CANARA BANK LTD Vs. STEPHEN JOHN

JUDGEMENT

(1.) The short question falls for consideration in this matter is whether the Chief Judicial Magistrate exercising power under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Act) has jurisdiction to grant time for payment of the debt due to the secured creditor.

(2.) The short facts relevant for adjudication of the question are the following : The petitioner is a bank satisfying the definition of 'bank' under of the Act. The case of the petitioner is that respondents 1 and 2 who are husband and wife, have been enjoying credit facilities along with the third respondent from them in the name of two partnerships on the security of a property belonging to respondents 1 and When respondents 1 to 3 committed default in remitting the dues to the petitioner, proceedings have been initiated by the petitioner before the Debts Recovery Tribunal, Ernakulam under the Recovery of Debts due to Banks and Financial Institutions Act for realisation of the outstanding dues. The said proceedings, namely O.A.350 of 2017 is pending. It is stated that the amount claimed by the petitioner from respondents 1 to 3 in the said proceedings charged on the property of respondents 1 and 2 is Rs.1, 68, 49, 710/- with interest from 31/05/2017. As the security furnished by respondents 1 and 2 would satisfy the definition of 'secured asset' under the Act, simultaneous proceedings have been initiated by the petitioner under the Act as well against the security. In furtherance to the said proceedings, the petitioner preferred an application before the Chief Judicial Magistrate under Section 14 of the Act. In terms of Ext.P1 order dated 19/01/2018, the Chief Judicial Magistrate appointed an Advocate Commissioner to take possession of the secured asset and hand over the same to the petitioner with the police aid. Respondents 1 and 2, thereupon, filed Ext.P2 application before the Chief Judicial Magistrate seeking time to pay the amounts due to the petitioner. On the said application, in terms of Ext.P3 order, the Chief Judicial Magistrate granted 45 days time to respondents 1 and 2 to pay Rs.45 lakhs. Ext.P3 order is under challenge in the writ petition as one issued without jurisdiction.

(3.) A counter affidavit has been filed by the first respondent in the matter on his behalf as also on behalf of his wife, the second respondent, contending that respondents 1 and 2 availed only a loan of Rs.75 lakhs from the petitioner on the security of their property; that the said loan was availed by them in their individual capacity and not in the name of any partnership as alleged by the petitioner and that the Manager of the petitioner in collusion with the third respondent created false documents so as to extend the security interest over the said property for other credit facilities extended to the third respondent as well. According to respondents 1 and 2, in a case of this nature, the Chief Judicial Magistrate has jurisdiction to pass orders in the nature of Ext.P3 order.