Smt. Pushpa Pathak vs State Of U.P. Thru Chief Secy. And ...
2012 Latest Caselaw 2513 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 

 
Court No.34
 

 
Civil Misc. Writ Petition No.30440 of 2012
 
Smt. Pushpa Pathak  Vs. State of U.P. & Ors.
 

 
Hon. Sunil Ambwani, J.

Hon'ble Mrs. Sunita Agarwal,J.

1. We have heard Shri S.K. Misra holding brief of Shri Mukesh Singh for the petitioner. Shri Sanjeev Singh appears for the Union Bank of India and represents respondent nos.2 and 3. Learned Standing Counsel appears for respondent nos.1, 4, 5 and 6.

2. Brief facts giving rise to this writ petition, are that the petitioner's husband late Shri Anand Kumar Pathak availed Cash Credit facility of Rs.19 lacs as well as housing loan of Rs.20 lacs, from the respondent bank sometimes in the year 2006. He could not pay the installments in time on which the bank issued notices under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI Act, 2002) dated 16.8.2010 for realising outstanding dues of Rs.23,18,110.24 paisa in Housing loan account by securitising the security interest in the mortgaged property. (Land and Building: House in Village Sukhipur, Tehsil Sadar Jaunpur in the name of Smt. Pushpa Devi, wife of Late Shri Anand Kumar Pathak); and Rs.21,50,696.68 paisa in C.C. (H) (Housing Loan Account) by securitising the security interest in mortgaged properties (Land and Building; House No.21, Moh. Kaseri Bazar, Tehsil Sadar, Jaunpur).

3. The petitioner's husband filed the first Writ Petition No.35276 of 2008, Anand Kumar Pathak v. Manager, Union Bank of India, Main Branch, Jaunpur & Ors. and Writ Petition No.35943 of 2008 in which a statement was given by the counsel appearing for the petitioner that the petitioner is prepared to clear the entire outstanding dues, if some easy installments are fixed and to show its bonafides the petitioner offered to deposit Rs.2,50,000/- in each case within a month. On this statement the Court by its order dated 23.7.2008 disposed of the writ petitions with directions that the bank will permit the petitioner to deposit Rs.2,50,000/- by 23.8.2008 and to clear the remaining amount along with interest in four equal quarterly installments. The Court fixed four installments in which fourth installment was to include the upto date interest, and stayed recoveries upto 23.8.2009, upto the payment of the fourth and last installments. It was made clear that in the event of failure of deposit of any of the amount or installments, the bank would be at liberty to proceed in accordance with law. The Court also made it clear that it has not adjudicated the claim on merits.

4. The petitioner did not deposit the installment in time, on which the bank proceeded to sell the property by auction.

5. The petitioner filed a second Writ Petition No.20305 of 2010, Anand Kumar Pathak & Ors. v. State of U.P. & Ors. in which statement was given by learned counsel appearing for the bank that the sale had taken place but was not confirmed nor the sale certificate was issued to the auction purchaser. This Court once again considering the facts and circumstances of the case passed an order on 19.4.2010, of which the operative portion is quoted as below:-

"We have heard Sri Shiv Nath Singh learned counsel for the petitioners, learned standing counsel appearing for the respondent no.1 and Sri Rakesh Mishra learned counsel appearing for respondents no.2 and 3 who pray for and are allowed a month's time to file counter affidavit. Sri Anil Tiwari learned counsel has put in appearance for auction purchaser. He may also file counter affidavit along with impleadment application within the same period. Rejoinder affidavit may be filed by the learned counsel for the petitioners within next three weeks.

List thereafter.

Learned counsel for the petitioners has also filed an amendment application. The amendment application is allowed. Learned counsel for the petitioners shall incorporate amendment prayed for during the course of day.

Learned counsel for the petitioners has urged that the auction of the property had taken place on 31.3.2010. The auction purchaser did not deposit 25% of the amount which was subsequently deposited by him. From a reading of sub-rule (4) of rule 9 of the Security Interest (Enforcement) Rules, 2002, there appears to be an ambiguity in the language of rule 9 (4), therefore, it has to be interpreted by this court harmoniously. To us it appears that the date on which the petitioner makes the entire deposit, thereafter 15 days period would be counted for confirmation of sale. The word "on" in rule 9(4) appears to be superfluous. On 15th April, 2009 a statement was made before a division bench presided by Hon'ble S.K. Singh, J. that auction sale is likely to be confirmed by the respondents on which the division bench had orally directed the counsel for the bank not to proceed with the auction proceedings. As the court was having a heavy backlog of fresh cases, the matter could not be taken up and despite statement made before the aforesaid division bench on 15.4.2009, it appears that in spite of oral direction to the counsel for the bank, the bank is yet to confirm the sale. According to the learned counsel for the bank, the sale has not yet been confirmed nor sale certificate has been issued to the auction purchaser. In the earlier writ petition No.35275 of 2008 and 35943 of 2008 were filed with regard to accounts in which the cash credit limit was taken and housing loan was taken. Both the writ petitions were disposed of by that bench on 23.7.2008 fixing instalments.

