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2010 (1) GCD 191 (Guj)
Hon’ble Mr. Justice D.A. Mehta
Bharatbhai Ramniklal Sata Prop. of Satyajeet Trading Co.
Versus
Collector & District Magistrate & Anr.
Special Civil Application No. 4563 of 20091—Decided on 29/10/2009
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 — Sections 13(2), 13(4), 14, 17 — Security Interest (Enforcement) Rules, 2002 — Rules 8, 8(1) and 8(3) — Taking possession of the subject assets — Order of — Appeal against — Maintainability in absence of other measure provided under the Act — Finding of — The impugned order of taking possession of the assets is made by Respondent No. 1 authority under Section 14 of the Act as a measure of assistance provided there in — However, any other measure for recovery provided under Section 13(4) is open to challenge under Section 17 of the Act and in the circumstances authority acting under Section 14 of the Act can not travel beyond the scope of Section 14 of the Act — In view of this appeal rightly held not maintainable on ground of absence of any measure under Section 13(4) of the Act — Further notice under Rule 8 of Rules 2002 is concerned it suffice to say that notice envisaged is a possession notice and same can not equated with a notice for an opportunity of hearing prior making an order under Section 14 of the Act — Therefore, absence of notice as contended by petitioner before impugned order is of no availed to petitioner — In the circumstances there is no infirmity in the impugned order of Respondent No. 1 Authority.
Held :
Insofar as challenge to action under Section 14 of the Securitization Act is concerned this Court has held consistently that any action under Section 13 (4) of the Securitization Act is open to challenge under provisions of Section 17 of the Securitization Act and in the circumstances authority acting under Section 14 of the Securitization Act is not required to act beyond the scope of provisions of Section 14 of the Act by usurping adjudicatory power available to DRT under Section 17 of the Securitization Act.
Section 14 of the Securitization Act provides for rendering of an assistance to a secured creditor by the authority named in said provision for the purpose of taking possession of any secured asset by the secured creditor. [Para 8]
Insofar as the contention based on Rule 8 of the Security Interest (Enforcement) Rules 2002 (the Rules) is concerned, suffice it to state that the notice referred to in Sub-rule (1) of Rule 8 of the Rules is a Possession Notice and the same cannot equated with a notice envisaging an opportunity of hearing prior to making an order under Section 14 of the Act. The use of phrase “possession of immovable property is actually taken by the authorized officer” in Sub-rule (3) of Rule 8 of the Rules also cannot assist the case of the petitioner for the simple reason that the Possession Notice referred to in Sub-rule (1) of Rule 8 of the Rules has to be in the form prescribed in Appendix IV of the Rules. A plain reading of the said form makes it clear by use of the following words in paragraph No. 2 of the notice that the notice has to be issued at the stage when possession has already been taken over. [Para 12]
Law Laid Down :
Any action under Section 13(4) of the Act is open to challenge under Section 17 of the Act and authority acting under Section 14 of the Act is not to travel beyond the scope of Section 14 of the Act.
Case Law Analysis :
Satyendra Singh Gupta (HUF) & Anr. vs. Authorized Officer, Letters Patent Appeal No. 1472 of 2008, dated 20/02/2009 [Para 9];; Transcore vs. Union of India & Anr., 2008 (1) SCC 125 [Para 9].—Relied on
Kalyanji Sales Company & Anr. vs. Union of India & Anr., 2006 BC 1 (DB) (P & H) [Para 11];; Subhash Chandra Panda vs. State of Orissa & Ors., AIR 2008 Orissa 88 [Para 11];; Purshottam D. Somani vs. Authorized Officer & Anr., in Special Civil Application No. 9010 of 2009, dated 10/09/2009 [Para 13].—Distinguished
D.A. Mehta, J.—As both the petitions challenge a consolidated order dated 06/01/2009 made by Respondent No. 1 - authority in Case Nos.37 of 2008 and 38 of 2008 both the petitions have been heard together and are taken up for disposal together by this common order. For the sake convenience the facts, to the extent necessary, are taken from Special Civil Application No. 4563 of 2009.
2. The petitioner availed of financial assistance from Respondent No. 2-Bank for business purpose. As the petitioner was not able to discharge the outstanding liability within the specified period action has been initiated by Respondent No. 2-Bank under provisions of the Securitization and Reconstruction of Financial assets and Enforcement of Security Interest Act, 2002 (the Securitization Act) and Rules made thereunder. It is the case of the petitioners that in response to notice under Section 13 (2) of the Securitization Act the petitioners approached Respondent No. 2-Bank and referred to the proposal to settle the account. Admittedly no representation / objections as required by provisions of Section 13 (3A) of the Securitization Act had been filed by the petitioners. Respondent No. 2-Bank therefore applied to Respondent No. 1-authority to render assistance in view of provisions of Section 14 of the Securitization Act. Accordingly vide impugned order dated 06/01/2009 Respondent No. 1-authority issued direction to the Mamlatdar and Executive Magistrate to take possession of the subject assets.
3. The case of the petitioners as propounded by learned Advocate for the petitioners is that while passing impugned order dated 06/01/2009 Respondent No. 1-authority has not issued any notice to the petitioners. It is further submitted that out of four properties in question, one of the properties is partly tenanted, and no notice has been issued even to the tenants. It was further submitted that guidelines issued by the High Court have also not been followed by Respondent No. 1-authority.
4. It appears that petitioner of Special Civil Application No. 4564 of 2009 approached the Debts Recovery Tribunal (DRT) under Section 17 of the Securitization Act. Respondent No. 2-Bank objected to the said appeal and DRT came to the conclusion that in absence of any measures under Section 13 (4) of the Securitization Act, the appeal was not maintainable.
5. The petitioners have challenged the order dated 06/01/2009 by praying for following reliefs.
“8. The petitioner, therefore, prays that :—
(A) YOUR LORDSHIPS may be pleased to issue other appropriate writ, order or direction quashing and setting aside the impugned order both dtd. 06.01.2009 made by the Respondent No. 1 in Case No. 37 of 2008 and Case No. 38 of 2008 (Annexure - A Colly) as being unjust, arbitrary, unreasonable, contrary to provisions of an order passed without application of mind and violative of Article 14 of the Constitution of India;
(B) YOUR LORDSHIPS may be pleased to stay the implementation, operation and execution of both the impugned orders dated 06.01.2009 made by Respondent No. 1 in Case No. 37/2008 and Case No. 38/2008 and further be pleased to restrain the Respondent No. 2 Bank of Baroda, its Officers, Agents and/or servants from taking any coercive action or steps in respect of the subject property pursuant to the impugned orders both dated 06.01.2009 pending the admission, hearing and final disposal of this petition;
(C) YOUR LORDSHIPS may be pleased to grant such other and further reliefs as may be deemed fit and proper by this Hon’ble Court, in the interest of justice.”
6. On 11/05/2009 notice was issued by the Court by recording that Respondent No. 2-Bank had approached Respondent No. 1-authority for making an order under Section 14 of the Securitization Act without taking any action under Section 13 (4) of the Act. That as DRT had dismissed the appeal as being not maintainable the petition had been preferred.
7. It is also necessary to record that during pendency of the petitions the p
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