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2020 Supreme(Mad) 2237

IN THE HIGH COURT OF MADRAS
M.M. Sundresh, R. Hemalatha, JJ.
Tamilnadu Mercantile Bank Ltd. and Ors. – Appellants
Versus
The District Magistrate, Thiruvallur and Ors. – Respondents
W.P. Nos. 28047, 25192 of 2019, 24655 of 2018, 32467 of 2016, 29972 of 2018, W.M.P. Nos. 20401 and 24765 of 2019
Decided On : 18-09-2020

Advocates:
Advocate Appeared:
For the Appellant : S. Sethuraman, F.B. Benjamin George and Om Prakash, Sr. Adv. for L. Poompavai for P. Elayarajakumar
For the Respondent:S.R. Rajagopal, Addl. Advocate General assisted by G.K. Muthukumar, Spl. G.P., C. Deivasigamani, S. Seshachalam and F.B. Benjamin George

Headnote:

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14 - Physical possession of secured assets - Application filed by petitioner was rejected by taking note of criminal complaints in form of First Information Report pending at relevant point of time - Only the residential properties are to be taken possession of. There are pending suits touching upon very same property - Suit filed by alleged tenant is also pending - Accordingly, it was held that the request cannot be considered, particularly when tenancy Act would prevail over SARFAESI Act - It is also seen that petitioner initiated fresh action thereafter - Held, Submission made by Additional Advocate General that nature of agricultural land has to be verified by District Magistrate, as in given case it may even belong to the Government, cannot be countenanced - District Collector can always take action to take possession if land is a Government land after handing over same in favour of the secured creditor while functioning as District Magistrate - District Collector is same as Chief Judicial Magistrate and, therefore, he cannot have a better or higher role than other - Writ petitions are allowed.

ORDER :

M.M. Sundresh, J.

1. The commonality of the issue makes us to dispose of all these writ petitions by a single order.

2. These writ petitions have been filed by the lenders aggrieved over the orders passed by the authority on the applications filed seeking to invoke Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, 'the SARFAESI Act') towards handing over of the physical possession of the secured assets.

3. In W.P. No. 29972 of 2018, the application filed by the petitioner was rejected by taking note of the criminal complaints in the form of First Information Report pending at the relevant point of time. Only the residential properties are to be taken possession of. There are pending suits touching upon the very same property. The suit filed by the alleged tenant is also pending. Accordingly, it was held that the request cannot be considered, particularly when the tenancy Act would prevail over the SARFAESI Act. It is also seen that the petitioner initiated fresh action thereafter. A notice invoking Section 13(4) of the SARFAESI Act was also put to challenge and the interim conditional order granted has been complied with by the private respondents. However, such an action was initiated by the petitioner without prejudice to the action taken already.

4. W.P. No. 24655 of 2018 has been filed challenging the order passed by the District Magistrate-cum-District Collector, Thiruvallur District, by which the application filed invoking Section 14 of the SARFAESI Act was rejected as not maintainable on the premise that the petitioner has auctioned and sold the property already.

5. W.P. No. 32467 of 2016 challenges the order of the District Collector, Coimbatore, rejecting the application filed, by a cryptic order, by placing reliance upon the letter of the Tahsildar concerned that the mortgaged property is an agricultural one, and therefore would not be amenable for taking action under the SARFAESI Act.

6. W.P. No. 28047 of 2019 is against the order which itself is again rejecting the application filed for possession on the premise that the sale has already been effected.

7. Thus, in all these writ petitions, the issue for consideration is as to whether the District Magistrate is competent to go into the merits of the case such as existence of tenancy, classification of the land as agricultural land, pendency of the civil proceedings and the locus standi to file an application after the sale is effected in favour of the third party.

Submissions on behalf of the petitioners:

8. Learned counsel appearing on behalf of the petitioners submitted that the order impugned cannot be sustained in the eye of law. The District Magistrate or the Chief Metropolitan Magistrate, as the case may be, cannot go into the merits of the case. What is required to be done by them is to specify the compliance of Section 14(1) of the SARFAESI Act. Once that is done, consequences will have to follow. It is only a mechanism by which the District Magistrate or the Chief Metropolitan Magistrate will have to facilitate in taking possession in favour of the creditor. There is difference between taking symbolic possession and physical possession. There is no bar for maintaining the application by the secured creditor even if sale is effected in favour of the third party. The question of tenancy, the land being agricultural or not, pendency of the suit, among other issues, cannot be decided by the District Magistrate in exercise of power under Section 14 of the SARFAESI Act.

9. Insofar as W.P. No. 29972 of 2018 is concerned, the learned counsel appearing for the petitioner submitted that the subsequent proceedings are obviously without prejudice to the earlier one. Therefore, they would not act as a bar.

10. To buttress their submissions, reliance has been made on the following decisions (i) Harnandrai Badridas v. Debidutt Bhagwati Prasad and others reported in (1973) 2 SCC 647, (ii) Standard

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