Punjab-Haryana High Court
State Bank Of India vs District Magistrate Ludhiana And ... on 18 April, 2024
Bench: Sureshwar Thakur, Lalit Batra
Neutral Citation No:=2024:PHHC:052710-DB
CWP-11641-2020 & CWP-7952-2021 -1- 2024:PHHC:052710-DB
IN THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH.
Reserved on: 21.03.2024
Pronounced on: 18.04.2024
1. CWP-11641-2020
STATE BANK OF INDIA .....Petitioner
Versus
DISTRICT MAGISTRATE, LUDHIANA AND ORS. ....Respondents
2. CWP-7952-2021
STATE BANK OF INDIA .....Petitioner
Versus
DISTRICT MAGISTRATE, LUDHIANA AND ORS. ....Respondents
CORAM: HON'BLE MR. JUSTICE SURESHWAR THAKUR
HON'BLE MR. JUSTICE LALIT BATRA
Argued by: Ms. Madhu Dalal, Advocate
for the petitioner(s) - Bank.
Mr. Maninder Singh, Sr. DAG, Punjab.
Mr. Harsh Chopra, Advocate
for the private respondents (in both the cases).
****
SURESHWAR THAKUR, J.
1. Since both the writ petition(s) (supra), involve common
questions of facts and law, thus, they are amenable to be decided
through a common verdict.
2. Be that as it may, the facts of both the writ petition(s)
(supra) are yet required to be separately delineated.
Facts of CWP-11641-2020
3. That respondent No. 3-company became granted various
credit facilities, thus by the lending institution concerned, but against
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various secured assets. On account of non-adherence to financial
discipline by respondent No. 3, thus the apposite debt was on
30.12.2014, hence classified as Non Performing Assets.
4. The petitioner Bank issued notice on 30.07.2016 under
Section 13 (2) of the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (hereinafter
called as the 'SARFAESI Act') thereby calling upon respondent No. 3
and its directors and guarantors to discharge in full its financial
borrowings but within 60 days from the date of the notice (Annexure P-
1A).
5. That respondent No. 3 filed theretos its objections under
Section 13 (3A) of SARFAESI Act. The said objections were duly
considered but became rejected by the petitioner-Bank, through an
order drawn thereons on 13.10.2016 (Annexure P-3).
6. That notice under Section 13 (4) of the SARFAESI Act
read with Rules 8 and 9 of the Security Interest Enforcement Rules,
2002 was issued and the Bank took symbolic possession of the
mortgaged properties.
7. Thereafter, the erstwhile State Bank of Bikaner and Jaipur
merged with the State Bank of India. After merger, the petitioner-State
Bank of India again issued possession notice under Section 13 (4) of
the SARFAESI Act.
8. The petitioner-Bank made application under Section 14 of
the SARFAESI Act, on 10.01.2018, wherebys the respondent No. 1-
District Magistrate, Ludhiana, was requested to provide assistance for
the taking over of possession of the secured assets, as, described in the
application.
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9. Respondent No. 3 filed its objections to the said
application. The Bank submitted its reply dated 28.03.2018 to
respondent No. 1 against the objections made by respondent No. 3.
10. Respondent No. 1 through the impugned order (Annexure
P-10) dismissed the application as became preferred under Section 14
of the SARFAESI Act, by the lending institution concerned.
11. The petitioner-Bank filed CWP-23399 of 2018 before this
Court which was dismissed as withdrawn vide order dated 14.09.2018
with liberty to avail alternative remedies as available to it in accordance
with law.
12. The petitioner-Bank got security interest registered with
the Central Registry under Section 26-D of the SARFAESI Act.
Subsequently, a 2nd application under Section 14 of the SARFAESI
Act was moved by the Bank before respondent No. 1.
13. Respondent No. 1 through an order drawn on 12.04.2019
(Annexure P-15 again rejected the apposite application of the
petitioner-Bank.
14. Thereafter, the Bank issued fresh notice under Section 13
(4) of the SARFAESI Act, through registered post, which became
pasted on the premises concerned. Moreover, the said notice was also
published in newspapers but the above notices, were so respectively
pasted and published but only after withdrawal being made of all the
earlier notices.
15. Subsequently, a fresh application cast under Section 14 of
the SARFAESI Act, was preferred by the lending institution concerned
before the District Magistrate concerned.
