Andhra Pradesh High Court - Amravati

M/S Sri Chandramala Enterprises ... vs Punjab National Bank, on 18 August, 2022

           HON'BLE SRI JUSTICE C.PRAVEEN KUMAR
                                  AND
     HON'BLE SRI JUSTICE TARLADA RAJASEKHAR RAO

              WRIT PETITION No. 15356 of 2022

ORDER: (Per Hon'ble Sri Justice C. Praveen Kumar)


1.     The circumstances, which lead to filing of the present

Writ Petition, are as under:


 i.    The Petitioners Company is a registered Private Limited

       Company incorporated under the Companies Act, and

       doing business in General Manufacturing Trade/Retail

       -    Storage    in    wholesale    and   retail    and      trading

       commodities of paddy, pulses, rice, coal and all

       Biomassi,      in    the   name    and   style     of     M/s.   Sri

       Chandramala          Enterprises    Private       Limited.       The

       Petitioners Company took the house property, on lease,

       bearing No. 18-10-11 and 18-10-11/2, Marellavari

       Street, Bheemavaram, West Godavari District, from

       Respondent No. 5.

ii. It is said that, Respondent No. 1 bank initiated

proceedings under Securitisation and Reconstruction

of Financial Assets and Enforcement of Security

Interest Act, 2002, ['SARFAESI Act'] against

Respondent No. 2. Aggrieved by the same, one of the

neighbours of the subject property preferred an Appeal

before the Debt Recovery Tribunal, Visakhapatnam,

vide S.A. No. 144 of 2015, alleging that a part of their

property is also included in the SARFAESI proceedings.

The Debt Recovery Tribunal appointed an Advocate

Commissioner for the purpose of demarcating the

subject property. However, the said S.A. No. 144 of

2015 and I.A. No. 811 of 2018, which was filed by the

Appellant therein, for issuance of warrant, were

dismissed for default on 19.06.2019. Thereafter, the

Appellant filed a restoration application vide M.A. No.

87 of 2020 on 29.09.2020 for restoration of S.A. No.

144 of 2015.

iii. It is said that, on an application filed under Section 14

of the SARFAESI Act, the Respondent No. 7 issued a

warrant on 15.07.2015, in Crl M.P. No. 19 of 2015, to

the Advocate Commissioner, but the same was not

executed.

iv. It is said that, Respondent No. 1 Bank filed a Memo

before Respondent No. 7 in Crl. M.P. No. 19 of 2015

stating that S.A. No. 144 of 2015 along with I.A. No.811

of 2018 before the Debt Recovery Tribunal,

Visakhapatnam, were dismissed for default on

19.06.2019. Acting upon the said memo and since a

Commissioner was appointed in the year 2015 itself,

Respondent No. 7 re-entrusted the warrant to

Respondent No. 8 (Sri T. Nageswara Rao) on

23.03.2022. However, Respondent No. 1 Bank did not

bring to the notice of Respondent No. 7 that a

restoration petition filed in S.A. No. 144 of 2015 is

pending consideration before the Debt Recovery

Tribunal, Visakhapatnam.

v. Pursuant to the Order, dated 23.03.2022, passed by

Respondent No. 7, the Advocate Commissioner visited

the premises of the Petitioners Company. As the

premises was locked, he broke open the same without

any permission from the Court. After coming to know

about the said incident, the Petitioners filed an

objection Petition, dated 04.05.2022, before

Respondent No. 7, narrating all the facts along with

supporting documents. Respondent No. 7 returned the

said objection Petition, vide Order, dated 06.05.2022,

on the ground that the same is not maintainable under

Section 17 (4A) of SARFAESI Act. Even though a

detailed explanation was submitted, the same was not

accepted and returned on 09.05.2022. This action of

the Respondents is sought to be questioned in this Writ

Petition. The learned counsel relied upon the judgment

of the Hon'ble Supreme court in Harshad Govardhan

Sondagar V. International Assets Reconstruction

Company Limited1 in support of his plea.

( 2014) 6 SCC 1

2. Sri. Hanumantha Rao Bachina, learned Counsel

appearing for the Respondents/Bank, sought time to file

counter, but no counter is filed. However, he submits that,

as the Petitioners are lessees to the Schedule Property and

third parties to the lis, they have no locus standi to file the

present Writ Petition.

