Dismissed

M/S Hanumant Refoils Incorporation v. the Authorised Officer, Corporation Bank

Gujarat HC20 Jul 2022SCA/6305/2020

Case brief

AI extract

What is this about?

The High Court, without expressing opinion on merits, relegated parties to Debt Recovery Tribunal for hearing the main securitisation application. The Court directed DRT to decide the matter within four months and vacated interim relief granted earlier in the writ proceedings.

What did the court decide?

Writ petition dismissed; parties relegated to DRT; interim relief vacated; DRT directed to decide matter within four months.

M/S Hanumant Refoils Incorporation Vs the Authorised… — Banking and Recovery | Gujarat HC (2022)

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C/SCA/6305/2020 ORDER DATED: 20/07/2022

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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R/SPECIAL CIVIL APPLICATION NO. 6305 of 2020

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M/S HANUMANT REFOILS INCORPORATION

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Versus

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THE AUTHORISED OFFICER, CORPORATION BANK

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Appearance:

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SANDIPKUMAR N SOLANKI(9119) for the Petitioner(s) No. 1,2,3,4 MR AS PANESAR(5390) for the Respondent(s) No. 1 NOTICE SERVED for the Respondent(s) No. 2,3

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CORAM: HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Date : 20/07/2022

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ORAL ORDER

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1.0. Heard Shri Aditya Pandya, learned advocate for Shri Sandip Solanki, learned advocate for the writ applicants and Shri Panesar, learned advocate for the respondent Bank.

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2.0. The petitioners herein have preferred present writ petition under Articles 226 & 227 of the Constitution of India seeking following reliefs:

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“A. Your Lordships be pleased to issue writ of certiorari or any other writ, order or direction in the nature of certiorari and be pleased to quash and set aside the order dated 4.3.2020 passed in Securitisation Application No. 173 of 2018 by the learned Debt Recovery Tribunal-1, Ahmedabad;

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B. Your Lordships be pleased to restrain the respondent Bank from proceeding with any Securitisation actions pursuant to 13(2) notice dated 8.4.2016 and 13(4) notice dated 23.08.2016 and other consequent notices till the final adjudication of Securitisation Application No. 173 of 2018 and be further pleased to grant interim relief as prayed for in Securitisation Application No.173 of 2018;

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Page 1 of 5

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C/SCA/6305/2020 ORDER DATED: 20/07/2022

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C. During the pendency and till final disposal of this petition, Your Lordships be further pleased restrain the respondent no.1 bank from proceeding with any Securitisation Actions pursuant to already withdrawn 13(2) notice dated 8.4.2016 and 13(4) notice dated 23.08.2016 and other consequent notices;”

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3.0. Shri Panesar, learned advocate appeared on behalf of the respondent on caveat. This Court by an order dated 12.03.2020 passed the following order:

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“1. By way of present petition under Article 226 of the Constitution of India, the petitioners have challenged the order of the Debt Recovery Tribunal dated 04.03.2020 by which interim-relief has been refused and the appridatión being Securitisation Application No.173 of 2018 is placed for final hearing on 05.05.2020.

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Mr.Ashok L. Shah, learned advocate appearing with Mr. Sandipkumar Solanki, learned advocate for the petitioners has essentially assailed the order on the ground that the order passed by the District Magistrate dated 23.01.2020 which is a subject matter of challenge before the Debt Recovery Tribunal is passed without jurisdiction.

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Inviting the attention of is Court to the order of the District Magistrate, Mr.Shah, learned advocate for the petitioners would submit that there is non-compliance of the mandatory provision of Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act-2002 (for short the "SARFASI Act") and there is no satisfaction recorded by the District Magistrate on the compliance of 9 pointer affidavit so required under the provision of section 14 of the SARFASI Act.

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Mr.Shah, learned advocate for the petitioners invited the attention of this Court to the 2^nd proviso of Section 14 of the SARFAESI Act and also to the order of the District Magistrate and according to him, jurisdictional error has been committed, as the Chief Metropolitan Magistrate has not recorded any satisfaction on the contents of the affidavit before passing the order under section 14 of the SARFASI Act

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5.Attention of the Court was invited to Rule 2(a) of the Security Interest (Enforcement) Rules-2002 together with

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Page 2 of 5

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C/SCA/6305/2020 ORDER DATED: 20/07/2022

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reply to contend that when a specific contention was raised with regard to the authority of the authorized officer, the same was required to be dealt with. All those contentions were taken before the Debt Recovery Tribunal, but without recording the reason the Debt Recovery Tribunal has simply said that no prima facie case is made out. Hence, interim relief is refused and the application is ordered to be listed for hearing on 05.05.2020.

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In support of his submissions, Mr.Shah, learned advocate for the petitioners would rely on the decision of the supreme Court in the case of Standard Chartered Bank and Ors. Vs. Noble Kumar and Ors. Reported in (2013) 9 SC 620. The relevant Paragraph read thus:

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We must make it clear that these provisions were not in existence on impugned in the date of the order the instant proceedings. These amendments are made to provide safeguards to the interest that of borrower. These provisions stipulate a secured creditor who is seeking the intervention of the Magistrate under Section 14 is required to file an affidavit furnishing the information contemplated under various sub-clauses (I) to (ix) of the proviso and obligates the Magistrate to pass suitable orders regarding taking the possession of the secured assets only after being satisfied with the contents affidavits.

