HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Reserved Civil Misc. Writ Petition No. 65726 of 2011. Rajendra Ispat Pvt. Ltd. ........ Petitioner. Versus State of Uttar Pradesh and others. ........ Respondents. Along with: Civil Misc. Writ Petition No. 65683 of 2011. Rajendra Ispat Pvt. Ltd. ........ Petitioner. Versus State of Uttar Pradesh and others. ........ Respondents. ----------
Present:
(Hon. Mr. Justice Amitava Lala & Hon. Mr. Justice V.K. Mathur) Appearance:
For the Petitioner/s : Mr. U.N. Sharma, Sr. Advocate, Mr. Chandan Sharma.
For the Respondents : Mr. O.P. Mishra, & Mr. Dashrath Ram, Standing Counsel.
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Amitava Lala, J.-- Since the controversy involved in both the writ petitions are identical, the same have been taken up together for the purpose of analogous hearing and disposal and are being decided by this common judgement having binding effect upon both the writ petitions.
Briefly stated facts, according to the petitioner, are that M/s. Cawnpore Sugar Works Ltd. (in short called as ''CSWL'), which was originally incorporated in the year 1984 as a Joint Stock Company for the manufacture, refining and sale of sugar and other sugar bi-products, was initially having four units at Padrauna, Kathkuiyan, Gauri Bazar (in State of Uttar Pradesh) and Marhowra (in State of Bihar). Subsequently, by an order dated 01st February, 1993 of the Board for Industrial and Financial Reconstruction (in short called as ''BIFR') the CSWL was declared a sick industrial company and Industrial Finance Corporation of India (in short called as ''IFCI') was appointed as operating agency under Section 17(3) of the Sick Industrial Companies (Special Provisions) Act, 1985. Thereafter, a scheme for revival of CSWL was sanctioned by BIFR by its order dated 18th June, 2003, pursuant to which several efforts were made but all in vain. Subsequent thereto, on behalf of the secured creditor, IFCI proceeded under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter in short called as ''SARFAESI Act') and issued a notice under Section 13(2) thereof claiming Rs.30,09,18,022/- to be paid within sixty days from the date of receipt of notice. Such notice was also published in the daily newspaper on 13th January, 2011. When CSWL failed to discharge its liability as per said notice, again a notice dated 03rd March, 2011 was issued under Section 13 (4) of the SARFAESI Act and the same was also published in the daily newspaper ''Dainik Jagran' on 08th March, 2011. Thereafter an auction notice dated 15th March, 2011 was published by IFCI in daily newspaper ''Dainik Jagran' on 16th March, 2011 inviting proposals for sale of assets of two units of CSWL i.e. Gauri Bazar and Kathkuiyan. As per the auction notice, the minimum reserve price for both moveable and immoveable properties of Gauri Bazar unit was collectively fixed at Rs. 1656 lacs, whereas in respect of Kathkuiyan unit such reserve price was Rs.722 lacs. Accordingly, at the time of submitting offers the petitioner deposited earnest money of Rs. 165 lacs in respect of Gauri Bazar unit and Rs. 72 lacs in respect of Kathkuiyan unit. In the aforesaid auction, the petitioner was declared successful and accordingly, sale certificates dated 26th September, 2011 were issued in favour of the petitioner in respect of moveable and immoveable properties of both the units i.e. Gauri Bazar and Kathkuiyan. Subsequently thereto, on 15th October, 2011 the petitioner submitted an application before the District Magistrate, Deoria to provide necessary security so as to enable the petitioner to take over the possession of the fixed assets and moveable and immoveable assets of Gauri Bazar unit without any obstruction and hindrance. Similar application was also made to the District Magistrate, Kushinagar on 17th October, 2011 in respect of Kathkuiyan unit. However, the possession of the aforementioned properties have not been handed over to the petitioner as yet. Hence, seeking direction to that extent the petitioner has approached this Court by means of the present writ petitions, out of which Civil Misc. Writ Petition No. 65726 of 2011 is in respect of Gauri Bazar unit and Civil Misc. Writ Petition No. 65683 of 2011 is in respect of Kathkuiyan unit. Since the prayers made in both the writ petitions are identical, for brevity the prayers of Civil Misc. Writ Petition No. 65726 of 2011 are quoted hereunder:
"(a) a writ, order or direction in the nature of mandamus commanding upon the respondents to hand over the physical possession of the entire moveable and immoveable properties of Gauri Bazar unit of M/s. Cawnpore Sugar Works Ltd., forthwith, in pursuance to the Sale Certificates dated 16.9.11 issued in favour of the petitioner, within a period to be specified by this Hon'ble Court;
(b) a writ, order or direction in the nature of mandamus commanding upon the District Magistrate, Deoria, to take appropriate steps under section 14(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(c) any other writ, order or direction as this Hon'ble Court may deem fit and proper in the circumstances of this case; and
(d) award cost of the petition to be paid to the petitioner."
Mr. U.N. Sharma, learned Senior Counsel appearing for the petitioner, has drawn our attention to Section 14 (1) of the SARFAESI Act and submitted that it casts a duty upon the concerned Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset, on being made a request in writing. However, in the present cases, in spite of the applications having already been made, possession of the properties is not being handed over to the petitioner, due to which the petitioner is suffering huge financial loss as for the purpose of procuring the aforesaid properties the petitioner had taken loan from the bank, on which it is paying huge interest in lacs of rupees per day. Moreover, the sale certificates reveal that assets of both moveable and immoveable properties are free from all encumbrances but there are certain hurdles at the local level in taking over the possession of the property. The moveable assets lying in the premises are obsolete and if the same are not removed immediately from the premises, the same will become of no use. In further, the State will also incur huge loss on the tax if the moveable properties are left at the premises.
