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IN THE HIGH COURT OF MADHYA PRADESH
(DIVISION BENCH)
Hemant Gupta, CJ and Vijay Kumar Shukla, J.
Aditya Birla Finance Limited v. Shri Carnet Elias Fernandes
Vemalayam and others
Writ Appeal No. 784 of 2018 (Jabalpur); against the order dated 11.4.2018 passed in Writ Petition No. 8077 of 2017;
Decided on 13.7.2018
(2) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -- Ss. 14 and 35 -- Arbitration and Conciliation Act, 1996 -- S.9 -- Court Receiver appointed and symbolic possession given to writ petitioners in proceedings under section 9 of Arbitration Act -- will not create any encumbrance on right of secured creditor as such right is exercised in terms of later and special statute giving overriding effect to SARFAESI Act -- Court Receiver will not have preference over later and special Act -- District Magistrate passing order under section 14 of SARFAESI Act is not interfering with order passed by High Court under section 9 of Arbitration Act -- District Magistrate derives power not by authority of its office but by authority of central statute having overriding effect over all other laws including Arbitration Act -- question of rank of officer not relevant as District Magistrate is not in hierarchy of officers under Arbitration Act -- both statutes operate in different fields with SARFAESI Act having overriding effect -- proceedings initiated by appellant under section14 of SARFAESI Act cannot be said to be illegal on account of receiver appointed in proceedings under section 9 of Arbitration Act. (2004)4 SCC 311, (2018)3 SCC 85 and (2009)4 SCC followed. M. P. No. 2271 of 2018 decided on 10.5.2018 and Appeal (L) No. 162 of 2016 decided on 6.10.2016 (Bom.) relied on. (2009)4 SCC 94 discussed. (2000)1 SCC 742 distinguished. [Paras 18 & 20
(3) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -- S.14 -- Arbitration and Conciliation Act, 1996 -- S. 9 -- S. 14 contemplates disclosure on nine different points -- all nine points mentioned specifically in affidavit -- non-disclosure of order in proceedings under section 9 of Arbitration Act -- petitioners have not suffered any prejudice as such disclosure was not mandatory. [Paras 21 & 22
(4) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -- Ss.13(4) and 14 -- Act does not contemplate symbolic or actual possession. (2008)1 SCC 125 and (2009)4 SCC 94 followed. 2018(2) JLJ 585 relied on. [Paras 23 to 25
(5) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -- S.14 -- District Magistrate is duty bound to hand over physical possession to the secured creditor. II (2016) BC 567 (Mad.) distinguished. (2014)6 SCC 1 referred to.
[Paras 26 & 27
(6) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -- Ss.13 and 14 -- proceedings under section 14 do not adjudicate rights of parties -- no notice is contemplated to be served upon debtor as such proceedings are taken only after serving notice under section 13. (2013)9 SCC 620 followed. 2007 Cri. LJ 2544 (Bom.) relied on. [Paras 28 & 29
(7) Natural justice -- proceedings under section 14 of SARFAESI Act -- do not adjudicate rights of parties -- no notice is contemplated to be served upon debtor. (2013)9 SCC 620 followed. 2007 Cri. LJ 2544 (Bom.) relied on. [Paras 28 & 29
