Dismissed

Ruchi Salwan and Anr. v. Edelweiss Asset Reconstruction Company Limited

DRT8 May 2023SA/155/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal dismissed the second appeal by borrowers as premature and not maintainable. The court held that no cause of action arose because physical possession under the SARFAESI Act had not yet been taken at the time of filing.

What did the court decide?

Application dismissed for being premature and lacking cause of action as dispossession had not occurred.

Ruchi Salwan and Anr. versus Edelweiss Asset Reconstruction… — Banking and Recovery | DRT (2023)

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Debts Recovery Tribunal-IIl' Delhi

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SAi 155/2023 of DRT-II'^Delhi

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Ruchi Salwan & Anr Vs EARCL

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08.05.2023

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Item no. 23

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Present: Sh. Kunal Kalra, Counsel for the S.^applicants Sh. Kumar Dushyant Singh, Counsel^{fbr the respondent FI}

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Matter is taken through VC

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The present matter is being heard; in compliance of^Hon'ble DRAT, New Delhi order dated 25 .04.2023, in Misc.^{Application No.} 24112023, filed by the S applicant, directing to hear the matter^on 26.04.2023 and the order dated 21 .04.2023 of the Hon'bte High Court of Delhi, directing to hear the SA on interim^{relief. Beingon} leave due to illness on 26.04.2023, the matter was heard on 27.04.2023 and notice on the SA, to the respondent FI was issued. 2. The present SA has been filed on 06.04.2023. by the S applicants, aggrieved by possession notice dated 03.04.2023. issued by the CMM appointed Receiver, in terms of CMM Tis Hazari. Delhi order dated 21.03.2023, informing that physical possession of their propefty bearing Flat No. 1764., Ground Floor, MIG Flat, Rajouri Garden, Near Subhash Nagar Chowk, New Delhi - 110027, measuring 86.2 sq. mtrs. (herein-after referred to as the "property in question") shalt be taken on 20.04.202.3, which was postponed ro be taken on \2.05.2023, on the strength of section l3 (4) SARFAESI Act, meaning thereby, measure with reference to section l3 (4) SARFAESI Act is going to be taken on 12.05.2023.

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From the perusal of the S.A., it is revealed that the S applicants are borrowers / mortgagers and they had received a demand notice dated 11.11.2022, which disclosed that loan account of S applicant

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was declared NPA. Counsel for the S. applicant submits that symbolic possession notice U/s l3(4) was never issued, which is confirmed by the counsel for the respondent FI

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As for the Receiver's notice dated 03.04.2023. i.e. measures U/s l4 (3) is concerned, the possession has not been taken as yet, rather it is going to be taken on 12.05.2023, meaning thereby, no cause of action for filing the instant SA, has arisen till the filing of SA and as per section 17 (1) SARFAESI Act,

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To make it clear, I want to quote the provision u/s 17⁽ l) SARFAESI Act, which says,

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" Application asainst measures to recover secured debt l7 (l'l: Any person (including borrower), aggrieved bv any of the measures referred to in sub-section (4) of section l3 taken by the secured creditor or his authorized olficer under this Chapter, [may make an application along with such fee, as may be prescribedl to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the dote on which such meosures had been taken."

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Thus, there is no doubt that an aggrieved person is entitled to file an application u/s l7 (1) SARFAESI Act, only when any of the measures referred to, in sub-section (4) of section 13 is taken by the secured creditor, within 45 days from the date, on which such measures had been ta ken.

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In other words, the aggrieved person is not entitled to file SARFAESI application before the measures referred to in sub-section (4) ofsection l3 is taken by the secured creditor.

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In a leading case law (Transcore Case), the Hon'ble Supreme Court have been pleased to clarifr the reliefs which can be granted to aggrieved person, who has filed the SARIAESI application in DRTs if the measures referred to in sub-section (4) of section l3 taken by

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the secured creditor is not lound in accordance with SARFAESI Act by interpreting l7 (3) SARFAESI Act.

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In Transcore case it has been observed that:

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The uord^'possession is t relutive concept. lt is not an absolute concept. The dichotomy berv'een symbolic and physical posscssion does not rtnd place in the Act. The scheme of Seclion l3(4), read with Section 17(3), shob,s lhal, if lhe borrower is tlispossessed, not in accordance with lhe provisions of lhe Act, lhen DRT is entitled lo pul lhe clock back by resloring lhe stolus quo ante."

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Thus, it is clear that without dispossession of aggrieved, no remedy is available for him, in DRTs.

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Now the question arises about time, till when the secured creditor is entitled to take possession of secured asset of borrower / guarantor?