We have gone through Section 14 of the SARFAESI Act and for the purpose of better understanding, such section is reproduced hereunder:
"14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.--(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 assets and documents to the secured creditor.
(2) For the purpose of securing compliance with the 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."
However, we find that in both the writ petitions the Court has been called upon to give effect to the letters written by the purchaser company being dated 15th October, 2011 to the District Magistrate, Deoria in respect of Gauri Bazar unit and dated 17th October, 2011 to the District Magistrate, Kushinagar in connection with Kathkuiyan unit. Both the writ petitions have been filed before this Court on 15th November, 2011. On 16th April, 2011 another Division Bench of this Court was pleased to pass an interim order in Civil Misc. Writ Petition No. 20805 of 2011 (Janta Chini Mill Mazdoor Sangh Gauri Bazar, Eroria & anr. Vs. Industrial Finance Corporation of India & ors.) by directing that the sale under the SARFAESI Act may be held; the entire amount realised from sale may be retained by IFCI, and will be kept in no lien account to be disbursed in accordance with the orders to be passed by the Court. Such writ petition, in which the interim order was passed, was filed on the part of the workmen of Gauri Bazar unit of CSWL. Therefore, one aspect is very clear that the Division Bench even at the instance of the workmen did not debar the secured creditor from proceeding with the sale. In any event, it appears to us from the respective letters, as aforesaid, that sale certificates issued by the IFCI were enclosed with the letters. However, it has been complained by way of writ petitions that in spite of the information given to the concerned District Magistrates to take steps in accordance with Section 14 of the SARFAESI Act, no step has been taken by such authority. We have gone through various judgements of the High Courts and also of the Supreme Court and found that having alternative remedy available under the SARFAESI Act, invocation of writ jurisdiction under Article 226/227 of the Constitution of India is not proper. Reference of such judgements is AIR 2004 SC 2371 : 2004 (4) SCC 311 [Mardia Chemicals Ltd. etc. etc. Vs. Union of India (UOI) and ors. etc. etc.], AIR 2010 SC 3413 : 2010 (8) SCC 110 (United Bank of India Vs. Satyawati Tondon and ors.), 2011 (2) SCC 782 (Kanaiyalal Lalchand Sachdev and others Vs. State of Maharashtra and others), IV (2010) BC 125 (Bharat Lal Vs. Punjab National Bank Housing Finance Ltd. and ors.) and one unreported judgement of the Bombay High Court dated 20th August, 2011 delivered in Crl. Public Interest Litigation No. 24 of 2011 (International Asset Reconstruction Company Private Limited Vs. Union of India and others). Out of such judgements, in Kanaiyalal Lalchand Sachdev (supra) it has been held by the Supreme Court that an action under Section 14 of the SARFAESI Act constitutes an action taken after the stage of Section 13 (4), and therefore, the same would fall within the ambit of Section 17 (1) of such Act. Thus, the SARFAESI Act itself contemplates an efficacious remedy for the borrower or any person affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT (Debts Recovery Tribunal).
If we go through Section 14 of the SARFAESI Act, we will find that the application is required to be made by the secured creditor, whereas in the present cases, the applications under Section 14 have been made by the purchasers with a copy to secured creditor. Therefore, the applications as made to the concerned District Magistrates are technically defective. The intention of the legislature is that genuinity of the sale is to be confirmed by the secured creditor to the Chief Metropolitan Magistrate or the District Magistrate, who were not present at the time of sale. However, it is duty incumbent upon the secured creditor to make such application if, according to them, the sale is complete and the sale certificate/s is/are issued. On the other hand, if no such action is taken by the secured creditor, a purchaser can not wait indefinitely for having physical possession in respect of the assets of the properties in spite of making payment/s of its price. It may delay their right of carrying on business as protected under Article 19(1)(g) of the Constitution of India. Therefore, an authority cannot behave like silent spectator. Hence, let us examine the remedy available to the petitioner. Section 17(1) of the SARFAESI Act speaks as follows:
"17. Right to appeal.--(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application along with such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken:
Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.
Explanation.--For the removal of doubts it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of section 17."
From the plain reading of such section read with the ratio of Kanaiyalal Lalchand Sachdev (supra), we find that "any person (including borrower)", if aggrieved by any of the "measures" even at the stage of Section 14 of the SARFAESI Act, can prefer an appeal before the DRT under such Act. The words "any person" and the word "measures" are qualifying the purchasers to raise this issue before the DRT by an appeal under Section 17 of the SARFAESI Act. Dictionarically, ''measures' means, when someone takes measures to do something, they carry out particular actions in order to achieve a particular result, which cannot be restricted only with regard to order or direction under Section 14 being consequence of Section 13(4) but also includes all types of actions or inactions on the part of the Chief Metropolitan Magistrate or the District Magistrate. Therefore, remedy regarding inaction on the part of the authority under Section 14, as alleged by the petitioner, is available before the DRT and not before the writ Court. Hence, both the writ petitions are dismissed, however, without imposing any cost.
In any event, passing of this order will in no way affect the right of the petitioner to invoke the jurisdiction of the DRT under Section 17 of the SARFAESI Act in accordance with law and as per the interpretation as made by this Court for its expeditious disposal.
(Justice Amitava Lala) I agree.
(Justice V.K. Mathur) Dated: 21st December, 2011.
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Hon'ble Amitava Lala, J.
Hon'ble V.K. Mathur, J.
Under the authority of the Hon'ble Chief Justice additional cause list has been printed for the purpose of delivery of judgement and the same has been delivered at 2.00 P.M. in the Court upon notice to the parties.
The writ petition is dismissed, however, without imposing any cost.
Dt./- 21.12.2011.
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For judgement and order, see order of the date passed on the separate sheets (eight pages).
Dt./-21.12.2011.
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