¼1½ fof/k dk fuoZpu && foÙkh; vkfLr;ksa dk izfrHkwfrdj.k vkSj iquxZBu vkSj izfrHkwfr fgr izorZu vf/kfu;e] 2002 && folaxfr;ksa dh lhek rd vU; lHkh dkuwuksa ds] rFkk ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 ds Hkh] mica/kksa ij vfHkHkkoh gksxkA ¼2004½4 ,l lh lh 311] ¼2018½3 ,l lh lh 85 rFkk ¼2009½4 ,l lh lh 94 vuqlfjrAA izdh.kZ ;kfpdk Ø& 227 lu~ 2018 fu.khZr fnukad 10&5&2018 voyafcrA ¼2009½4 ,l lh lh 94 foosfprA ¼iSjk 17 ¼2½ foÙkh; vkfLr;ksa dk izfrHkwfrdj.k vkSj iquxZBu vkSj izfrHkwfr fgr izorZu vf/kfu;e] 2002 && /kkjk 14 rFkk 35 && ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 && /kkjk 9 && ek/;LFke~ vf/kfu;e dh /kkjk 9 ds v/khu dk;Zokgh esa U;k;ky; fjlhoj fu;qä rFkk fjV ;kfp;ksa dks lkadsfrd dCtk iznÙk && izfrHkwr ysunkj ds vf/kdkj ij foYyaxe l`ftr ugha gksxk D;kasfd ;g vf/kdkj ljQslh vf/kfu;e dks v/;kjksgh izHkko nsus okys i'pkr~orhZ vkSj fo'ks"k dkuwu ds vuqlkj iz;qDr fd;k tkrk gS && U;k;ky; fjlhoj dks i'pkr~orhZ vkSj fo'ks"k vf/kfu;e ij vf/keku izkIr ugha gksxk && ljQslh vfèkfu;e dh /kkjk 14 ds v/khu vkns'k ikfjr djus esa ftyk eftLVªsV mPp U;k;ky; }kjk ek/;LFke~ vf/kfu;e dh /kkjk 9 ds v/khu ikfjr vkns'k esa gLr{ksi ugha djrk && ftyk eftLVªsV dks 'kfä vius in ds izkf/kdkj ls ugha vfirq ekè;LFke~ vf/kfu;e lfgr vU; lHkh fof/k;ksa ij v/;kjksgh izHkko okys dsanzh; dkuwu ds izkf/kdkj ls izkIr && vf/kdkjh ds jSad dk iz'u lqlaxr ugha D;ksafd ftyk eftLVªsV ek/;LFke~ vf/kfu;e ds v/khu vf/kdkfj;ksa ds vf/kØe esa vf/kdkjh ugha && nksuksa dkuwu fHkUu {ks=ksa esa izofrZr gksrs gSa ftlesa ls ljQslh vf/kfu;e dk vè;kjksgh izHkko gS && vihykFkhZ }kjk ljQslh vf/kfu;e dh /kkjk 14 ds v/khu izkjaHk dh xbZ dk;Zokgh dks ek/;LFke~ vf/kfu;e dh /kkjk 9 ds v/khu dk;Zokgh esa fu;qDr fjlhoj ds dkj.k voS/k ugha dgk tk ldrkaA ¼2004½4 ,l lh lh 311] ¼2018½3 ,l lh lh 85 rFkk ¼2009½4 ,l lh lh 94 vuqlfjrA izdh.kZ ;kfpdk Ø&2271 lu~ 2018 fu.khZr fnukad 10&5&2018 rFkk vihy ¼,y½ Ø& 162 lu~ 2016 fu.khZr fnukad 6&10&2016 ¼cacbZ½ voyafcrA ¼2009½4 ,l lh lh 94 foosfprA ¼2000½1 ,l lh lh 742 izHksfnrA ¼iSjk 18 ,oa 20 ¼3½ foÙkh; vkfLr;ksa dk izfrHkwfrdj.k vkSj iquxZBu vkSj izfrHkwfr fgr izorZu vf/kfu;e] 2002 && /kkjk 14 && ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 && /kkjk 9 && /kkjk esa ukS fHkUu fcanqvksa dk izdVhdj.k vuq/;kr && lHkh ukS fcanq 'kiFki= esa fofuZ"Vr% mfYyf[kr && ek/;LFke~ vf/kfu;e dh /kkjk 9 ds v/khu dk;Zokgh esa vkns'k dk vizdVhdj.k && ;kphx.k izfrdwyr% izHkkfor ugha D;ksafd ,slk izdVhdj.k vkKkid ugha FkkA ¼iSjk 21 ,oa 22 ¼4½ foÙkh; vkfLr;ksa dk izfrHkwfrdj.k vkSj iquxZBu vkSj izfrHkwfr fgr izorZu vf/kfu;e] 2002 && /kkjk 13¼4½ rFkk 14 && vf/kfu;e esa lkadsfrd vFkok okLrfod dCtk vuq/;kr ughaA ¼2008½1 ,l lh lh 125 rFkk ¼2009½4 ,l lh lh 94 vuqlfjrA 2018¼2½ ts ,y ts 585 voyafcrA ¼iSjk 23 ,oa 25 ¼5½ foÙkh; vkfLr;ksa dk izfrHkwfrdj.k vkSj iquxZBu vkSj izfrHkwfr fgr izorZu vf/kfu;e] 2002 && /kkjk 14 && ftyk eftLVªsV izfrHkwr ysunkj dks HkkSfrd dCtk lkSaius gsrq drZC;kc) gSA 2 ¼2016½ ch lh 567 ¼enzkl½ izHksfnrA ¼2014½6 ,l lh lh 1 fufnZ"VA ¼iSjk 26 ,oa 27 ¼6½ foÙkh; vkfLr;ksa dk izfrHkwfrdj.k vkSj iquxZBu vkSj izfrHkwfr fgr izorZu vf/kfu;e] 2002 && /kkjk 13 rFkk 14 && /kkjk 14 ds v/khu dk;Zokgh esa i{kdkjksa ds vf/kdkjksa dk U;k;fu.kZ;u ugha gksrk && _.kh dks lwpuk dh rkehy vuq/;kr ugha D;kasfd ,slh dk;Zokgh /kkjk 13 ds v/khu lwpuk dh rkehy ds mijkar gh dh tkrh gSA ¼2013½9 ,l lh lh 620 vuqlfjrA 2007 fØ& ,y ts 2544 ¼cacbZ½ voyafcrA ¼iSjk 28 ,oa 29 ¼7½ uSlfxZd U;k; && ljQslh vf/kfu;e dh /kkjk 14 ds v/khu dk;Zokgh && i{kdkjksa ds vf/kdkjksa dk U;k;fu.kZ;u ugha gksrk && _.kh dks lwpuk dh rkehy vuq/;kr ughaA ¼2013½9 ,l lh 620 vuqlfjrA 2007 fØ& ,y ts 2544 ¼cacbZ½ voyafcrA ¼iSjk 28 ,oa 29
Gupta, C.J. -- 1. The challenge in the present writ appeal is to an order passed by the learned Single Bench on 11.4.2018 in Writ Petition No. 8077/2017 (Shri Carnet Elias Fernandes Vemalayam and another v. District Magistrate and others) whereby an order passed by the District Magistrate, Bhopal on 28.4.2017 under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the Act”) has been set aside.
