Calcutta High Court (Appellete Side)
State Bank Of India vs The State Of West Bengal & Ors on 5 September, 2024
Author: Shampa Sarkar
Bench: Shampa Sarkar
05.09.2024
Court No.09
Item no.220 ML
CP
WPA No. 22343 of 2022
State Bank of India
Vs.
The State of West Bengal & Ors.
Mr. Om Narayan Rai
Ms. Deblina Lahiri
Mr. Mrinmoy Chatterjee
.... for the petitioner.
Mr. Somnath Ganguly
Mrs. Rupsha Chakrabarty
....for the State.
Mr. Reetobrata Mitra
Mr. Binay Kumar Jain
Mr. Piyush Jain
Ms. M. Ghosh
......for the respondent no.6.
1. The petitioner, who is the secured creditor, has
challenged several orders passed by the Chief
Metropolitan Magistrate, Calcutta by reopening
a disposed of proceeding under Section 14 of
the SARFAESI Act. Mr. Rai, learned Advocate
for the petitioner submits that the order was
passed on December 12, 2014, directing
delivery of physical possession of the
mortgaged property in favour of the bank.
Sometime in 2022, the bailiff had taken
possession and handed over the property to the
bank. Thereafter, the bank found out that the
respondent No.6 had broken open the padlock
affixed by the bank and had taken possession.
The bank approached the Shakespeare Sarani
Police Station for necessary action. The police
authorities did not take steps. Accordingly,
WPA No.19879 of 2022 was filed by the bank
challenging inaction of the police authorities.
By an order dated September 14, 2022, a
coordinate Bench allowed the prayer of the
petitioner by directing the police authorities to
remove the padlock of the respondent no.6 and
affix a lock on behalf of the bank. Such
procedure was completed.
2. Such order was challenged by the respondent
no.6 before the Hon'ble Division Bench, on the
ground that the said respondent was a tenant
in respect of the premises in question, even
before the SARFAESI proceedings had been
initiated. Further submission was that the
respondent no. 6 had already approached the
Chief Metropolitan Magistrate for modification
of the order. Upon taking cognizance of its
possession and rightful claim as tenant, the
order was also modified and the possession
was restored. That S.A. 89 of 2011 was
pending before the learned Debts Recovery
Tribunal and the order delivery of possession
would be subject to the decision in the SA.
3. The Hon'ble Division Bench dismissed the
appeal, inter alia, coming to the following
conclusions:-
a) That the conduct of the respondent no. 6
was deplorable. The finding of the learned
Single Judge that the respondent no. 6 had
broken open the padlock and wrongfully
entered into the property, was correct. Such
finding was backed by the fact that the
bailiff's report indicated that possession of
the property was handed over to the bank.
b) The Chief Metropolitan Magistrate had
become functus officio and did not have any
authority to proceed with the matter after
the delivery of physical possession.
c) The tenant had wrongly indicated to the
court that a proceeding was pending before
the Debts Recovery Tribunal, whereas the
proceeding initiated before the Debts
Recovery Tribunal by the borrower and the
guarantor had been dismissed.
4. Mr. Mitra, learned advocate for the respondent
no. 6 submits that an application for review is
pending from the order of the Hon'ble Division
Bench. He submits that the bank should have
disclosed that the property was tenanted in its
application under Section 14. The application
was liable to be rejected by the District
Magistrate, for such suppression.
5. The Chief Metropolitan Magistrate also
recorded that the order of taking over physical
possession would be subject to possession of
the tenant. The said order was not challenged
by any party. The right of the tenant was
protected even at that stage by the Chief
Metropolitan Magistrate.
6. Mr. Mitra relies on several decisions of the
Hon'ble Apex Court on the ground that a pre-
existing tenant had a right to be protected even
if the SARFAESI proceedings were initiated.
7. Learned advocate for the State respondents
submits that the Chief Metropolitan Magistrate
has not decided any issue. The Chief
Metropolitan Magistrate had kept the matter in
abeyance, to enable the tenant to get his right
adjudicated. Under such circumstances, the
orders impugned cannot be said to be devoid of
merits.
