Bombay High Court
Housing Development Finance ... vs Sh. Sanjay S/O. Nandlal Agrawal ... on 5 February, 2021
Bench: Pushpa V. Ganediwala
3WP 936.2018.odt 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO. 936 OF 2018
(Housing Development Finance Corporation Ltd. (HDFC Ltd.), Nagpur Vs. Sh. Sanjay s/o
Nandlal Agrawal & Anr.)
_________________________________________________________
Office Notes, Office Memoranda of Coram,
appearances, Court's orders of directions Court's or Judge's orders.
and Registrar's Orders.
Mr. A.T. Purohit, Advocate for the petitioner.
Mr. R.H. Agrawal, Advocate for the respondents.
.....
CORAM : DIPANKAR DATTA, C.J. &
PUSHPA V. GANEDIWALA, J.
FEBRUARY 05, 2021.
PC :-
The petitioner before us is a secured
creditor within the meaning of the Securitisation and
Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (hereafter "the Act",
for short). It challenges an order dated November
29, 2017 passed by the Debts Recovery Tribunal,
Nagpur (hereafter "the DRT", for short) in
Securitisation Application No. 77/2017. By the
impugned order, the DRT granted interim stay on
the prayer of the borrowers, the respondents herein,
on condition that they deposit not less than 30% of
the dues mentioned in the demand notice issued
under Section 13(2) of the Act by December 06,
2017; in default thereof, the interim order of stay
would stand vacated.
2. The impugned order is assailed by the
secured creditor primarily on the ground that the
order of the District Magistrate, Amravati, passed
under Section 14 of the Act could not have been
challenged in an application under Section 17 of the
Act in view of the decision of the Supreme Court
reported in (2014) 6 SCC 1 (Harshad
Govardhan Sondagar Vs. International Assets
Reconstruction Company Limited And
Others). It is also challenged on the ground that the
DRT mechanically passed the order of stay without
considering that none of the factors on the fulfilment
whereof an interim stay could be granted existed in
the present case.
3. We record the fairness of Mr. Purohit,
learned Advocate for the secured creditor in placing
before us a decision of the Supreme Court earlier in
point of time than Harshad Govardhan
Sondagar (supra), reported in (2011) 2 SCC 782
(Kanaiyalal Lalchand Sachdev And Others Vs.
State of Maharashtra And Others) where the
Supreme Court took a view that an action under
Section 14 of the Act constitutes an action taken after
the stage contemplated by Section 13(4) is reached
and, therefore, the same would fall within the ambit
of Section 17(1) of the Act.
4. We also place on record the submission
of Mr. Agrawal, learned Advocate for the
respondents, that the Supreme Court in its decision
reported in AIR 2010 SC 3413 (United Bank of
India Vs. Satyawati Tondon and Ors.) also took
the view that after an action is taken under Section
14 of the Act, the borrower could avail his remedy by
filing an application under Section 17(1) of the Act.
5. On reading the decisions of the Supreme
Court referred to above, there is seemingly a conflict
in views. While Harshad Govardhan Sondagar
(supra) says that an order of the District Magistrate
under Section 14 of the Act cannot be challenged in
an application under Section 17 of the Act in view of
the bar created by sub-section (3) of Section 14
thereof, the decisions in Satyawati Tondon and
Kanaiyalal Sachdev (supra) are authorities for the
proposition that once an order is passed under
Section 14 of the Act, it constitutes a measure
contemplated within the meaning of Section 13(4) of
the Act giving right to the borrower to invoke the
remedy provided by Section 17 of the Act. However,
the decisions can be reconciled and the seeming
conflict done away with.
6. A plain and literal reading of sub-section
(3) of Section 14 of the Act, i.e., an order passed
under sub-section (1) is also included in the verb
"act", produces an absurd result and looking to the
object that the Act seeks to achieve, a contextual and
purposive rather than a strict literal approach to
interpretation is necessary and ought to be adopted
while reading Section 14. After all, it is the context in
which the words are used that is of significance and
relevance for deciding an issue. One cannot lose sight
of the law authorising the Chief Metropolitan
Magistrate/District Magistrate to make a choice of
the subordinate officer to whom the power of taking
possession may be delegated, as well as the choice of
the Chief Metropolitan Magistrate/District
Magistrate or the officer authorised to take such
"steps" or to employ such "force" as may be
considered necessary on facts and in the
circumstances for taking possession. The phrase "in
pursuance of" in sub-section (3) assumes
significance here. The dictionary meaning of the
word "pursuance" which follows from the verb
"pursue", is carrying out or following out' (see
Chambers Dictionary). What it suggests is that any
act aimed at taking possession either in terms of
Section 14(1-A) or Section 14(2), in pursuance of an
order passed under Section 14(1), would not be open
to challenge except before the High Court under
Article 226 or before the Supreme Court under
Article 32. The Chief Metropolitan
Magistrate/District Magistrate has been given
absolute discretion to choose his subordinate officer,
who would execute the order and take possession of
the secured asset. In terms of sub-section (2), the
Chief Metropolitan Magistrate/District Magistrate is
also authorised to take or may cause such steps to be
taken and use or cause to be used such force as may,
in his opinion, be considered necessary. Take an
instance, where even after an order under Section
14(1) is passed the resistance put up by the borrower
turns the situation violent and use of force to
maintain orderliness and to take possession of the
secured asset leads to some casualty. Can the
step/force that is taken or used by the officer
authorised by the Chief Metropolitan
Magistrate/District Magistrate be challenged before
any ordinary court/tribunal? We are of the
considered opinion that sub-section (3) of Section 14
should be read as intending to provide protection to
persons acting in good faith to give effect to an order
passed under sub-section (1), without their
supposedly reasonable action being amenable to
challenge before any court/tribunal, except the
Supreme Court/High Court, and can never be read as
foreclosing a challenge to such order, i.e., an order
under Section 14(1) on merits, before the specified
forum under Section 17. The Chief Metropolitan
Magistrate/District Magistrate, upon receipt of a
request of a secured creditor for assistance is
required to apply his mind and ascertain whether all
the factors have been satisfied by the secured
creditor for taking over possession of the secured
asset. If the order of the Chief Metropolitan
Magistrate/District Magistrate is impeached on the
ground that he has either not applied his mind or
that the pre-conditions for grant of assistance are not
fulfilled, in a fit and proper case, we see no reason
why the borrower may not have the right to approach
the Tribunal under Section 17 of the Act questioning
such order.
