Intelnet It Solutions Private ... vs The State Of West Bengal & Ors
2023 Latest Caselaw 5760 Cal

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31.08.2023
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                     IN THE HIGH COURT AT CALCUTTA
                    CONSTITUTIONAL WRIT JURISDICTION
                             APPELLATE SIDE

                            W.P.A. No. 21057 of 2023


                   Intelnet IT Solutions Private Limited & Anr.
                                        Vs.
                         The State of West Bengal & Ors.


                     Mr. Siddhartha Banerjee,
                     Mr. Subir Banerjee,
                     Mr. Shantanu Mishra
                             ...for the petitioners

                     Mr. Anand Farmania,
                     Ms. Indumouli Banerjee
                             ...for the State

                     Mr. Amit Kumar Nag,
                     Ms. Ranjabati Ray
                             ...for the respondent nos. 5 and 6

1. At the outset, learned counsel for the petitioners

submits that the matter has been mentioned for being

taken up out of turn in view of the action taken by the

secured creditor/respondent in taking possession

from the petitioners, despite a copy of the writ petition

being sought to be served.

2. It is submitted that although the writ petition was

sought to be served on learned counsel for the

secured creditor, the same was refused.

3. An affidavit-of-service in that regard, filed in court

today, be kept on record.

4. In view of the extreme urgency involved, since the

possession of the petitioners' property/secured assets

were taken by the Financial Institution despite the

petitioners having filed the writ petition, leave under

Rule 26 of the Writ Rules is sought for.

5. Learned counsel having instruction to appear for the

Financial Institution /secured creditor submits that

she did not accept the service of the writ petition

since she had not been engaged at the relevant

juncture by the Financial Institution to accept service

on its behalf.

6. Although such ground of refusal of service is

accepted, since learned counsel having no authority

to accept rightly refused not to so accept, in view of

the extreme urgency, since possession has been

taken, the matter is taken up upon dispensation of

prior service on the secured creditor under Rule 26 of

the Writ Rules, for the purpose of considering the

prayer for interim orders.

7. Learned counsel for the petitioners, at the outset,

points out that a process server was empowered by

the District Magistrate under Section 14 of the

Securitisation and Reconstruction of Financial Assets

and Enforcement of Security Interest Act, 2002

(hereinafter referred to as "the Act of 2002"), for

taking possession of the secured assets. It is argued

that a process server is not an officer subordinate to

the District Magistrate within the contemplation of

sub-section (1A) of Section 14 of the Act of 2002.

8. It is pointed out, by placing reliance on the said

provision, that the Chief Judicial Magistrate may

authorize any officer subordinate to him to take

possession of assets etc.

9. Learned counsel places reliance on the West Bengal

District Courts (Constitution of Service, Recruitment,

Appointment, Probation and Discipline of Employees)

Rules, 2015 to argue that a process server is not

qualified to come within the purview of sub-section

(1A) of Section 14. Learned counsel places the

different sections of the said Rules.

10. At the outset, learned counsel points out that

Chapter-III of the Rules deals with methods of

recruitment, qualification and age limited etc.

11. Under Category (iii), Process Establishment has

been stipulated, which provides that the method of

recruitment of process server in District Court or City

Civil Court or City Sessions Judge etc. of equivalent

rank, shall be as specified in Schedule E and the

recruitment shall be conducted by the District

Recruitment Committee constituted under the Rules

as enumerated therein.

12. By placing reliance on Serial No.1 of Schedule E,

Part I of the said Rules, it is pointed out that the

qualification for direct recruitment of a process server

is that he or she must have passed VIII standard

examination from any recognized institution. It is

argued that a person of such qualification is not

sufficiently capable of dealing with an occasion where

he has to ascertain the extent of the secured assets

for taking possession.