16. However, through an order drawn thereons on 30.12.2019
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(Annexure P-18), the respondent No. 1, rather rejected the said
application, on the ground that the Bank has not complied with the
provisions of Section 13 (3-A) of the SARFAESI Act, inasmuch as, the
order rejecting the borrower's objections becoming not been passed
within 15 days from the date of receipt of representation or objection,
as made, by the borrower, to the notice issued to it by the lending
institution, thus under Section 13(2) of the SARFAESI Act.
17. The drawing of the orders (supra) (Annexures P-10, P-15
and P-18) has caused pain to the petitioner-Bank, and, has led it to
institute thereagainst the instant writ petition.
Facts of CWP-7952-2021
18. Respondent No. 2 - Company through the State Bank of
India SME Branch, Ludhiana had been sanctioned various credit limits,
thus by the lending institution concerned, but against various secured
assets. On account of non-adherence to financial discipline by
respondent No.2, thus the apposite debt was on 22.10.2014 hence
classified as Non Performing Assets.
19. The petitioner Bank issued on 16.06.2016 notice under
Section 13 (2) of the 'SARFAESI Act', thus calling upon respondent
No.2 to discharge in full its financial borrowings within 60 days from
the date of notice (Annexure P-1).
20. That respondent No. 2-Company filed thereto its objections
under Section 13 (3A) of the SARFAESI Act on 12.08.2016. The said
objections, were duly considered and rejected by petitioner-Bank
through order drawn thereons on 29.08.2016.
21. It is averred in para No. 5 of the paper book that prior to
issuance of notice under Section 13 (2) of the SARFAESI Act, the
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Bank vide letter dated 16.02.2016 had conveyed to respondent No. 2,
that its request for restructuring of loan is approved by the bank on
terms and conditions as mentioned thereins. However, despite repeated
communications being made to the respondents No. 2 and 3, they never
came forward for execution of documents.
22. It has been further averred that thereafter respondent No. 2
submitted an OTS letter dated 06.08.2016 to the bank offering to pay
Rs. 1 crore as full and final payment against an outstanding amount of
Rs. 35,47,22,222/- as on 13.05.2016. However, the said letter was
rejected and duly conveyed to respondents No. 2 and 3 by the Bank
vide letter dated 17.08.2016 (Annexure P-9).
23. That notice under Section 13 (4) of the SARFAESI Act
was issued on 13.04.2017 and the Bank took symbolic possession of
the mortgaged properties.
24. Thereafter, respondent No. 2 - Company instituted a civil
suit against the petitioner-Bank. However, the same was dismissed by
the learned Civil Court vide order dated 19.01.2017, and, appeal
thereagainst was also rejected by the Court of learned Additional
District Judge, Ludhiana.
25. The petitioner-Bank made 1st application under Section 14
of the SARFAESI Act. However, the said application was rejected by
respondent No. 1-District Magistrate, Ludhiana, on account of passing
of stay order in the civil suit by one Jagdeep Singh Behl, who claimed
to be tenant in the disputed premises.
26. Thereafter, the said civil suit filed by Jagdeep Singh Behl
was dismissed vide order dated 30.07.2018. Resultantly, the petitioner-
Bank instituted 2nd application under Section 14 of the SARFAESI
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Act. Respondent No. 2-Company filed representations before
respondent No. 1 against the application for taking physical possession.
The said representations were duly replied by the Bank.
27. Since respondent No. 1 did not take any action thereons.
Accordingly, the Bank filed CWP No. 11385-2020 before this Court
which was allowed vide order dated 07.08.2020, and, a direction was
made to respondent No. 1 to provide assistance to the petitioner-Bank
for its taking physical possession of the secured assets.
28. Thereafter, CM No. 7908-CWP of 2020 was filed by
respondent No. 2 - Company in the writ petition (supra), thus seeking
the recalling of the order dated 07.08.2020, on the ground that the
application of the petitioner-Bank as became made under Section 14 of
the SARFAESI Act, rather was declined by respondent No. 1 vide order
dated 22.01.2020 (Annexure P-21), thus when CWP (supra) was
subjudice before this Court.
29. Vide order dated 15.01.2021, the order made by this Court
on 07.08.2020 was recalled and the petitioner-Bank sought permission
to withdraw the writ petition with liberty to challenge the order dated
22.01.2020 (Annexure P-21) before the appropriate authority.
