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2008 Supreme(Ori) 105
2008 (I) OLR — 659
THE CHIEF JUSTICE AND B. N. MAHAPATRA, J.
Subash Chandra Panda...Petitioner
Versus
State of Orissa and 6 others...Opp. Parties
W.P.(C) No.10115 of 2007
Decided on 29th February, 2008.
For Petitioner:M/s. Rama Ch. Sarangi, A. K. Dash, P. M. Pratihari, D. Panda, L. Pradhan and P. K. Singh
For the Opp. Parties:Government Advocate (for O.P. Nos. 1 to 5)
M/s. B. P. Tripathy, R. N. Mohanty, R. D. Acharya, S. R. Parija, S. Misra, R. R. Das and B. Barik (for O.P. Nos. 6 & 7)
Headnote:1. SECURITIZATION AND RE-CONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - Sec. 13, 2(f), 2(m)(iv), 2(zd), 2(zf) - O.P.No 6 paid loan to petitioner under two agreements - Realization of the same - In order to invoke the provisions of Section 13 of the Act on the date the alleged agreement was entered into, O.P.No. 6 must be a financial insti¬tution and a secured creditor within the meaning of the Act - Held, by the time the alleged agreement was entered into, O.P.No. 6 was not a financial institution within the meaning of Sec. 2(m)(iv) of the said Act and not being a financial institution it was not a secured creditor and could not invoke the provisions of Section 13 of the Act. (Paras - 13 to 16)
2. CONSTITUTION OF INDIA, 1950 - Art. 226 - Securitization and Reconstruction of Financial Assets and Enforcement of Securi¬ty Interest Act - Sec. 13 - Dispossession from house - Dispossession on the basis of notice issued under Sec. 13(2) of the Act - Action of O.P.No. 6 in order to realize loan amount given to petitioner in two agreements - Discussing the facts, contention and provisions of law held, on the dates on which the alleged transactions were made between the petitioner and the O.P.No. 6, it was not a financial institution within the meaning of Securitization Act and it could not invoke Section 13 - Notice which is issued to the petitioner under Sec. 13(2) of the Act is without jurisdiction - Proceeding on the basis of which the petitioner has been dispossessed from his residential property is illegal and without any authority of law - Held, entire action of O.P.No. 6 is unauthorized, illegal and bad in law. (Paras - 22 and 23)
3. SECURITIZATION AND RE-CONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - Sec. 2(f) - “Borrower” - It means any person who has been granted financial assistance by any bank or financial institution.
(Para - 12)
4. SECURITIZATION AND RE-CONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - Sec. 2(zd) - “Secured creditor” - It means a bank or financial institution or group of banks or financial institutions. (Para - 10)
5. SECURITIZATION AND RE-CONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - Sec. 2(zf) - “Security interest” - It means right, title and interest of any kind what¬soever upon property, created in favour of any secured creditor and includes any mortgage, charge hypothecation, etc. (Para - 10)
JUDGMENT
A. K. GANGULY, C.J. — This writ petition has been filed challenging the action taken by the opposite parties in dispossessing the petitioner from his residential house at vil¬lage Uttara Sasan, P.O. Kausalyaganga, P.S. Pipili, District Puri. He alleges that he has been dispossessed from his house and that dispossession was suppressed by the Collector and the Super¬intendent of Police, Puri, opposite party Nos.2 and 3 respective¬ly. It is further alleged that the dispossession of the petition¬er was at the instance of opposite party Nos. 6 and 7 on the basis of notice issued under Section 13(2) of the Securitization Act. In the writ petition only notice under Section 13(2) of the Securitization Act has been disclosed and the grievance of the petitioner is that no notice under Section 13(4) of the Securiti¬zation Act was given by opposite party Nos. 6 and 7. On the other hand it is submitted on behalf of opposite party Nos. 6 and 7 that the notice under Section 13(4) of the Securitization Act has been given to the petitioner. On perusal of the purported notice dated 1.10.2005, this Court does not find that any separate notice under Section 13(4) of the Securitization Act has been given.
2. Learned counsel for opposite party Nos. 6 and 7 submits that no notice under Section 13(4) of the Securitization Act is required and as such no separate notice was given under Section 13(4) of the said Act.
3. It is difficult for us to accept the said contention. It is well settled that notice under Section 13(4) is a must before the financial institution takes any of the measures specified in the said Sub-section.
4. This becomes all the more necessary in view of right of appeal given under Section 17. Unless notice under Section 13(4) is given, the right of appeal which is given under Section 17 of the Statute becomes illusory. This omission, according to the learned counsel for the petitioner, is a fundamental one and we find that there is a lot of substance in that.
5. It has been urged that opposite party Nos. 6 and 7, namely, Bijayananda Mishra and Sanjaya Sinha, have styled them¬selves as Authorised Representative and Executive Director of Maharshi Housing Development Finance Corporation Ltd.
6. In the counter affidavit, which has been filed by opposite party No.6, reference has been made to a notification dated 10.11.2003 issued by the Ministry of Finance (Department of Economic Affairs) (Banking Division). In the said notification some institutions have been notified in exercise of powers con¬ferred under sub-clause (iv) of clause (m) of Sub-section (1) of Section 2 of the Securitization Act. In the said notification Maharshi Housing Development Finance Corporation Ltd., New Delhi has been notified as a financial institution on and from 10th November, 2003. This fact is not disputed. It is not the case of opposite party No.6 that prior to 10th November, 2003 the said institution has been notified under the said Act as a financial institution.
7. The agreements in respect of the action which has been taken under Section 13 of the Securitization Act have been dis¬closed in the counter affidavit of opposite party No.6 from which it appears that the agreements are dated 26.5.2001 and 13.2.2002. The first agreement was for loan of an amount of Rs. 1 lakh and the second agreement was for an amount of Rs.2 lakhs. The entire action under Section 13 has been initiated by opposite party Nos.6 and 7 against the petitioner in order to realize loan amount given to the petitioner under the aforesaid two agree¬ments.
8. Now the question is whether by virtue of the notifica¬tion dated 10.11.2003 issued by the Central Government notifying it to be a financial institution, it can initiate such proceeding under Section 13 of the Securitization Act in respect of those two loan agreements of 2001 and 2002.
9. This question has been answered by the statute itself.
Section 13 (1) and 13(2) of the said Act are set out below :
“13. Enforcement of
