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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Vaibhavi D. Nanavati, J.
The Kalupur Commercial Cooperative Bank Ltd – Petitioner
Versus
M/S Raj Silk Mills & Ors. – Respondents
R/Special Civil Application No. 5062 Of 2024
Decided On : 03-09-2024
Securitization - Multi State Cooperative Society - Securitization Act - The court interpreted Sections 13 and 14 of the Securitization Act, emphasizing the authority of secured creditors to enforce security interests without court intervention, and the limited role of magistrates in executing such orders.
Fact of the Case:
The petitioner, a Multi State Cooperative Society, sought possession of secured assets after issuing notices under the Securitization Act. The application for possession was granted, but the executing authority failed to act, prompting the petitioner to seek a writ of mandamus from the court.
Finding of the Court:
The court found that the executing authority was required to comply with the order granting possession and could not raise disputes regarding the property, as such matters were to be resolved by the Debts Recovery Tribunal.
Issues: Whether the executing authority can dispute the order for possession granted under the Securitization Act and whether the petitioner is entitled to a writ of mandamus for compliance.
Ratio Decidendi: The court held that under the Securitization Act, the executing authority must assist the secured creditor in taking possession and cannot adjudicate disputes regarding the secured asset.
Result: The petition is allowed, and the executing authority is directed to execute the order for possession.
ORDER :
Vaibhavi D. Nanavati, J.
1. Issue Rule, returnable forthwith. Mr. Nandish H. Thackar, learned advocate waives service of notice of rule for and on behalf of the respondent Nos.1 and 2, Ms. Delshad A. Kapadia, learned advocate waives service of notice of rule for and on behalf of the respondent No.5 and Ms. Suman Motla, learned AGP waives service of notice of rule for and on behalf of the respondent Nos.6, 7 and 8.
2. The petitioner herein is a Multi State Cooperative Society registered under the Multi State Cooperative Societies Act, 2002. The petitioner herein served a notice upon the respondent on 04.02.2014 under Section 13(2) of the Securitization Act for recovery of an amount of Rs.48,92,488/-. Notice under Section 13(4) of the Securitization Act came to be issued by the petitioner herein on 21.05.2014.
2.1 The petitioner preferred application before the respondent No.6 under Section 14 of the Securitization Act on 20.10.2015 for possession of the secured asset being Plot No.61/A and 61/B admeasuring 85 square yard (800 sq. mtr. area) situated at Atopnagar Cooperative Housing Society Limited, Bhatar, bearing survey No.154, 155, Moje Village : Majura, Surat City as per the mortgage deed being MAG/SARFAESI/Case No.1165/2019. The said application under Section 14 of the Act, came to be allowed/granted by order dated 11.12.2019 duly produced at Annexure – C.
2.2 The petitioner herein approached the respondent No.7 for execution and compliance of the order passed by the respondent No.6 dated 11.12.2019 under Section 14 of the Act and for issuance of the 14 days notice. It was intimated to the petitioner that on 15.01.2024, the respondent No.7 issued notice to the respondents intimating that after 14 days from service of notice, the proceedings will be taken to handover the possession of the secured assets to the secured creditors. The petitioner again addressed a communication dated 01.02.2024 to the respondent No.7. The respondent No.6 also once again addressed a communication dated 08.02.2024 to the respondent No.7.
2.3 The petitioner herein once again applied to the respondent No.7 on 28.02.2024 to take appropriate actions for the possession of the secured assets. The petitioner addressed a communication once again with respect to the report of action taken by the respondent No.7. The aforesaid exercise was repeated by the petitioner herein on 01.03.2024. In absence of any action taken by the respondent No.7 to comply with the order passed by the respondent No.6 dated 11.12.2019, the petitioner herein is constrained to approach this Court seeking the following reliefs:
B) Your Lordship be pleased to issue a writ of mandamus or certiorari or any other writ, direction, order in the nature of Mandamus or Certiorari directing the respondent no.7 Executive Magistrate Majura to comply with the order passed by the District Magistrate dated 11- 12-2019 Annexed herewith and marked as ‘Annexure C’ to the petition under Section 14 of the Securitization Act, forthwith and Handover the possession of the secured asset to the petitioner.
(C) Your Lordship be pleased to grant any other further reliefs your lordship deems fit, just and proper in the interest of Justice.”
3. Heard Mr. J.B. Dastoor, learned advocate appearing for the petitioner, Mr. Nandish H. Thackar, learned advocate appearing for the respondent Nos.1 and 2, Ms. Delshad A. Kapadia, learned advocate appearing for the respondent No.5 and Ms. Suman Motla, learned AGP appearing for the respondent Nos.6, 7 and 8.
4. Mr. J.B. Dastoor, learned advocate appearing for the petitioner, submitted that the respondent No.7 is required to comply with the directions of the order dated 11.12.2019 passed by the respondent No.6 under Section 14 of the Act whereby, the recital of the property in the said order is required to be complied with by the respondent No.7. The respondent No.7 is delegated the power to execute the order under Secti
The court established that the executing authority under the Securitization Act must comply with orders for possession and cannot raise disputes regarding the secured asset.
The court established that magistrates must assist secured creditors in enforcing possession orders under the Securitization Act without adjudicating disputes over the legitimacy of the claims.
A secured creditor retains the right to seek possession of secured assets even after issuing a sale certificate without physical possession, and the relevant authority acts ministerially under Sectio....
The jurisdiction of the Civil Court is completely barred in so far as those matters, which would fall for adjudication within the jurisdiction of the Tribunal.
Remedy of appeal under Section 17(1) of the SARFAESI Act is not available to secured creditors against District Magistrate orders but only to aggrieved parties.
The court clarified that the jurisdiction of the relevant Authority under Section 14 of the SARFAESI Act is limited to assisting a secured creditor in recovering possession of secured assets from a d....
The Court clarified the jurisdiction of the Chief Judicial Magistrate under Section 14 of the SARFAESI Act, holding that both the District Magistrate and Chief Judicial Magistrate have the jurisdicti....
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