13. Learned counsel places reliance on a judgment of

the Supreme Court reported at (2022) 10 SCC 286

(NKGSB Cooperative Bank Limited vs. Subir

Chakrabarty and Others). It was held by the Supreme

Court therein, in the context of adjudicating whether

a learned Advocate was competent enough to come

within the purview of subordinate officers of a District

Magistrate/Chief Judicial Magistrate, that while

entrusting the act of taking possession of the secured

assets consequent to the order passed under Section

14(1) of the 2002 Act to any officer subordinate to

him, the CMM/DM ought to exercise prudence in

appointing such person who will be capable of

executing the orders passed by him. It was also

observed that merely because he has power to

appoint "any" officer subordinate to him, it would not

permit him to appoint a peon or clerk, who is

incapable of handling the situation.

14. Learned counsel next argues that the person who

affirmed and moved the application under Section 14

of the Act of 2002 on behalf of the secured creditor

was not legally competent to be appointed as an

authorized officer. In such context, learned counsel

places reliance on the definition of "authorized officer"

in Rule 2(a) of the Security Interest (Enforcement)

Rules, 2002 (for short "the 2002 Rules").

15. It is argued that the petitioner applied under

Section 17 of the Act of 2002 at the stage when

symbolic possession was taken. As such, there was

no occasion or threat for the petitioners to apply for

any interim order at that stage. Subsequently, it is

argued, the office of the Chief Judicial Magistrate

served an incomplete copy of the application under

Section 14, where one of the pages was missing. Even

today, no complete copy has been given to the

petitioner, despite an order to that effect having been

passed by the competent forum.

16. It is further argued that the petitioners did not have

any notice regarding filing of the Section 14

application and/or the possibility of any order being

passed thereunder.

17. Although service of notice has been dispensed with

under Rule 26 of the Writ Rules, learned counsel

having instructions to appear for the secured creditor

seeks to submit on the case, in which regard she is

permitted.

18. Learned counsel for the secured

creditor/respondent contends that the Authorized

Officer who undertook the exercise under Section 14

of the 2002 Act, was duly authorized to do so within

the contemplation of the Act of 2002 and Rules.

19. It is submitted that Rule 2(a) of the 2002 Rules has

been framed under Section 13(12) of the Act of 2002

itself, which provides that the rights of a secured

creditor under this Act may be exercised by one or

more of his officers authorized in this behalf in such

manner as may be prescribed. Learned counsel

submits that the person who affirmed and filed the

Section 14 application is a legal counsel of the

Financial Institution concerned and deals with the

affairs of the said institution on the legal side. As

such, it is argued that there was no bar in the

application being filed by the said officer, who was

duly authorized by the secured creditor and/or an

order being passed on such application. That apart, it

is argued that the petitioners did not take appropriate

steps despite the pendency of the application under

Section 17 for a long time. Insofar as the service of

incomplete copy is concerned, learned counsel for the

secured creditor also disputes such allegation.

20. It is sought to be argued by the secured creditor

that the said entity has spent huge amounts and

resources for taking possession and, as such, the

possession may not be directed to be restored on a

mere technical issue.

21. Learned counsel for the State files a report

authored by the police authorities indicating that the

assistance given by the State was in pursuance of the

order passed under Section 14 of the Act of 2002.

22. Insofar as the first submission of the petitioners is

concerned, the same cannot be accepted. The entire

gamut of consideration by the Supreme Court in the

reported judgment was whether an Advocate comes

within the purview of an authorised officer as

contemplated in Section 14(1A) of the Act of 2002. In

such context, the Supreme Court held that an

Advocate was sufficiently qualified to come within the

purview of the said provision. In such backdrop, it

was observed further that merely because he has

power to appoint "any" officer subordinate to him, it

would not permit the Magistrate to appoint a "peon or

clerk" who is incapable of handling the situation.

23. It would be extremely feudal for the court if we

proceed on the premise that a person having studied

up to Class VIII is not sufficiently competent to take

possession of a property, despite being a trained

process server, merely due to his lack of higher

education, particularly since he meets the criterion

required for becoming a process server.

24. The context of the observations of the Supreme

Court, cited by learned counsel, can only mean that a

peon or clerk who is incapable of handling the

situation will not be appointed.

25. The stress, in the said observation, is on the

expression "incapable of handling the situation", and

not "peon or clerk."

