Au Small Finance Bank Limited Thr. ... vs The State Of Madhya Pradesh
2021 Latest Caselaw 2802 MP

          The High Court Of Madhya Pradesh

                               WP-11069-2021
    (AU SMALL FINANCE BANK LIMITED THR. ITS AUTHORIZED SIGNATORY MR. DHIRENDRA
                SONKAR Vs THE STATE OF MADHYA PRADESH AND OTHERS)

                                      and
                               WP-11149-2021
    (AU SMALL FINANCE BANK LIMITED THR. ITS AUTHORIZED SIGNATORY MR. DHIRENDRA
                SONKAR Vs THE STATE OF MADHYA PRADESH AND OTHERS)




Indore, Dated : 29-06-2021
               Heard through Video Conferencing.

               Shrir Rohit Saboo, learned counsel for the Petitioner.
               Shri Vivek Dalal, learned Additional Advocate General, for
the respondent/State.

Regard being had to the similitude of the question involved, on the joint request of the parties, the matters are finally heard.

2 At the outset, Shri Saboo, places reliance upon Division Bench judgment of this Court reported in 2019(1) MPLJ, 147 ( Aditya Birla Finance Vs. Carnet Elias Fernandes Yemalayam ) to bolster his submissions that in a proceedings of this nature, which is arising out of the order passed under section 14 of Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( for short 'SARFAESI Act' ), the other side namely, the borrower is not required to be heard.

3 Both the petitioners assail the order of learned Additional Collector, whereby the application filed by the petitioners were rejected mainly for two reasons- (i) the mortgage property was a residential accommodation / house of the borrower and therefore, in the teeth of section 31(g) of the SARFAESI Act, the said property is beyond the purview of auction etc. (ii) the loan is taken by more than one person, then it was not justifiable to recover it from one person only. 4 Assailing the said reasons, Shri Saboo places heavy reliance on the recent order passed in W.P. no. 16891/2020 ( Aspire Home Finance Corporation Ltd Vs. State of M.P and others ) decided on 21/06/2021, wherein after examining the language of section 31(g) of the Act, this Court has opined that learned Additional District Magistrate has incorrectly appreciated the statutory provision and reached to a wrong conclusion. So far as second reason is concerned, Shri Saboo places reliance on the judgment reported in 2018(3) MPLJ, 123 ( Cholamandhalam Investment and Finance Ltd Vs. Additional District Magistrate and others) to contend that it is not open to learned Additional District Magistrate to examine, whether the borrower was wrongly declared as NPA or not. He has limited jurisdiction to consider two aspects namely (i) whether the secured assets fall within the territorial jurisdiction. (ii) whether the notice under section 13(2) has been validly issued. No adjudication is permissible in a proceedings initiated under section 14 of the Act. 5 Shri Vivek Dalal,learned AAG did not dispute that in recent order passed in Aspire Home Finance (supra) this Court considered and opined about the ambit and scope of section 31(g) of the Act. He did not dispute the legal position flowing out from the judgment of Cholamandhalam Investment and Finance Ltd ( supra), however, he submits that learned District Magistrate needs to examine whether formalities and statutory requirement of section 13 of the Act was fulfilled.

6 No other point is pressed by learned counsel for the parties. This is trite that if language of statute is plain and unambiguous, it should be given effect to irespective of consequences See - Nelson Motis Vs. Union of India and others reported in 1992 (4) SCC 711.

7 This Court in recent order passed in Aspire Home Finance (supra) opined as under -

Relevant portion of Sec.31 reads as under:- "31. Provisions of this Act not to apply in certain cases.-- The provisions of this Act shall not apply to--

(g) [any properties not liable to attachment (excluding the properties specifically charged with the debt recoverable under this Act)] or sale under the first proviso to sub-section (1) of section 60 of the Code of Civil Procedure, 1908 (5 of 1908);

(emphasis supplied)

9. A plain reading of this provision shows that argument of learned counsel for petitioners has substance. The legislature in its wisdom decided to exclude the properties which are specifically charged with the debt recoverable under the Act. The provision is clear and unambiguous which makes it clear that provision of the Act is inapplicable relating to such properties which are not liable to attachment excluding the properties specifically charged with debt recoverable under this Act namely Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The learned Addl. District Magistrate in fact read the provision in such a way where word "excluding" is understood or read by him as "including" which resulted into a conclusion that a residential property is outside the purview of the Act whereas Clause (g) shows otherwise. Pertinently in the instant matter, we are concerned with a property which was admittedly mortgaged and description of which is covered by the expression which finds place in Clause (g) of Sec.31. In this matter, we are not concerned with the property which is not liable to the attachment as per sub-section (1) of Section 60 and, therefore, we are not required to deal with the said aspect.

10 Considering the aforesaid, order dated 26/8/2020 and 19/8/2020 impugned in both the cases are set aside. The matters are restored in the file of learned Addl. District Magistrate who will consider and pass appropriate orders in consonance with Sec.14 of the Act. It is made clear that this Court has not expressed any opinion on the merits of this matter."

8 The first point raised by Shri Saboo stands concluded. We have no hesitation to hold that the Additional District Magistrate has erred in understanding and reading section 31(g) of the Act. In the scheme of the Act, such residential accommodations are not beyond the purview of the Act.

9 Secondly,as per the principle laid down in the judgment passed in Cholamandhalam Investment and Finance Ltd (supra), no adjudication by Additional District Magistrate was permissible. It was not open to learned Additional District Magistrate to hold that initiation of NPA proceedings against only one borrower is bad in law. 10 Considering the aforesaid, the impugned orders dated 12/10/2020 ( Annexure-P/3) and 19/08/2020 ( Annexure-P/3) respectively in both the petitions are set aside. The matters are restored in the file of learned Additional District Magistrate, who will proceed in accordance with law and pass appropriate orders in accordance with law. It is made clear that this Court has not expressed any opinion on the merits of this matter.

C c as per rules.

                      (SUJOY PAUL )                         ( ANIL VERMA)
                        JUDGE                                   JUDGE

amol
 Digitally signed by AMOL N
 MAHANAG
 Date: 2021.06.30 11:19:16 +05'30'