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The satisfaction of the Magistrate contemplated under the second- proviso to Section 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 possessions of the secured asset.

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Mr.Shah, learned advocate for the petitioners also relied upon the decision of this Court (Coram: Hon'ble Mr.Justice S.H.Vora) dated 30.07.2018 passed in Special Civil Application No.11516 of 2018. He also relied upon the decision of the Madras High Court in the case of Radaan Textiles Vs. The District Magistrate and District Collector, Tirpur District and Ors. Dated 24.04.2018 passed in W.P.No.7089 of 2018 and W.M.P. NO. 8789 of 2018, more particularly Paragraph Nos. 6 to 9 thereof.

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In support of his submissions that recording of reasons is a paramount importance and in absence of recording such reasons by the Magistrate while exercising powers under section 14 of the Act, was apparent jurisdictional error

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Page 3 of 5

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C/SCA/6305/2020 ORDER DATED: 20/07/2022

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which the magistrate failed to appreciate and the error was repetitive at the hands of the Debt Recovery Tribunal on the question of an alternative remedy of an appeal before the Debt Recovery Tribunal

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9.Learned advocate for the petitioners would submit that when purported jurisdictional error is pointed out to this court, the petitioner ought not to be relegated to an alternative remedy when apparently the order passed by the learned Magistrate under Section 14 of the Act pursuant to want of jurisdiction.

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Mr.Panesar, learned advocate for the petitioner, has appeared on Caveat. An affidavit is tendered taking preliminary objections to maintainability of the petition. Reliance is placed upon the decision of the Supreme Court in the the case of United Bank of India Vs. Satyawati Tandon reported in 2010 (8) SCC 110 and upon the case of Authorised officer, State Bank of Tranvancore vs. KC Mathew reported in 2018.

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In view of the averments made in the petition, Mr. Panesar, learned advocate for the respondent would submit that whatever argued before this Court is not even contended in the grounds mentioned in the petition.

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Considering the submissions made by the learned advocate for the respective parties, a perusal of the Order of the Debt Recovery Tribunal under challenge would indicate that the counsel appearing for the petitioner there had raised an issue whether 9 pointer affidavit was filed along with the application under Section 14 of the Act. A specific contention was raised that the order under Section 14 of the Act was defective on that ground.

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Going thorough the order under challenge of the Debt Recovery Tribunal, it would also indicate that after recording the contentions of the learned advocates for the respective parties, the Tribunal after holding that there was no prima facie case, has refused to grant interim-relief and post the matter on 05.05.2020.

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Having perused the order of the District Magistrate, the order of the District Magistrate is found in want of satisfaction recorded in the compliance of prerequisites of Section 14 of the Act. Whether there was compliance of Section 14 of the Act, does not find to discuss before the Debt Recovery Tribunal.

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Mr.Panesar, learned advocate for the respondent raised objections on the ground that the petitioner ought to be relegated to an alternative remedy for filing an appeal. Having recorded the satisfaction that the order suffers from want of jurisdiction, I find no reason to relegate the petitioner to the alternative remedy. On this ground alone,

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Page 4 of 5

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C/SCA/6305/2020 ORDER DATED: 20/07/2022

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ISSUE NOTICE returnable on 07.05.2020. In the meanwhile, there shall be ad-interim relief in terms of Paragraph No. 9(C) of the petition. Pendency of this petition shall not prevent either party to approach the Debt Recovery Tribunal by filing an application to request the Tribunal for preponing hearing of the main application.”

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4.0. Today, when the matter was taken up for hearing, learned advocates for the respective parties with broad consensus submitted that the parties be relegated to the Debt Recovery Tribunal for further hearing in view of the fact that order which is assailed before this Court dated 4.3.2020 is an interim order passed by the Debt Recovery Tribunal in Securitisation Application No. 173 of 2018. In view of the above, without expressing any opinion on merits of the matter, the parties are relegated to the Debt Recovery Tribunal. Shri Panesar, learned advocate for the Bank under the instructions submitted that the respondent Bank would not take any coercive steps pending the proceedings before the Debt Recovery Tribunal being Securitisation Application No. 173 of 2018.

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The Debt Recovery Tribunal is directed that Securitisation Application No.173 of 2018 be heard and decided as expeditiously as possible but not later than four months from the date of receipt of the present order. The Debt Recovery Tribunal may decide the Securitisation Application independently and without in any way being influenced by the observations and directions made by this Court. With the aforesaid directions, present writ petition stands disposed of. Interim relief granted by this Court stands vacated.

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(VAIBHAVI D. NANAVATI,J)

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KAUSHIK J. RATHOD

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M/S Hanumant Refoils Incorporation v. the Authorised Officer, Corporation Bank

Case brief

What is this about?

What did the court decide?

M/S Hanumant Refoils Incorporation v. the Authorised Officer, Corporation Bank

Case brief

What is this about?

What did the court decide?

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