26. In fact, the process servers, as evident from the

Rules of 2015 cited by the petitioners themselves, are

part of the Process Establishment and are equivalent

to Bailiff/ Summons Bailiff /Seal Bailiff. In the

present case, a Seal Bailiff was appointed to take

possession, who is specifically trained and competent

to execute orders of court, thereby fully coming within

the zone of competence as contemplated by the

Supreme Court.

27. As such, the said objection of the petitioners is

turned down, observing that the Seal Bailiff was

sufficiently qualified and competent to be appointed

by the District Magistrate otherwise.

28. However, a more discordant note is struck by the

petitioners, vis-à-vis the extant Rules, when the

petitioners rely on Rule 2(a) of the 2002 Rules. It

cannot be gainsaid that the "authorised officer" as per

the said definition means an officer not less than a

Chief Manager of a Public Sector Bank "or equivalent"

or any other person or authority exercising powers of

superintendence, direction and control of the

business or affairs of the secured creditors, as the

case may be.

29. The principle of ejusdem generis fully applies to

"any other person or authority" as provided in Rule

2(a), which demands that the said person or authority

has to be of equivalent rank as a Chief Manager of a

Public Sector Bank.

30. In any event, the definition also clarifies that the

person or authority has to have powers of

superintendence, direction and control of the

"business or affairs of the secured creditor". By no

stretch of imagination can it be said that a 'legal

counsel' of a financial institution exercises such

powers as envisaged in Rule 2(a).

31. The reliance placed by the secured creditor on

Section 13(12) of the 2002 Act is misplaced, since the

same clearly stipulates, in no uncertain terms, that

the rights of a secured creditor under the Act may be

exercised by one or more of the officers of the secured

creditor "authorised in this behalf in such manner as

may be prescribed". The word 'prescribed' here

specifically refers to the "Security Interest

(Enforcement) Rules, 2002, which has given a specific

definition of 'authorised officer' as indicated above.

32. Thus, such argument of the secured creditor

cannot be accepted. It is palpable that the concerned

person, that is, the "legal counsel" described to be so

in Section 14 application itself, had no qualification

under the law to be appointed as an Authorised

Officer by the secured creditor.

33. Hence, the entire exercise undertaken by the said

person in the capacity of an authorised officer, was de

hors jurisdiction and without authority, including the

filing of the application under Section 14 of the 2002

Act and all steps taken consequent thereto, including

the order by which the possession was directed to be

given to the secured creditor. The dispossession of the

petitioners was a mere consequence of the said action

and, as such, is also without the authority of law and

has to be set aside.

34. Hence, the secured creditor shall, within 48 hours,

restore the possession of the secured asset, taken

pursuant to the abovementioned application under

Section 14 of the 2002 Act, to the petitioners, to be

restored in its original form and status as it was when

the possession was taken.

35. The entire application under Section 14 of the 2002

Act and all actions taken thereupon, including all

orders passed on the same by the Chief Judicial

Magistrate, are hereby quashed and set aside as well.

36. However, nothing in this in this order shall prevent

the secured creditor to take further and fresh steps in

accordance with law, for taking possession under

Section 14 of the 2002 Act.

37. The petitioners will be at liberty to make further

application, in the event occasion so arises, for

further interim orders with regard to the property-in-

dispute. The writ petitioners, however, shall be

restrained from dealing with and/or parting with

possession of and/or encumbering or transferring the

secured assets in any manner during the pendency of

the writ petition in favour of third parties apart from

the secured creditor.

38. Since certain other arguable questions have been

raised by the writ petitioners for hearing of the writ

petition, the respondents shall file their affidavit(s)-in-

opposition within three weeks from date. Reply

thereto, if any, shall be filed by the petitioners within

a week thereafter.

39. The matter shall next be listed in the monthly

combined list of cases for the month of October, 2023.

40. The question of maintainability of the writ petition

is kept open for being argued at the time of final

hearing of the writ petition.

(Sabyasachi Bhattacharyya, J.)