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In Transcore case, Hon'ble Supreme Court have been pleased to answer this issue after referring to Rule 8,

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''The Supreme Court obsen'es that Ru/e 8 prorides that "till issuance of sale certiJicate under Rule 9, lhe Authorized OfJicer shall take such steps ds he deems lit lo preserve the secured assets.^"

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Hon'ble Supreme Court further obsened that .'under Section 1318), if the dues of the secured credilor toqelher u,ith ull costs. Lhurges and expenses incurred by him are tendered to the credilor before the dale ftxed for sale or transfer, the asset shall not be sold or transferred.^"

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From the above observations made in this judgment, in the light of the provisions of SARFAESI Act and Security Interesr (Enforcement) Rules, it is clear that the borrower can seek restoration of possession.

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In my view, the only remedy in cases llled u/s I 7⁽ I ), as provided in SARFAESI Act, is incorporated u/s l7 (3), if SARFAESI Action is found to be not in accordance with law, which is restoration of possession. Thus, again it is clear that without dispossession, how the remedy of restoration of possession r-r/s l7⁽³⁾ can be^granted.

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The Hon'ble Supreme Court of India in Standard Chartered Bank Vs. V. Noble Kumar & Ors., (2013) 9 SCC 620, has observed about the mode of possession and in concluding Para 27 that-

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"Section l3(1) (a) dcclares that the secured creditor ma1, take possc.ssion. of the secured us.\els. ll Llo(.\ not specif . u'hether sut'h a possession i.\ to be obtained direc't11' b,v the secure<1 credilor or bt resorting to lhe procedure under Seclion lJ.^W'e ure oJ the opinion that by whalevet manner tlte secured credilor obtains possession either through thc process contemplated under Section ll or v'ilhout resorting lo such a process obtaining ol the possessktn of o secured asset is alv,ays a measure against whiclt a remedy under Section l7 is available.^"

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In the case at hand, the property-in-question is still in possession ofS applicant. Therefore, no cause of action has arisen, till the date of filing, for this SA.

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Regard being had, of the entire facts and circumstances. in the light of the provisions of SARFAESI Act, Security Interest (Enforcement) Rules and quoted ratio of decisions of Hon'ble Supreme Court of India, I am of the view that the physical possession of the secured asset u/s l3 (4) SARI'AESI Act has not been taken till the date of filing of the present application, in view of Rule 8( I ) and 8(2) of the Security Interest (Enforcement) Rules, 2002 and the impugned notice is only notice to take physical possession of secured asset on 12.05.2023 and this case has been filed before taking of

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possession of the property in question on 06.04.2023, therefore, this Application is not maintainable and is liabte to be dismissed. 14. In a recent decision reported ICL 2021 (9) SC 35 Raiendra Bajoria & Ors. v. Hemant Kumar Jalun & Ors., the Hon'ble Supreme court has been pleased to hold that

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''The pou,er conlerred on lhe courl lo lerminale a civil action is a drastic one. and lhe L'ondition.\ enumerated under Order l'll Rule ll oJ^{('P(' ure} required to be strictll,odhered to^(tnder Order L'll Rule I 1 o/^('P('. the tlutru is cast upon llte courl lo delermine whelher the plainl discloses u c'ttuse of action, b)) scrulinizing the avermenls in the^plaint. read in conjunction v,ith lhe documenls relied upon. or whelher lhe suit is barred by any lau. This Court has held thar rhe underlying obiect el Order L'll Rula 11 of CPC is that xhen a plaint does nol disclose tt cause of action. lhe courl rt'ould ncsl permil^the plaintiJl to unnece.ssarily protract :he proceetlings. It hos bcen hcltl that in such u cusc. it llill hc necessory lo put un end to the sham liligution so thut .further^{judicial timeis not vosted".}

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Order VI Rule 2(l) of the Code of Civil Procedure. clearly stipulates that the pleadings should contain, the material facts. It has been observed by the Hon'ble Apex Court in Sopan Sukhdeo Sable and Others vs. Assistant Charity Commissioner and Others [(2004)^{3 SCC l37l that omission of a single material fact, Ieadsto an} incomplete cause of action and the statement or plaint becomes bad. Order VII Rule I I of the Code of Civil Procedure lays down, an independent remedy, made available to the delendant to challenge rhe

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maintainability of the suit itself, irrespective of his right to contest the same on merits.

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In view of above discussion, the present SA is hereby dismissed, being premature and not maintainable at this stage, as no cause of action, has been disclosed in SA. The date already fixed on 30.05.2023, is hereby cancelled.

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File be consigned to records.

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9?
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(Deepak Nath Tiwari) Presiding Officer, DRT-III, Delhi

Ruchi Salwan and Anr. v. Edelweiss Asset Reconstruction Company Limited

Case brief

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Ruchi Salwan and Anr. v. Edelweiss Asset Reconstruction Company Limited

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