7. It is well known that judgments of courts
are not to be read as statutes. Since the Chief
Metropolitan Magistrate/District Magistrate under
Section 14 upon being satisfied with the claim of the
secured creditor may take possession of the secured
asset and hand over the same with documents to the
secured creditor, such act becomes a part of the
measures that a secured creditor may take recourse
to for the purpose of enforcing its security interest. If
challenge is thrown, upon possession of the secured
asset being taken, to the entire acts of the secured
creditor commencing with issuance of notice under
Section 13(2) upon declaration of an account as non-
performing asset, there is no reason as to why an
approach to the Debts Recovery Tribunal under
Section 17(1) would be barred. If reading of the
decision in Harshad Govardhan Sondagar
(supra) in the manner Mr. Purohit wishes us to read
is accepted, there can be no challenge to an action of
a secured creditor seeking to enforce its security
interest by taking recourse to Section 14. The
cumulative effect of a combined reading of the
relevant provisions of the Act in the light of the
aforesaid three decisions of the Supreme Court leads
us to the conclusion that although an act in
pursuance of an order under sub-section (1) of
Section 14 of the Act passed by the District
Magistrate may not be challenged before the
Tribunal under Section 17, but if a borrower is
dispossessed pursuant to an order passed by the
District Magistrate under Section 14(1) of the Act,
the same would nonetheless result in a measure that
is comprehended within the meaning of Section
13(4) of the Act and, therefore, challenge to such an
order under Section 14(1) of the Act would be
maintainable in proceeding under Section 17 on the
existence of circumstances as indicated above in the
preceding paragraph.
8. In such view of the matter, once a
measure is taken for taking possession of the
secured asset in terms of the provisions of the Act,
depending upon the facts and circumstances the
borrower may approach the Tribunal and in a fit and
proper case, the Tribunal may entertain the
application and grant such relief, interim or final, as
is warranted on facts and circumstances of the case.
9. In the application that was moved before
the DRT under Section 17(1) of the Act, no doubt the
order of the District Magistrate made in exercise of
power under Section 14 was under challenge; but,
apart from a prayer to set it aside, there were other
prayers challenging the action of the secured
creditor. In such circumstances, the proceedings
before the DRT cannot be held to be not
maintainable on the primary ground raised by the
petitioning creditor.
10. Insofar as the other ground of challenge
is concerned, there appears to be substance in the
contention of Mr. Purohit that the order is cryptic is
evident on its face. However, having regard to the
passage of time, we consider it appropriate to give
direction to the respondents to clear their debt to the
extent of their debt as mentioned in the notice under
Section 13(2) of the Act. The respondents have
enjoyed the benefit of the interim stay granted by the
DRT for far too long. They have not paid the
petitioning creditor 2/3rd of the amount claimed in
the notice issued under Section 13(2) of the Act. Four
years from the date of the DRT's order and six years
from the date of the notice under Section 13(2) is
sufficient time for the respondents to pay up.
11. We, accordingly, direct that the
respondents shall be entitled to the benefit of the
interim stay granted by the DRT unconditionally for
a period of a fortnight from date. In the event, the
respondents pay Rs.2,65,000/- (Rs. Two lakh sixty
five thousand only) to the petitioning creditor within
a fortnight from date, obviously without prejudice to
the rights and contentions of the parties in the
application pending before the DRT, the order
granting interim stay shall continue till the end of
June, 2021. In the event, the respondents fail to pay
Rs.2,65,000/- (Rs. Two lakh sixty five thousand) to
the petitioner within a fortnight from date, the order
passed by the Tribunal shall stand vacated, and it
shall be open to the petitioner to seek assistance for
implementing the order passed by the District
Magistrate under Section 14 of the Act.
12. Before June 30, 2021, the DRT shall
make earnest endeavour to dispose of the application
under Section 17 of the Act finally.
13. If the DRT is presently not functional for
any reason, the Tribunal in-charge of the matters of
the DRT shall comply with this order.
14. All other contentions are left open for
the parties to urge before the DRT.
15. With the aforesaid directions, this writ
petition stands disposed of. There shall be no order
for costs.
(PUSHPA V. GANEDIWALA, J.) (CHIEF JUSTICE)
Sumit
