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2025 Supreme(MP) 341
IN THE HIGH COURT OF MADHYA PRADESH AT GWALIOR
ANAND PATHAK, HIRDESH, JJ.
UCO Bank, Gwalior - Appellant
Versus
M/s Girraj Ware House and Others - Respondents
Misc. Petition No. 3610 of 2024
Decided On : 24-03-2025
For the Appellant : Ajay Sharma
For the Respondent: D.K. Agarwal
The court ruled that a secured creditor can proceed under Section 14 of the SARFAESI Act without hearing borrowers who have already availed their statutory remedies under Section 17, emphasizing the non-judicial nature of Section 14 inquiries.
Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13, 14, and 17 - Petition under Article 227 challenging the rejection of application under Section 14 by CJM due to non-payment of process fee - The provision allows creditors to proceed without hearing borrowers when they have already availed their statutory remedies under Section 17. (Paras 3-4, 20-21)
(B) Legal effect of proceeding under Section 14 - It is an administrative function, not judicial, aimed at enabling secured creditors to take possession swiftly, without the necessity of hearing borrowers again. (Paras 14-17)
Facts of the case:
The petitioner, a secured creditor, challenged the rejection of an application for taking possession of secured assets under Section 14, arguing that a notice to borrowers was not required due to their statutory challenge under Section 13.
Findings of Court:
The order was set aside, allowing the secured creditor to proceed with the application under Section 14 without imposing the requirement of notifying borrowers.
Issues: The main issues involved whether respondents are entitled to a hearing under Section 14 when they had previously engaged the DRT proceedings.
Ratio Decidendi: The court held that an inquiry under Section 14 is non-judicial and does not require borrower participation if they have already availed themselves of statutory remedies.
Result: Petition allowed, impugned order set aside.
ORDER :
1. With consent, heard finally.
2. The instant petition is preferred under Article 227 of the Constitution of India seeking following reliefs:-
"(i) That, the order dated 20-05-2024 passed by the learned Chief Judicial Magistrate, Bhind may be quashed and it may be directed to act in accordance with section 14 of the SARFAESI Act and the directions issued by Hon’‘ble High court in W.P. No. 26176/2023 and dispose the same within the stipulated time limit.
(ii) any other relief deemed fit and expedient in the facts of the case may also be granted to the petitioner."
3. Petitioner is a secured creditor in the present case and is taking exception to order dated 20.05.2024 passed by CJM, Bhind whereby application under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred as "the Act, 2002") preferred by petitioner as secured creditor stands rejected because of non-payment of process fee for respondents.
4. It is the submission of learned Counsel for petitioner that proceeding under consideration before CJM, Bhind was in respect of Section 14 of the Act, 2002 and not in respect of Section 13 (2) and Section 13 (4) of the Act, 2002. Therefore, respondents are not required to be intimated or PF is required to be paid for service of respondents.
5. It is further submitted that respondents/borrowers have already challenged the proceedings and order under Section 13 (4) of the Act, 2002 before learned DRT, purportedly under Section 17 of the Act, 2002. Therefore, they have already availed the statutory remedy which is available to them. No interim relief is granted in said case. Therefore, no opportunity of hearing is required to be given to the respondents/borrowers in this regard. Section 14 of the Act, 2002 is a proceeding consequential to Section 13 of the Act, 2002. Learned counsel for petitioner relied upon the Full Bench decision of this Court in the case of Bank of Baroda vs. District Magistrate Cum Collector and Ors. /b>. passed recently vide order dated 14.02.2025 in WP No. 11500/2020 whereby Full Bench of this Court held that remedy to the secured creditor is not available under Section 17 of the Act, 2002. It is only available to the borrower or any person affected by the action of secured creditor. Therefore, secured creditor has no remedy to approach for proceedings under Section 17 of the Act, 2002. Hence, this petition is preferred.
6. Learned counsel for petitioner further relied upon the judgments passed by Division Bench of this Court in the case of IIFL Home Finance Ltd. vs. State of Madhya Pradesh & Ors. vide order dated 27.02.2024 in WP No. 2078/2023 and in the case of Cholamandalam Investment and Finance Company Ltd. through its Authorised Officer Ravi Sahu Vs. Indal Singh & Ors. 2024 SCC OnLine MP 9114 vide order dated 27.11.2024 in MP No. 6395/2024 and seeks parity. According to him, in Para 11 of Cholamandalam Investment (supra), this Court has held that Section 14 of the Act, 2002 appears to be consequential in nature and therefore, no notice is required to be given to borrower. In fact, by providing opportunity of hearing again (under Section 14 ) to the borrower would be contrary to the Legislative Intent and purpose for which SARFAESI Act was promulgated.
7. Learned counsel for respondents fairly submits regarding passing of Full Bench of this Court, however, tries to distinguish the case on the ground that proceeding under Section 14 of the Act, 2002 is a quasi judicial function, therefore, in view of the amendment caused in Section 14 of the Act, 2002 on 15.01.2013, notice is required to be given. Learned counsel relied upon the judgment passed by Apex Court in the case of Authorised Officer, Indian Bank Vs. D. Visalakshi & Anr. (2019) 20 SCC 47 .
8. Heard.
9. This is a case where petitioner happens to be a secured creditor and is taking exception to the order dated 20.05.2024 passed by CJM, Bhind, whereby applicatio