In this petition we are concerned with the accounts of the petitioner wherein the cash credit limit had been taken. The petitioners did not comply with the instalments fixed by the order dated 23.7.2008. But it appears that when the petitioner deposited an amount of Rs.8,60,000/- on 23.1.2009 in his account, the bank permitted him to operate the cash credit limit which is clear from Annexure-3 to the amendment application filed today by the counsel for the petitioners. Therefore, the bank has decided not to proceed with the recovery proceedings in pursuance of the order dated 23.7.2008 and permitted the petitioner to operate his cash credit limit. In such a situation , the property of the petitioners ought not to have been auctioned by the respondent bank and if any one has purchased the property in auction, his amount may be refunded by the bank along with interest as per rules. In case the auction purchaser applies for refund then the same shall be refunded to the auction purchaser within a short time along with admissible charges and interest as per the bank rate which shall be reimbursed to the bank by the petitioners. In this view of the matter, the petitioners are entitled for interim order.

Until further orders of this court, the recovery proceedings against the petitioners initiated by the bank as well as the confirmation of auction sale in favour of the auction purchaser shall remain stayed. It shall be open to the bank to return the amount of sale to the auction purchaser if he applies for refund of the amount along with admissible charges and interest within 15 days from today and the interest and other charges paid to the auction purchaser shall be charged from the petitioners."

6. On 19.7.2010 the Writ Petition No.20305 of 2010 was dismissed with the following order:-

"Shri Rakesh Mishra, learned counsel appearing for the respondents-Bank stated that the Bank has withdrawn the recovery proceeding initiated against the petitioners under Section 13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and, therefore, this petition has become infructuous. Learned counsel for the petitioner does not dispute this position. The writ petition is, therefore, dismissed as having become infructuous."

7. The bank again issued notice under Section 13 (2) of the SARFAESI Act, 2002 on 16.8.2010. The petitioner filed third Writ Petition No.67013 of 2010, Vishnu Pathak v. State of U.P. & Ors. in which statement was given that the petitioner has taken cash credit limit of Rs.20 lacs and one housing loan. When the earlier writ petition was pending, the petitioner was permitted to operate both the accounts. The petitioner has met the Branch Manager and requested him to permit the transaction and to deposit arrears and installments with interest. The bank, however, did not permit the petitioner to operate the account. The Court was of the view that if the petitioner makes an application to the respondent bank with regard to willingness of the petitioner for making payments in installments of housing loan with interest, as well as outstanding of cash credit limit account with interest, the same may be considered by the bank. The Bank will after receipt of the letter inform the petitioner within a week for making payment of the outstanding amount. Subject to petitioner's depositing the amount indicated as above (as intimated by the bank) within a period of four weeks, no further action was directed to be taken in pursuance to the notice dated 16.8.2010.

8. The petitioner did not deposit the amount as promised to the Court on which the bank sent a notice dated 21.12.2010 under Section 13 (4) of the Act informing Smt. Pushpa Devi wife of Shri Anand Kumar Pathak that since she has failed to discharge in full a sum of Rs.23,18,110.24 together with interest even after expiry of 60 days on the issuance of the notice dated 16.8.2010, bank has no other way to take further action by way of enforcement of securities by taking possession and selling the securities for realising the bank dues as contemplated under the SARFAESI Act, 2002. The bank, thereafter, stated in the notice as follows:-

"We do hereby call upon you to handover/ surrender possession of the above-mentioned secured assets to the officials and representatives of the bank on the date, place and time mentioned herein and we require you to cooperate in taking over of the possession of the secured assets and in drawing inventory by the bank.

We do hereby inform you that officials and representatives of the bank shall take or cause for taking possession of the secured assets wherever it may be situated/ stored, on the date and time mentioned below:-

I. Date:29.12.2010

II. Time: 2 P.M.

Description of Secured Assets:-

Land and building, Arazi No.27, area-0.130 hectare, situated at Vill.-Sukkhipur, PO-Sadar, Distt.-Jaunpur

Boundary:- East-Kaccha rasta, West-Field Amritlal Sonkar & others, North-Field Dr. Sochan Ram, South- Field Melahu Saw

and other assets or securities whether movable or immovable covered under the security created by you in favour of the Bank."

9. The petitioner filed Contempt Application (Civil) No.272 of 2011 alleging that inspite of order dated 16.11.2010 the period of deposit given in which had not expired, the bank had proceeded to issue notice under Section 13 (4) of the Act. This Court issued notices in the contempt petition on 19.1.2011.

