Janta Sahakari Bank Ltd., ... vs The Collector, Nagpur District, ...
2016 Latest Caselaw 6728 Bom

     WP 1474.16 (J).odt                            1

            IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                               
                                   NAGPUR BENCH : NAGPUR
                              WRIT PETITION NO.1474 OF 2016




                                                       
     Janta Sahakari Bank Limited, Amravati,
     R.N. ATI/BNK-175, Head Office,
     Panchsheel Cinema Road, Jaistambh




                                                      
     Chowk, Amravati, through its
     Authorised Officer, Shri Suresh
     Gopalrao Shrirao, Aged 56 years,
     Occupation-Service, R/o. Above address.            ..             Petitioner 




                                                  
                                    .. Versus ..

     1]     The Collector,
                             
            Nagpur District, Nagpur.
                            
     2]     Additional Collector,
            Nagpur District, Nagpur.

     3]     Shri Vilas Chandrabhanji Borkar,
            aged Major, Occ: Service.
      


     4]     Sau. Vandana Vilas Borkar,
   



            aged Major, Occ: Service.

            Both are R/o. Near Malviya
            Garden, Anand Nagar, At post Morshi,





            Tq. Morshi, District : Amravati.

     5]     Shri Rajendra Anandrao Gharad,
            aged Major, Occ: not known,
            Samarth Colony, At Post Morshi,
            Tq. Morshi, Dist: Amravati.





     6]     Shri Dilip Punamchand Agrawal,
            aged Major, Occ: not known,
            Prashant Colony, At Post Morshi,
            Tq. Morshi, Dist: Amravati.                 ..             Respondents

                             ..........
     Shri S.S. Shingane, Advocate for the petitioner,
     Shri A.M. Joshi, AGP for respondent nos.1 and 2,
     None appears for respondent nos.3 to 6 though served.
                             ..........



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      WP 1474.16 (J).odt                               2
                                   CORAM :  SMT. VASANTI  A  NAIK  AND
                                            MRS. SWAPNA JOSHI, JJ.

DATED : NOVEMBER 28, 2016.

ORAL JUDGMENT : (Per : MRS. SWAPNA JOSHI, J.)

Rule. Rule made returnable forthwith. The petition is heard

finally at the stage of admission with the consent of the learned counsel for the

parties.

The petitioner-Bank has impugned the order, dated 30.9.2015

passed by the respondent no.2-Additional Collector in Case No.94/2014 under

Section 14 of the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (hereinafter referred to as the

'Securitisation Act' for the purpose of brevity) thereby closing the case. By this

writ petition, the respondent no.1-Collector had declared that the property of

which the possession is to be taken is an agricultural land and rejected the

claim of the petitioner-Bank to secure the possession of the land mortgaged

with the petitioner-Bank and closed the case in view of the provisions of

Section 31 (1) of the Securitisation Act.

The brief facts of the petition are as under :

The respondent nos.3 and 4 are the members and share holders of

the petitioner-bank. The respondent nos.3 and 4 wanted to purchase Flat

No.202 at apartment by name "Jayanti Mansion-VII" situated at Kh.No.12/4,

mouza Besa within the limits of Gram Panchayat Beltarodi which was owned

by Abhijit Realtors. Therefore, the respondent nos.3 and 4 approached the

petitioner-bank and requested to grant housing loan of Rs.12,00,000/- from

the petitioner-bank for purchasing the above said flat. On 17.7.2009, the

petitioner-bank and the respondent nos.3 and 4 entered into agreement of

loan and as per the said agreement they were required to repay the loan

within five years in monthly installment at the rate of 13% per annum. The

respondent nos.3 and 4 have defaulted in making regular payment of the loan

amount obtained by them. The amount outstanding on the said respondents-

borrowers had reached Rs.12,86,915/-. On 20.3.2014, the petitioner-bank

issued the notice under Section 13 (2) of the Securitisation Act and called

upon the respondent nos.3 and 4 to pay the outstanding amount within a

period of 60 days, otherwise bank would take appropriate measures to recover

the possession of the property. On 21.5.2014 the petitioner issued the notice

of constructive possession under Rule 8(1) of the said Rules and the same is

published in the newspaper "Dainik Punyanagari", as the respondent nos.3 and

4 did not pay the entire loan amount as per the notice dated 20.3.2014.

According to the petitioner, the loan was given to the borrower after obtaining

the valuation report, dated 19.6.2009 from the Government approved valuer.

As per the report, the land on which the apartment was constructed was non-

agricultural land and assessed value was Rs.16,00,000/-. The respondent

nos.3 and 4 did not pay the loan amount, therefore, on 27.8.2014, the

petitioner filed application under Section 14 of the Securitisation Act thereby

praying the respondent no.1 to recover the possession of mortgage property

from the respondent nos.3 and 4 and hand over the same to the petitioner.

