SRI BALAJI CENTRIFUGAL CASTINGS Vs. ICICI BANK LIMITED

JUDGEMENT

(1.) The petitioner firm seeks a declaration that the ICICI Bank Limited, the first respondent herein, had no legal right to invoke Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, 'the SARFAESI Act'), having already delivered physical possession of the secured asset to the auction purchaser on 07.12.2017 and in consequence, challenges the order dated 05.05.2018 passed by the learned Chief Metropolitan Magistrate, Ranga Reddy District at L.B.Nagar, in exercise of power under Section 14 of the SARFAESI Act, in Crl.M.P.No.224 of 2018 filed by the bank. In the alternative, the petitioner firm seeks a direction to the bank to cancel the auction sale of the secured asset held on 08.11.2017, return the highest bid amount to the auction purchaser and thereafter avail the benefit of Section 14 of the SARFAESI Act.

(2.) The secured asset in question is Plot No.B-52, along with the Industrial Shed therein, situated at the Assisted Private Industrial Estate at Balanagar, Hyderabad. The petitioner firm claims to be the absolute owner of the said shed. M/s. Sojiram Ispat Private Limited, the second respondent herein, availed certain credit facilities from the bank and in relation thereto, the petitioner firm created a security interest over its shed by mortgaging the same with the bank. The said shed was put to auction sale by the bank on 08.11.2017 pursuant to recovery proceedings initiated under the SARFAESI Act. Sale certificate dated 07.12.2017 was issued by the bank in favour of the auction purchaser, M/s. Varun Motors, which is not made a party to this writ petition. Possession of the shed was also delivered to the auction purchaser. However, as such possession was taken over forcibly from it by the bank, the petitioner firm filed W.P.No.19442 of 2017 before this Court complaining of the same and seeking redelivery. The writ petition was allowed by this Court vide order dated 14.12.2017. S.L.P. (Civil) No.638 of 2018 filed by the bank against the said order was dismissed by the Supreme Court on 22.01.2018. Thereupon, the bank redelivered possession of the shed to the petitioner firm on 01.03.2018. Thereafter, the bank approached the learned Chief Metropolitan Magistrate, Range Reddy District at L.B.Nagar, under Section 14 of the SARFAESI Act, by filing Crl.M.P.No.224 of 2018, seeking to take possession of the shed. The petitioner firm claims that though it was shown as a respondent in the said petition, no notice was served upon it and a warrant was straightaway issued to an AdvocateCommissioner to take physical possession of the shed. Apprehending dispossession pursuant thereto, the petitioner firm is before this Court.

(3.) The petitioner firm would point out that in the petition filed in support of Crl.M.P.No.224 of 2018 the bank admitted that possession of the shed was handed over to the auction purchaser on 07.12.2017 and contend that once the auction sale concluded by delivery of physical possession of the property sold, the security interest of the bank over the mortgaged property would come to an end and Section 14 of the SARFAESI Act would no longer be available to it as the said provision is to be invoked only by a secured creditor for taking possession of a secured asset which is required to be sold or transferred. The petitioner firm would assert that the bank could have invoked Section 14 of the SARFAESI Act only before such sale, when the shed still remained a secured asset. It would further contend that as the sale already stood concluded, it is for the auction purchaser to take recourse to civil legal remedies by filing a suit for recovery of possession, as the bank no longer had a security interest in the shed sold. It is on this ground that the petitioner firm assails the action of the bank in taking recourse to Section 14 of the SARFAESI Act by filing Crl.M.P.No.224 of 2018 before the learned Chief Metropolitan Magistrate, Ranga Reddy District at L.B.Nagar. According to the petitioner firm, the bank has to cancel the sale already held and only thereafter avail the benefit of Section 14 of the SARFAESI Act. The logic of the petitioner firm in this regard is that in the event the bank cancels the auction sale, the shed would again assume the character of a secured asset, whereby the bank could take measures for taking over its possession by invoking Section 14 of the SARFAESI Act.