The High Court dismissed a writ petition filed by a defaulting borrower challenging the District Collector's proceedings to take possession of secured assets under Section 14 of the SARFAESI Act. The Court held that the Act does not contemplate a notice of hearing and lacked an interim stay pending appeals.
The Writ Petition is dismissed with no costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 16.12.2019
CORAM
THE HONOURABLE MR. JUSTICE M. SATHYANARAYANAN
AND
THE HONOURABLE MRS. JUSTICE R.HEMALATHA
WP.No.34527 of 2019
1.M/s.Techno Builders, rep.by its Managing Partner, Mr.M.A.Jahangir, Office at Plot no.39, Door No.4/32, Royala Nagar 1st Main Road, Ramapuram, Chennai 600 089. 2.Mr.M.A.Jahangir 3.Mrs.J.Shajitha Banu 4.Mr.R.Sathyanarayanan .. Petitioners Versus 1.M/s.Canara Bank, Rep.by its Chief Manager, Ashok Nagar Branch, no.9, First Avenue, Ashok Nagar, Chennai 600 083. 2.The District Collector, No.62, Rajaji Salai, Singaravelan Maligai, Chennai 01. .. Respondents PRAYER:Writ petition filed under Article 226 of the Constitution of India prays to issue a Writ of mandamus directing the second respondent to consider the representation (objections) given by the petitioner dated 19.08.2019.
For Petitioners : Mr.Thenmozhi Shivaperumal For Respondents : Mr.Akhil Akbar Ali Government Advocate for R2
ORDER
[Order of the Court was made by M.SATHYANARAYANAN,J.,]
The petitioner is the partnership firm and it availed Housing Finance facilities from the 1st respondent Bank, vide Sanction letter dated 03.10.2007 and in view of the default committed in payment of dues, action was initiated under the provision of the Securatization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short 'the SARFAESI Act') by issuing notice under Section 13(2) dated 15.03.2017.
Commissionerate of Revenue Administration and Disaster Management, Chepauk, Chennai 600 005.
CIRCULAR PRESENT: Dr. KORLAPATI SATYAGOPAI, I.A.S., Additional Chief Secretary/ Commissioner of Revenue Administration
Rc.No.RA.6(3)/6075/2019 Dated:01.03.2019
Sub: Writ Petition~W.P.No.29670 of 2017 filed by Vijaya Bank, Coimbatore ~ to ensure ~ strict compliance ~ under ~ Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 ~ Instructions issued~ Reg.
Ref: 1. Writ Petition W.P.No.29670 of 2017 filed by Vijaya Bank, Coimbatore. 2. Additional Chief Secretary to Government, Finance Department D.O.Letter N0 .6888A/ Res.II/2019~1, dated 13.02.2019.
The Government in Finance Department, Secretariat Chennai~ 600 009 in their D.O. letter 2nd cited it has informed that the Additional Government Pleader, High Court of Madras has stated that in the Writ Mandamus filed by Vijaya Bank, Coimbatore in W . P.No.29670/2017, the Division Bench of Madras High Court has directed State Government to issue suitable instructions to the District Collectors with regard to compliance regarding the time limit enumerated under Section 14 of the SARFAESI Act 2002 and requested this Commissionerate to issue necessary instructions to all the District Collectors so as to adhere the provisions of the SARFAESI Act 2002.
(1) Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him~
(a) take possession of such asset and documents relating thereto; and
(b)forward such asset and documents to the secured creditor:
(2) For the purpose of securing compliance with provisions of sub section (1) the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use or cause to be used, such force, as may, in his opinion, be necessary
(3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any court or before any authority
Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that~
(i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application;
(ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period;
(iii) the borrower has created security interest over various properties giving the details of properties referred to in subclause (ii) above;
(iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount;
(v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a non~performing asset;
(vi) affirming that the period of sixty days notice as required by the provisions of sub~section (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower;
(vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non~acceptance of such objection or representation had been communicated to the borrower;
(viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of sub~section (4) of section 13 rad with section 14 of the principal Act;
(ix) that the provisions of this Act and the rules made thereunder had been complied with:
Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets:
Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.
(1~A) The District Magistrate or the Chief Metropolitan Magistrate may authorize any officer subordinate to him,~
(i) to take possession of such assets and documents relating thereto; and
(ii) to forward such assets and documents to the secured creditor (ie) the Banker
(i) In the second proviso, after the words ?secured assets?, the words ? within a period of thirty days from the date of application? have been inserted (ii)
after the second proviso, the following proviso has been inserted namely:~
? Provided further that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate within the said period of thirty days for reasons beyond his/her control, he/she should be recorded reasons in writing for the same, pass the order within such further period but not exceeding in aggregate sixty days?
District Name
Total No.of pending cases as on date
No of cases order passed during the month
No of cases pending
More than 1 month
More than 2 months
More than 3 months
8) The receipt of the circular may be acknowledged by
return post.
Sd/~ K.SATYAGOPAL
Additional Chief Secretary
/Commissioner of Revenue Administration
Sd/-
Assistant Registrar(CS-VIII)
// True Copy//
Sub Assistant Registrar
Sk
To
1.The Chief Manager,
M/s.Canara Bank,
Ashok Nagar Branch,
No.9, First Avenue,
Ashok Nagar, Chennai 600 083.
2.The District Collector,
No.62, Rajaji Salai,
Singaravelan Maligai,
Chennai 01.
WP.No.34527 of 2019
MR(CO)
CSR: 29/01/2020
2 issues framed by the court
Whether notice of hearing or opportunity of personal hearing is required under Section 14 of the SARFAESI Act before the District Collector proceeds to take possession of assets.
Whether pending appeals against recovery proceedings mandate staying the proceedings under Section 14 in the absence of an interim order.
2 provisions across 2 enactments
M/s.Techno Builders
M/s.Canara Bank
The District Collector
M. SATHYANARAYANAN
R. HEMALATHA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
