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IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH
Ajay Kumar Mittal, Avneesh Jhingan, JJ.
Capital First Limited - Appellant
Versus
State Of Haryana And Others - Respondent
Civil Writ Petition No. 18058 of 2018
Decided On : 09-10-2018
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Possession of Secured Asset - Section 14
Fact of the Case:
The petitioner, a financial institution, sought possession of a mortgaged property under Section 14 of the Act. The borrowers defaulted on a loan, and a receiver was appointed to take possession. However, a tenant filed a civil suit, obtaining a status quo order and preventing the handover of possession.
Finding of the Court:
The court found collusion between the borrower and the tenant to stall recovery proceedings. It noted that the tenant intentionally did not include the petitioner in the civil suit, allowing the borrowers to retain possession. The court also highlighted the lack of evidence for the alleged tenancy.
Issues: The main issue was the refusal to hand over possession due to a civil suit and the alleged tenancy, leading to a dispute between the borrower, tenant, and the financial institution.
Ratio Decidendi: The court emphasized the need for unimpeachable evidence to establish a genuine tenancy and the jurisdiction of the Debt Recovery Tribunal to examine claims of tenancy under Section 17(4A) of the Act.
Final Decision: The court allowed the writ petition, directing the possession of the mortgaged property to be taken, imposing a cost on the tenant for not vacating the premises, and providing police assistance for possession. It also clarified that the borrower could approach the petitioner to clear outstanding dues for restoration of possession.
JUDGMENT
Avneesh Jhingan, J. - The present writ petition has been filed for directions to respondents No.2 and 3 to hand over the physical possession of the secured asset to the petitioner by exercising powers under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity, 'the Act').
2. The petitioner is a "Financial Institution" as per the provisions of the Act and by virtue of a notification of Ministry of Finance dated 05.08.2016. The State of Haryana; District Magistrate, Gurgaon; Naib Tehsildar-cum-Executive Magistrate; Sub Tehsil Kadipur, Tehsil and District Gurgaon have been arrayed as respondents No.1 to 3 respectively in the present writ petition. Respondents No.4 to 9 are the borrowers and respondents No.10 to 12 are the alleged tenants in the mortgaged property.
3. Respondents No.4 to 9 availed a loan of Rs. 6,80,27,000/- on 30.12.2013 from the petitioner. The loan was to be repaid in 180 monthly installments of Rs. 8,49,547/-each. In order to secure the cash credit facility, respondents No.4 to 9 mortgaged property situated at Khasra No.709(4-8), 711/1 (0-19) situated at Delhi Jaipur Road, Near Hero Honda Chowk, Khandsa, Gurgaon, Haryana Land Admeasuring 7056 Square Yards in 37 KM Stone comprising in favour of the petitioner Company.
4. Respondents No.4 to 9 defaulted in repayment of loan and the account was classified as Non Performing Asset (NPA) on 31.07.2016. The petitioner issued a notice under Section 13(2) of the Act on 24.09.2016. As per the notice, there were outstanding dues of Rs. 7,35,89,893/- as on 15.09.2016. The petitioner moved an application under Section 14 of the Act in March 2017. Respondent No.2 vide order dated 16.05.2017 appointed receiver for taking possession of the secured asset with the help of police.
5. For quashing of order dated 16.05.2017, the borrowers filed a writ petition bearing CWP-COM No.221 of 2017, the same was dismissed vide order dated 10.07.2017. However, liberty was granted to respondent No.4 to file objections.
6. On dismissal of the writ petition, the borrowers filed objections dated 10.04.2018 alleging tenancy qua the secured asset. In the meantime, respondents No.10 to 12 also filed the objections alleging that they were the tenants in the secured property. Since the physical possession of the property was not being taken by the receiver and the objections were pending before respondent No.2, petitioner filed CWP No.27607 of 2017 and the same was disposed of vide order dated 19.01.2018 and the District Magistrate, Gurgaon was directed to decide the application and the objections within a period of one month from the date of receiving a certified copy of the order. Liberty was given to the petitioner to approach the District Magistrate for the limited purpose of change of receiver.
7. Respondent No.2 vide order dated 01.05.2018 dismissed the objections filed by the tenants. It was observed that the tenants have to raise their grievance under Section 17(4A) of the Act before the DRT. The Naib Tehsildar-cum-Executive Magistrate, Khadipur, was appointed as receiver for taking over the physical possession of the secured mortgaged assets. The relevant portion extract of the order is reproduced below:-
"After hearing the argument and going through the case file, it has been concluded that as per Section 17(4A) of SARFAESI Act, 2002, grievance of tenants have to be raised before Hon'ble DRT, thus this Court does not have remedy of the objections filed by tenants and hence application is rejected. As requested by lender, receiver to be changed and Naib Tehsildar-cum-Executive Magistrate, Kadipur is appointed as receiver in place of Sh. Sube Singh Yadav, Advocate, who was appointed as receiver for taking physical possession of the mortgaged/secured asset involved in the above said case vide this office Letter No.9082-85/PB dated 18.05.2017 and is directed to refund the amount paid to receiver by the peti
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