3. The point that arises for consideration is, whether the

action of the authorities in trying to take possession of the

property is permissible under law?

4. Section 14 of the SARFAESI Act deals with 'secured

creditor taking possession of secured asset'. It states that,

where possession of any secured assets 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 SARFAESI Act, the secured creditor

may request in writing, the Chief Metropolitan Magistrate or

the District Magistrate, within whose jurisdiction any such

secured asset or other documents relating thereto are

situated or found, to take possession thereof. The Chief

Metropolitan Magistrate or as the case may be, the District

Magistrate shall, on such request being made to him to take

possession of such asset, forward such asset and documents

to the secured creditor, provided the conditions specified in

Section 14 are satisfied.

5. Therefore, Section 14 of the SARFAESI Act is an

enabling provision through which the secured creditor may

seek the assistance of the C.M.M., in taking physical

possession of the secured asset. It is to be noted that,

Section 14 is silent with regard to time limit for taking

possession. The only limit contemplated in Section 14 is

that, C.M.M. is required to pass an order within thirty days

from the date of application by the secured creditor. The

second proviso to Section 14 postulates that the said period

of thirty days is extendable by another 30 days.

6. Dealing with the issue involved in the present case,

namely as to fixing of time limit for execution of warrant and

its consequences, if the warrant for taking possession is not

executed within the time limit, a Division Bench of this Court

in M/s. Mangalagiri Textile Mills Pvt Ltd V. The State

Bank of India after considering the judgments on the

subject and distinguishing the view expressed in Housing

Development Finance Corporation Ltd. V. Rakesh

Kumar2, held as under:

"31. An essential component of judicial orders is certainty. If a CMM imposes a time-limit for taking over possession, such stipulated time has to be mandatorily adhered to. If the same is not done, be it for whatever reason, the appropriate course of action is to re-approach the CMM concerned for extension of time. We are of the

2021 SCC OnLine Del 5209

clear view that a reasonable time limit should be imposed by the CMMs, in their wisdom and discretion. Although in the context of recovery of excise duties, the Hon'ble Supreme Court, in Government of India v Citedal Fine Pharmaceuticals, Madras, (1989) 3 SCC 483, had held that, in the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period.

What would be reasonable period would depend upon the facts of each case... No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case.

32. In judging what is to be a reasonable period for reopening an order of assessment under the Punjab General Sales Tax Act, 1948, in State of Punjab v Bhatinda District Cooperative Milk Producers Union Ltd., (2007) 11 SCC 363, the Hon'ble Supreme Court observed that, it is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors.'

33. The same principle would hold the field. We would, thus, hold and direct that the CMMs shall, when passing orders under Section 14 of the Act, mandate a reasonable time-limit for taking over possession of the secured asset in question. This, to our mind, appropriately secures the interests of all concerned parties. Needless to state, it will be open to the bank or financial institution to approach the CMM for extension of time, if need be."

7. From the above paragraphs, it stands established that

once a time limit is fixed and when the said period has

expired/lapsed, possession of property in question cannot be

taken under the same warrant. In the facts of the said case,

warrant was executed 10 months after it has elapsed. The

Court declared the action of the Advocate Commissioner in

taking possession of the property as illegal and, accordingly,

directed Status-Quo Ante to be restored. Thereafter, the

Respondent Bank was given liberty to file fresh application

before the C.M.M. seeking extension of time for taking

possession of the secured asset.

8. At this stage, it would be appropriate to refer to another

Division Bench judgment of this Court in Korada Rajababu

V. The State of Andhra Pradesh3. In the said case, the

Court was dealing with a warrant issued under Section 70(2)

of Cr.P.C. The main contention before the Division Bench in

a batch of Appeals was that, warrants are deemed to be dead

or lapsed, if they are not executed within the time specified

in the warrants or by the next date of adjournment. This

aspect, which was not considered by the learned Single

Judge, came to be challenged in W.As. It is to be noted that,

the Court was dealing with the warrants issued under

Section 70(2) of Cr.P.C. After referring to catena of judgment

Writ Appeal No. 703 & 748 of 2021 dated 26.04.2022

starting from Emperor V. Alloomiya Husan4, Dickinson V.

