The main legal point established in the judgment is the proper application of Section 14 of the SARFAESI Act, including the requirements for the application, consideration of borrower's representation, and the authority of the District Magistrate in authorizing possession.

JUDGMENT :

Ravindra Maithani, J.

The challenge in this petition is made to an order dated 15.07.2023, passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“the SARFAESI Act”) by the respondent no.1, District Magistrate, Udham Singh Nagar with the related reliefs.

2. Heard learned counsel for the parties and perused the record.

3. According to the petitioners, the petitioner no.1 was a partnership firm, whose sole proprietor was Mayank Agarwal. The firm had got sanctioned Cash Credit Limit facility with regard to the flourmill from the respondent no.2, Bank of Baroda (“the Bank”). He has died. Thereafter, the firm has been represented by the petitioner nos. 2 and 3. The petitioner nos. 2 and 3 are shown guarantors of the loan taken by the petitioner no.1 the firm. It has been acknowledged as well by the respondent no.2 the Bank. The petitioners were maintaining their accounts regularly, but the respondent no.2, the Bank in utter violation of the guidelines and directives of the Reserve Bank of India (“RBI”), regarding classification of Non Performing Assets (“NPA”) classified the loan account of the petitioners firm as NPA on 02.01.2023. The respondent no. 2 the Bank thereafter, proceeded under the provisions of the SARFAESI Act. It is the case of the petitioners that notice under Section 13 (2) of the SARFAESI Act was served on them. Thereafter, on an application of the respondent no.2, the Bank, the respondent no.1, the District Magistrate, Udham Singh Nagar has passed the impugned order dated 15.07.2023 for taking possession of the assets.

4. Learned counsel for the petitioners would submit that entire action of the respondent no.2, the Bank is in utter violation of the RBI guidelines; the accounts of the petitioners could not have been classified as NPA. He would raise the following points in his submission:-

(i) A writ petition assailing an order passed under Section 14 of the SARFAESI Act is maintainable, in view of the law, as laid down by the Hon’ble Supreme Court in the case of Harshad Govardhan Sondagar Vs. International Assets Reconstruction Company Limited and others, (2014) 6 SCC 1. Under Section 13 (4) of the SARFAESI Act, an aggrieved person may ventilate his grievance under Section 17 of the SARFAESI Act, but action taken under Section 14 of the SARFAESI Act may not be challenged in any other court as per Section 14 (3) of the SARFAESI Act.

(ii) The action under Section 14 of the SARFAESI Act has not been as per law because an application that is required to be filed under Section 14 of the SARFAESI Act, requires to give all the details that are related to the matter. It is argued that the petitioners in response to the notice under Section 13 (2) of the SARFAESI Act have made a representation under Section 13 (3A) of the SARFAESI Act and this fact was necessarily required to be mentioned in the application under Section 14 of the SARFAESI Act, in view of clause (vii) of the first proviso to Section 14 (1), which reads as hereunder:-

“14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.- (1) Where the possession of any secured asset is required to be taken by the secured creditor of if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him-

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