Quashed

A.V Sidheek v. the Authorized Officer

Kerala HC12 Oct 2017OP (DRT)/117/2017

Case brief

AI extract

What is this about?

The High Court of Kerala held that the Debts Recovery Tribunal (DRT) vitiated an order granting a conditional stay under Section 14 SARFAESI Act. The Court quashed the order due to procedural irregularity, directing the DRT to first determine if the impugned property is agricultural before proceeding.

What did the court decide?

The impugned order dated 13/9/2017 passed by the DRT in I.A. No.1556/2017 was quashed. The DRT is directed to accept a Securitisation Application challenging Section 14 proceedings and decide the agri

A.V Sidheek Vs the Authorized Officer — Banking and Recovery | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR

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THURSDAY, THE 12TH DAY OF OCTOBER 2017/20TH ASWINA, 1939

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OP (DRT).No. 117 of 2017 ()

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(AGAINST THE ORDER DATED 13/9/2017 IN IA.NO.1556/2017 IN S.A.NO.132/2017 OF DEBTS RECOVERY TRIBUNAL, ERNAKULAM)

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PETITIONER(S)/APPLICANTS:

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1. A.V.SIDHEEK, AGED 59, S/O. K.K. ABOOBACKER,

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KALLIYATH HOUSE, PAVARATTY, THRISSUR, PIN - 680 554.

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2. SHYLAJA SIDHEEK,W/O. A.V. SIDHEEK, KALLIYATH HOUSE, PAVARATTY,

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THRISSUR, PIN - 680 554.

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3. ADHEAL SIDHEEK, KALLIYATH HOUSE, PAVARATTY, THRISSUR, PIN - 680 554.

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BY ADVS.SRI.K.M.SATHYANATHA MENON SMT.KAVERY S THAMPI

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RESPONDENT/RESPONDENT:

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THE AUTHORIZED OFFICER, FEDERAL BANK, M.G. ROAD BRANCH, KRISHNA HOSPITAL BUILDING, OPPOSITE MAHARAJA'S COLLEGE GROUND, M.G. ROAD, ERNAKULAM, PIN - 682 011.

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BY ADVS. SRI.MOHAN JACOB GEORGE SMT.P.V.PARVATHI SMT.REENA THOMAS SMT.NIGI GEORGE SRI.NITISH SEBASTIAN JOSHY

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THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 12-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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sts

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OP (DRT).No. 117 of 2017 ()

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APPENDIX

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PETITIONER(S)' EXHIBITS

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EXHIBIT P1 TRUE COPY OF THE TAX RECEIPT NO. 7053700 DATED 14.12.2016 ISSUED BY THE VILLAGE OFFICER, ELAPALLY.

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EXHIBIT P1(A) TRUE COPY OF THE TAX RECEIPT NO. 7053699 DATED 22/07/2017 ISSUED BY THE VILLAGE OFFICER, ELAPALLY.

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EXHIBIT P1(B) TRUE COPY OF THE TAX RECEIPT NO. 7053698 DATED 22/07/2017 ISSUED BY THE VILLAGE OFFICER, ELAPALLY.

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EXHIBIT P1(C) TRUE COPY OF THE RELEVANT PAGES DATA BANK PREPARED FOR ELAVALLY VILLAGE WITH RESPECT TO THE PROPERTY COVERED BY EXT.P1, EXT.P1(A) AND EXT.P1(B)

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EXHIBIT P2 TRUE COPY OF THE S.A. NO. 132/2017 FILED BEFORE THE DEBT RECOVERY TRIBUNAL II, ERNAKULAM ALONG WITH ITS ANNEXURES.

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EXHIBIT P3 TRUE COPY OF THE I.A. NO. 839/2017 FILED IN S.A.NO. 132/2017 BEFORE THE DEBT RECOVERY TRIBUNAL II, ERNAKULAM.

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EXHIBIT P4 TRUE COPY OF THE I.A. NO. 840/2017 FILED IN S.A.NO. 132/2017 BEFORE THE DEBT RECOVERY TRIBUNAL II, ERNAKULAM.

