Back
2009 Supreme(All) 2344
[2009(6) ADJ 261 (DB)]
ALLAHABAD HIGH COURT
BEFORE : SUNIL AMBWANI AND VIRENDRA SINGH, JJ.
ICICI BANK LIMITED ....Petitioner
Versus
STATE OF U.P. AND OTHERS ....Respondents
(Civil Misc. Writ Petition No. 26893 of 2009, decided on 25th May, 2009)
Counsel :
Ashish Mishra for the I.C.I.C.I. Bank; S.C. for the Respondents.
Headnote:Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002—Sections 14, 13(2), 17(3) and 31—Application by I.C.I.C.I. Bank to expedite process for appointment of Receiver—And to take possession of property under Section 14—Overdraft facility given to respondent-2, a partnership firm against security of mortgage of immovable property besides executing personal guarantees in favour of Bank—Default in repayment—Application moved by Bank before Chief Metropolitan Magistrate under Section 14 for appointment of Receiver and for taking possession—Chief Metropolitan Magistrate observed that notices have not been served upon respondents, hence, rejected application of Bank—Bank filed a recall application—Plea of Bank that under Section 14, there is no provision for issuing notice to respondents before appointing a receiver, or in taking possession—If any third party complains of exceptional hardship, High Court may, in a given case, issue necessary directions to allow notional possession to be taken, allowing such third party to approach Debt Recovery Tribunal to seek remedies at first instance—CMM/DM, however, do not have such powers under Act of 2002—Thus, orders dated 7.1.2009, by which CMM had issued notice to opposite party and order dated 2.4.2009 rejecting application of Bank to recall order, set aside—C.M.M. directed to consider application afresh, keeping in view Section 14 of Act of 2002. [Paras 4, 10, 11 and 12]
By the Court.—Heard Shri Ashish Mishra, learned counsel for ICICI Bank Limited-the petitioner in the writ petition. Learned Standing Counsel appears for the respondent Nos. 1 and 2.
2. The ICICI Bank Limited (in short the Bank) has approached the Court to set aside the orders passed by the Chief Metropolitan Magistrate (CMM) Kanpur Nagar dated 7.1.2009 and 2.4.2009 in Misc. Application No. 948 of 2008; to expedite the process for appointment of receiver and to take possession of the property under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short the Act of 2002).
3. Brief facts leading in filing the writ petition are that the respondent No. 2-a partnership firm entered into an agreement of overdraft facility of Rs. 24 lacs from the bank against security of mortgage of the immovable (residential) property bearing No. W-177, M.I.G., Keshav Nagar, Kanpur City, besides executing personal guarantees in favour of the bank. The respondent No. 3 failed to maintain financial discipline and made defaults in payment on which as per terms and conditions of the agreement the authorised officer of the bank issued a notice under Section 13 (2) of the Act of 2002 to the defaulter borrower firm M/s Ludhiana Agencies and it’s partners Mr. Narendra Kumar Grover and Smt. Santosh Kumari Grover, giving details of the amount payable by them and to repay the outstanding dues within the statutory period of sixty days, failing which the bank will take possession of the mortgage properties to recover the secured credits. The notice dated 13.7.2007 was received and acknowledged by them. The debtor did not make any effort to pay the money, nor has replied to the notice or filed any appeal under Section 17 of the Act of 2002 in Debt Recovery Tribunal.
4. The bank moved an application before the Chief Metropolitan Magistrate under Section 14 of the Act of 2002 for appointment of the receiver and for taking possession. The application was filed on 5.7.2008 and was fixed for hearing on 4.8.2008. It was adjourned thereafter from time to time and that lastly on 7.1.2009 the Chief Metropolitan Magistrate observed that the notices have not been served upon the respondents. He found that it would be in the interest of justice to issue notice and to hear the other side, and directed the notices to be issued fixing 7.2.2009 for hearing. The bank filed a recall application on 19.3.2009 objecting that under Section 14 of the Act of 2002, there is no provision for issuing notice to the respondent before appointing a receiver or taking possession. The application has been rejected by the Chief Metropolitan Magistrate, Kanpur Nagar on 2.4.2009 with observations that the principles of natural justice require a person to be heard in the matter before issuing an order against his interest, and that his earlier order dated 7.2.2009 has not been complied with, and cannot be reviewed by him.
5. Shri Ashish Mishra, learned counsel for the bank submits that the scheme of the Act of 2002 does not provide under Section 14 to issue notice by the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the Act of 2002 to the borrower. The orders under Section 13 (4) can be challenged under Section 17 of the Act of 2002 before the Debt Recovery Tribunal. Under sub-section (3) of Section 17 the Debt Recovery Tribunal can restore the possession, if it has been taken over illegally by the bank. He submits that the validity of the provisions of the Act has been upheld in Mardia Chemicals Limited v. Union of India, (2004) 4 SCC 311, and that thereafter in Transcore v. Union of India and another, (2008) 1 SCC 125, the Supreme Court has interpreted the provisions of the Act. He has referred to the discussion on point No. 2 in para-12, on the question of possession in paragraph-72 to 74 in which the Supreme Court held :
"72. We do not find any merits on the above contentions for the follow