Brown5, Ranshan Singh and Ors. V. Emperor6, King

Emperor V. Binda Ahir7 and also the Judgment of Hon'ble

High Court in Raghuvansh Dewanchand Bhasin V. State

of Maharashtra8, the Division Bench of this Court held as

under:

"From bare reading of Guideline No.(d), the Court must issue direction for return of the Warrant whether executed or unexecuted on or before the specified date. When the Warrant of arrest was issued under Section 70(2) of Cr.P.C, it shall remain in force till it is executed by the authority executed or cancelled by the competent court or returned unexecuted by the police officer or authority to whom the Warrant was entrusted. But, in the instant case, the Warrants appears to have been open ended and no direction was issued for return of the Warrants on or before the specified date, but directed the police to execute Warrants to produce the accused on or before the particular date. Thus, the date was fixed for execution of Warrants, but not for return of the Warrants, if not executed. Therefore, the Warrants issued in C.C.No.350 of 2014 on the file of I Additional Judicial First Class Magistrate at Anakapalli, Visakhapatnam and C.C.No.263 of 2018 on the file of III Additional Metropolitan Magistrate, Visakhapatnam, are said to be open ended Warrants without any direction for return of the Warrants, if unexecuted on or before a specified date. Therefore, we have no hesitation to hold that, Warrants will never become dead or lapsed and they will remain in force till they are executed or returned by the police officers or the authority to whom they are entrusted or they are cancelled/withdrawn by the competent court. In the instant case on hand, the Warrants of Arrest were neither cancelled nor withdrawn by a competent court nor returned unexecuted by the police officer(s) or the authority to whom the Warrants were entrusted. In those circumstances, the Warrants are deemed to be alive and it can be executed at any time till they are cancelled or withdrawn or till they are returned on execution or returned unexecuted. Accordingly, the point is held against the petitioners and in favour of the respondents."

ILR 1904 28 Bom 129

(1791) 1 Peak. N.P. 307

4 Ind. Cas.31

112 Ind. Cas.223

AIR 2011 SC 3393

9. From the above findings, it is clear that the warrants

will never become dead or lapsed and they will remain in

force till they are returned by the police officers or the

authority to whom they are entrusted or they are cancelled /

withdrawn by the competent court. The court also held that,

if any date is fixed for execution of Warrants, but not for

return of the Warrants, if not executed, there is no bar in

returning the warrant even after lapse of sometime. Thus

categorized "warrants" as open ended Warrants, which do

not contain any direction for return of the Warrants, if

unexecuted on or before a specified date or a close ended

warrant, which specifies the date on which the warrant is

required to return after its execution or otherwise.

10. In the instant case, the Principal Assistant Sessions

Judge Court, Eluru, passed an Order, on 15.07.2015 in Crl.

M.P. No.19 of 2015 in S.R. No. 5237 of 2015, appointing

Sri.T. Nageswara Rao as an Advocate Commissioner, for

taking physical possession of the Petition Schedule Property,

make inventory of the articles under a panchanama and

handover possession of the schedule property to the

Petitioner Bank therein. The Advocate Commissioner was

directed to execute the warrant within one month from the

date of receipt of warrant, failing which, the authority to

execute the warrant stands cancelled. The Commissioner

was further directed to file his report forthwith after

execution of the warrant.

11. At this stage, it would be appropriate to refer to the

Order, dated 04.03.2022, passed in Crl. M.P. No.19 of 2015

in S.R. No. 5237 of 2015, by the Principal Assistant Sessions

Judge Court, Eluru, which reads as under:

"DOCKET ORDER DATED 04-03-2022

Memo filed by the Counsel for Petitioner stating that S.A. 144/2015 along with I.A. No. 811/2018 on the file of Debts Recovery Tribunal, Visakhapatnam, are dismissed for default on 19-06-2019. Memo recorded. Hence, Commissioner warrant re-entrusted to the same Advocate Commissioner for execution. For filing report call on 04-05-2022."

12. A reading of the above order would show that,

pursuant to orders passed in S.A. No. 144/2015 on the file

of the Debts Recovery Tribunal, Visakhapatnam, the

Commissioner's Warrant was re-entrusted to the same

Commissioner for its execution. The order is silent as to what

happened from the date of Order passed on 15.07.2015 till a

fresh warrant was re-entrusted on 04.03.2022. In-fact, the

Order, dated 15.07.2015 clearly indicate that warrant has to

be executed within one month from the date of receipt of

warrant, failing which, the authority to execute the warrant

stands cancelled and the Commissioner was further directed

to file his report forthwith after execution of the warrant,

meaning thereby that it lapses if not executed within one

month.