2. The sole reason for setting aside the order of the District Magistrate is that the Bombay High Court in Arbitration Petition No.1118/2015 (Aditya Birla Finance Limited v. Mr. Carnet Elias Fernandes and another) has passed an order on 4.9.2015 to hand over the physical possession of the property to the Receiver in proceedings initiated by the appellant under section 9 of the Arbitration and Conciliation Act, 1996 (for short “the Arbitration Act”). It was found that since symbolic possession of the property is with the Receiver, therefore, an order passed by the District Magistrate cannot override the order dated 4.9.2015 passed by the Bombay High Court. The relevant extract from the order dated 11.4.2018 (Annexure A-1) passed by the learned Single Bench, reads, thus :
“19. So far as ground No. 3 and 4 regarding physical possession of the properties is concerned, the Bombay High Court while passing the interim order has directed to hand over the physical possession of the properties to the receiver. Thus, as per the interim order passed by the Bombay High Court, symbolic possession of the properties has been given to the receiver and, thus, as the symbolic possession of the properties is with the receiver, the order passed by respondent No. 3 ceased to have any effect and cannot override the order dated 4.9.2015 passed by the Bombay High Court. The order passed by the Bombay High Court is certainly having a binding effect and cannot override and ceased by taking shelter of any other law, be it SARFAESI Act. Respondent No.3 has concealed the fact about the order passed by the Bombay High Court on 4.9.2015 and that the properties as of now are not with the petitioners and it is with the receiver of the Bombay High Court. As these facts were not brought to the notice of respondent No.1, therefore, the said order deserves to be quashed.”
3. Though the learned Single Bench has held that there is no alternative remedy against an order passed by the District Magistrate under section 14 of the Act, but, a Division Bench of this Court in Writ Petition No.19028/2017 (Sunil Garg v. Bank of Baroda and others) decided on 16.4.2018 has held that remedy of an aggrieved person against an order passed by the District Magistrate is before the Debts Recovery Tribunal under section 17 of the Act. Therefore, such finding of the learned Single Bench cannot be sustained.
4. Since the learned Single Bench has held that an order passed by the District Magistrate overrides the order of the Bombay High Court, whether such reasoning is legal and proper, needs to be examined.
5. The parties have entered into an agreement on 28.9.2012 whereby the appellant sanctioned loan of Rs.18.00 Crore to the writ petitioners (respondents No.1 and 2 herein). The stand of the writ-petitioners is that they faced an acute financial stress on account of an order of the Hon’ble Supreme Court cancelling the coal blocks and the Reserve Bank of India advised the Banks to curtail their exposures on power sector based industries. Thereafter, the writ-petitioners availed a housing loan from the appellant and that the appellant demanded the entire housing loan on 8.1.2015. The stand of the writ petitioners is that though the agreement contemplated resolution of dispute at Bhopal but the appellant initiated arbitration proceedings in Mumbai by unilaterally altering the arbitration clause. The sole Arbitrator was appointed. The appointment of which was disputed by the writ petitioners. However, the Arbit
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