10. When the Writ Petition No.67013 of 2010 came up for hearing on 1.2.2011, the Court found that since action was taken by the bank in exercise of powers under Section 13 (4) of the Act, the petitioner has statutory remedies and thus the writ petition could not be entertained. The writ petition was dismissed on 1.2.2011 with liberty to the petitioner to avail remedies as provided under Section 17 of the Act.

11. The petitioner, thereafter, approached the Debts Recovery Tribunal at Allahabad under Section 17 (1) of the Act, in S.A. No.124 and 125 of 2011 in respect of the both the loans and notices under Section 13 (4) dated 21.12.2010, separately. The appeals were dismissed as premature on 7.9.2011 accepting the objections of the counsel appearing for the bank, intended action prior to Section 13 (4) does not give the borrowers any right to file an application under Section 17 (1) of the Act. Notice under Section 13 (4) speaks of the creditor having taken possession. But the notice impugned is request made to the petitioner to deliver possession and thus till filing of the application, the bank had not taken any measures spoken of in Section 13 (4). The Tribunal held that the letter/ notice dated 21.12.2010 cannot be said to be an action contemplated under sub-section (4) of Section 13 of the Act. It has also relied upon the judgment from DRAT Kolkata reported in 2011 (2) Bank CLR 120 (DRAT) in reaching to the said conclusion.

12. The bank has now initiated proceedings under Section 14 of the SARFAESI Act, 2002 and has requested the District Magistrate, Jaunpur for handing over the possession of the mortgaged assets. The Collector, Jaunpur has by his order dated 2.1.2012 directed the Sub Divisional Magistrate, Sadar to take over possession of the mortgaged property and hand it over to the bank. He also directed the police to secure peace and to cooperate with the Sub Divisional Magistrate to take over possession, on which the Sub Divisional Magistrate has given a notice to the Circle Officer, Jaunpur on 26th May, 2012 to provide help to take over possession on 6.6.2012.

13. Now in this fourth petition the petitioner has only prayed for a direction to quash the order of the District Magistrate, Jaunpur dated 17.1.2012, and the order of the Sub Divisional Magistrate dated 26.5.2012 and for restraining the respondents from taking over possession of the mortgaged properties.

14. The writ petition was filed without referring or enclosing the previous judgments and undertakings given by the petitioner in the first and third writ petition to deposit the amount. Shri S.K. Misra, learned counsel appearing for the petitioner states that the petitioner has after 15.2.2012 deposited Rs.6,02,000/- in the bank. The details of these deposits, and the accounts in which these deposits have been made have not been given.

15. It is submitted by Shri S.K. Mishra that he is now left without any remedies as his appeal has been dismissed by the Debts Recovery Tribunal and that the bank has proceeded to securitise the mortgaged properties over and above the properties mortgaged to the bank. He submits that in the circumstances the Court must interfere to protect the rights of the petitioner.

16. We do not propose to interfere in the matter. Firstly we may observe that the petitioner is not entitled to any relief as he had tried to conceal the facts of the case from the Court in the writ petition as it was filed on 14.6.2012. He did not disclose filing of the earlier three writ petitions and the undertaking given to deposit the amount and the orders passed by DRT. Secondly we may observe that the petitioner has not challenged the order of the Debts Recovery Tribunal either in the DRAT or even in this writ petition even after he has annexed the orders passed in the earlier writ petitions, and the DRT by way of supplementary affidavit.

17. In our opinion the order of DRT dated 7.9.2011 is not based on the facts as they were presented to the Tribunal and the language of the notice under Section 13 (4) in which the bank not only expressed clear intention to take over possession but also fixed a date on which the officers and representatives of the bank shall take or cause to take possession of the secured assets, wherever they may be situated. The date was fixed on 29.12.2010. The notice dated 21.12.2010 under Section 13 (4) is not a mere intimation, communication or letter to the petitioner to hand over possession. It is a notice giving directions to hand over possession for which date was also fixed. Nothing more is required to be done under Rule 4 (1) of the Security Interest (Enforcement) Rules, 2002, in pursuance to the notice under Section 13 (4) of the Act. The measures taken in pursuance to Section 13 (4) were, therefore, in accordance with law and that it can not be said by any kind of reasoning that the bank has only intimated the borrower for taking over possession. The SARFAESI Act of 2002 and the Security Interest Enforcement Rules, 2002 provide for procedure for taking over possession after notice under Section 13 (2) by giving a notice and adopting the measures namely for fixing a date on which officers of the bank will proceed to take over possession. Since the bank does not have police powers, the Act provides for sufficient provisions under Section 14 to approach the District Magistrate or Chief Metropolitan Magistrate to secure possession and for that purpose take such steps and use or cause to use such force as may be necessary. We find that since the bank was unable to take possession on its own through its officers it applied for taking over possession under Section 14 of the Act on which the Collector has passed the orders and after noticing the litigation in which the petitioner had pursued and had failed.

