The District Magistrate's jurisdiction under Section 14 of the SARFAESI Act is limited to ascertaining whether the statements required by the secured creditor in its affidavit have been made. The District Magistrate cannot adjudicate the correctness of the information provided in the affidavit or determine the due amount.

JUDGMENT :

AUGUSTINE GEORGE MASIH, J.

Challenge in this writ petition is to the order dated 17.05.2017 (Annexure P-1) passed by the Additional District Magistrate, Ludhiana, exercising the powers of District Magistrate, rejecting the application of the petitioner filed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act”).

2. Briefly the facts are that petitioner-Kotak Mahindra Bank Limited is a banking company under the provisions of the Banking Regulation Act, 1949 and incorporated under the Companies Act, 1956. Various credit facilities have been provided to M/s Oswal Spinning and Weaving Mills Limited (the company) by way of financial assistance by UCO Bank, IFCI Limited, State Bank of Patiala, Life Insurance Corporation of India, General Insurance Corporation and United India Insurance Corporation. To secure the credit facilities sanction, the company credited security interest by way of creation of mortgage in favour of the lenders on its immovable and movable properties. These financial facilities were also secured by the personal guarantees of Mr. D.P. Oswal, Mr. Ashok Oswal, Mr. R.P. Oswal-respondent No.2 herein. There were continuous defaults by the company and despite repeated requests to the company as well as the guarantors/mortgagers to discharge the dues, when they were unable to do so, the lenders in accordance with the directives and guidelines of the Reserve Bank of India (RBI), classified the account of the company as Non Performing Asset (NPA). Petitioner acquired the debts/debentures of the above-mentioned lenders by way of assignment/transfer on 16.11.2007. This assignment/transfer of debentures was confirmed by the company and guarantors vide letter of acceptance dated 26.12.2007. Petitioner, as a part of reconstructing, extended/rescheduled financial facilities to the company and the company created charge on the movable and immovable properties for securing the said financial/rescheduled facilities assigned in favour of the petitioner-bank. The said facilities were additionally secured by the personal guarantees of Mr. Ashok Oswal, Mr. R.P. Oswal-respondent No.2, Mr. Sambhav Oswal and additionally guaranteed by M/s. Oswal Industries Private Limited, M/s Oswal Vanaspati and General Industries and M/s Sidhant Investment P. Ltd. The financial facilities were also secured by pledge of shares aggregating to 1,35,93,900 shares of M/s Oswal Spinning and Weaving Mills Limited held by M/s Anant Portfolios Pvt. Ltd., M/s Oswal Cottex Exports Ltd. and M/s Sidhant Investment Pvt. Ltd.

3. Due to defaults of the company, the account became irregular and at the request of the company for revised statement of debts, a second letter of acceptance dated 30.09.2009 was signed by the company and its guarantors/pledgers. Further to secure the outstanding dues, charge was credited in favour of Kotak Mahindra Bank on the residential premises in favour of the petitioner. Despite all this, company again committed defaults in repayment of the agreed instalments and at their request, bank issued permissions from time to time for sale of charged properties subject to various terms and conditions. Company sold major portion of the charged properties and deposited aggregated amount of Rs.49,82,00,000/- from time to time towards part payment of the dues. The company failed to adhere to the repayment schedule and, therefore, the account of the company, as per the directives and guidelines of the RBI was declared as NPA on 07.12.2013. Demand notice under Section 13 (2) of the SARFAESI Act to the mortgagers and hypothecators of the movable and immovable properties were issued by the petitioner. Petitioner issued notice dated 04.04.2014 (Annexure P-2) amongst others to respondent No.2 under Section 13 (2) of the SARFAESI Act and called upon the said respondent to pay an aggregate sum of Rs.63,42,83,420.68 as on 04.04.2014 t