KOTAK MAHINDRA BANK Vs. DISTRICT COLLECTOR/DISTRICT MAGISTRATE

JUDGEMENT

(1.) The petitioner has filed the above Writ Petition to issue a Writ of certiorarified mandamus to call for the records and to quash the order passed by the District Collector cum District Magistrate, the 1st respondent dated 22.05.2018 and direct the 1st respondent to pass an order afresh as per provisions.

(2.) It is the case of the petitioner that the respondents 2 and 3 availed loan in the year 2012 from the petitioner against the property. Since the respondents 2 and 3 committed default in repaying the loan, the petitioner issued notice dated 29.01.2015 under Sec. 13(2) of the SARFAESI Act calling upon the respondents 2 and 3 to pay a total sum of Rs. 1,73,05,304.62p as on 29.01.2015. Thereafter, the petitioner issued Sec. 13(4) notice dated 08.05.2015 to the respondents 2 and 3. Challenging the possession notice dated 08.05.2015, the respondents 2 and 3 filed an appeal in S.A.No.207 of 2015 on the file of the Debts Recovery Tribunal - III, Chennai and sought for an interim order. 2.2. The Debts Recovery Tribunal granted an order of interim stay on condition the petitioners paying a sum of Rs. 35 lakhs in two installments. However, the respondents 2 and 3 failed to comply with the conditional order. Thereafter, in the year 2015, the petitioner filed an application before the 1st respondent under Sec. 14 of the SARFAESI Act for taking possession of the property. 2.3. After the filing of Sec. 14 application before the 1st respondent, the 6th respondent, who claimed to be a tenant under the 2nd respondent, filed a suit in O.S.No.2295 of 2016 on the file of the I Additional District Munsif Court, Puducherry for injunction restraining the 2nd respondent from disturbing or evicting her from the suit property in any manner without due process of law. The 2nd respondent appeared through counsel and he submitted to a decree. Accordingly, by judgment and decree dated 21.03.2017, the trial Court decreed the suit as prayed for.

