Madhya Pradesh High Court
M/S New Sky Mega Marg Through ... vs Tata Capital Financial Services ... on 17 October, 2023
Author: Sushrut Arvind Dharmadhikari
1
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
HON'BLE SHRI JUSTICE PRANAY VERMA
ON THE 17 th OF OCTOBER, 2023
WRIT PETITION No. 26319 of 2023
BETWEEN:-
M/S NEW SKY MEGA MARG THROUGH PROPRIETOR
JAY PRAKASH AGRAWAL S/O LATE SHRI
SHIVNARAYAN AGRAWAL OCCUPATION: BUSINESS
H.NO. 577, BADI GWALTOLI, NEAR YUKO BANK, TILAK
NAGAR, INDORE (MADHYA PRADESH)
.....PETITIONER
(SHRI AMIT RAJ, ADVOCATE)
AND
TATA CAPITAL FINANCIAL SERVICES LIMITED
THROUGH ITS PROPRIETOR SHRI ANURODH JULIOUS
ALANKAR COMPLEX 2ND FLOOR PLOT NO. 10, M.P.
NAGAR ZONE NO. 2, NEAR PRAGATI PETROL PUMP
BHOPAL (MADHYA PRADESH)
.....RESPONDENT
(NONE)
This petition coming on for admission this day, Justice Sushrut Arvind
Dharmadhikari passed the following:
ORDER
Heard on the question of admission and interim relief.
By way of filing this petition under Section 226 of the Constitution of
India, the petitioner has assailed the orders dated 15.10.2022 as well as order
dated 08.04.2023 passed by the Ld. Chief Judicial Magistrate without granting
any opportunity of hearing and has directed to take the physical possession of
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Signed by: VATAN
SHRIVASTAVA
Signing time: 10/18/2023
7:37:18 PM
the house belonging to the petitioner.
2. Being aggrieved, the petitioner has filed the writ petition seeking the
following reliefs:-
(i) It is, therefore, prayed that this Hon'ble Court may be pleased to
issue appropriate writ, order or direction to quash the impugned orders
15.10.2023, 08.04.2023 & 15.09.2023 (Annexure P/1 & P/2 & P/3
respectively).
(ii) That, respondent No. 1 may kindly be directed to allow the
petitioner to make payment in terms of oral agreement/ compromise.
(iii) That, the present writ petition may kindly be allowed with costs.
(iv) That, any other relief which this Hon'ble Court deem fit may
grant to the petitioner.
3. The brief facts of the case are that, the petitioner had availed a cash
credit limit/ loan from the Respondent No. 1 to the tune of Rs. 1,50,05,653/-
under the loan A/c No. TCFLA0284000011067404 dated 18.06.2021 and under
the loan A/c No. TCFLA0284000010969579 Rs. 22,00,000/- dated 30.12.2020
total Rs. 1,72,95,653/-. In order to secure the aforesaid loan/ C.C. Limit, the
petitioner created security in favor of the Respondent No. 1 on the property
Plot No. 577 East side part (Rear side) and basement of four shops situated in
the west side, Badi Gwaltoli Indore (M.P.), having total area 1140 sq. ft., with
open land in the east side, built shop in the west side thereafter the road,
Rajendra Singh's house is on the north side and Babulal's house in on the south
side, where the petitioner is living presently.
4.That, due to some financial crises the petitioner could not make some
of the installments therefore, on 05.04.2022 the respondents declared the Loan
Account of petitioner as Non-Performing Asset. Thereafter, the respondent No.
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Signed by: VATAN
SHRIVASTAVA
Signing time: 10/18/2023
7:37:18 PM
1 without following the due procedure prescribed in the Act and without serving
the mandatory notice as prescribed under Section 13(2) of SARFAESI Act
submitted an application under Section 14 of the SARFAESI Act on
14.09.2022 for taking possession of the secured assets.
5. That, upon the application of the respondent No.1, a case bearing No.
2631/2022 was registered wherein without serving any notice to the petitioner
and without granting any opportunity of hearing to the petitioner, the Chief
Judicial Magistrate has passed the order dated 15.10.2022, whereby the
possession warrant has been issued. It is important to mention here that, the
order dated 15.10.2022 is without jurisdiction because as per the SARFAESI
Act, the Chief Judicial Magistrate has no authority to pass order under Section
14 of SARFAESI Act. That, without serving the order dated 15.10.2022 to the
petitioner, the respondent No. 1 moved an application before the Ld. Chief
Judicial Magistrate for execution of order dated 15.10.2022 and the same was
registered with MJCR No. 7184/2023. It is important to mention here that the
aforesaid proceeding was also not brought in the knowledge of the petitioner. In
view of the aforesaid, the effect and operation of the impugned orders may
kindly be stayed till the final disposal of the writ petition.