18. The reasoning given by the DRT in its order dated 7.9.2011 is not correct. The notice dated 21.12.2010 under Section 13 (4) of the Act is on record. The statement of the counsel for the bank that it was a letter and not a notice is a misreading of the document on record. It is a notice to take over possession to be given in accordance with the provisions of Rule 4 of the Security Interest (Enforcement) Rules, 2002.

19. In Kanhaiyalal Lal Chand Sachdev v. State of Maharashtra, (2011) 2 SCC 782, following Indian Overseas Bank v. Ashok Saw Mill, (2009) 8 SCC 366, the Supreme Court has held that when action under Section 13 (4) is initiated apparently by giving a notice the borrower has right to approach the DRT in appeal under Section 17 (1) of the Act, under Rule 8 of the 2002 Rules, the borrower has a right to file application under Section 17 (1) of the Act. Paragraphs 19 to 22 of the judgment is quoted as below:-

"19. Section 17 of the Act which provides for an appeal to the DRT, reads 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.

(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder....."

20. The 2002 Rules, enacted under sub-section (1) and clause (b) of sub- section (2) of Section 38 read with sub-sections (4), (10) and (12) of Section 13 of the Act, set down the procedure for enforcing a security interest. Rule 4 of the 2002 Rules deals with the possession of movable assets, whereas Rule 8 deals with the possession of immoveable assets. It is manifest that Rule 4 has no application to the facts of the instant case, as contended by the learned counsel for the State.

21. In Authorised Officer, Indian Overseas Bank & Anr. Vs. Ashok Saw Mill, the main question which fell for determination was whether the DRT would have jurisdiction to consider and adjudicate post Section 13(4) events or whether its scope in terms of Section 17 of the Act will be confined to the stage contemplated under Section 13(4) of the Act? On an examination of the provisions contained in Chapter III of the Act, in particular Sections 13 and 17, this Court, held as under :

"35. In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the banks or financial institutions, certain checks and balances have been introduced in Section 17 which allow any person, including the borrower, aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor, to make an application to the DRT having jurisdiction in the matter within 45 days from the date of such measures having taken for the reliefs indicated in sub- section (3) thereof.

36. The intention of the legislature is, therefore, clear that while the banks and financial institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee.............................................

39. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. On the other hand, the law is otherwise and it contemplates that the action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT."

(Emphasis supplied by us)

22. We are in respectful agreement with the above enunciation of law on the point. It is manifest that an action under Section 14 of the 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 the Act. Thus, the 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."

20. There is another reason on which we find that the order passed by the Debts Recovery Tribunal cannot be sustained. The Supreme Court has in Mardia Chemicals Ltd. & Ors. v. Union of India & Ors., (2004) 4 SCC 311; Transcore v. Union of India & Anr., (2008) 1 SCC 125 ; United Bank of India v. Satyawati Tandon & Ors., (2010) 8 SCC 110; Indian Bank v. Blue Jaggers Estates Ltd. & Ors., (2010) 8 SCC 129; and in Kanaiyalal Lalchand Sachdev & Ors. v. State of Maharashtra & Ors., (2011) 2 SCC 782 has observed that remedies of the petitioner in case of the proceedings initiated under Section 13 (4) by the bank is to approach the DRT. The Supreme Court has issued clear directions to the High Courts not to interfere in such matters and to relegate the borrowers to remedies under Section 17 of the Act. If notice under Section 13 (4) to hand over possession fixing a date is to be treated only as a communication or a letter, and not a measure, in pursuance to Section 13 (4), the High Court may be required to interfere and thereby clearly violating the mandate of the Supreme Court.

21. We also find that the Tribunal was in doubt of the view taken by it. The Tribunal has used the expression:- "perhaps" which does not show that it was not convinced with the reasoning given by it, and has thereafter proceeded to rely upon sub-section (3A) of Section 13, which is a stage anterior to issuance of notice under Section 13 (4) of the Act and further that the Explanation is by way of a clarification.

22. Since the petitioner has not challenged the order of the Tribunal dated 7.9.2011, we do not propose to set aside the order, and thus leave it to the petitioner to pursue the remedies by approaching Debts Recovery Appellate Tribunal (DRAT) to challenge the order of DRT. If such an appeal is filed, the DRAT will decide it in accordance with the observations made by us in this judgment and may consider to either decide or remand the matters to DRT.

23. In view of the facts and circumstances, we do not propose to interfere in the order passed by the Collector under Section 14 of the Act directing the Sub Divisional Magistrate to take over possession and hand it over to the bank.

24. The writ petition is dismissed.

Dt.20.06.2012

SP/