The interpretation of stamp duty provisions and loan transfers under the Securitisation Act, and the requirement for an Asset Reconstruction Company to satisfy the Trust status under the Act.

JUDGMENT :

The petitioner in W.P.(C) No.33707/2023, who is a Class A Contractor approved by the Government of Kerala, has filed this writ petition seeking to set aside Ext.P3 order passed by the Chief Judicial Magistrate, Thrissur. Ext.P3 order has been passed by the Chief Judicial Magistrate, Thrissur in MC No.441/2023 filed by the respondent-Asset Reconstruction Company. By Ext.P3 order, the Chief Judicial Magistrate has appointed an Advocate Commissioner to assist the Company to take possession of the petition schedule property, invoking Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

2. The petitioner had availed financial advance from the South Indian Bank. The petitioner met with an accident in the year 2015 and was under continued treatment and had to undergo a major surgery. As the petitioner defaulted payments, the Bank invoked the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to recover the amounts due from the petitioner.

3. The petitioner was informed that the assets and liabilities in respect of the loan account of the petitioner had been assigned to the respondent-Asset Reconstruction Company on 17.03.2017 as per Ext.P2. On 06.07.2017, the respondent informed the petitioner that symbolic possession of the secured asset has been taken. The petitioner hence filed SA No.66/2018 before the Debts Recovery Tribunal-I, Ernakulam, which is pending.

4. It is during the pendency of SA No.66/2018 that the respondent filed MC No.441/2023 before the Chief Judicial Magistrate's Court. The counsel for the petitioner argued that MC No.441/2023 is not maintainable. Ext.P2 agreement assigning the secured assets to the respondent-Asset Reconstruction Company, is not enforceable. Ext.P2 assignment deed is not executed on sufficient stamp paper. Ext.P2 is in violation of the provisions contained in the Kerala Stamp Act, 1959. The respondent is not a State or instrumentality of the State. The respondent is therefore not exempted from paying stamp duty.

5. The counsel for the petitioner argued that stamp duty at the rate of 8% has to be paid on Ext.P2 assignment/agreement in view of Article 22 in the Kerala Stamp Act. The respondent has paid only Rs.500/-towards stamp duty. Therefore, Ext.P2 cannot be relied upon.

6. The counsel for the petitioner further pointed out that the Asset Reconstruction Company as contemplated under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 should be a Trust. The respondent has not produced any document to show that the respondent is a Trust.

7. When the petitioner filed IA No.2614/2023 praying to stay all further proceedings pursuant to a dispossession notice, the Debts Recovery Tribunal dismissed the IA holding that the petitioner has miserably failed to make out a prima facie case so as to get the relief sought for in the IA. The petitioner therefore filed OP(DRT) No.453/2023 seeking to set aside Ext.P3 order dated 24.08.2023 in IA No.2614/2023 in SA No.66/2018.

8. In the OP(DRT), the petitioner contended that the notice of dispossession has been issued by the respondent without following the statutory requirements under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The petitioner had already filed a proposal for One Time Settlement. The petitioner requested the respondent to consider his case compassionately since he could not continue the work due to the fact that huge amount was payable to him by the Kerala Water Authority.

9. Standing Counsel entered appearance on behalf of the respondents and resisted the writ petition and OP(DRT). On behalf of the respondent, it is stated that there is no provision under the Kerala Stamp Act, 1969 pertaining to assignment of debts. What is transferred under Ext.P1 is only the debt along with right to