Shriram Housing Finance Limited vs State Of Haryana And Others
2022 Latest Caselaw 1523 P&H

CWP-31871-2019                        -1-



         IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                        CHANDIGARH
                                                CWP-31871-2019
                                         Reserved on: 28.02.2022
                                      Date of Decision: 11.03.2022

Shriram Housing Finance Limited                                  . . . . Petitioner

                                             Vs.

State of Haryana and others                                    . . . . Respondents
                                 ****
CORAM: HON'BLE MR JUSTICE M.S. RAMACHANDRA RAO
           HON'BLE MR JUSTICE H.S. MADAAN
                                 ****
Present: - Mr. Harsh Chopra, Advocate for the petitioner

             Mr.S.S. Pannu, DAG, Haryana.

             Mr.Ishaan Ksheterpal, Advocate, for respondents No.4 & 5.
                                    ****
M.S. RAMACHANDRA RAO, J.

In this Writ petition the petitioner has challenged order

dt. 24.05.2018 (P7) passed by the District Magistrate, Kaithal (Respondent

No.2).

The Back Ground Facts

The Writ petitioner is a financial institution.

Respondent No.5, his deceased mother, namely, Saroj Rani and

family members had availed loan against property for an amount of

`28,39,988/- vide loan agreement dt. 28.5.2016.

To secure the said loan, the above referred borrowers had created

security interest over their residential property and some agriculture land by

way of equitable mortgage of deposit of title deeds in favour of the petitioner.

On account of default by the borrowers, their loan account was

declared as Non Performing Asset (NPA) by the petitioner on 08.05.2017.

1 of 10

Thereafter a demand notice dt. 24.07.2017 (P2) under Section

13(2) of the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 [for short 'the SARFAESI Act']

was issued through speed post to respondent No.5 and his late mother (during

her lifetime), demanding total outstanding of `31,48,379/-, which was

outstanding and demanded a payment of the same within 60 days of the demand

notice.

But the borrowers did not discharge their liability and symbolic

possession of the Secured Assets was taken on 02.12.2017 by issuance of notice

(P4) under Section 13(4) of the SARFAESI Act.

Actual possession could not be taken by the authorized officer of

the petitioner and so the petitioner filed an application under Section 14 of

SARFAESI Act before the District Magistrate, Kaithal (respondent No.2) on

12.02.2018 for seeking assistance in taking the possession of the said Secured

Asset.

The said application was allowed by respondent No.2 on

02.05.2018 (P5) and respondent No.2 appointed the Sub Tehsildar (respondent

No.3) to take possession of the Secured Asset with the assistance of the

concerned police and to forward it to the petitioner.

In the meantime, on 17.3.2018, the mother of respondent No.5

Saroj Rani passed away but, this fact was not within the knowledge of the

petitioner, and so it could not bring it to the notice of respondents No.2 & 3

before passing of the order dt.02.05.2018 (P5).

2 of 10

According to the petitioner, it came to know about the death of the

co-borrower Saroj Rani only when the respondents filed their reply on

27.08.2018 to CWP-16875-2018, filed by the petitioner earlier.

The petitioner contends that it also came to know from the filing of

the said reply in that Writ petition that respondent No.2 had passed a

subsequent order dt.24.05.2018 (Annexure P7) asking respondent No.3 to return

the original order dt.02.05.2018 (P5) passed by respondent No.2 and thus, the

proceedings initiated under Section 14 of SARFAESI Act came to be halted.

Counsel for the petitioner contended that there is no provision

under the Act to review or to recall an order passed by the District Magistrate

because such a power has not been conferred under the SARFAESI Act. He

also placed reliance on the order passed by the Gujarat High Court in Prime

Cooperative Bank Limited Vs. District Magistrate/Chief Metropolitan

Magistrate1 wherein, the Gujarat High Court held that after passing of an order

under Section 14 of SARFAESI Act, the District Magistrate becomes functus

officio and he cannot reopen a concluded issue. It is, therefore, contended by

petitioner that respondent No.2 could not have recalled his order

dt. 02.05.2018/07.05.2018 (P5) vide its order dt.24.05.2018 (P-7).

In the written statement filed on behalf of respondents No.1 o 3, it

is contended that the warrant dakhal was called back in view of the application

filed by Sukhbir Singh, husband of the borrower Saroj Rani intimating to the

District Magistrate, Kaithal that Saroj Rani had died and it was felt that it is not

appropriate to pass a warrant against a dead person. It is stated that a letter dt.

25.05.2018 (R2) was addressed to the petitioner asking it to submit list of legal

MANU/GJ/0801/2009

3 of 10

heirs of Saroj Rani against whom warrant of possession may be issued, but the

petitioner did not furnish such a list and filed the instant Writ Petition.