30. The drawing of Annexure P-21 by respondent No. 1,
whereby the application filed by the petitioner-Bank under Section 14
of the SARFAESI Act, thus has been rejected, has caused pain to the
petitioner-Bank and it has led to institute thereagainst the instant writ
petition.
Submissions of the learned counsel for the petitioner(s).
31. The provisions of Section 13 (3-A) of the SARFAESI Act
are directory and it is not obligatory on part of the secured creditor to
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under Section 13 (3-A) of the SARFAESI Act, rather within 15 days
from the preferment of the apposite objections, thus respond to the said
objections, as became submitted by the borrower. However, reiteratedly
the contemplated thereins period of 15 days, thus for the secured
creditor responding to the borrowers' objection/representation, but from
the date of receipt of such objections, rather are submitted to be not
mandatory but are submitted to be directory.
32. In support of her arguments, the learned counsel for the
petitioner-Bank has placed reliance, upon, a judgement passed by this
Court in case titled as Nippo Foods vs State of Punjab and others,
reported in 2014 (8) R.C.R.(Civil) 2962, relevant para no. 8 whereof,
is extracted hereinafter.
"8. In respect of the second argument that the reasons
were not communicated within 7 days, suffice is to state
that the petitioner has not suffered any prejudice for not
communicating the reasons within 7 days. In fact, a
reading of Section 13(3A) would show that such period is
only directory. No penal consequences are contemplated
by the aforesaid statutory provisions. Therefore, in the
absence of any prejudice and the fact that such provision
is only directory, we do not find any merit in the argument
raised."
33. Further, reliance has been placed on a judgment made by
the Hon'ble Bombay High Court in case titled as M/s. Clarity Gold
Private Ltd and Another versus State Bank of India and Others,
reported in 2011 (13) RCR Civil 422. The relevant paragraphs No. 12
and 13 thereof are extracted hereinafter.
12 The requirement that the secured creditor must
communicate reasons to the borrower for the rejection of
the objection is undoubtedly mandatory because the whole
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object and purpose of subsection (3A) is to enable the
borrower to have some recourse upon a notice being
issued under Section 13(2). However, the failure of the
secured creditor to deal with the representation within a
period of one week does not render the disposal of the
representation invalid. The secured creditor must of
course deal with the representation on an expeditious
basis particularly since under Section 13 a borrower, after
receipt of a notice under sub-section (2) is restrained from
transferring the secured assets without the prior written
consent of the secured creditor.
13 We are in respectful agreement with the judgment of the
Gujarat High Court which holds that every prescription of
a period within which an act has to be done does not
constitute a prescription of a period of limitation, a failure
of compliance with which would render the action invalid.
The object of sub-section (3A) is to provide an expeditious
method for the disposal of objections in order to ensure
that the action of the secured creditor is not held up for an
unduly long period of time. The period of one week that is
prescribed in subsection (3A) is clearly directory. That
apart, the Petitioners have not established that any
prejudice was caused to them by the delay on the part of
the Bank in responding to the representation submitted to
the notice under Section 13(2). That submission must
therefore fail."
34. Reliance in this regard has also been placed on a judgment
made by the Hon'ble Delhi High Court in case titled as 'M/s Kannu
Aditya India Ltd. Vs. State Bank of India to which W.P.(C) No.
11540 of 2018 became assigned. The relevant paragraphs no. 23 to 25
thereof are extracted hereinafter.
" 23. In the present case the requirement that the secured
creditor considered the objection/representation of the
borrower as mandatory but the requirement that he
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communicates its conclusion within fifteen days cannot be
held to be so. It is difficult to accept that the Parliament
intended a secured creditor to forfeit its right to enforce its
security interest on account of failure to respond to the
representation or objection of a borrower within the
stipulated period of fifteen days.
24. In view of the above, the petitioners contention that the
SBI is precluded from taking any action under Section
13(4) of the SARFAESI Act since it had not communicated
its decision to the petitioners representation within a
period of fifteen days from receipt of such representation,
is unmerited.
