Bombay High Court

Saraswat Co-Operative Bank Ltd vs Purnanandu Shekharmal Jain Deceased ... on 8 August, 2024

Author: Revati Mohite Dere

Bench: Revati Mohite Dere, Prithviraj K. Chavan

2024:BHC-AS:32722-DB
12-1983-2023-WP-Jud.=.doc

Digitally
signed by Uday S. Jagtap
UDAY
UDAY SHIVAJI
SHIVAJI JAGTAP
JAGTAP Date:
2024.08.16 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
11:19:54
+0530
CRIMINAL APPELLATE JURISDICTION

CRIMINAL WRIT PETITION NO. 1983 OF 2023

Saraswat Co-operative Bank Ltd. .. Petitioner

Vs.

1. Purnanadu Shekharmal Jain, deceased
Through LRs. (a) Anupama P. Jain
(b) Vaibhav Purnandu Jain
(c) Ms. Aakansha Sawa

2. M/s. Ankur Drugs & Pharma Ltd.

3. The State of Maharashtra

4. The Competent Authority under
MPID Act, 1999 AND
The Deputy Collector, Malad, Mumbai .. Respondents

....
Mr. Prathamesh Kamat i/b Mr. Tushar Pabale & Mr. Kayush
Zaiwala for the petitioner
Mrs. P.P. Shinde, APP for the respondent - State
Ms. Apurva Thipsay for the respondent no.4
Mr. Anil Bhagure, Asst. O.L. present
Mr. Ashwin Pimple i/b SSB Legal & Advisory for the respondent
no.1
Mr. Rahul Deshmukh, PI, EOW Unit - 08(MPID), Mumbai
present
....

CORAM : REVATI MOHITE DERE &
PRITHVIRAJ K. CHAVAN, J.J.

DATE : 8th AUGUST, 2024.

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ORAL JUDGMENT :- (Per Revati Mohite Dere, J.)

1. At the outset, learned Counsel for the petitioner seeks

leave to amend the prayer clause. Leave granted. Amendment

to be carried out forthwith during the course of the day.

2. Heard learned Counsel for the parties.

3. Rule. Rule is made returnable forthwith, with the consent

of the parties and the petition is taken up for final disposal.

4. By this petition, the petitioner seeks the following

substantive relief :-

(a) This Hon'ble Court may be pleased to issue Writ of Certiorari or Writ in the nature of Certiorari or any other appropriate thereby quashing and setting aside the order dated 10.11.2022 passed by the Hon'ble MPID Court in M.A. No.1350 of 2018 i.e. Exhibit-1-I in MPID Case No. 22 of 2015 [C.R. No. 166 of 2013] and the Attachment Order MPI-2014/Pra.Kra.186/Pole 11 Dt. 01.04.2016 passed by the Respondent No.1 and further allow the Objection dated 23.10.2018 of the petitioner."

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5. Mr. Kamat, learned Counsel for the petitioner submits that

the MPID Court had no jurisdiction to attach the properties in

question, which were the subject matter under the Securitisation

and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (for short, SARFAESI Act). He

further submits that since the properties in question were

mortgaged prior in point of time to the petitioner i.e. prior to

the attachment of the properties by the learned Special Judge,

Mumbai (under the MPID Act), i.e. in March 2011, the

SARFAESI Act would override the provisions of the Maharashtra

Protection of Interest of Depositors (in Financial Establishments)

Act, 1999 (for short, "MPID Act").

6. Learned Counsel for the petitioner relied on the judgment

of this Court in the case of (i) Invent Assets Securitisation and

Reconstruction Pvt. Ltd. Vs. The State of Maharashtra (EOW) ,

dated 29th August 2023 passed in Criminal Writ Petition (L) No.

22056 of 2023 and; (ii) The State of Maharashtra Vs. Aryarup

Tourism Club Resorts Pvt. Ltd. (In Liquidation) dated 25th

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August, 2022 passed in Appeal No. 396 of 2017, in support of

his submission that SARFAESI Act would prevail over the MPID

Act, where the property in question was mortgaged prior to the

invocation of the MPID Act i.e. prior to the attachment under

the MPID Act.

7. Perused the papers. A few dates, which are relevant for

deciding the petition are as under :-

(a) The respondent no.1 had purchased suit property

from M/s. Parekh Brother-n-Sons by an Agreement for

Sale on 15.10.1999.

(b) The respondent no.1 thereafter purchased another

property from Mr. Nafisa M. Rajkotwala by an Agreement

for Sale on 16.12.2004.

(c) On 21.03.2011, the petitioner was granted overdraft

facility against both the properties of Rs.1.2 crore.

