Airpac Filters and Systems Private Limited and Anr. Vs the State of Maharashtra and Ors.

31-WP-1422-2023.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 1422 OF 2023

¶4

Airpac Filters and Systems Private)
Limited and Another)...Petitioners
 V/s.
The State of Maharashtra and Ors.)...Respondents

¶5

Mr. Bhavin Gada a/w. Ms. Lavita Avhadi/b. Ms. Pratibha
Mehta, Advocate for the Petitioners.

¶6

Mrs. Shruti D. Vyas “B” Panel Counsel for the Respondent-
State.

¶7

Mr. Harinder Toor a/w. Mr. Zulfiq Multani, Mr. Nainesh
Amin for N.N.Amin & Co., Advocate for the Respondent
No.3.

¶8

Mr. Abhinav Chandrachud a/w. Mr. Akash Agarwal i/b. AMR
Law LLP, Advocate for the Respondents No.4 to 8.
Advocate for the Respondent.

¶9

CORAM : NITIN JAMDAR AND
 ABHAY AHUJA, JJ.

¶10

DATE : 29 MARCH 2023

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P.C.

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The Petitioner has challenged the order / communication
issued by the District Magistrate, Palghar dated 6 December

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31-WP-1422-2023.doc

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2022 to the Tahsildar, Vasai, with a copy to the Respondent –
bank, the secured creditor. The main contention of the
Petitioner is that this communication issued by the District
Magistrate is beyond his jurisdiction and even on merits, the
ground on which the communication is issued is not
sustainable in law.

¶16

2The Respondents no.4 to 8 are the borrowers and the
Respondent no.3–secured creditor– bank. The Respondent
no.3 had sanctioned certain credit facility to the Respondents
No.4 to 8 – the borrowers and an equitable mortgage was
created. Respondent no.3 initiated proceedings under Section
13(2) of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002
(SARFAESI Act) against the Respondents no.4 to 8 on 20
October 2016. In January 2017, Respondent no.3-bank took
symbolic possession of the mortgaged property. The
Respondent no.3 also filed a Securitisation Application No. 13
of 2017 under Section 14 of the SARFAESI Act before the
District Magistrate, Palghar and an order was passed on 11
January 2019 directing possession to be taken of Plot No.22
on Survey No.93 at Vasai.

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31-WP-1422-2023.doc

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3The Respondent no.3, thereafter, issued an E-Auction
notice on 17 September 2022, pursuant to which Petitioner
participated in the auction and was declared highest bidder in
the auction held on 20 October 2022. The Petitioner paid the
full sale consideration. The Respondents no.4 to 8 filed an
Interim Application to challenge the E-auction and sought for
stay. By order dated 26 October 2022, the Interim
Application was dismissed by Debt Recovery Tribunal-III.
Thereafter, the Respondents no.4 to 8 filed an application
before the learned Magistrate seeking to suspend the order
issued by the District Magistrate on 11 January 2019 on the
ground that the Respondent no.4 has approached the National
Company Law Tribunal (NCLT) and moratorium has come
into effect since 12 November 2022. Upon this application,
impugned communication is issued by the District Magistrate,
Palghar to Tahsildar on 6 December 2022 and further
communication by Tahsildar to certain official on 12 December
2020.

¶20

4We have heard Mr. Bhavin Gada, learned Counsel for the
Petitioner, Mrs. Shruti D. Vyas, learned Counsel for the
Respondent-State, Mr. Harinder Toor, learned Counsel for the
Respondent no.3 and Mr. Abhinav Chandrachud, learned
Counsel for the Respondents no.4 to 8.

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5As stated earlier, the contention of the Petitioner is two-
fold as to whether moratorium applies to the facts of the
present case is not an issue which the District Magistrate could
not have gone into and even otherwise going by the case of the
Respondents no.4 to 8, there is no merit in the contention that
because of the moratorium, no auction under the SARFAESI
Act be taken against the Respondents no.4 to 8 in this case.
The learned Counsel for the Petitioner also contended that the
Petitioner has invested substantial amount and has been issued
a Sale Certificate and therefore such order / communication
gravely prejudices the Petitioner.

