The Delhi High Court while going through the provisions of the SARFESI Act with regards to measures of secured creditors and remedies available against the same, noted that when there is an efficacious remedy available under section 17 of the act to approach the Debt Recovery Tribunal (hereinafter referred to as "DRT") then the same shall be approached for the cases where the petitioner has issues with the measures taken by secured creditors for enforcement of security.
Brief Facts:
The petitioner in the current case had taken certain credit from the Bank or the Respondent and for the same, they had kept a property comprising of a floor with a common staircase as a collateral security. Later on, this loan account was classified to be as a Non-Performing Asset (NPA) for which the bank had served a notice to the petitioner under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Subsequently, a case was filed by the Bank under section 14 of the act before the Chief Metropolitan Magistrate (CMM) of the North-West, Rohini Court for assistance in taking possession of the secured asset against the petitioner. This case was allowed by the CMM and a notice was served to the petitioner to take possession of the property in question. The petitioner had approached the high court contending that the Court of learned CMM, North West, Rohini did not have the territorial jurisdiction as the property in question was situated under the jurisdiction of learned CMM, North District, under Police Station: Model Town.
The Court noted that as per the letter from the Principal District and sessions judge (North-West) Rohini Courts, Delhi the area of the property in question falls under the civil and criminal jurisdiction under the North District and accordingly the court noted that the property falls under the jurisdiction of the North District CMM and not the North-West District CMM.
Further, the court went through section 13(4) of the SARFAESI Act which talks about the enforcement of security interest and according to which in case the borrower fails to discharge his liability in full within the prescribed period then the secured creditor has the authority to take recourse as has been given in the section which includes taking the possession of the secured assets of the borrower.
The Court then went through Section 17(2) of the same act and noted that it categorically elucidates that any person, including the borrower who is aggrieved by any of the measures as mentioned in Section 13(4) of the act can move an application with the Debt Recovery Tribunal (DRT) which has the jurisdiction in such cases and accordingly the DRT analyses whether the measures taken by the secured creditors for enforcement of the security are in accordance with the provisions of the act. Accordingly, it was noted that DRT has the jurisdiction to assess whether the enforcement of security by the secured creditor is in accordance with the provisions of the Act.
The Court further noted that as per section 14 of the SARFESI Act, the CMM or the District Magistrate has the authority to assist the secured creditor in possession of the secured asset, but the same is only with the CMM or DM within whose jurisdiction the property falls.
It was then observed that in the current case, the impugned order was clearly against the territorial jurisdiction and it was noted that the learned DRT has the authority under section 17 of the act to deal with all matters, including considering the fact that the steps taken by the secured creditor for enforcement of security, are in accordance with the provisions of the SARFAESI Act.
The Decision of the Court:
The Delhi High Court held that the petitioner ought to have approached the learned DRT since there is an efficacious remedy available under section 17 of the SARFAESI Act and it was further noted that the impugned order of the CMM was not within its territorial jurisdiction, therefore the same was suspended and an opportunity was granted to the petitioner to approach the DRT.
Case Title: M/s Subhash Chand Kathuria v. Punjab National Bank
Coram: Hon’ble Mrs. Justice Mini Pushkarna
Case No.: W.P.(C) 1869 of 2024
Advocate for the Appellant: Mr. Bharat Bhushan with Mr. Pulkit Sangh
Advocate for the Respondents: Mr. Nitin Garg with Mr. Rahul Kumar
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