25. This Court is also of the view that no interference with
the proceedings under the SARFAESI Act are warranted at
this stage. In Authorized Officer, State Bank of Travancore
and Anothers v. Mathew K. C.: (2018) 3 SCC 85, the
Supreme Court considered the contention that borrower
had no option but to prefer a writ petition against an order
passed under Section 13(3A) of the SARFAESI Act, in
absence of a right to appeal under Section 17 of the said
Act. In this context, the Supreme Court held as under:-
"......The legislative scheme, in order to expedite the
recovery proceedings, does not envisage grievance
redressal procedure at this stage, by virtue of the
explanation added to Section 17 of the Act, by Amendment
Act 30 of 2004, as follows :-
"Explanation.- For the removal of doubts, it is hereby
declared that the communication of the reasons to the
borrower by the secured creditor for not having accepted
his representation or objection or the likely action of the
secured creditor at the stage of communication of reasons
to the borrower shall not entitle the person (including
borrower) to make an application to the Debts Recovery
Tribunal under this sub section."
35. The learned counsel for the petitioner further submits, that
Section 14 of the SARFAESI Act, does not confer any adjudicatory
power on the District Magistrate. The District Magistrate under Section
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14 of SARFAESI Act, is not a Court of law with powers to adjudicate
any application under the said Act. Moreover, Section 14 of the
SARFAESI Act is only an executory provision and is not an
adjudicatory provision. The District Magistrate has no power to
adjudicate on the merits of the application. In support of her arguments,
the learned counsel for the petitioner places reliance upon judgments
rendered by the Hon'ble Apex Court in cases titled as 'M/s. R.D. Jain
and Co versus Capital First Ltd.' (AIR 2022 SC 4820);
'Balakrishna Rama Tarle (D) through LRS versus Phoenix Arc
Private Limited' (AIR 2022 SC 4756) ; 'Standard Chartered Bank
versus V Noble Kumar' (2013) 9 SCC 620; and judgment rendered by
this Court in case titled as 'Asset Reconstruction Company India
Limited versus State of Haryana' 2018 (1) PLR 473.
36. The learned counsel for the petitioner also submits that no
opportunity of hearing/ notice is required to be given to the borrower.
The reply/written statement/objections filed by the borrower, either
before the District Magistrate or before the Hon'ble High Court in the
present petition(s), cannot be gone into. The only remedy available to
the borrower is to challenge the apposite order through availing the
remedy as contemplated under Section 17 of the SARFAESI Act.
Submissions of the learned counsel for the respondents-Company.
37. Though there is a mandatory requirement, under Section 13
(3A) of the SARFAESI Act, thus for the apposite objections becoming
mandatorily replied within 15 days from the date of their receipt, but in
the instant case, the said mandatory compliance to the said statutory
provision rather has not been done by the petitioner-Bank.
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38. In support of his arguments, the learned counsel for the
respondents-Company places reliance upon a judgment made by the
Hon'ble Apex Court in case titled as 'ITC Ltd. Vs. Blue Coast Hotels
Ltd. and others' reported in (2018) 15 SCC 99, whereby he contends
that the provisions (supra) are mandatory in nature. The relevant
paragraphs No. 28, 29 and 30, as occur in the verdict (supra) are
extracted hereinafter.
28. Moreover, this provision provides for
communication of the reasons for not accepting the
representation/objection and the requirement to furnish
reasons for the same. A provision which requires reasons
to be furnished must be considered as mandatory. Such a
provision is an integral part of the duty to act fairly and
reasonably and not fancifully. We are not prepared in such
circumstances to interpret the silence of the Parliament in
not providing for any consequence for non-compliance
with a duty to furnish reasons. The provision must
nonetheless be treated as 'mandatory'. We agree with the
view of this Court in this regard in Mardia Chemicals Ltd.
v. Union of India, Transcore v. Union of India and
Keshavlal Khemchand & Sons (P) Ltd. v. Union of India.
We also approve of the view of several High Courts in this
regard.
29. It was submitted on behalf of the creditor that the
conduct of the debtor does not warrant an interference in
this case. However, we are of the view that the
construction of the Act should not be affected by the facts
of a particular case. For, indeed, where the remedy
invoked is a discretionary remedy, the Court may deny
relief if the circumstances so warrant.
30. In the present case, it is a fact that the creditor has
not replied to the debtor's representation, and thus
appears to be in breach of Section 13 (3A), but the
following attendant circumstances are important:
(i) On 26.03.2013, the creditor issued a notice under
Section 13(2) to the debtor to discharge his liabilities
within 60 days. On 27.05.2013 the debtor made a
representation to the creditor containing a proposal for
reschedulement (which was the same as the one made as
far back as on 22.08.2012) and reserving the right to file a
reply.
(ii) On 07.06.2013, the debtor again sent a proposal for
extension of time for repayment, repeating its proposal
dated 27.05.2013.