13. If the warrant is not executed/returned within the time

fixed by the Court, the Magistrate cannot automatically

postpone the same by giving another date. But, there has to

be an application either by the secured creditor or Advocate

Commissioner, seeking extension of time for execution of the

warrant. The said application should also contain an

explanation / reason as to why it could not be executed

within the time fixed by the Court. On being satisfied with

the reasons mentioned therein, the Chief Metropolitan

Magistrate/District Magistrate can extend the time for

executing the warrant or issue a fresh warrant.

14. In the instant case, we find no such application being

made and, in a routine manner, re-entrustment of warrant

was made seven years later, basing on a memo, which do not

disclose any reasons for re-entrustment of warrant, which

cannot be accepted. Even assuming for the sake of argument

that the earlier warrant issued in the year 2015 is silent as

to when it has to be returned, the Petitioners herein cannot

be put to such disadvantage position by not executing the

warrant for seven years.

15. We are not in agreement with the procedure followed by

the Court. As stated earlier, there has to be an application

seeking extension of time, giving reasons as to why it could

not be executed within the time fixed by the Court. Of-

course, this procedure, in our view, will not apply to cases

where no time limit is not fixed for execution of the warrant.

16. At this stage Sri. Hanumantha Rao Bachina, learned

Counsel appearing for the Respondents/Bank, would submit

that, since the Petitioners are lessees to the Schedule

Property and being third parties to the lis, have no locus

standi to file the Writ Petition. Countering the same, the

learned Counsel for the Petitioners would submit that, the

Hon'ble Supreme Court in Harshad Govardhan Sondagar

V. International Assets Reconstruction Company

Limited9 while dealing with the remedies available to the

lessee where he is threatened to be dispossessed by any

action taken by the secured creditor under Section 13 of the

SARFAESI Act, held as under:

"22. Sub- section (3) of Section 14 of the SARFAESI Act provides that no act of the Chief Metropolitan Magistrate or the District Magistrate or any officer authorised by the Chief Metropolitan Magistrate or District Magistrate done in pursuance of Section 14 shall be called in question in any court or before any authority. The SARFAESI Act, therefore, attaches finality to the decision of the Chief Metropolitan Magistrate or the District Magistrate and this decision cannot be challenged before any court or any authority. But this Court has repeatedly held that statutory provisions attaching finality to the decision of an authority excluding the power of any other authority or Court to examine such a decision will not be a bar for the High Court or this Court to exercise

(2014) 6 SCC 1

jurisdiction vested by the Constitution because a statutory provision cannot take away a power vested by the Constitution. To quote, the observations of this Court in Columbia Sportswear Company v. Director of Income Tax, Bangalore [(2012) 11 SCC 224]:

"17. Considering the settled position of law that the powers of this Court under Article 136 of the Constitution and the powers of the High Court under Articles 226 and 227 of the Constitution could not be affected by the provisions made in a statute by the Legislature making the decision of the tribunal final or conclusive, we hold that subsection (1) of Section 245S of the Act, insofar as, it makes the advance ruling of the Authority binding on the applicant, in respect of the transaction and on the Commissioner and income-tax authorities subordinate to him, does not bar the jurisdiction of this Court under Article 136 of the Constitution or the jurisdiction of the High Court under Articles 226 and 227 of the Constitution to entertain a challenge to the advance ruling of the Authority."

In our view, therefore, the decision of the Chief Metropolitan Magistrate or the District Magistrate can be challenged before the High Court under Articles 226 and 227 of the Constitution by any aggrieved party and if such a challenge is made, the High Court can examine the decision of the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, in accordance with the settled principles of law.

17. For the aforesaid reasons, as no report is filed till date

and since S.A. No. 144 of 2015 was dismissed for default, in

respect of which an application for restoration is still

pending, the Respondents are at liberty to make a fresh

application under Section 14 of the Act, and then proceed in

accordance with law after restoring possession of the

property in dispute to the Petitioner, if required.

18. With the above direction, the Writ Petition is disposed

of. No order as to costs.

19. As a sequel, interlocutory applications, if any, pending

shall stand closed.

_________________________ C. PRAVEEN KUMAR, J