Allahabad High Court
Shiv Charan Lal Sharma vs Allahabad Bank A.M.U. Branch ... on 6 May, 2015
Bench: Tarun Agarwala, Amar Singh Chauhan
HIGH COURT OF JUDICATURE AT ALLAHABAD
AFR
Court No. - 32
Case :- WRIT - C No. - 25953 of 2015
Petitioner :- Shiv Charan Lal Sharma
Respondent :- Allahabad Bank A.M.U. Branch Aligarh And 6 Others
Counsel for Petitioner :- Sudhanshu Pandey
Counsel for Respondent :- C.S.C.,Tarun Verma
Hon'ble Tarun Agarwala,J.
Hon'ble Amar Singh Chauhan,J.
The petitioner is the guarantor and father of respondent nos. 5 and 6 who took a cash credit limit of rupees seventy five lacs in a partnership firm known as S.R. Tractors in 2012 in which they were the partners. The petitioner stood guarantee for the cash credit limit by depositing the title deeds of his residential house no. 5/298A, Lohia Nagar Banna Devi, G.T. Road, Aligarh. It transpires that the accounts of respondent nos. 5 and 6 became NPA on 31.5.2014 pursuant to which a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'Act') dated 2.6.2014 was issued demanding a sum of Rs. 44.92 lacs. Thereafter, symbolic possession under Section 13(4) was also taken on 29.8.2014. It further transpires that the respondent bank filed an application dated 30.10.2014 before the District Magistrate under Section 14 of the Act praying for actual physical delivery of possession. On this application, the Additional District Magistrate (F&R), respondent no. 3 issued an order dated 4.3.2015 for delivery of physical possession pursuant to which the Additional City Magistrate, respondent no. 5 issued an order dated 21.4.2015 fixing 6.5.2015 for taking physical possession. The petitioner being aggrieved by the application of the respondents under Section 14 of the Act filed an application under Section 17 before the Debt Recovery Tribunal. The Tribunal by an order dated 1.5.2015 rejected the stay application relying upon a decision of the Supreme Court in the case of Harshad Govardhan Sondagar Vs. International Reconstruction Company Ltd. and others [2014 (6) SCC-1] on the ground that the order under Section 14 of the Act cannot be challenged on an application under Section 17 of the Act. The petitioner being aggrieved has filed the present writ petition.
We have heard Sri Sudhanshu Pandey, learned counsel for the petitioner and Sri Tarun Verma for the respondent bank.
Since there is no factual controversy and only a legal point has to be decided, we are proceeding to dispose of the writ petition at the admission stage itself without calling for a counter affidavit.
The contention of the learned counsel for the petitioner is that the District Magistrate alone can decide the application under Section 14 of the Act and that there is no power to delegate it to any subordinate officer. The second ground urged is that the application of the bank under Section 14 of the Act is required to be accompanied by an affidavit which is mandatory and which has not been done in the instant case. It was urged that non filing of the affidavit was fatal to the disposal of the application under Section 14 and such application without being accompanied by an affidavit could not be allowed.
Sri Tarun Verma, learned counsel for the bank, on instructions received to him, submitted that the District Magistrate has full authority and power to delegate his power to any subordinate officer under the Act and the mere fact that the application was not accompanied by an affidavit, was not fatal to the disposal of the application since all the ingredients required in the affidavit were present and existing in the application. Learned counsel submitted that non filing of an affidavit at best could be termed as an irregularity curable and which was not fatal to the disposal of the application under Section 14 of the Act.
Having heard the learned counsel for the parties, we find that Section 14 (1) gives power to the District Magistrate or to the Chief Metropolitan Magistrate to assist the secured creditor in taking possession of the secured assets. Section 14 (1A) provides that the District Magistrate or the Chief Metropolitan Magistrate may authorize any officer subordinate to him to take possession of such assets and document relating thereto and to forward such assets and documents to secured creditor. This Sub Section (1A) to Section 14 of the Act was inserted by Act No. 1 of 2013. In the light of this provision, it is clear that the District Magistrate could delegate the power to any officer subordinate to him for the purpose of taking possession of such secured assets to the secured creditor. In the light of the aforesaid, the submission of the learned counsel for the petitioner on this issue cannot be accepted.
By Act No. 1/2013 a proviso was also added to Section 14(1) which required that where an application is filed by a secured creditor for the purpose of taking possession of a secured asset, the said application shall be accompanied by an affidavit duly affirmed by the authorized officer of the secured creditor which would contain nine ingredients. For facility, proviso to Section 14(1) is extracted hereunder:
"Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorized 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 sub-clause (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, therefore, entitled to take possession of the secured assets under the provisions of sub-section (4) of section 13 read with section 14 of the principal Act;
(ix)that the provisions of this Act and the rules made thereunder had been complied with:
This provision was considered by the Supreme Court in Standard Chartered Bank Vs. V. Noble Kumar and others [2013 (9) SCC 620] whereas the Supreme Court analysed the nine sub clauses of the proviso indicating that the following information must be furnished in the affidavit, namely that there was a loan transaction under which a borrower is liable to repay the loan amount with interest; that there was a security interest created in a secured asset belonging to the borrower; that the borrower committed a default in the repayment; that a notice contemplated under Section 13(2) was in fact issued; that in spite of such a notice, the borrower did not make the repayment; that the objections of the borrower was considered and rejected and the reasons was communicated to the borrower.
The Supreme Court held that this insertion was done in order to provide safeguards to the interest of the borrower and that this provision stipulates that a secured creditor who is seeking the intervention of the Magistrate under Section 14 was required to file an affidavit furnishing the information contemplated under various sub-clauses (i) to (ix) of the proviso. The Supreme Court further held that the affidavit containing the aforesaid information was necessary as it would obligate the Magistrate to pass suitable orders regarding taking and delivery of possession of the secured asset only after being satisfied with the contents of the affidavits. The Supreme Court further held that the satisfaction of the Magistrate under the second proviso to Section 14(1) necessarily requires the Magistrate to examine the factual correctness of the assertions made in such an affidavit and only after recording the satisfaction that the Magistrate could pass appropriate orders regarding taking of possession of the secured assets.
From the aforesaid decision of the Supreme Court in Standard Chartered Bank (Supra), we are of the opinion that the word 'shall' used in the first proviso to Section 14(1) of the Act is mandatory. It is an essential requirement for the Bank that the application filed under Section 14 must be accompanied by an affidavit duly affirmed by the authorized officer of the secured creditor indicating the ingredients contemplated under sub clause (i) to sub clause (ix) to the first proviso. Non filing of the affidavit in our opinion would be fatal.
Sri Tarun Verma, learned counsel for the bank has conceded that in the instant case no affidavit was filed. Consequently, the application could not have been allowed by the District Magistrate.
Consequently, for the reasons stated aforesaid, the impugned order of the Additional District Magistrate dated 4.3.2015 and the consequential order dated 21.4.2015 passed by the Additional City Magistrate being illegal, cannot be sustained and are hereby quashed. The writ petition is allowed.
It would be open to the respondent bank to proceed afresh by filing a fresh application under Section 14 in accordance with the provisions of the Act.
Order Date :- 6.5.2015
AK
(Amar Singh Chauhan,J.) (Tarun Agarwala,J.)
