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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Jaswant Singh, Harinder Singh Sidhu, JJ.
Allahabad Bank - Appellant
Versus
District Magistrate, Ludhiana & Ors. - Respondents
Cm No. 3178-CWP of 2021 and CWP No. 4916 of 2020
Decided On : 06-09-2021
SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - SECTION 13(1), 13(2), 13(3-A), 13(4), 14, 17, 34, 35 - CIVIL PROCEDURE CODE, 1908 - ORDER 38 RULE 5 - TRANSFER OF PROPERTY ACT, 1882 - SECTION 48, 69, 69-A - RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993 - SECTION 51-B(2)(A), (B), (C) - WEST BENGAL ESTATES ACQUISITION ACT, 1953 - SECTION 57B(2)(A), (B), (C) - CODE OF CIVIL PROCEDURE, 1908 - ORDER 39 RULE 3 - CONSTITUTION OF INDIA, 1950 - ARTICLE 226 - PUNJAB AND SIND BANK V/S DISTRICT MAGISTRATE MOHALI - CWP NO. 13068 OF 2014 - 22.12.2014 - NALANDA WOOLENS LTD. V/S ANUJ KAPOOR - NALANDA SPINNERS LTD. V/S CREATIVE YARN PVT. LTD. - DISTRICT MAGISTRATE, LUDHIANA V/S INDIAN BANK - APPLICATION NO. 1055 OF 2020 - 18.08.2021 - JASWANT SINGH, J.
Fact of the Case:
Respondent No. 1 (District Magistrate, Ludhiana) and Respondent No. 3 Tehsildar (East), Ludhiana, filed an application seeking modification of the order dated 25.02.2020, which directed Respondent No. 1 to hand over the possession of the secured assets to the petitioner bank (Indian Bank) within 3 weeks from the date of the order. The modification was sought on the ground that after the order was passed, it was realized that the petitioner bank had concealed material facts, which subsequently came to the notice of the Applicant-Respondents No. 1 to 3, due to which implementation of the order was not possible as physical possession of the secured assets could not be taken under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "Act, 2002").
Finding of the Court:
1. Civil Court would not have jurisdiction to negate any right of the secured creditor under the Securitisation Act, 2002, qua the secured asset in a civil suit or proceedings instituted by the borrower / guarantor / any third party qua the secured asset. 2. The petitioner bank/secured creditor would not be bound by an order passed by a Civil Court in a Us inter se between parties pertaining to the secured asset, not having impleaded the secured creditor. 3. The District Magistrate does not assume any adjudicatory function while examining the application of the secured creditor under Section 14 of the Act, 2002.
Issues: 1. Whether Civil Court would have jurisdiction to negate any right of the secured creditor under the Securitisation Act, 2002, qua the secured asset in a civil suit or proceedings instituted by the borrower/guarantor/any third party qua the secured asset? 2. Whether the petitioner bank/secured creditor would be bound by an order passed by a Civil Court in a Us inter se between parties pertaining to the secured asset, not having impleaded the Bank? 3. Scope of powers of the District Magistrate in exercise of its jurisdiction under Section 14 of the Securitisation Act,2002?
Ratio Decidendi: 1. The jurisdiction of the Civil Court shall be completely barred, so far as the "measure" taken by a secured creditor under sub-section (4) of Section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal to determine as to whether there has been any illegality in the "measures " taken. 2. Since the petitioner bank is not a party to either of the civil suits which have been referred to by respondents Nos. 1 and 3, the interim orders passed therein would not effect the rights of the petitioner. 3. The District Magistrate is required to pass an order within a period of thirty days from the date of application which period can be extended by another 30 days i.e. maximum period 60 days are available. After the order is passed by the District Magistrate, the officer so deputed to execute the said order under Section 14(1 A) of the Act, 2002 would also complete the process of its execution within 60 days from the date of receipt of such order.
Final Decision: The application of the respondent-State is dismissed. Respondent Nos. 1 and 3 are directed to ensure handing over of actual physical possession of the secured asset to the petitioner bank within four weeks with an advance notice of 15 days to the occupants/borrowers.
ORDER
Jaswant Singh, J. - The present application has been filed on behalf of Respondent No. 1 (District Magistrate, Ludhiana) and Respondent No. 3 Tehsildar (East), Ludhiana, seeking modification of the order dated 25.02.2020, which reads as under :-
Notice of motion to the respondents.
Mr. I.P.S. Doabia, Learned Additional Advocate General, Punjab, who is present in Court, accepts notice.
Learned counsel appearing on behalf of State of Punjab undertakes to hand over the possession to petitioner bank within 3 weeks from today after completing all the necessary formalities.
In view of the aforesaid, the petition is disposed off." [Emphasis supplied]
2. In brief, the facts which emerge from the pleadings are that M/s Creative Yarn Private Limited having its Registered Office at K-l, Textile colony , Industrial Area-A Ludhiana availed a Cash Credit facility of Rs 7 Crore from Allahabad Bank (now merged with Indian Bank). Mr. Anuj Kapoor executed a guarantee deed dated 15.01.2015 in favor of the bank for the aforesaid loan facility availed by the borrower company. He also created an equitable mortgage of Factory land and building built over MC No. B-XII-667 and B-XXIII -2119/A, measuring 1769 Square Yards situated at Textile Colony, Ludhiana Consequent upon declaration of the account as Non Performing Asset, the petitioner bank issued notice dated 03.04.2018 under Section 13(2) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "Act, 2002") seeking a recall of Rs. 8,20,24,851 due as on 02.04.2018.
3. An Application under Section 14 of the Act, 2002 filed by the bank was allowed by Respondent No. 1 vide order dated 15.11.2018 directing Respondent No. 3 to take physical possession and hand it over to the petitioner bank. Since the said order was not being implemented, the petitioner bank had approached this Court by filing the instant petition which was disposed off vide aforesaid order dated 25.02.2020.
4. Learned State Counsel, contends that the necessity to file the instant application arose on account of the fact, that after the aforesaid order was passed, it was realized that the petitioner bank has concealed material facts, which subsequently came to the notice of the Applicant-Respondents No. 1 to 3, due to which implementation of the order was not possible to the carried out as physical possession of the secured assets could not be taken under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "Act, 2002").
4.1. Learned State Counsel further contends that as per official record, on 18.11.2019 a representation was received from M/s Nalanda Woolens Ltd. alongwith copy of the order dated 13.07.2018 and 07.11.2019 passed by Ld. Civil Judge (Junior Division), Ludhiana in Civil Suit No. 3604 of 2018 titled as "Nalanda Woolens Ltd. V/s Anuj Kapoor". The case set up by M/s Nalanda Woolens Ltd in the plaint was that the plaintiff company is a tenant and in possession of the suit property (secured asset) bearing No. B-XXIII-667 (old), B-XXIII-2119 (new) and Plot No. K-l, measuring 1769 Sq. Yards situated at Textile Colony, Industrial Area-A, Ludhiana, which is owned by the landlord/defendant - Sh. Anuj Kapoor (guarantor/mortgagor), and sought for a decree of permanent injunction against the defendant/landlord from interfering in its possession. The plaintiff company relies upon Telephone connection, Sales Tax Registration Number and VAT Registration Number to substantiate its possession. The plaintiff is seeking protection of its possession in view of the provisions of East Punjab Urban Rent Restriction Act, 1949. It is to be noticed that this very property is claimed to be a secured asset of which the Petitioner - Bank, intends to take physical possession under Section 14 of the Act, 2002.
4.2. Learned State Counsel points out that the learned Civil Court, vide order d
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