BANK OF INDIA A BODY CORPORATE CONSTITUTED UNDER THE BANKING COMPANIES ACT V OF 1970 BANDRA KURLA COMPLEX BANDRA Vs. DEVELOPMENT CREDIT BANK LTD

JUDGEMENT

(1.) Bank of India, the petitioner herein, advanced housing loan of Rs.15,00,000/- as well as overdraft facility of Rs.15,00,000/- to respondents 2 and 3. A house situated at Sainikpuri (hereafter, the secured asset) was mortgaged to secure the loan. When respondents 2 and 3 committed default in repayment, the petitioner issued two notices of demand under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereafter, the SARFAESI Act or the Act), demanding a total sum of Rs.32,65,132/-. The borrowers were called upon to clear the loan within 60 days. They did not pay. The petitioner, therefore, issued possession notice under Section 13(4) of the Act and filed Crl.M.P.No.98 of 2008 under Section 14(1) and (2) of the Act for taking possession. The Court of the Chief Metropolitan Magistrate, Cyberabad at L.B.Nagar, appointed an advocate commissioner to take possession of the mortgaged property. The advocate commissioner could not deliver the notice as respondents 2 and 3 were not staying in the house. In the mean while, one Lalithnarayan, who claiming to have purchased the secured asset under an agreement of sale-cum-GPA, filed an application being S.A.No.230 of 2008 under Section 17 of the Act before the Debts Recovery Tribunal, Hyderabad (DRT). The DRT also passed orders of stay on 14.08.2008 in I.A.No.904 of 2008. The petitioner then moved an application being I.A.No.1251 of 2009 for vacating the interim order. The same is pending.

(2.) The Development Credit Bank Ltd., (DCB), the first respondent herein, statedly took possession of the secured asset pursuant to their notice under Section 13(4) of the Act. Having come to know this, the petitioner addressed a letter to DCB informing that possession was already taken under the provisions of the Act. After obtaining orders under Section 14(1), the first respondent sent a reply on 23.08.2011 informing the petitioner that they also obtained orders from the Chief Metropolitan Magistrate in Crl.M.P.No.29 of 2009 and obtained possession through an advocate commissioner appointed by the said Court. The petitioner then realised that respondents 2 and 3 availed credit facilities from the first respondent by mortgaging the same property suppressing the prior mortgage. Therefore, the present Writ Petition is filed seeking a Writ of Mandamus declaring the action of the first respondent in taking possession of the secured asset ignoring the prior charge in favour of the petitioner as illegal and arbitrary.

(3.) The first respondent opposed the Writ Petition challenging the maintainability in view of the effective alternative remedy under Section 17 of the Act. The maintainability of the Writ Petition is also challenged on the ground that DCB is not 'State' or its agency. It is further stated that the first respondent sanctioned Rs.40,00,000/- to M/s. Ananth Gas Agency, a propriety concern of the third respondent on 20.03.2006; as there is default, action was initiated under the Act and possession was taken through advocate commissioner appointed in Crl.M.P.No.29 of 2009 on 27.08.2009. The answering respondent also filed private complaint, which was registered as Crime No.745 of 2011 of P.S. Kushaiguda against two persons, who forcibly occupied the secured asset. While denying petitioner's priority right over secured asset, it is submitted that sub-section (9) of Section 13 of the Act has no application as the loan was not jointly sanctioned by the petitioner and the first respondent.