8. Heard the parties. The bank had approached
the High Court, challenging the inaction of the
police in putting back the bank in possession
by removing the padlock fixed by the
respondent no. 6. In the said writ petition,
certain factual aspects were taken note of by
the coordinate Bench and such order was
passed after the orders dated August 5, 2022,
August 16, 2022 and August 17, 2022 were
passed by the Chief Metropolitan Magistrate in
Misc. Case No. 35 of 2014, which are under
challenge before this court. In the said order
dated September 14, 2022, the coordinate
Bench had directed the Shakespeare Sarani
Police Station to put a padlock in the premises
and seal the same in favour of the bank. The
dispute between the bank and the tenant was
left to be decided by the tribunal and it was
directed that possession of the secured asset
would abide by the order passed by the Debts
Recovery Tribunal-II in S.A. No. 89 of 2011.
The order of the learned Single Judge was
carried in appeal.
9. This order was subsequently modified and CAN
1 of 2022 was disposed of with a direction
upon the Shakespeare Sarani Police Station to
hand over possession to the bank.
10. The Division Bench found that the Chief
Metropolitan Magistrate, Calcutta had passed
the order on December 12, 2014 under Section
14 of the Act for delivery of possession of the
property. Thereafter, on an application by the
bank, the Chief Metropolitan Magistrate had
passed the order dated September 21, 2021
directing breaking open of the padlock. In
compliance of the order, physical possession of
the property was delivered to the bank on July
29, 2022. The bailiff had also duly indicated
this fact to the police authority vide a
communication dated July 29, 2022. No
materials were produced before the appeal
court indicating that the bank had been
informed by the borrower that the respondent
no. 6 had ever been inducted as a tenant. By
the order dated August 17, 2022, passed in
Misc. Case No.35 of 2014, the Chief
Metropolitan Magistrate once again directed
restoration of possession to the respondent
no.6. The appeal court recorded that the
counsel for the respondent no. 6 had failed to
point out the provision of law under which
such order could be passed by the Chief
Metropolitan Magistrate. Hence, the
submissions of the counsel for the respondent
No.6 on the basis of the judgments of the
Hon'ble Supreme Court were not accepted and
submissions of the bank were recorded and
accepted.
11. The appeal court recorded that even assuming
that the Chief Metropolitan Magistrate had
jurisdiction to pass the order of restoration, the
respondent no. 6 had failed to demonstrate
that the padlock of the respondent bank was
removed by following due process of law and
the respondent no. 6 was in possession of the
premises.
12. There was no document indicating delivery of
possession by the bank to the respondent no.
6, after the order was passed by the Chief
Metropolitan Magistrate.
13. Under such circumstances, the Hon'ble
Division Bench dismissed the appeal, inter
alia, holding that the powers exercisable by the
Chief Metropolitan Magistrate under Section 14
of the Act were ministerial and the said
authority could not adjudicate the dispute
between a borrower and a secured creditor or a
third party. The conduct of the respondent
no.6 was found to be doubtful in view of the
report filed by the bailiff and the police
authorities.
14. It also transpired during the hearing that the
respondent no. 6 had filed a letter before the
bank pursuant to the order dated August 17,
2022, requesting the bank to hand over
possession. Thus, the fact that possession had
not been handed over to the respondent No.6,
even though there was an order of the Chief
Metropolitan Magistrate to restore possession
to the respondent no. 6, was a specific finding
of the Division Bench. It was noted that S.A. 89
of 2011 was dismissed even before the learned
Single Judge had taken up the matter.
15. Under such circumstances, the orders passed
by the Chief Metropolitan Magistrate dated
August 5, 2022, August 16, 2022 and August
17, 2022 passed in Misc. Case No. 35 of 2014
are contrary to law. The order passed by the
Hon'ble Division Bench on November 1, 2022,
also records that the Chief Metropolitan
Magistrate did not have the power to reopen
the issue and restore possession to a third
party. In this proceeding, such orders have
been challenged. The same are set aside in the
backdrop of the case as discussed hereinabove.
Prayer (a) is allowed.
16. It is submitted by Mr. Mitra, that a review
application is pending. The review application
may be proceeded with in accordance with law
and all the points raised by Mr. Mitra may be
urged.
17. The application filed under Section 17 of the
SARFAESI Act, by the respondent no. 6, if any,
will proceed independently and the
consequence thereof will follow.
18. The writ petition is disposed of accordingly.
There shall be no order as to costs.
Parties are directed to act on the basis of the
server copy of this order.
(Shampa Sarkar, J.)
