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IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. MANIKUMAR, SUBRAMONIUM PRASAD, JJ.
State Bank of India, Stressed Assets Management Branch - Petitioner
Versus
The District Collector, District Magistrate and Ors - Respondents
W.P.No.10483 of 2018 and W.M.P.No.12435 of 2018
Decided on : 04-09-2018
SARFAESI Act - District Collector's refusal to take physical possession of properties - Section 14
Fact of the Case:
The State Bank of India filed a writ petition against the District Collector's order refusing to take physical possession of properties under Section 14 of the SARFAESI Act. The properties were deemed as agricultural land and undivided, leading to the refusal.
Finding of the Court:
The court found that the District Collector's role was to verify the contents of the affidavit filed by the secured creditor, not to adjudicate on the nature of the properties. The court emphasized that the District Collector's satisfaction was limited to verifying the contents of the affidavit.
Issues: The key issue was whether the District Magistrate's role under Section 14 of the SARFAESI Act was to adjudicate on the nature of properties or to verify the contents of the affidavit filed by the secured creditor.
Ratio Decidendi: The court held that the District Magistrate's role was limited to verifying the contents of the affidavit and issuing notice to the borrower, and that the determination of the nature of the properties should be adjudicated by the Debt Recovery Tribunal.
Final Decision: The court set aside the District Collector's order and directed interested parties to approach the Debt Recovery Tribunal to establish the nature of the properties.
1. Instant writ petition filed by the State Bank of India is directed against the order dated 13.03.2018 passed by the District Magistrate and District Collector, Tirupur District in K.Dis.3330/2017/C3 dated 13.03.2018. The District Magistrate by the order impugned herein has refused to take physical possession of two properties in proceedings initiated by the petitioner under Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, herein after called as SARFAESI Act, on the ground that property in S.F.No. 886/1 & 882/2 of Chinnaputhur Village is an agriculture land and is therefore outside the ambit of SARFAESI Act and property in S.F.No.119/5 and 120 (Patta No.2110 & 2111) of Karaiputhur Village, Palladam Taluk belongs to 19 people including the guarantor and is not sub-divided and the boundaries cannot be identified.
2. M/s.Balu Spinning Mills Pvt. Ltd., herein after called as the Borrower availed credit facility to the tune of Rs.113.58 crores from the petitioner, State Bank of India. The respondents 2 to 6 stood as guarantors for repayment of the loan. Borrower committed default in repayment of dues and the petitioner classified the account of borrower as a Non Performing Asset.
3. Demand notice under Section 13(2) of the SARFAESI Act was issued calling upon the borrower and the guarantors to pay the outstanding sum of Rs.188,33,03,827.27 On the failure to clear the dues within the stipulated period of 60 days, the authorized Officer of the petitioner bank issued a notice under Section 13(4) of the SARFAESI Act and took symbolic possession of the assets mortgaged to the bank to secure the loan. The Bank filed an application on 18.02.2017 under Section 14 of the SARFAESI Act, before the District Collector, Tirupur collectorate for taking physical possession of the mortgaged properties. The District Collector cum District Magistrate did not provide assistance to take possession of the properties. The Bank filed a writ petition before this Court in W.P.No.33194/2017. This Court by an order dated 19.12.2017 directed the District Magistrate cum District Collector, Tirupur to dispose of the application dated 18.02.2017 within four weeks from the date of receipt of the copy of the order.
4. In compliance of the order passed by this Court the District Collector passed the impugned order on 13.03.2018. The order being a very short one is reproduced as under:-
"The Authorised Officer/Chief Manager of the State Bank of India, Stressed Assets Management Branch (SAMB), Coimbatore has submitted a petition u/s 14(1) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 praying for suitable orders/directions to take possession of the schedule mentioned secured assets belonging to M/s.Balu Spinning Mills Pvt. Ltd., represented by Tmt.B.Rajalakshmi and three others to hand over the same to the petitioner bank, as per the provisions of the Section 14 1(a) of the said Act, 2002 in order to realize the defaulted loan Rs.86,70,19,716/- as on 31.01.2017 from the borrowers.
On perusal of the Memorandum of Deposit of Title deeds in respect of immovable properties vide under Doc.No.7728/2010 dated 15.07.2010, Doc.No.7729/2010 dated 14.07.2010, Doc.No.2718/2012 dated 20.06.2012, and reports received from the Tahsildars concerned.
In the reference 2nd cited letter the Tahsildar, Palladam has inspected the field and reported that in S.F.No.119/5 and 120 (Patta No.2110 & 2111) of Karaiputhur Village is jointly holding Tmt.Rajalakshmi and 19 members and it was not a subdivided properties.
In the reference 3rd cited, the Tahsildar, Dharapuram has inspected the field and reported that in S.F.No.886/1 and 882/2 of Chinnaputhur Village has agriculture lands. And it was informed to the Authorised officer for filling of revised application in the reference 4th cited. But the Authorised officer not yet to file the fresh application.
Hence, I ordered th
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