The same was registered as Case No.94/2014. On 30.9.2015, the respondent

no.2-Additional Collector passed the impugned order. The respondent no.2-

Additional Collector filed the case only on the ground that the land on which

the flat is situated comes under the exception contemplated under Section 31

sub-clause (i) that the agricultural land cannot be recovered. It was further

stated that the petitioner has not filed any documentary proof to show that the

land is non-agricultural. Thus, being aggrieved by the impugned order dated

30.9.2015 passed by the respondent no.2-Additional Collector, the petitioner-

bank has filed the present petition.

Shri Shingane, the learned counsel for the petitioner vehemently

argued that the respondent no.2-Additional Collector had no jurisdiction to

decide whether the property was agricultural land or not. He submitted that

the Additional District Magistrate has no powers to adjudicate upon the

question in regard to the nature of the property. According to the learned

counsel for the petitioner, the respondents had not raised any objection at any

point of time that the property of which the possession was to be taken is an

agricultural land. According to the learned counsel for the petitioner, the

respondent no.2- Additional Collector had no jurisdiction to go into the merits

of the case and pass an order under Section 14 of the Securitisation Act

declaring that the property of which the possession is to be taken is an

agricultural land. The learned counsel for the petitioner has placed reliance on

the judgment reported in 2010 (4) Bom.C.R. 490 in the case of Union Bank of

India .vs. State of Maharashtra and others.

Shri Joshi, the learned Assistant Government Pleader appearing on

behalf of the respondent nos.1 and 2, did not dispute that the powers of the

District Magistrate are limited and he had no jurisdiction to decide, whether

the property was agricultural property or not. He stated that if the matter is

remanded to the District Magistrate, he may pass the appropriate order.

After hearing both sides and perusal of the documents placed on

record, it is necessary to go through the provisions of Section 14 of the

Securitisation Act:-

"14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset:

(1) Where the possession of any secured asset 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 this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing,the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other

documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him :

                       (a)          take   possession   of   such   asset   and 
             documents relating thereto; and 
   



                        (b)                forward such asset   and documents to the 
             secured creditor,

             1.(a)          Provided  that  any  application by the secured  creditor 





             shall   be   accompanied     by   an   affidavit   duly   affirmed   by   the 

authorised 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 of 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 is, 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 has been complied with:

Provided further that on receipt of the affidavit from the Authorised officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets:

Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act."

(b) after sub-section (1), the following sub-section shall be inserted, namely:

"(1A) The District magistrate or the Chief Metropolitan magistrate may authorise any officer subordinate to him, -

                      (i)         to   take   possession   of   such     assets   and 
                      documents relating thereto; and 

                      (ii)       to   forward   such   assets   and   documents     to   the 
                      secured creditor."

             (c)             in   sub-section   (3),   after   the   words   "the   District 




             Magistrate",   the   words   "   any     officer   authorised   by   the   Chief 

Metropolitan magistrate or District Magistrate " shall be inserted. "

The provisions quoted herein-above clearly indicate that the

District Magistrate has to simply verify that the contents in the affidavit

tendered by the petitioner-Bank, are in accordance with the provisions of

Section 14(1)(a) of the Act. A bare perusal of the order passed by the

respondent no.2-Additional Collector would reveal that the observation of the

Additional District Magistrate that the property of which possession is sought

to be taken appears to be 'agricultural land' and no evidence is filed on record

that the property is non-agricultural land and that as per the provisions of

Sec.31 sub-clause (1) of Securitisation Act does not apply to the agricultural

land, appears to be without jurisdiction. Significantly, neither the respondent

nos.3 to 6 nor the objector/tenant raised such an objection. The District

Magistrate has no power under section 14 of the Act to go into the merits of

the case. In Kotak Mahindra Bank Vs District Magistrate (supra) the Division

Bench of Gujarat High Court, relying upon the judgment in the case of IDBI

Bank Limited through Authorised signatory vs. District Magistrate and another;

reported in 2011 (2) GLH 12, in paragraph no.6 observed as under :

"6. The Authority who is called upon to act under Section 14 of the Securitisation Act can only assist, nay, is bound to assist the secured creditor in taking possession of the secured asset. As the Chief Metropolitan Magistrate and District Magistrate under section 14 is not empowered to decide the question of legality and propriety of any of the actions taken by the secured creditor under Section 13 (4), which may be assailed under section 17 of the Act by the aggrieved person, under sub-section (3) of Section 14 of the Securitisation Act, the act of the Chief Metropolitan Magistrate or District Magistrate done in pursuance of said Section cannot be called in question in any court or before

any authority. It is evident from the provisions of law that the District Magistrate while bound to assist the secured

creditor in taking possession of the secured assets and to take the possession of the documents to be secured creditor,

he is not empowered to decide the question of genuinity or propriety of such documents, including the document signed or agreed between the borrower and the secured creditor. "