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EXHIBIT P5 TRUE COPY OF THE REPLY STATEMENT ALONG WITH ITS ANNEXURES FILED BY THE RESPONDENT IN S.A. NO. 132/2017 BEFORE THE DEBT RECOVERY TRIBUNAL I, ERNAKULAM.

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EXHIBIT P6 TRUE COPY OF THE COUNTER AFFIDAVIT FILED BY THE RESPONDENT IN I.A. NO. 839/2017 IN S.A.NO. 132/2017 BEFORE THE DEBTS RECOVERY TRIBUNAL-I, ERNAKULAM.

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EXHIBIT P7 TRUE COPY OF THE I.A. NO. 840/2017 IN S.A.NO. 132/2017 ALONG WITH ITS ANNEXURES BEFORE THE DEBTS RECOVERY TRIBUNAL-I, ERNAKULAM.

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EXHIBIT P8 TRUE COPY OF I.A. NO. 1480/2017 IN S.A.NO. 132/2017 ALONG WITH ITS ANNEXURES BEFORE THE DEBTS RECOVERY TRIBUNAL-II, ERNAKULAM.

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EXHIBIT P9 TRUE COPY OF I.A. NO. 1556/2017 IN S.A.NO. 132/2017 ALONG WITH ITS ANNEXURE.

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EXHIBIT P10 TRUE COPY OF THE ORDER DATED 13.09.2017 PASSED BY THE DEBTS RECOVERY TRIBUNAL IN I.A.NO. 1556/2017 IN S.A.NO.132/2017.

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RESPONDENT(S)' EXHIBITS:

NIL

/TRUE COPY/

P.S.TO JUDGE

sts

'C.R.'

A.K.JAYASANKARAN NAMBIAR, J.

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O.P.(DRT).NO.117 OF 2017 (O) ----------------------------------Dated this the 12^th day of October, 2017

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J U D G M E N T

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The petitioners have approached this Court aggrieved by Ext.P10 order passed by the Debts Recovery Tribunal - II, [DRT - II] Ernakulam, in I.A.No.1556/2017 in S.A.No.132/2017. The facts in the original petition would indicate that, on being served with a possession notice by the respondent bank, the petitioners approached the Tribunal through the aforementioned S.A. challenging the step taken by the respondent bank. Along with the S.A., the petitioners had filed two interlocutory applications, namely, I.A.Nos.839/2017 and 840/2017. I.A.No.839/2017 was one that was filed seeking a stay of further proceedings pursuant to the possession notice that was impugned in the S.A. I.A.No.840/2017 was one that was preferred seeking the appointment of an Advocate Commissioner to report on the nature of the property that was being proceeded against by the respondent bank, with the contention of the petitioners being that the property was essentially agricultural in nature, and, therefore, the bank could not proceed against the said property under the provisions

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O.P.(DRT).No.117/2017

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of the Securitisation and Reconstructions of Financial Assets and Enforcement of Security Interest Act, 2002 [hereinafter referred to as the 'SARFAESI Act']. While the pleadings in the said interlocutory applications were being completed, the respondent bank proceeded further in the matter, and approached the Chief Judicial Magistrate, Thrissur, under Section 14 of the SARFAESI Act. The said step initiated by the respondent bank culminated in an order passed by the CJM, appointing an Advocate Commissioner to take possession of the secured asset. This step taken by the respondent bank was impugned by the petitioner through I.A.No.1556/2017 that was filed in the aforementioned S.A. Ext.P10 is the order passed in the said I.A., whereby, the DRT - II granted a conditional stay, against further proceedings pursuant to the Section 14 step taken by the respondent bank, on condition that the petitioner paid an amount of Rs.25 lakhs on or before 28.9.2017, and a further sum of Rs.25 lakhs on or before 19.10.2017. The matter is now listed before the Tribunal on 20.10.2017, for reporting compliance, and for hearing I.A.No.480/2017. As already noted, in this Original petition, Ext.P10 order is impugned inter alia on the contention that the Tribunal ought not to have considered the issue of stay of further proceedings,

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O.P.(DRT).No.117/2017

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pursuant to the step initiated by the respondent bank under Section 14, without first determining whether the bank had the jurisdiction to proceed against the property of the petitioner, which according to the petitioner, is agricultural in nature.

