The court upheld the validity of actions under S.14 of the SARFAESI Act, reinforcing creditor rights in possession cases.

1. The petitioner, by the instant petition, questions the legality and validity of the order dated 26.02.2014 passed by the learned Chief Metropolitan Magistrate, Egmore, Chennai - 8 in Crl.M.P. Mo. 840 of 2014, whereby and whereunder, the learned Chief Metropolitan Magistrate has directed to take possession of the property schedule mentioned in the order and further, seeks a direction to the respondents 1 and 2 to finalise the settlement proposal submitted by the petitioner on 21.01.2013 through their Settlement Advisory Committee by applying the Special OTS Scheme Guidelines of the Reserve Bank of India applicable to Micro Entrepreneurs.

2. The indisputable facts, in nutshell, are that the first petitioner availed cash credit hypothecation limit of Rs.50 lakhs, working capital term loan of Rs.1 crore and Ad hoc limit of Rs. 13.85 lakhs, thus, a total sum of Rs. 1,63,85,000/-, by executing a loan agreement on 15.12.2013. The second petitioner submitted his personal guarantee for the outstanding of Rs. 1,63,85,000/- and also created equitable mortgage of his property as security for the dues of the first petitioner. In default of payment, a demand notice under S.13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 , (for short "the Act) was issued on 30.05.2006. Thereafter, the said secured asset was classified as a Non - Performing Asset on 30.06.2005. Possession notice was issued under S.13(4) of the Act on 06.09.2006. Challenging the possession notice, the first petitioner filed an application before the Debts Recovery Tribunal - I, Chennai, which was numbered as S.A. No. 147 of 2007. The respondent bank also preferred one application being OA No. 149 of 2006 on the file of the Debts Recovery Tribunal, II, Chennai, for recovery of a sum of Rs. 1,49,34,261.32 with future interest from 08.12.2006, which was, thereafter, renumbered and transferred to the Debts Recovery Tribunal - I as OA No. 29 of 2007. Several attempts were made at the instance of the parties to settle the dispute. Even the matter was referred by the Debts Recovery Tribunal to Lok Adalat held on 20.06.2008. However, no settlement could take place on account of the lackadaisical approach of the petitioners. The petitioners made an attempt to make some payment by way of post dated cheques which were returned on the ground that post dated cheques could not be accepted. A demand draft for a sum of Rs.10 lakhs was also tendered along with post dated cheques. The same was also rejected as not being 25% of the tentative amount of Rs. 170 lakhs as suggested in the Lok Adalat by way of settlement. Representations were made by the petitioners without taking any serious endeavour to make payments. The application filed by the bank is still pending before the Debts Recovery Tribunal - I, Chennai. However, the application filed by the first petitioner, being S.A. No. 147 of 2007 was dismissed on 24.07.2008, reserving liberty to the first petitioner to take recourse to the appellate forum. However, it is not clear as to whether the first petitioner has preferred any appeal before the Debts Recovery Appellate Tribunal or not.

3. Challenging the legality of the impugned order dated 26.02.2014, it is contended by the learned counsel for the petitioners that the order sought to be impugned is bad in law, as required under the first proviso to S.14(1), as per which, the application filed by the secured creditor shall be accompanied by an affidavit duly affirmed by authorised officer of the secured creditor declaring the requirements therein. The secured creditor has filed an application