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(iii) On 20.06.2013, the creditor issued the notice of
possession under Section 13(4). The taking over of
possession was purely symbolic. We are informed that the
debtor is in possession of the hotel till date and is running
its business without any noteworthy repayment.
(iv) On the next day 21.06.2013, the debtor wrote a letter
to the creditor seeking extension of time and enclosed six
cheques for upfront payment of Rs.33.16 crores without
making any reference to the notice of taking over of
possession. The cheques were dishonoured.
(v) On 04.09.2013, the creditor published a Notice of Sale
by Public Auction in the newspaper fixing the date of
auction as 09.10.2013 at a reserve price of Rs. 403 crores.
(vi) Following this the debtor sent a letter to the creditor
on 19.09.2013 undertaking that it will repay all
outstanding installments by 31.12.2013 and that the sale of
assets be deferred up to the said date. The debtor further
stated that it shall not proceed further in respect of their
Securitization Application before the DRT.
(vii) On 08.10.2013, the creditor deferred the sale by
issuing a public notice while considering the debtor's
proposal.
(viii) On 29.10.2013, the creditor granted an opportunity
to the debtor to clear the debt as stated in the debtor's
letter dated 03.10.2013 wherein it sent forth another
proposal for extension of time for repayment stating that it
will repay a principal installment of the corporate loan of
a total of Rs. 89 crores by 31.12.2013. However, the
creditor only extended the time for repayment by 15-20
days.
(ix) On 25.11.2013, "A Letter of Undertaking" was given
by the debtor accepting the schedule given by the creditor
on 29.10.2013 and also acknowledging the right of the
creditor to sell the assets in case of default as per the
above mentioned schedule.
(x) The creditor wrote to the debtor on 08.01.2014
informing the debtor that due to the default in repayment,
the creditor is proceeding with steps to recover the dues
and accordingly rejected the debtor's request letter dated
30.12.2013 seeking further time to repay the outstanding
dues..."
39. That since an OTS (in CWP-7952-2021) is pending before
the DRT, thereby till the decision on the said motion is made by the
DRT concerned, thereupto the lending institution concerned rather was
not leveraged to move an application under Section 14 of the
SARFAESI Act, for therebys the District Magistrate concerned,
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purveying assistance to the lending institution concerned, rather to
assume physical possession of the secured assets concerned.
Analysis of the submissions of the learned counsel for the parties.
40. On analyzing the above made submissions addressed
before this Court by the learned counsel for the petitioner, and, by the
learned counsel for the respondents, this Court deems it fit, that the
hereafter substantial question of law is required to be formulated, and,
is also required to be answered.
41. Whether the provisions encapsulated in Section 13 (3-A)
of the SARFAESI Act, provisions whereof are extracted hereinafter,
whereins there is a statutory duty cast upon the lending institution
concerned to respond to the objections concerned, thus within 15 days
from the date of their receipt/preferment, thus are mandatory or
directory.
13. Enforcement of security interest.--(1) Notwithstanding
anything contained in section 69 or section 69A of the
Transfer of Property Act, 1882 (4 of 1882), any security
interest created in favour of any secured creditor may be
enforced, without the intervention of court or tribunal, by
such creditor in accordance with the provisions of this Act.
(2) Where any borrower, who is under a liability to a
secured creditor under a security agreement, makes any
default in repayment of secured debt or any instalment
thereof, and his account in respect of such debt is
classified by the secured creditor as non-performing asset,
then, the secured creditor may require the borrower by
notice in writing to discharge in full his liabilities to the
secured creditor within sixty days from the date of notice
failing which the secured creditor shall be entitled to
exercise all or any of the rights under sub-section (4).
[Provided that--
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(i) the requirement of classification of secured debt as
non-performing asset under this sub-section shall not
apply to a borrower who has raised funds through issue of
debt securities; and
(ii) in the event of default, the debenture trustee shall be
entitled to enforce security interest in the same manner as
provided under this section with such modifications as
may be necessary and in accordance with the terms and
conditions of security documents executed in favour of the
debenture trustee.]
(3) The notice referred to in sub-section (2) shall give
details of the amount payable by the borrower and the
secured assets intended to be enforced by the secured
creditor in the event of non-payment of secured debts by
the borrower.