6. Heard the learned counsel for the petitioner and perused the record.
7. The Division Bench of this Court at Principal Seat Jabalpur in WA No.
784/2018 (Aditya Birla Finance Limited Vs. Shri Carnet Elias Fernandes
Vemalayam). Relevant para of which is reproduced below:-
"28. Coming to the argument that opportunity of hearing was not granted to
the writ-petitioners and that the order passed by the District Magistrate violates the
principles of natural justice is again not tenable. The Bombay High Court in a
judgment reported as 2007 Cri LJ 2544 (Bom.) (Trade Well vs. Indian Bank) has held
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SHRIVASTAVA
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that the District Magistrate is not required to give notice either to the borrower or to
the third party. He is only to verify from the Bank whether notice under Section 13(2)
of the Act has been issued or not. The said judgment has been quoted with approval
by the Supreme Court in a judgment reported as (2013) 9 SCC 620 (Standard
Chartered Bank, etc. vs. V. Noble Kumar and others, etc), wherein it was held as
under:-
" 22. However, the Bombay High Court in Trade Well v. Indian Bank [2007
Cri.L.J. 2544 (Bom.)] opined;
"2. CMM/DM acting under Section 14 of the NPA Act is not required to give
notice either to the borrower or to the third party.
3. He has to only verify from the bank or financial institution whether notice
under Section 13(2) of the NPA Act is given or not and whether the secured assets fall
within his jurisdiction. There is no adjudication. of any kind at this stage.
4. It is only if the above conditions are not fulfilled that the CMM/DM can
refuse to pass an order under Section 14 of the NPA Act by recording that the above
conditions are not fulfilled. If these two conditions are fulfilled, he cannot refuse to
pass an order under Section 14."
The said judgment was followed by the Madras High Court in Indian Overseas
Bank v. Sree Aravindh Steels Ltd. [AIR 2009 Mad. 10]. Subsequently, Parliament
inserted a proviso to section 14(1) and also subsection (1-A) by Act 1 of 2013.
25. The satisfaction of the Magistrate contemplated under the second proviso
to section 14(1) necessarily requires the Magistrate to examine the factual correctness
of the assertions made in such an affidavit but not the legal niceties of the transaction.
It is only after recording of his satisfaction the Magistrate can pass appropriate orders
regarding taking of possession of the secured asset."
Thus, the proceedings under Section 14 of the Act are not proceedings to
adjudicate the rights of the parties. Therefore, no notice is contemplated to be served
upon the debtor, as such proceedings are taken only after serving notice under Section
13 of SARFAESI Act."
8. In view of the aforesaid, as per Section 14 of the SARFAESI Act, the
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SHRIVASTAVA
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District/Chief Metropolitan Magistrate is required to assist the secured creditors
in taking possession of secured assets. The District Magistrate is not required
to give any notice to either the borrowers or to the third party. He is only
required to verify from the Bank whether notice under Section 13(2) of the
SARFAESI Act has been issued/served or not. [See: (2013) 9 SCC 620
(Standard Chartered Bank, etc. vs. V. Noble Kumar and others, etc).
9. Recently, the Apex Court in the case of M/S South Indian Bank
Ltd. & Ors. Vs. Naveen Mathew Philip & Anr. Etc Etc [2023 Livelaw
(SC) 320 has deprecated the practice adopted by the High Courts whereby the
writ petitions are being entertained in Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act,2002 (for short
SARFAESI Act hereinafter) matters, especially against the private banks when
the statute prescribes a particular mode, an attempt to circumvent shall not be
encouraged by the writ Court. The litigant cannot avoid the non compliance of
approaching the Tribunal which requires the prescription of fee and use of
constitutional remedy as an alternative. The Apex Court has also deprecated the
practice of approaching the High Court for consideration of an offer by the
borrower.
10. The Apex Court in the case of M/S South Indian Bank Ltd.
(supra) further went on to hold that "we deprecate such practice of entertaining
the writ petitions by the High Court in exercise of power u/S 226 of the
Constitution of India without exhausting the alternative remedy available under
the law."
11. In the light of the aforesaid pronouncements of the Apex Court as
well the facts and circumstances of this case, this Court is not inclined to
entertain the writ petition.
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Signed by: VATAN
SHRIVASTAVA
Signing time: 10/18/2023
7:37:18 PM
12. Accordingly, the same is hereby, dismissed at the admission stage
itself.
No order as to costs.
(S. A. DHARMADHIKARI) (PRANAY VERMA)
JUDGE JUDGE
Vatan
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Signed by: VATAN
SHRIVASTAVA
Signing time: 10/18/2023
7:37:18 PM