(3.) The learned counsel appearing for the petitioner, in support of his contentions relied upon the following judgments: (i) (2008) 1 Supreme Court Cases 125 [Transcore Vs. Union of India and another] wherein the Honourable Supreme Court held as follows: "... As stated above, the NPA Act provides for recovery of possession by non-adjudicatory process, therefore, to say that the rights of the borrower would be defeated without adjudication would be erroneous. Rule 8, undoubtedly, refers to sale of immovable secured asset. However, Rule 8(4) indicates that where possession is taken by the authorised officer before issuance of sale certificate under Rule 9, the authorised officer shall take steps for preservation and protection of secured assets till they are sold or otherwise disposed of. Under Sec. 13(8), if the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the creditor before the date fixed for sale or transfer, the asset shall not be sold or transferred." (ii) (2013) 9 Supreme Court Cases 620 [Standard Chartered Bank Vs. V.Noble Kumar and others] wherein the Honourable Supreme Court held as follows: "... 20.In every case, where the objections raised by the borrower are rejected by the secured creditor, the secured creditor is entitled to take possession of the secured assets. In our opinion, such action - having regard to the object and scheme of the Act - could be taken directly by the secured creditor. However, visualising the possibility of resistance for such action, Parliament under Sec. 14 also provided for seeking the assistance of the judicial power of the State for obtaining possession of the secured asset, in those cases where the secured creditor seeks it. 21.Under the scheme of Sec. 14, a secured creditor who desires to seek the assistance of the State's coercive power for obtaining possession of the secured asset is required to make a request in writing to the Chief Metropolitan Magistrate or District Magistrate within whose jurisdiction, the secured asset is located praying that the secured asset and other documents relating thereto may be taken possession thereof. The language of Sec. 14 originally enacted purportedly obliged the Magistrate receiving a request under Sec. 14 to take possession of the secured asset and documents, if any, related thereto in terms of the request received by him without any further scrutiny of the matter. ... 25.The satisfaction of the Magistrate contemplated under the second proviso to Sec. 14(1) necessarily requires the Magistrate to examine the factual correctness of the assertions made in such an affidavit but not the legal niceties of the transaction. It is only after recording of his satisfaction the Magistrate can pass appropriate orders regarding taking of possession of the secured asset. ... 36.Thus, there will be three methods for the secured creditor to take possession of the secured assets:- 36.1.(i) The first method would be where the secured creditor gives the requisite notice under rule 8(1) and where he does not meet with any resistance. In that case, the authorized officer will proceed to take steps as stipulated under rule 8(2) onwards to take possession and thereafter for sale of the secured assets to realise the amounts that are claimed by the secured creditor. 36.2.(ii) The second situation will arise where the secured creditor meets with resistance from the borrower after the notice under rule 8(1) is given. In that case he will take recourse to the mechanism provided under Sec. 14 of the Act viz., making application to the Magistrate. The Magistrate will scrutinize the application as provided in Sec. 14, and then if satisfied, appoint an officer subordinate to him as provided under section 14(1)(A) to take possession of the assets and documents. For that purpose the Magistrate may authorize the officer concerned to use such force as may be necessary. After the possession is taken the assets and documents will be forwarded to the secured creditor. 36.3.(iii)The third situation will be one where the secured creditor approaches the Magistrate concerned directly under Sec. 14 of the Act. The Magistrate will thereafter scrutinize the application as provided in Sec. 14, and then if satisfied, authorize a subordinate officer to take possession of the assets and documents and forwards them to the secured creditor as under Clause 36.2.(ii) above. 36.4.In any of the three situations above, after the possession is handed over to the secured creditor, the subsequent specified provisions of Rule 8 concerning the preservation, valuation and sale of the secured assets, and other subsequent rules from the Security Interest (Enforcement) Rules, 2002, shall apply. ... 38.Coming to the facts of this case, a notice under Sec. 13(2) was in fact served on the respondent for which the respondent did not choose to respond. Therefore, there was no occasion for the appellant to consider the objections as there was none of the respondent against the demand made in the said notice. It is brought to our notice that even while making application under Sec. 14 of the appellant filed an affidavit substantially providing for the necessary information contemplated under the newly introduced proviso to Sec. 14(1). We have already noticed that there was no statutory requirement as on the date when the application under Sec. 14 was made in the instant case either to give such an affidavit or regarding the content of the affidavit. Nonetheless the appellant chose to give such an affidavit, a copy of which is placed before us. We have perused the affidavit and it substantially complies with the conditions stipulated in the newly introduced proviso. Maybe the appellant did it by way of abundant caution to avoid any litigation. 39.However, the respondent submitted before us that there is nothing in the impugned order of the Magistrate which indicates that the Magistrate applied his mind to such an affidavit and satisfied that it is necessary to deliver possession of the secured asset to the appellant. No doubt that there is no material on record to show that the Magistrate applied his mind to the facts stated in the affidavit filed by the appellant. On the date of the impugned order the law did not oblige the Magistrate to undertake any such exercise. Apart from that we are satisfied on examination of the content of the affidavit that all the basic requirements necessary for granting the request of the appellant of delivery of the possession of the secured asset are asserted to have existed on the date of application. Therefore, we do not see any illegality in the impugned order. The appeal is allowed. The order of the High Court is set aside. (iii)2010-5-L.W.567 [Hemabushan Vs. ICICI Bank Limited, rep by its Authorized Officer, Balu Menon, DSMG, Mortgages, Arihant Insight, Plot No.24, 2nd Floor, Block No.1, Industrial Estate, Ambattur, Chennai - 600 058 and another] wherein the Division Bench of this Court held as follows: "... 14.Nature of powers that are exercised by the Chief Metropolitan Magistrate/District Magistrate under Sec. 14 of the Act are purely executionery in nature. At the time of passing order under Sec. 14 of NPA Act, the Chief Metropolitan Magistrate/District Magistrate will have to consider only two aspect. He must find out whether the secured assets fall within his territorial jurisdiction and whether notice under Sec. 13(2) of NPA Act is given or not. No adjudication of any kind at that stage."