[(3A) If, on receipt of the notice under sub-section (2),
the borrower makes any representation or raises any
objection, the secured creditor shall consider such
representation or objection and if the secured creditor
comes to the conclusion that such representation or
objection is not acceptable or tenable, he shall
communicate [within fifteen days] of receipt of such
representation or objection the reasons for
non-acceptance of the representation or objection to the
borrower:
Provided that the reasons so communicated or the likely
action of the secured creditor at the stage of
communication of reasons shall not confer any right upon
the borrower to prefer an application to the Debts
Recovery Tribunal under section 17 or the Court of
District Judge under section 17A.]
Analysis of the contention (supra) of the learned counsel for the
respondent-Company based on the verdict passed in case ITC
Ltd.(supra) by the Hon'ble Apex Court.
42. A reading of the above extracted paragraphs, though also
discloses that irrespective of the above apposite declaration being made
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by the Hon'ble Apex Court, that the apposite statutory provisions, thus
are mandatory in nature, yet the Hon'ble Apex Court further concluded,
that the writ remedy, thus for undoing the said breach rather is a
discretionary remedy, and, that the writ Court becomes empowered to
deny relief to the borrower, if the circumstances so warrant. Therefore,
when in paragraph No. 30, it was concluded that despite the creditor not
replying to the debtors representation and thereby breach being caused
to the provisions of Section 13 (3-A) of the SARFAESI Act, but yet the
attendant circumstances appertaining to the said case, which are
embodied in paragraphs 30.1 to 30.10, also became borne in mind by
the Hon'ble Apex Court, thus to conclude that the conduct of the
debtor, did not warrant any interference in the case (supra), and the
Hon'ble Apex Court made speakings thereins, that the debtor had been
merely seeking time, and, did not intend to repay the loan as promised
to be paid on several occasions.
43. In the said case despite the fact that there was no reply by
the lending institution concerned, to the debtor's representation thereby
yet the Hon'ble Apex Court despite concluding that the apposite
statutory provisions are mandatory in nature, but it proceeded to
conclude that the relief claimed by the borrower for undoing the said
breach is a discretionary remedy, and, for the reasons enclosed in
paragraphs (supra), it ultimately declared that the said discretionary
relief is not to be granted to the debtor. Therefore, if the Hon'ble Apex
Court laid much emphasis on the debtors conduct and also declared that
the relief claimed by the debtor for undoing the breach thus is
discretionary in nature. Resultantly the makings thereins of the above
pre-eminent parameter, by the Hon'ble Apex Court, thus therebys the
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breach as caused to the mandatory provision (supra), rather ex facie
became eclipsed or became inconsequential. As such, the effect of the
conclusions made by the Hon'ble Apex Court, that the coinage 'shall'
occurring in the apposite provision, thus has a mandatory overtone,
rather is to be read in light of the further observation(s) (supra) as made
thereins.
44. Furthermore, when in the said case despite their being no
reply to the debtors representation, reiteratedly the writ discretionary
remedy became declined to the debtor, whereas, in the instant case(s),
there has been a minimal delay rather in the lending institution(s)
responding to the debtors representation(s), therebys the said minimal
delay is not to be stricto sensu construed to be ipso facto making a
blatant transgression to the mandatory statutory provision concerned.
45. The reason being that, as stated in paragraphs (supra)
occurring in the verdict (supra) made by the Hon'ble Apex Court, the
construing of the coinage 'shall' occurring, in the statutory provision
(supra), thus as mandatory in nature, rather has been spelt thereins to
only entail a necessity upon the lending institution to furnish reasons.
However, since in the verdict (supra) no reply to the debtors
representation was made, thus yet reiteratedly the Hon'ble Apex Court
declining the discretionary remedy to the borrower and resting the said
refusal on the errant conduct of the borrower in the said case, whereas,
in the instant case(s), there are evident well made reasons for rejecting
the debtors representation(s).
46. Moreover, when the order(s) rejecting the debtors
representation(s)/objection(s) are well informed orders and/or not
cryptically recorded, therefore, when therebys the mandatoriness
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assigned to the coinage 'shall' occurring thereins, has been in terms of
the paragraph No.28 of the verdict (supra), thus complied with.
47. Resultantly also therebys the delay beyond 15 days in the
secured creditor, responding to the debtors concerned, cannot be
concluded to be either absolutely or in toto breaching the mandate as
enclosed in Section 13(3-A) of the SARFAESI Act, especially when
therebys no evident prejudice has accrued to the borrower.