A plea is also raised that there is no violation of the provisions of the

Statute by respondent No.2 and he had not passed any fresh order but had only

recalled the warrant dakhal for the aforesaid reason of the death of Saroj Rani

after the application under Section 14 of SARFAESI Act was filed on

12.02.2018 (P4), and before passing of the initial order by respondent No.2 on

02.05.2018.

Mr.S.S. Pannu, DAG, Punjab reiterated the aforesaid submissions.

The legal heirs of respondent No.4 and respondents No.5

(co-borrower) supported the stand of respondents No.1 to 3.

It is also contended that the mortgage property was only in the name of

deceased Saroj Rani but the petitioner had got signatures of Saroj Rani, her

husband Sukhbir Singh, son Paramjeet Singh (respondent No.5) and Sudha

Rani daughter, as borrowers in the loan agreement, and that this was cleverly

done by the petitioner so that if the owner of the property dies, the petitioner

would still have the remedy to take possession of the mortgaged property under

the SARFAESI Act from the legal representatives.

Mr.Ishan Ksheterpal, counsel for respondents No.4 & 5 reiterated

the said submissions.

The consideration by the Court

In the light of the above submissions of the respective parties, the

following points arise for consideration:

4 of 10

(i) Whether a District Magistrate, after passing an order under Section 14 of the SARFAESI Act, can stop the enforcement of the order by a subsequent order/direction for whatever reason?

(ii) Whether, in the facts and circumstances, the absence of husband and daughter of the deceased borrower Saroj Rani as parties in the application under Section 14 of the SARFAESI Act would justify the non-enforcement of the said order?

Point (a):

The SARFAESI Act,2002 was enacted to provide machinery for

enabling banks and financial institutions to take possession of the secured assets

of borrowers/guarantors and to sell them speedily in the event of a default by

the borrowers in their payment obligations.

Section 14 of the SARFAESI Act is a provision enacted in the Act to

enable banks and financial to take possession of the Secured Asset.

In Asset Reconstruction Company (India) Limited Vs. State of

Haryana in CWP-16366-2016 decided on 18.8.2017, a Division Bench of this

Court considered the question "whether the District Magistrate is competent to

'review' his own order or the one passed by his predecessor under Section 14

of the SARFAESI Act? .

It held as under:

"(27) The powers exercisable by a District Magistrate under Section 14 are creation of a Statute. Those powers are required to be exercised within the four corners of the said provision. In the case in hand, the then District Magistrate, Sonepat rightly exercised such power and passed the order dated 08.02.2016 thereby directing his subordinate officer, namely, Naib Tehsildar-cum-Executive Magistrate to take possession of the secured assets and hand over the same to ARCIL. It could not be disputed by the learned State counsel or senior counsel for the borrowers that there is no provision under the SARFAESI Act under

5 of 10

which the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, can review, recall or modify his order. The successor District Magistrate, therefore, had no jurisdiction whatsoever either to entertain the borrower's application dated 12.06.2016 or to pass the impugned orders dated 14.06.2016 and 24.10.2016. These orders are totally without jurisdiction and void ab initio, for it is well settled that the power to review is not an inherent power and it must always be conferred by law either expressly or by necessary implication. The so- called reasons assigned by the successor District Magistrate, even if assumed to be correct, did not and cannot clothe him with a non- existent power to review the order passed by him or his predecessor. [Ref. (i) Patel Narshi Thakershi & Ors. vs. Shri Pradyumansinghji Arjunsinghji (1971) 3 SCC 844; (ii) Kewal Chand Mimani (D) By Lrs. Vs. S.K. Sen & Ors. (2001) 6 SCC 512]."

(28) It would be apt to cite a Division Bench decision of Allahabad High Court in Writ-C No.30899 of 2016 (Kotak Mahindra Bank Ltd. vs. State of UP & 4 others) decided on 21.10.2016, where an identical question came up for consideration and the High Court viewed as follows:-

"Be that it may, we are of the considered opinion that the District Magistrate has absolutely no jurisdiction to review his order dated 24.06.2013 passed under the Act, 2002 specifically when the order was subjected to challenge before the Debt Recovery Tribunal and such application was dismissed by a reasoned order holding therein that the borrower had not approached the Tribunal with clean hands. If they were not satisfied they had the remedy of approaching the Appellate Tribunal under Section 18 of the Act, 2002. We are, therefore, more than satisfied that such order of the District Magistrate cannot be permitted to stand on record. The order of the District Magistrate dated 27.04.2016 and dated 30.06.2016 are hereby quashed."

We are respectfully in agreement with the view taken by the Allahabad High Court. Consequently, it is held that the District Magistrate, Sonepat had no authority or power to review the order dated 08.02.2016 and his subsequent orders being without any authority of law, cannot sustain." ( emphasis supplied)

6 of 10

This was reiterated by another Division Bench of this Court in

CWP-4892-2019 titled as "Indiabulls Housing Finance Ltd. Vs. State of

Haryana and others", decided on 15.10.2019.

