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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
G.S. SANDHAWALIA, HARPREET KAUR JEEWAN, JJ.
Amit Ahuja – Petitioner
Versus
The South Indian Bank Ltd. & Ors. – Respondents
CWP-16188 of 2022
Decided On : 03-05-2023
| Table of Content |
|---|
| 1. challenge to bank's possession order. (Para 1 , 2) |
| 2. petitioner's loan and payment history. (Para 3 , 4 , 5 , 6) |
| 3. district magistrate's obligations under the act. (Para 7 , 8 , 9) |
| 4. legal principles guiding possession rights. (Para 10 , 11 , 12) |
| 5. rights of borrowers under section 13. (Para 13 , 14 , 15 , 20) |
| 6. court's authority over section 14 proceedings. (Para 21 , 22 , 23) |
| 7. judgment quashing bank's order. (Para 24 , 25) |
JUDGMENT
G.S. Sandhawalia, J. - Challenge in the present writ petition filed under Article 226/227 of the Constitution of India is to the order 30.05.2022 (Annexure P-4) whereby application under Section 14 of the Securitization and Re- construction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 2002 Act') was allowed by the District Magistrate without any measure being taken under Section 13 (4) of the 2002 Act. The said order was further upheld by the District Magistrate on 14.11.2022 (Annexure R-1), which also in the considered opinion of this Court as per settled principles of law is not justifiable.
2. The question of law which, thus, arises in the present writ petition being a question of jurisdiction primarily calls upon us to exercise our powers under the extra-ordinary writ jurisdiction, as the Bank in its illegal manner had proceeded to take possession of the secured property secured without resorting to the measures under Section 13 (4) of the 2002 Act.
3. A perusal of the paper-book would go on to show that the case of the petitioner was that a term loan for machinery to the extent of Rs.95 lakhs had been granted vide sanction letter dated 04.08.2018. He had been regularly paying the loan installment in spite of having financial difficulties but the Bank in violation of RBI Guidelines had declared him as a 'Non-Performing Asset on 25.05.2021. He had deposited the amounts in April, 2021 to the tune of Rs.1,45,469/- and Rs.13,397/-. Notice under Section 13 (2) was issued on 09.07.2021 (Annexure P-1) wherein against the term loan of Rs.95 lakhs there was balance outstanding of Rs.71,38,710.59 and against the ECLGS facility of Rs.14,77,000/- there was balance of Rs.14,76,973.16 as on 08.072021 for both accounts. Resultantly, hypothecation of machineries which were computerized machines and which were stored in the premises of godown at D-74, HSIIDC, Sector-37, Phase-VI, Udyog Vihar, Gurgaon, Haryana, were shown as the movable properties, which were secured with the Bank.
4. The case of the petitioner is that between the intervening period from being declared NPA on 25.05.2021 and 13 (2) notice issued on 09.07.2021, he made payments of Rs.13,397/- and Rs.39,360/- on 04.06.2021 and Rs.40,639/- on 11.06.2021, Rs.10,000/- on 16.06.2021, Rs.14,500/- on 29.06.2021, Rs.50,000/- on 03.07.2021. After issuance of notice under Section 13 (2) he made payments of Rs.11,145/- and Rs.58,999/- on 16.07.2021. It is his case that he had paid Rs.66,11,928/- against the total amount of Rs.1,09,77,000/-.
5. Apparently, the Bank in its anxiety never proceeded under Section 13 (4) of the 2002 Act, which is sine qua non as it is given a right to the borrower to approach the Tribunal against the action of the Bank. The Bank straightway preferred Section 14 application dated 29.11.2021 (Annexure P-2) before the District Magistrate seeking the possession of the machineries and their accessories as per the invoice dated 04.08.2017 having a value of Rs.1,40,93,188 which were stated to be stored in the said godown which were mentioned in the Section 13 (2) notice.
6. The petitioner objected to the said methodology and filed his objection dated 30.05.2022 (Annexure P-3) and highlighted the payments as noticed above and prayed for dismissal of the application.
7. However, the District Magistrate in its anxiety passed the order on the same date when the reply was filed on 30.05.2022 (Annexure P-3) without recording its satisfaction regarding the provisions of Section 14 wherei
The jurisdiction of the Civil Court is completely barred in so far as those matters, which would fall for adjudication within the jurisdiction of the Tribunal.
Remedy of appeal under Section 17(1) of the SARFAESI Act is not available to secured creditors against District Magistrate orders but only to aggrieved parties.
The Court clarified the jurisdiction of the Chief Judicial Magistrate under Section 14 of the SARFAESI Act, holding that both the District Magistrate and Chief Judicial Magistrate have the jurisdicti....
A secured creditor retains the right to seek possession of secured assets even after issuing a sale certificate without physical possession, and the relevant authority acts ministerially under Sectio....
The court established that the executing authority under the Securitization Act must comply with orders for possession and cannot raise disputes regarding the secured asset.
The court established that magistrates must assist secured creditors in enforcing possession orders under the Securitization Act without adjudicating disputes over the legitimacy of the claims.
The District Magistrate is not required to grant an opportunity of hearing to the petitioners while examining applications filed by secured creditors under Section 14 of the SARFAESI Act, 2002. The p....
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