48. Be that as it may, additionally since alike the conduct of
the borrower in case titled as ITC Ltd. Vs. Blue Coast Hotels Ltd.
(supra), the conduct of the borrower(s) in the instant case(s), sparks an
inference that they are employing dilatory tactics so as to evade the
liquidation of borrowings to the financial institution concerned.
Resultantly when therebys they appear to be destroying the holistic
purpose of the statutory provisions enclosed in the SARFAESI Act,
thus to expeditiously beget bad debt remediation. Resultantly therebys
this Court also does not deem it fit to accord the discretionary relief to
the borrower's concerned.
49. Furthermore, when in the said case the Hon'ble Apex Court
did not consider the provisions of Section 17 of the SARFAESI Act
whereunders a statutory remedy is purveyed to the borrower, in the
event of breach being caused to the apposite mandatory statutory
provision, to thus recourse the said statutory remedy.
50. Moreover, when therebys there was a complete dis-
empowerment in the District Magistrate concerned, to make an
adjudication upon the said objection, given the District Magistrate
concerned being only an executory functionary, and, not being an
adjudicatory forum, whereas, the adjudicatory forum for redressing the
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grievance of the borrower anviled upon breach being caused to the
statutory provisions concerned, was through a statutory appeal being
raised under Section 17 of the SARFAESI Act, thus before the
Appellate Authority concerned.
Further analysis by this Court.
51. For the reasons to be assigned hereinafter, this Court is of
the view, that the lending institution concerned, is not under any
mandatory statutory obligation, to respond to the relevant objections,
rather within 15 days from the receipt of such representation or
objection, unless therebys demonstrable grave prejudice is caused to the
objector and/or the said statutory mandatory obligation is restricted
only to the objectors representation(s), being decided rather through a
well informed non cryptic order, besides the breach, if any, caused to
the said mandatory provision thus may be undone but only upon
evidence surging forth, thus suggestive that there is no errant conduct
on the part of the borrower in ensuring the maintenance of financial
discipline.
52. Consequently, the said provision in the above context is
not mandatory in nature rather is directory in nature. In sequel, the
omission to communicate the relevant decision to the objector, thus
within 15 days from the receipt of such representation(s) or objections,
does not cause any causality, to the application(s) moved by the
petitioner-Bank, under Section 14 of the SARFAESI Act before the
District Magistrate nor the District Magistrate was required to dismiss
the said application(s), especially when he is only contemplated to be
an executing functionary, and, is not empowered to make any
adjudication on the said application(s). Predominantly when as in the
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instant case(s), apart from the above argument, no ground became
raised either before the District Magistrate concerned or before this
Court, thus devolving upon the factum, that the apposite statutory
ingredients carried in Section 14 of the SARFAESI Act, thus evidently
became breached.
53. Be that as it may, this Court also for the reasons assigned
hereafter, concludes that since the remedy to challenge the rejection of
the apposite objections by the lending institution, thus on the ground
that it was not communicated within 15 days, but was communicated
rather within 21 days (in CWP-11641-2020), and within 49 days (in
CWP-7952-2021), thus from the date of receipt of the said
communications, is not through the said agitation being laid before the
District Magistrate, but is through an appeal thereagainst becoming
filed under Section 17 of the SARFAESI Act, thus before the Appellate
Authority concerned.
54. The reason for making the said conclusion becomes
banked upon.
a) The judgment(s) relied upon by the learned counsel
for the petitioner making clear and candid underlinings that the said
provision is merely directory in nature and is not mandatory. Therefore,
when the apposite decision(s) became conveyed to the objector(s) not
within fifteen days from the receipt of such representation(s) or
objections but were communicated thereafters' to the
objector(s)/borrower(s), besides when there is no demonstrable
evidence that therebys prejudice has ensued to the
objector(s)/borrower(s). Resultantly therebys the apposite
communication(s) if were not made rather by the Bank within fifteen
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days from the receipt of such representation(s) or objections. Therefore,
the communication of the apposite decisions to the objector
respectively within 21 days (in CWP-11641-2020) and within 49 days (
in CWP-7952-2021), does not at all render vitiated, the institution of an
application cast under Section 14 of the SARFAESI Act, by the
lending institution before the District Magistrate concerned.