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I have heard Sri. K.M. Sathyanatha Menon, the learned counsel for the petitioners as also Sri. Mohan Jacob George, the learned Standing counsel for the respondent bank.

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On a consideration of the facts and circumstances of the case as also the submissions made across the bar, I find, at the very outset, that Ext.P10 order is passed in an interlocutory application [I.A.No.1556/2017], which impugns the further step taken by the respondent bank under Section 14 of the SARFAESI Act. It is trite that the further step, after the first step under Section 13(4) of the SARFAESI Act was impugned by the petitioners in S.A.No.132/2017, could have been impugned only through a separate Securitisation Application preferred by the petitioners challenging the further step. The Tribunal could not have entertained an Interlocutory application seeking reliefs against a subsequent step, in a Securitisation

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O.P.(DRT).No.117/2017

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application that was preferred impugning the earlier step taken by the respondent bank under Section 13(4) of the SARFAESI Act. I find therefore that Ext.P10 order is vitiated on the ground that the Tribunal passed the order in an application that itself was not maintainable before it as per the provisions of the SARFAESI Act. That apart, I also find that, in the instant case, the petitioners had a definite contention before the DRT, in the S.A. that was filed against the step under Section 13(4), that the property in question was an agricultural property, and, therefore, the respondent bank did not have the jurisdiction to proceed against the said property under the SARFAESI Act. In order to establish the fact that the property was agricultural in nature, the petitioners had also filed I.A.No.840/2017 seeking the appointment of an Advocate Commissioner to ascertain the nature and lie of the land. In my view, when the DRT was confronted with an application seeking a stay against further steps resorted to by the respondent bank under Section 14, it ought to have taken note of the fact that in an earlier S.A. that was filed against the previous step taken by the respondent bank, the petitioners had filed an I.A. with the specific purpose of getting an adjudication done on the jurisdictional issue as to whether the property, against which the

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O.P.(DRT).No.117/2017

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respondent bank was proceeding, was agricultural in nature or not. I find that the inaction on the part of the DRT, in not considering the said issue, as a prelude to considering the subsequent application for a stay of further proceedings by the respondent bank, is another ground on which Ext.P10 order would stand vitiated. Accordingly, I quash Ext.P10 order of the Tribunal, and dispose the Original petition with the following directions:

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(i) If the petitioners file a Securitisation Application challenging the order passed by the Chief Judicial Magistrate, Thrissur, under Section 14 of the SARFAESI Act, within a period of two weeks from the date of receipt of a copy of this judgment, after complying with all the necessary procedural formalities, then the DRT - II shall accept the said S.A., number the same, and proceed to consider the same on merits.

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(ii) The DRT - II shall endeavour to consider the issue as to whether or not the property of the petitioners that is proceeded against by the respondent bank is agricultural or not, and pass orders on the said issue within a period of two months from the date of receipt of a copy of this judgment.

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(iii) It is made clear that the parties before the

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O.P.(DRT).No.117/2017

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Tribunal in the S.A. shall not seek any adjournment, while the Tribunal is considering the preliminary issue of whether or not the property, against which the respondent bank is proceeding, is agricultural or not, so as to enable the Tribunal to pass orders within the time granted in this judgment.

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(iv) The respondent bank shall refrain from proceeding further, pursuant to the order of the Chief Judicial Magistrate, till such time as orders are passed by the DRT - II, on the preliminary issue, within the time granted in this judgment.

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A.K.JAYASANKARAN NAMBIAR JUDGE

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prp/12/10/17

A.V Sidheek v. the Authorized Officer

Case brief

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A.V Sidheek v. the Authorized Officer

Case brief

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