Back
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. MANIKUMAR, V. BHAVANI SUBBAROYAN, JJ.
S. Valarmathi - Petitioner
Versus
The District Collector-cum-District Magistrate, & Others - Respondents
W.P.No. 2457 of 2018 & WMP No. 2977 of 2018
Decided On : 05-02-2018
SARFAESI Act - Loan Default - Sections 13(2), 13(4), 13(6), 14 - The court discussed the provisions of the SARFAESI Act, particularly Sections 13(2), 13(4), 13(6), and 14, and their implications on the rights of the secured creditor, borrower, and auction purchaser. The interpretation of the Act influenced the court's decision to dismiss the writ petition.
Fact of the Case:
The borrower defaulted on a loan from United Bank of India, leading to possession and sale of the mortgaged property. The bank sought assistance under Section 14 of the SARFAESI Act for physical possession. The petitioner, a society president, challenged the bank's actions.
Finding of the Court:
The court found that the petitioner did not challenge the possession and sale notices, and the bank's application under Section 14 was filed before the sale certificate. The court dismissed the writ petition, stating that the petitioner did not challenge the bank's measures for loan recovery.
Issues: Default on loan repayment, validity of possession and sale notices, application under Section 14 of SARFAESI Act, ownership claims of the petitioner.
Ratio Decidendi: The court held that the petitioner's failure to challenge the bank's actions and the timely filing of the application under Section 14 influenced the decision to dismiss the writ petition.
Final Decision: The writ petition was dismissed, and no costs were awarded. The connected writ miscellaneous petition was closed.
1. Material on record discloses that a sum of Rs.50 Lakhs, has been availed as loan from United Bank of India, Pondicherry, to be repaid with interest at 12.75% in 84 equated instalments at Rs.90,000/- per month. Borrower has defaulted and therefore, bank has issued a notice dated 23.12.2010 under Section 13(2) of the SARFAESI Act, 2002, directing the petitioner to pay a sum of Rs.39,83,146/- within 60 days from the date of receipt of the notice failing which, bank would take recourse to one or more of the measures provided under Section 13(4) of the SARFAESI Act, 2002.
2. Thereafter, bank has issued possession notice dated 23.03.2011, taking symbolic possession of all that piece and parcel of the land and building situated (three floors) at RS no.144/7, Reddiarpalayam Revenue Village Oulgaret-Sub Registration District, Pondicherry and bounded on the
North by : Building,
South by : Canal
East by : Building,
West by Road.
Property owned by Mrs.S.Valarmathy
3. Material on record, further discloses that said property was brought for public auction and a sale certificate was also issued to Soorya Educational Trust, the auction purchaser.
4. Perusal of the above shows that the property has been sold for Rs.1,70,50,000/-. Thereafter, bank has filed an application under Section 14 of the SARFAESI Act, 2002, and after considering the parameters set out in Section 14 of the said Act, the District Collector-cum-District Magistrate, Puducherry, has passed orders on 09.01.2018, directing the Deputy Collector (Revenue) North-cum-Sub Divisional Magistrate to take possession of the schedule mentioned property and handover the said property to the authorised officer, United Bank of India or his authorised representative, within15 days from the date of issue of the order dated 09.01.2018. The Deputy Collector (Revenue) North-cum-Sub Divisional Magistrate, is also permitted to take necessary civil and police help for taking possession of the secured property. Order of the District Collector-cum-District Magistrate, Puducherry, is assailed in the instant writ petition.
5. Substantiating the prayer, Mr.D.Padmanabhan, learned counsel for the petitioner submitted that though the borrower, was in constant touch with the bank and offered one time settlement, and though the bank had also agreed for the same, it was not honoured.
6. Learned counsel for the petitioner further submitted that when there were prospective buyers to purchase the property, at a higher value, bank had grossly reduced the reserve price and sold the property at Rs.1,70,50,000/-.
7. Though, property was transfered in the name of the purchaser, on 08.03.2017, through the registered sale certificate, dated 08.03.2017, registered as document No.2912 of 2017 dated 08.03.2017, belatedly, application under section 14 of the SARFAESI Act, 2002, has been filed before the District Collector-cum-District Magistrate, Puducherry, for taking physical possession of the property.
8. Referring to Sections 13(6) and 14 of the SARFAESI Act, 2002, and also placing reliance on the decision of the Calcutta High Court in United Bank of India and Another Vs State Bank of West Bengal and others in W.P.No.21814 (W) of 2017 dated 01.09.2017, Mr.D.Padmanabhan, learned counsel for the petitioner submitted that once the secured property is sold to a third party, then, the bank/secured creditor can no longer claim a security interest on such immovable property, as such security interest has been dissolved on the issuance of sale certificate and therefore, application filed by the bank under Section 14 of the SARFAESI Act, 2002, is not maintainable and in such circumstances, order dated 09.01.2018, made by the District Collector-cum-District Magistrate, Puducherry, has to be set aside.
9. Heard Mr.D.Padmanabhan, learned counsel for the petitioner and perused the materials available on record.
10. Admittedly, petitioner has borrowed a sum of Rs.50 Lakhs for the purpose of development of school including building, r
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