b) Secondarily, if this Court concludes that the said
provisions are contextually directory in nature. Consequently, when it
has been declared in judgments (supra) that the statutory mechanism
created under Section 14 of the SARFAESI Act, thus empowering the
District Magistrate concerned, to purvey the asked for assistance(s) to
the lending institution concerned, to assume physical possession of the
secured assets, rather is only an executory mechanism for expeditiously
remedying a bad debt. Resultantly the said limited jurisdiction
conferred upon the District Magistrate concerned, was not required to
be enlarged or expanded, into an appellate adjudicatory mechanism, as
became untenably done by the District Magistrate concerned, through
his rejecting the said application, after concluding that there is want of
adherence to the statutory mandate enclosed in provision (supra),
especially when even the said decision is completely outside the
domain of the expostulations of law (supra), as made in the verdicts
(supra).
c) Thirdly, since the statutory mechanism whereby the
objector could redress his grievances relating to the relevant breach in
the manner (supra) becoming caused to the statutory provision (supra),
is through its/his availing the remedy constituted under Section 17 of
the SARFAESI Act. Therefore, the District Magistrate concerned was
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also thereby not required to be making any adjudication on the
objection (supra) raised before him against the providing of assistance
to the lending institution concerned to assume physical possession of
the secured assets. Contrarily, he was required to be purveying the said
asked for assistance but irrespective of the objections raised by the
debtor, anviled rather on the mis-founded premise (supra).
d) Moreover, he was also required to relegate the
objector(s) to the statutory remedy contemplated in Section 17 of the
SARFAESI Act, for therebys the objector(s) propagating a premise, that
there is a purported breach caused to the mandate enclosed in Section
13 (3-A) of the SARFAESI Act, thus on the ground that there is any
purported non adherence to the mandate enclosed thereins, relating to
the apposite communication(s) being respectively made rather within
21 days (CWP-11641-2020) or within 49 days (in CWP-7952-2021),
and the said not being made within the statutory prescribed period of 15
days.
55. Though the learned counsel for the objector/respondent (in
CWP-7952-2021) has forcefully contended before this Court, that since
the objector has thus raised before the DRT a plea, whereby it intends
to challenge the orders made by the financial institution concerned, thus
rejecting the apposite OTS proposal emanating from the creditor
concerned. Therefore, though therebys it is further contended that till a
decision on the said motion is made, thereupto the lending institution
was not required to be moving an application under Section 14 of the
SARFAESI Act before the Magistrate, rather also is a flimsy raised
argument and is required to be rejected.
56. The reason for rejecting the said arguments, is founded on
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the premise, that the mere floating of an OTS proposal, by the creditor
concerned, unless it is complied with under orders made by the DRT, or
the entire sums of monies as offered thereunders to the borrowers
concerned rather are liquidated, to the financial institution concerned.
Resulantly when therebys the borrower may claim the employment vis-
a-vis it/her/him, thus the principle of promissory estoppel or legitimate
expectation. However, when evidently the entire sums embodied in the
apposite offer made by the lending institution to the borrower, rather
remains uncomplied with, thereupon, when neither the principle of
legitimate expectation nor the equitable doctrine of promissory
estoppel, thus is workable vis-a-vis the borrower concerned.
57. Resultantly therebys even if assumingly there is a
subjudice challenge to the order made by the financial institution
concerned, thus rejecting the OTS proposal of the borrower, or if the
said challenge is intended to be made, rather the said factum, does not
either preclude nor pre-empts the petitioner-Bank to recourse the
mandate of Section 14 of the SARFAESI Act.
58. Before parting, this Court has consistently noticed that the
District Magistrates concerned are repeatedly breaching the mandate of
law as enclosed in the instant verdict. Therefore, the Registry of this
Court, under intimation to this Court is directed to purvey a copy of this
verdict to all the District Magistrates, exercising jurisdiction as such
under Section 14 of the SARFAESI Act, so that compliance to the
verdict of even date is meted by all the District Magistrate concerned.
FINAL ORDER OF THIS COURT.
59. In aftermath, this Court finding merit in both the writ
petition(s), thus they are with the observation(s) aforesaid, hence
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allowed, and, the impugned orders are quashed and set aside.
60. The District Magistrate concerned is directed to forthwith
make an order for therebys assistance(s) being purveyed to the
petitioner-Bank to assume physical possession over the secured assets
concerned.
61. Since the main case(s) itself have been decided, thus, all
the pending application(s), if any, also stand(s) disposed of.
(SURESHWAR THAKUR)
JUDGE
(LALIT BATRA)
18.04.2024 JUDGE
kavneet singh
Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No
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