¶24

6The learned Counsel for the State contends that the
document dated 6 December 2022 is only a communication
and it is not an order under the SARFAESI Act. According to
the learned Counsel for the Respondents no.4 to 8, the
moratorium had come into effect and therefore, by operation
of law, the proceedings pursuant to the order passed by the
District Magistrate earlier, could not have continued. The
learned Counsel for the Respondent-bank had supported the
Petitioner and he also contends that the District Magistrate
would have no jurisdiction to review his earlier order passed
under Section 14 of the SARFAESI Act.

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31-WP-1422-2023.doc

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7We have to keep in mind that the proceedings have come
before us in writ jurisdiction from the communication / order
issued by the District Magistrate. It is a settled position that
the power vested in the District Magistrate under Section 14 of
the SARFAESI Act is not a quasi-judicial power. As regards the
exercise of quasi-judicial / judicial power to decide the
implications of the contentions of the Respondents no.4 to 8
based on moratorium, the appropriate forum ought to have
been the DRT where the Respondents no.4 to 8 have already
filed proceedings. Instead of applying for any relief in the
pending proceedings before the DRT, Respondents no.4 to 8
have approached the District Magistrate. Once substantial
proceedings were initiated in DRT, the dispute, if any,
governing the relationship between the parties should have
been agitated before the DRT. Though the learned Counsel
for the State contends that the document dated 6 December
2022 is not an order but only a communication, the effect of
the same is directly on the rights of the parties who are
agitating their dispute in the DRT.

¶28

8In these circumstances, we find that the District
Magistrate ought to have directed the Respondents no.4 to 8
to approach the DRT to seek appropriate orders and not
exercise the power, which we find is not traceable under any

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31-WP-1422-2023.doc

¶31

provisions under the SARFAESI Act. In light thereof, we are
inclined to set aside the order of the District Magistrate dated
6 December 2022 and consequently, communication dated 12
December 2022.

¶32

9The learned Counsel for the Respondents no.4 to 8
submits that Respondents no.4 to 8 will apply in the
proceedings pending before the DRT. However, some
breathing time may be given as the Respondents no.4 to 8 are
likely to lose physical possession of the property.

¶33

10Having considered the position that appropriate forum to
consider the issue on merits is DRT and Respondents no.4 to 8
seek to avail of that remedy on one hand, and that the
Petitioner is a successful auction purchaser with Sale Certificate
on the other, though we are inclined to give some time, we are
not inclined to grant more than ten working days to the
Respondents no.4 to 8. In these ten working days, it is open to
the Respondents no.4 to 8 to seek such relief as may be
permissible in law. Respondents no.2 and 3 will not take the
physical possession of the property in question from
Respondents no.4 to 8 for the abovementioned period of ten
working days.

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31-WP-1422-2023.doc

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11The Respondents no.4 to 8 corresponding will not create
any third party rights during this period of protection.

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12We make it clear that we have not considered the merits
of the rival contentions and they are kept open, if and when
the Respondents no.4 to 8 make an application in the DRT.
The Respondents no.4 to 8 would join the Petitioner as a party
Respondent in the application.

¶38

13 If such an application is made by the Respondents no.4 to 8, the DRT will make an endeavour to decide the same within a period of two weeks on its own merits.

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14 Accordingly, the impugned order / communication issued by the District Magistrate, Palghar dated 6 December 2022 is quashed and set aside.

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15Writ Petition stands disposed of in the above terms.

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(ABHAY AHUJA, J.)

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(NITIN JAMDAR, J.)

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ARTI VILAS KHATATE Digitally signed by ARTI VILASKHATATE Date: 2023.03.29 18:18:06 +0530

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Airpac Filters and Systems Private Limited and Anr. v. the State of Maharashtra and Ors.

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Airpac Filters and Systems Private Limited and Anr. v. the State of Maharashtra and Ors.

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