IMPORTANT POINT
Borrowers are not entitled to be heard under Section 14 of SARFAESI Act.

Dinesh Maheshwari, CJ.—Sri Madhukar M Deshpande, learned counsel for petitioner.

Sri K.Prasad Hegde, learned counsel for respondents 1 to 3.

These intra-court appeals are directed against the order dated 08.08.2017 in W.P.Nos.35597-35601/2017 and 35602-35604/2017, whereby the learned Single Judge, while disposing of the said writ petitions filed by the tenants/lessees of the borrowers, has not only accepted the submissions of the parties that the tenants were to be provided an opportunity to approach the Debts Recovery Tribunal (‘DRT’) under Section 17(4A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’), but has further proceeded to issue generalised directions, purportedly to the effect that even the borrowers have a right to be heard under Section 14 of the SARFAESI Act.

2. These intra-court appeals were initially considered by a Division Bench of this Court on 20.06.2018 and taking note of the submissions made on behalf of the appellant with reference to the decisions of the High Courts of Gujarat, Allahabad and Bombay, these appeals were admitted for consideration and the part of order impugned, to the extent it holds that the borrowers are entitled to be heard under Section 14 of the SARFAESI Act, was stayed.

3. In these appeals, service of notice to respondent Nos. 1, 3, 6, 11 and 12 was dispensed with; notices have been served in relation to the respondent Nos. 2, 5 and 7 to 10 who have remained unrepresented; and only the counsel for respondent No. 4/tenant has appeared before this Court.

4. Only the validity and correctness of the generalised directions in the impugned order dated 08.08.2017 being the subject-matter of these appeals, dilation on all the factual aspects is not necessary. Only a brief reference to the background aspects would suffice.

5. Put in brief, the relevant background aspects of the matter are that the landlords had secured a loan from the appellant-financial institution by mortgaging their property. As the borrowers had defaulted in repayment of the loan amount, the appellant-financial institution proceeded under Section 13(2) of the SARFAESI Act by issuing notice dated 10.11.2016 towards recovery of the outstanding loan amount. The appellant-financial institution also preferred Crl.Misc.No.2022/2017 under Section 14 of the SARFAESI Act before the Court of VIII ACMM, Bengaluru for taking over the possession of the secured asset, namely the building in question, wherein the tenants are said to be in occupation. The Magistrate, having considered the matter placed before it, passed the order dated 20.05.2017 (Annexure G) directing that no further notice was required to be given to any other person/s in lieu of the general notice that was pasted on the walls of the property; and further that the physical possession of the property be handed over to the financial institution. Thereafter, notices dated 31.07.2017 (Annexure E-1 to E4) came to be issued by the appellant-financial institution to all the tenants, asking them to vacate the premises within a period of 7 days from the date of the receipt of the aforesaid notices, and on failure to do so, they will be evicted from the premises with the assistance of the Police Department. Being aggrieved by the aforementioned order passed by the Magistrate and notices issued thereafter, the tenants preferred the aforesaid writ petitions, being W.P. Nos.35597-35601/2017 and 35602-35604/2017.

6. Upon hearing the contentions of the parties, the learned Single Judge, in his detailed impugned order dated 08.08.2017, took the view with reference to the decisions of the Hon’ble Supreme Court in Harshad Govardhan Sondagar vs. International Assets Reconstruction Company Limited and Ors: (2014) 6 SCC 1 and Vishal N. Kalsaria vs. Bank of India and Ors: (2016) 3 SCC 762, that the tenants were required to be heard in the matter. The learned Single Judge observed that if the tenants were