In view of the above, Point (a) is answered accordingly holding

that a District Magistrate, after passing an order under Sec.14 of the SARFAESI

Act,2002 has no jurisdiction to review or recall such order.

Point (b):

We shall next consider the question:

"(b) Whether, in the facts and circumstances, the absence of husband and daughter of the deceased borrower Saroj Rani as parties in the application under Section 14 of the SARFAESI Act would justify the non-enforcement of the said order?"

In the instant case admittedly, late Saroj Rani, her son i.e.

Paramjeet Singh (respondent No.5), Sukhbir Singh, husband of Saroj Rani and

also Sudha Rani daughter of Saroj Rani have signed the loan agreement

dt. 28.05.2016 (R4/2) with the petitioner.

The property is admittedly in the name of only Late Saroj Rani, who

passed away on 17.03.2018 after filing of application under Section 14 of

SARFAESI Act on 12.2.2018 (P4) by the petitioner and before 02.05.2018

when respondent No.2 passed the order under Section 14 of the SARFAESI

Act.

On her death, under Section 15 of the Hindu Succession Act,1956,

her children would succeed to her property.

In the application made under Section 14 of the SARFAESI Act

before District Magistrate, Kaithal (respondent No.2), the petitioner had sought

7 of 10

possession of the Secured Assets from both late Saroj Rani and her son

Paramjeet Singh, and the respondent no.2 had allowed the same on 02.05.2018.

Even if Saroj Rani had died prior to the passing of the order, in our

considered opinion there could not be any abatement of the proceeding when

her estate is represented by her son Paramjeet Singh (respondent No.5), who is

one of the legal heirs.

In Mohammed Hussain (Dead) by LRs and Others v.

Occhavlal and others2, the question whether there would be abatement of a

suit if all legal heirs of a deceased party are not impleaded, was considered by

the Supreme Court.

In that case, the Madhya Pradesh High Court in a Second appeal

had set aside the concurring judgments of the Courts below decreeing a suit for

redemption of mortgage filed by the appellants against the respondents on the

ground that the suit for redemption could not be held to be maintainable in law

in the absence of two married daughters of one of the mortgagees, who had

died.

When this judgment was challenged in the Supreme Court, by

relying upon its judgment in N.K. Mohd. Sulaiman Sahib Vs. N.C. Mohd.

Ismail Saheb and others3, the Supreme Court held that ordinarily a Court does

not regard a decree binding upon a person, who was not impleaded in the action

but, one of the important exceptions to the said Rule is that where by the

personal law governing the absent heir, the heir impleaded represents his

interest in the estate of the deceased, the decree would be binding on all the

persons interested in the estate; if there be a debt justly due and no prejudice is

2008(3) SCC 233

1966 AIR (SC) 792

8 of 10

shown to the absent heir, the decree in an action where the plaintiff has after

bona fide enquiry impleaded all the heirs known to him will ordinarily be held

binding upon all persons interested in the estate; the Court will also investigate,

if invited, whether the decree was obtained by fraud, collusion or other means

intended to overreach the Court. Therefore, in the absence of fraud, collusion

or other similar grounds, which taint the decree, a decree passed against the

heirs impleaded binds the estate, even though the other persons interested in

the estate are not brought on record.

Applying the said principle, the Supreme Court held that the

decision of the High Court was erroneous since two sons had sufficiently and in

bona fide manner represented the estate of the deceased and so the suit for

redemption of mortgage cannot be dismissed on the ground that the two married

daughters were not on record..

Similar view was also taken by the Supreme Court in Ramdass

and another Vs. Dy. Director of Consolidation and others4. In that case, it

was held that when two of the legal representatives of the deceased were

already on record, failure to bring the 3rd legal representative on record would

not result in the abatement of appeal.

No doubt proceeding under Section 14 of the SARFAESI Act is

not akin to a suit since no adjudication is permitted by the District Magistrate

but, the principle laid down in the aforesaid decisions would equally apply by

way of analogy, and on the sole ground that the husband and other legal heirs of

the deceased Saroj Rani were not on record, the process of execution of the

1971(1) SCC 460

9 of 10

order passed under Section 14 of the SARFAESI Act could not have been

stopped by respondent No.2.

This is because respondent No.5 was already on record in the said

proceedings and he represented the estate of the deceased; and the order against

him would be binding on all the other heirs or persons interested in the estate of

the deceased.

Point (b) is answered accordingly.

Therefore, the Writ Petition is allowed; order dt. 24.5.2018 issued

by respondent No.2 to the respondent No.3 is set aside; and respondents No.1 to

3 are directed to implement the order dt.02.5.2018 passed by respondent No.2

within four weeks from the date of receipt of certified copy of this order. No

costs.

                                                    (M.S. Ramachandra Rao)
                                                             Judge


11.03.2022                                               (H.S. Madaan)
Vivek
                                                             Judge

         1. Whether speaking/reasoned?                 Yes
         2. Whether reportable?                        Yes




                                         10 of 10