a third party other than the respondents/borrowers in light of the judgment of the Supreme Court in Harshad Govardhan Sondagar vs International Assets Reconstruction Co. Ltd. & Ors, (2014) 6 SCC 1; (ii) even after the amendment to the Act, the petitioners approaching the Court under Section 14 of the Act are not absolved from disclosing the status of possession of the secured assets; (iii) the purpose of the amendment to the Act is to safeguard the rights of lawful tenants; (iv) principles of natural justice dictate that a party must not be condemned unheard and hence, the petitioner should have issued notices under Section 13(4) of the Act in order to take symbolic possession of the properties in question; (v) the affidavit dated 17th September, 2021 filed by the petitioner only talks about a valuation report and does not state whether the properties in question were in possession of the respondents at the time of creation of the mortgage or the current status of the properties in question after issuance of Demand Notices by the petitioner; and (vi) the petitioner has not inspected the properties in question to find out as to who is in possession of the properties in question at the time of institution of the applications under Section 14 of the Act.

6. The counsel appearing on behalf of th