M.R. Gawai Enterprises vs Vidarbha Urban Co-Operative Bank ...
2004 Latest Caselaw 669 Bom

JUDGMENT

D.D. Sinha, J.

1. Heard Mr. Mardikar, learned counsel for the petitioner, Mr. Thakkar, learned counsel for respondent No. 1 and Mr. Kaptan, learned counsel for respondent No. 2. Rule made returnable forthwith by consent of the parties.

2. The short question, which falls for our consideration in the present case, is whether the action taken under Sub-section (3) of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, by respondent No. 1 is valid in view of the Law laid down by the Apex Court in Mardia Chemicals Limited and Ors. v. Union of India and Ors. 2004 (2) Mh.LJ. 1090. Mr. Mardikar, learned counsel for petitioner, states that in the instant case notice under Sub-section (2) of Section 13 of the said Act is issued to the Petitioner on 9th September, 2003. The petitioner filed Objection to the said notice on 7th November, 2003. However, the said objection has neither been considered by respondent No. 1, nor there is any reasoned order passed by respondent No. 1 for rejecting the objection, nor the petitioner was communicated the decision of Respondent No. 1 on the objection. It is contended that in absence thereof, the action taken by respondent No. 1 under Sub-section (4) of Section 13 of the said Act is not sustainable in view of the aforementioned Judgment of the Apex Court and, therefore, the said action should be quashed and set aside.

3. Mr. Thakkar, learned counsel for Respondent No. 1, on the other hand, does not dispute the fact that there is no reasoned order passed by Respondent No. 1 rejecting the objection, dated 7th November, 2003, of the Petitioner. It is contended that though action under Sub-section (4) of Section 13 was proposed to be taken by Respondent No. 1, however, since the petitioner approached this Court, and this Court vide Order dated 21st November, 2003, prevented the Respondent No. 1 from taking actual possession of the property pursuant to the notice, dated 9th September, 2003 no action could be taken against the petitioner under Sub-section (4) of Section 13 of the Act. Mr. Thakkar, learned counsel for Respondent No. 1, states that the respondent No. 1 now shall follow the procedure laid down by the Apex Court in the above referred judgment, namely the Respondent No. 1 shall reconsider the Objection, dated 7th November, 2003, submitted by petitioner to the Show-cause-Notice, dated 9th September, 2003, and if Respondent No. 1, for reasons, reject the same, that will be done by passing a speaking order and the same would also be communicated to the petitioner, who will be entitled to take appropriate steps thereafter, according to law.

4. Considered the contentions canvassed by respective counsel. Perused the judgment of the Apex Court. The controversy in issue is concluded by the judgment of the Apex Court in the above referred decision and the relevant observations of the Apex Court in Paragraph 80 of the judgment read thus :--

"80. Under the Act in consideration, we find that before taking action a notice of 60 days is required to be given and after the measures under Section 13(4) of the Act have been taken, a mechanism has been provided under Section 17 of the Act to approach the Debt Recovery Tribunal. The above noted provisions are for the purposes of giving some reasonable protection to the borrower. Viewing the matter in the above perspective, we find what emerges from different provisions of the Act, is as follows :--

1. Under Sub-section (2) of Section 13 it is incumbent upon the secured creditor to serve 60 days notice before proceeding to take any of the measures as provided under Sub-section (4) of Section 13 of the Act. After service of notice, if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower. In connection with this conclusion we have already held a discussion in the earlier part of the judgment. The reasons so communicated shall only be for the purposes of the information/knowledge of the borrower without giving rise to any right to approach the Debt Recovery Tribunal under Section 17 of the Act, at that stage."

5. In view of the above referred observations of the Apex Court, it is evident that after service of notice under Section 13(2), if the borrower raises any objection or places facts for consideration of the secured creditor, such as respondent No. 1, such objection/reply to the notice must be considered with due application of mind and the reasons for not accepting the objection, howsoever brief they may be, must be communicated to the borrower. In the instant case, admittedly, the petitioner's objection to the notice, dated 9th September, 2003, was neither considered by respondent No. 1, nor there is any reasoned order passed by respondent No. 1 for rejecting the said objection. Petitioner was also not communicated the "decision on the objection by respondent No. 1. It appears that since the petitioner approached this Court by filing the present writ petition under Article 226 of the Constitution of India and this Court, vide Order, dated 21st November, 2003, prevented Respondent No. 1 from taking actual possession of the property pursuant to the notice, dated 9th September, 2003, no action under Sub-section (4) of Section 13 of the Act could be taken against petitioner.

6. In view of the law laid down by the Apex Court, respondent No. 1 is now directed to reconsider the objection, dated 7th November, 2003, submitted by the petitioner to the Show-cause-Notice, dated 9th September, 2003, afresh and if the respondent No. 1 rejects the same, that should be by a reasoned order and the grounds for rejection be communicated to the petitioner.

With these observations, Rule is made absolute in above terms. No order as to costs.