(d) On 30.03.2011, the respondent no.1 furnished

documents in respect of both the properties, for securing a

loan of Rs.1.2 crore.

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(e) On 30.03.2011, the respondent no.1 mortgaged the

suit properties in favour of the petitioner to secure the

loan amount and deposited Title Deeds of the suit

property with the petitioner.

(f) On 06.03.2012, the petitioner no.1 registered the

mortgage with the Central Registry (CERSAI Registration)

under Section 26-E of the provisions of the SARFAESI Act.

(g) On 30.09.2014 as there were multiple defaults in

making the payment, the account was declared as a Non

Performing Asset (NPA).

(h) Pursuant thereto, a Notice dated 20.07.2015 was

issued by the petitioner under Section 13(2) of the

SARFAESI Act and recovery action was initiated against

the respondent no.1. The respondent no.1 admittedly did

not file a reply to the said notice.

(i) On 01.04.2016, the respondent no.3 issued a

Notification under Section 4(1) r/w Sections 5, 8 and 12 of

the MPID Act and as such, attached the secured assets.

(j) On 01.03.2017, the petitioner preferred an

application under Section 14 of the SARFAESI Act, for

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taking physical possession of the property in question,

pursuant to which, the learned Chief Metropolitan

Magistrate, Mumbai passed an order under Section 14.

(k) Pursuant thereto, the petitioner took physical

possession of the properties on 09.05.2017 and published

a "Possession Notice" as mandated under the provisions of

the Security Interest Rules 2002.

(l) Thereafter, the petitioner published a Notice of Sale

of the properties on 01.07.2017.

(m) On 10.08.2017, the Deputy Collector and the

Competent Authority issued a letter under the MPID Act

and attached the suit properties, which were mortgaged by

the respondent no.1 with the petitioner. It is pertinent to

note that when a letter was issued by the Deputy Collector

and Competent Authority, the petitioner had already taken

action under Section 14 of the SARFAESI Act and as such,

the property no longer vested with the respondent no.1.

8. Thereafter, the petitioner filed a Miscellaneous

Application before the MPID Court on 20.06.2014 and sought

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lifting of the attachment on the said two properties. The said

application was rejected by the Learned Special Judge, MPID

Court on 07.01.2017. The said Court while rejecting the

petitioner's application observed that if the properties i.e. subject

matter of the application are liquidated, then the sale proceeds

be kept in FDR.

9. By this present petition, the question that arise for

consideration is, whether in the facts, the two properties which

were mortgaged prior in point of time i.e. in 2011, could be

attached under the MPID Act and whether the provisions of

SARFAESI Act supersede the provisions of the MPID Act. Both

the said questions have been answered by a Division Bench of

this Court in the aforesaid judgments i.e. Invent Assets

Securitisation and Reconstruction Pvt. Ltd. (supra) and Aryarup

Tourism Club Resorts Pvt. Ltd. (supra) . Admittedly, this Court

in Invent Assets Securitisation and Reconstruction Pvt. Ltd.

(supra), in para 8 and 9, has observed as under :-

8. We have heard the learned Counsel for the parties and we have also perused the papers and proceedings in

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the above Writ Petition. It is not in dispute that the attached property mentioned above was originally mortgaged with Central Bank of India and now with the Petitioner [by virtue of a deed of assignment dated 26 th November, 2015]. This mortgage was created long before any attachment was levied by the Special Court under the MPID Act. In fact, action under the SARFAESI Act, 2002 has also been initiated in relation to the attached property and an order under Section 14 of the SARFAESI Act, 2002 is also passed. The order passed under Section 14 is not being implemented only because of this attachment.

9. Considering that admittedly a security interest in the attached property is created in favour of the Petitioner and which is attached by the Special Court, MPID, we are of the view that rather than relegating the Petitioner to the Hon'ble Bombay Session's Court for a decision on its Miscellaneous Application, it would be prudent to entertain this Writ Petition and raise the attachment levied on the said attached property. We say this because admittedly and undisputedly, the Petitioner is a secured creditor, and the said property is its secured asset. Under the provisions of the SARFAESI Act, 2002, the secured creditor not only gets priority under Section 26-E thereof but should also be allowed to take the SARFAESI proceedings [initiated by it] to its logical conclusion. To put it differently, the attachment under the MPID Act would subservient to the mortgage created in favour of the Petitioner. Hence, the proceedings initiated by the Petitioner to secure its dues by taking measures under the provisions of the SARFAESI Act, 2002 cannot be allowed to be thwarted by virtue of this attachment."