It is further held that:

"If such measures taken u/s 14 which amount to measures taken u/s 13 (4) is not in accordance with Securitisation Act or the Rules framed thereunder, including the objection, if any, raised that the asset is not a secured asset to be taken

under Section 13 (4), the aggrieved person has a remedy u/s 17 before the Debts Recovery Tribunal to show that the

measures taken are against the Act. Such a determination is to be made by the D.R.T. including the question whether the assets is a secured asset or not and the Chief Metropolitan

Magistrate or the District Magistrate has not been empowered to adjudicate such a dispute, but is directed only to secure asset in taking possession of the secured assets".

It is evident from the above discussion that the Additional District

Magistrate has no powers to adjudicate the dispute, but has to verify whether

the declarations are made in the affidavit tendered by the petitioner as per

Section 14(1)(a) and then pass an order for taking actual possession of the

secured assets.

In 2010 (4) Bom.C.R. 490 (supra), in paragraph 23, the Division

Bench of this Court, has observed thus :-

"23. Similarly, in the case of Bank of India (AIR 2007 Guj 201) (cited supra), the learned Judge in paragraph 8 has observed thus:

8. Hence, the authority who is called upon to act under Section 14 of the Securitisation Act can only assist, nay, is bound to assist the secured creditor in taking possession of the secured asset. Any dispute between the parties regarding the secured asset raised before the authority cannot be gone into by authority, the authority has to relegate aggrieved person to seek statutory remedy under the Securitisation Act

after taking possession and handing over to the secured creditor. The authority cannot be permitted to read anything

beyond this is Section 14 of the Securitisation Act.

It is further held that:

It is evident that Section 14 of the SARFAESI Act is an enabling section which empowers Magistrate only to assist secured creditor in taking possession of the secured assets and,

therefore, the power vested in the District Magistrate is limited and specific. Plain reading of Section 14 of the SARFAESI Act demonstrates that it does not clothe the District magistrate with power to undertake any adjudication in respect of any dispute between the parties regarding the secured assets. Hence, any

dispute raised regarding the secured assets of any kind, cannot be gone into by the District Magistrate while exercising power

under Section 14 and the aggrieved person is required to approach the competent forum for redressal of his grievance in respect of the secured assets."

In that case, this Court held that the District Magistrate cannot

adjudicate any dispute between the parties regarding the secured assets. It is

held that the District Magistrate cannot decide about the nature of the secured

asset and hence he cannot hold that a particular secured asset is an

agricultural land.

Likewise, in the case in hand, the learned District Magistrate has

exceeded his limits and has passed the impugned order without jurisdiction

and contrary to the provisions of Section 14.

In the case of Standard Chartered Bank vs. Noble Kumar and

others, reported in (2013) 9 SCC 620, the Hon'ble Apex Court has observed

in paragraph 25, as under :

"25. The satisfaction of the Magistrate contemplated 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 but not the legal niceties of the transaction. It is only after recording of his satisfaction the Magistrate can pass appropriate orders

regarding taking of possession of the secured asset."

Thus, the respondent no.2-Additional District Magistrate has

erred in passing the impugned order in as much as, he was only required to

examine whether assertions were made in the affidavit by the petitioner-Bank

as per Section 14(1)(a) and only after recording of the satisfaction, he should

have passed appropriate order regarding taking of possession of the secured

assets. The Additional District Magistrate has thus passed an illegal order,

without jurisdiction and, therefore, it is liable to be quashed. The respondent

no.1 erred in observing that the property of which possession was to be taken

is an agricultural land when neither the respondent no.3 to 6 nor the

objector/tenant raised the objection about the same and when he had no

jurisdiction to embark upon the said question. Thus, the order passed by the

Additional District Magistrate is unsustainable in law, being illegal and

without jurisdiction. Hence the following order:

O R D E R

(i) Writ Petition is allowed.

(ii) The impugned order dated 30.9.2015 passed by the respondent no.2- Additional Collector, Nagpur is hereby quashed and set aside.

(iii) The matter is remanded to the District Magistrate, Nagpur for fresh

decision by affording an opportunity of being heard, to the parties, in accordance with law, within a period of one month from the date of receipt of copy of this order.

Rule is made absolute in the aforesaid terms, with no order as to costs.

                                      JUDGE                                           JUDGE

     Gulande, PA