Au Small Finance Bank Limited ... vs The State Of Madhya Pradesh
2021 Latest Caselaw 3013 MP

1         HIGH COURT OF MADHYA PRADESH :
                     BENCH AT INDORE
                      W.P. No.11355/2021
          (AU Small Finance Bank Ltd. Vs. State of MP)

Indore: Dated:- 06/07/2021:-
      Shri Ramesh Kumar Saboo, learned counsel for the
petitioner.
      Shri Vivek Dalal, learned Additional Advocate General for
the respondent/State.
      With consent, finally heard.
                        ORDER

This petition filed under Article 226 of the Constitution takes exception to the order of learned District Magistrate, Mandsaur dated 21/01/2020 whereby he dismissed the application of petitioner preferred under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the Securitisation Act").

2) The learned counsel for petitioner submits that the said application was dismissed by assigning three reasons namely, (i) if petitioner obtained post dated cheques from the borrower and cheques were not honoured, the petitioner should have availed the remedy under the Negotiable Instruments Act, 1881. Without availing the said remedy, the application under Section 14 of the Securitisation Act is not tenable. (ii) The petitioner has not placed any documentary evidence to show that he has approached the Court under criminal jurisdiction for non- payment of cheques. (iii) Petitioner has not published the notice under Section 13(2) of the Securitisation Act in the local newspapers.

3)    Shri Saboo, learned counsel for the petitioner submits that
 2        HIGH COURT OF MADHYA PRADESH :
                    BENCH AT INDORE
                     W.P. No.11355/2021

(AU Small Finance Bank Ltd. Vs. State of MP)

all the aforesaid reasons are bad-in-law and the application could not have been rejected on the basis of said reasons. It is submitted that in view of judgment of this Court in 2018(3) MPLJ (Cholamandalam Investment and Finance Company Ltd. vs. Additional District Magistrate & Ors.), it was clearly held that the learned District Magistrate has limited jurisdiction to examine whether secured assets falls within his territorial jurisdiction and secondly, whether the notice under Section 13(2) of the Securitisation Act has been furnished to the borrower or not. No further adjudication is contemplated/required. Secondly, the Rule 3 of the Security Interest (Enforcement) Rules, 2002 makes it clear that if notices are not served to the borrower, the paper publication is necessary. In the instant case, the learned District Magistrate has failed to see that notices have already been served to the borrower and acknowledgment thereof was filed before him. The attention of this Court is drawn to Page No.37 & 38 of the petition to show that notices were duly served to the borrower and in that event, the publication was not necessary.

4) Shri Vivek Dalal, learned Additional Advocate General formally opposes the prayer by contending that in view of judgment of Supreme Court reported in 2013(9) SCC 620 (Standard Chartered Bank vs. V. Noble Kumar), it cannot be said that the learned District Magistrate had no power at all. He has limited powers while exercising jurisdiction under Section 14 of the Securitisation Act. However, he fairly submits that the finding of learned District Magistrate for not availing the remedy 3 HIGH COURT OF MADHYA PRADESH :

BENCH AT INDORE W.P. No.11355/2021 (AU Small Finance Bank Ltd. Vs. State of MP)

under the Negotiable Instrument Act, 1881, Section 14 of the Securitisation Act cannot be invoked cannot sustain judicial scrutiny.

5) We have heard the learned counsel for the parties at length and perused the record.

6) We find substance in the contention of Shri Saboo that under Section 14 of the Securitisation Act, learned District Magistrate has limited jurisdiction. He cannot act as an adjudicating authority to examine the merits of the case. Non- availing the remedy under the Negotiable Instruments Act cannot be a ground to reject an application under Section 14 of the Securitisation Act. Similarly, the District Magistrate was obliged to see that the borrower is already served and in that event, non- publication of notice in local newspaper will not deprive the financial institution to invoke Section 14 of the Securitisation Act.

7) The order of learned District Magistrate runs contrary to the scope and ambit of Section 14 of the Securitisation Act. Resultantly, the order dated 21/01/2020 passed by the respondent is set aside. The matter is restored in the file of the learned District Magistrate with the direction to proceed and pass an order in accordance with law afresh.

8) With the aforesaid, petition is disposed of.

CC as per rules.

     (SUJOY PAUL)                                   (ANIL VERMA)
       JUDGE                                           JUDGE
soumya   Digitally signed by
             SOUMYA RANJAN
             DALAI
             Date: 2021.07.07
             10:37:09 +05'30'