A division bench of the Madras High Court comprising of Justice Sujoy Paul and Justice Amar Nath while hearing a case under the SARFAESI Act held that even if a minuscule part of the cause of action has arisen within the territory of a court, the petition can be entertained.
The court also held that Section 17(1) of the SARFAESI Act nowhere talks about the existence of any documentary evidence for that purpose and thus, the application under it cannot be rejected on the basis of lack of documentary evidence.
Brief Facts:
The petitioner’s case was that by an order, the learned Registrar of Debt Recovery Tribunal (DRT) declined to register his application preferred under Section 17(1) of the SARFAESI Act and under the relevant Rules of 2002. Since registration was declined, the petitioner availed the remedy of Chamber Appeal as per Rule 5(5) of Debts Recovery Tribunal (Procedure) Rules, 1993. The chamber hearing was given to the petitioner and learned Presiding Officer by the impugned order dated 09/03/2023 held that an application under Section 17(1) can be entertained provided the secured creditor has taken some action under Section 13(4) of the Act.
Contentions of the Petitioner:
The petitioner submitted that both the orders under challenge were passed by competent officers of DRT, Jabalpur which is within the territorial jurisdiction of the Principle Seat of this Court, thus the office objection deserves to be overruled. Further, when no documents were given while taking possession of the vehicle, the expectation of the Tribunal that some documents should have been filed is without any basis. There was no reason to disbelieve the pleadings.
Neither the SARFAESI Act nor the Rules make it obligatory to file any such document to substantiate the case. The reliance is placed on Section 17(1) of the SARFAESI Act which makes it clear that any person aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by a secured creditor may approach the Tribunal. What is important is whether a measure has been taken or not. Section 17(1) nowhere talks about the existence of any documentary evidence for that purpose.
Contentions of the Respondent:
The respondent contended that although in the pleadings, the appellant/petitioner stated that the secured creditor has repossessed the hypothecated vehicle but for this purpose, no documentary evidence was filed. Thus, the application was not tenable.
Observations of the Court:
The court found substance in the petitioner’s argument in the light of Clause-2 of Article 226 of the Constitution which envisages that even if a minuscule part of the cause of action has arisen within the territory of this Bench, the petition can be entertained. Thus, the Office objection was overruled.
Further, it was held that a conjoint reading of Section 13(4) of Section 17(1) of the SARFAESI Act makes it clear that what is required to be established is that the secured creditor has taken measure under sub-Section(4) of Section 13 in order to invoke the remedy under Section 17 of the said Act. Since no documents were made available to the petitioner, the petitioner categorically pleaded in this regard which was even accepted by the learned Presiding Officer that the vehicle was repossessed.
If no document is given to the petitioner, an impossible act to produce the document should not have been expected by the Tribunal. Moreso, when filing of such a document is not a condition precedent for entertaining and registering an application under Section 17 of the SARFAESI Act. Thus, the court was unable to countenance the orders passed by the learned Registrar and Presiding Officer of the D.R.T. The petitioner could make out a case deserving registration of his application under Section 17 of the said Act.
Decision of the Court:
The petition was allowed and the impugned order passed by the learned Registrar and the order passed by the learned Presiding Officer were set aside. The D.R.T. was directed to register the application preferred by the petitioner under Section 17 of the Act and proceed therefrom in accordance with law
Case Title: M/S Agrawal Coals and Logistics vs Debts Recovery Tribunal and Others
Coram: Justice Sujoy Paul and Justice Amar Nath
Case No.: Writ Petition No. 6213 Of 2023
Advocate for the Petitioner: Shri Prabhanshu Shukla
Advocate for the Respondents:N.A.
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