Securitization and Reconstruction of Financial Assets and Enforcement of Security interest Act, 2002 (SARFAESI Act) – Section 14 – Security Interest (Enforcement) Rules, 2002 – Rule 8(6) – Writ petition is dismissed on the ground of availability of alternate remedy.

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

HON’BLE MR. JUSTICE VIJAY BISHNOI

Judgment / Order 09/02/2018

S.B. Civil Writ Petition No. 1958 / 2018

1. Sh. Anil Kumar Sotwal, S/o Sh. Pukhraj Ji, Aged About 49 Years, Resident of Prem Niwas, Sardarpura, First B Road, Kumharon Ka Mandir, Jodhpur. 2. Smt. Kiran Sotwal, W/o Sh. Anil Sotwal, Aged About 40 Years, Resident of Prem Niwas, Sardarpura, First B Road, Kumharon Ka Mandir, Jodhpur. 3. M/s Image Point, a Proprietorship Firm Having Its Office, At A- 19, Dalle Khan Circle, Akhaliya Vikas Yojana, Jodhpur Through It Proprietor Sh. Anil Kumar Sotwal. —-Petitioners

Versus

1. The District Magistrate Cum District Collector, Collectorate, Paota Circle, Jodhpur. 2. Aditya Birla Housing Finance Ltd, 3rd Floor, UCO Bank Building, Parliament Street, New Delhi- 110001 Through Its Managing Director. 3. Authorized Officer, Aditya Birla Housing Finance Limited, 1st Floor, PRM Plaza, 947, 10th D Road, Sardarpura, Jodhpur. —-Respondents

For Petitioner(s) : Mr Vishal J. Dave Mr Falgun Buch Mr Nipun Singhvi

This writ petition is filed by the petitioners praying for following reliefs:

“It is, therefore, most humbly and respectfully prayed that this writ petition may kindly be allowed and i. By an appropriate writ order or direction, the impugned order dated 08.11.2017 (Annex-8) passed by the District Magistrate Jodhpur while exercising its power under Section 14 of Securitization and Reconstruction of Financial Assets and Enforcement of Security interest Act (hereinafter to be referred as ‘the SARFAESI Act’) may kindly be quashed and set aside, the respondent NBFC may kindly be directed to restore the possession of the petitioners on the property in question.

ii. By an appropriate writ order or direction, the impugned notice dated 15.01.2018 (Annex-10) informing the petitioners about the auction proceedings proposed to be taken by the respondent NBFC and all further proceedings may kindly be quashed and set aside and the respondent NBFC may kindly be directed to accept the outstanding amount due on the part of petitioners and regularize/upgrade the loan account of the petitioners.

iii. Any other appropriate, writ, direction or order which this Hon’ble Court may deem it just and proper in the facts and circumstances of the case, may kindly be issued.

iv. Cost of this writ petition may kindly be awarded to the humble Petitioner.”

Facts of the case, in a nutshell, are that the petitioners took a loan of Rs.2,47,00,000/- from respondent No.2 – Aditya Birla Housing Finance Ltd. by mortgaging a house – Prem Niwas situated at 1st B Road, Sardarpura, Kumharon-ka-Mandir, Jodhpur admeasuring 146.60 square yards (hereinafter to be referred ‘as the property in question’), for which an agreement was executed between the petitioners and the respondent No.2 on 29.02.2016. The account of the petitioners was declared as Non Performing Asset (NPA) on 14.06.2017 and thereafter notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’ hereinafter) was issued on 08.07.2017 and another notice under under Section 13(4) of the SARFAESI Act was issued on 13.09.2017 and thereafter the respondent No.2 moved an application under Section 14 of the SARFAESI Act before the District Magistrate, Jodhpur on 16.10.2017.

The District Magistrate, Jodhpur while exercising powers under section 14 of the SARFAESI Act passed the order dated 08.11.2017 and the possession of the property in question was taken by the respondents on 26.12.2017 and vide letter dated 15.01.2018, the property in question is put to e-auction to be held on 22.02.2018.

This Court has raised a query why this writ petition be not dismissed in view of the alternate remedy available to the petitioners to file an appeal under Section 17 of the SARFAESI Act. In response to the said query, learned counsel for the petitioners has submitted that as a matter of fact the petitioners are challenging the order dated 08.11.2017 passed by the District Magistrate, Jodhpur while exercising powers under section 14 of the SARFAESI Act and the notice dated 15.01.2018 issued by the Authorized Officer for the respondent No.2 under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002 (for short ‘the Rules of 2002’) and against the said order and notice, the petitioners cannot file appeal under section 17 of the SARFAESI Act and, therefore, this writ petition cannot be dismissed on the ground of availability of alternate remedy.

In support of the above contention, learned counsel for the petitioners has placed reliance on decisions of Hon’ble Supreme Court rendered in Standard Chartered Bank vs. V. Noble Kumar and Ors., (2013) 9 SCC 620 and Harshad Goverdhan Sondagar vs. International Assets Reconstruction Company Ltd. and Ors., (2014) 6 SCC 1. He has also placed reliance on a decision of Gujarat High Court dated 11.10.2012 rendered in Consumer Protection and Analytic Committee vs. State of Gujarat & Ors. (Writ Petition (PIL) No.68/2012).

Upon careful perusal of the averments made in the writ petition, this Court is of the opinion that the petitioners very cleverly and deliberately not prayed for quashing the notice issued under section 13(2) of the SARFAESI Act on 08.07.2017 and the notice under section 13(4) of the SARFAESI Act dated 13.09.2017, both issued by respondent No.2, in the prayer clause of the writ petition, however, in para No.13 of the writ petition, the petitioners have specifically mentioned that they are filing this writ petition being aggrieved with the notice dated 08.07.2017 (issued under section 13(2)), notice dated 13.09.2017 (issued under section 13(4)) as well as the order dated 08.11.2017 passed by the District Magistrate, Jodhpur and the notice dated 15.01.2018 issued by the Authorized Officer of respondent No.2.

Even in the first ground of the writ petition, it is clearly averred that the notices dated 08.07.2017 and 13.09.2017 deserve to be quashed and set aside. For convenience, the relevant portions of the writ petition are reproduced hereunder:

“Being aggrieved of the entire chain of events more particularly the notice dated 08.07.2017, 13.09.2017, 08.11.2017, 15.01.2018 and the illegal action of taking forceful possession of the petitioner’s property on 26.12.2017, the petitioners have preferred this instant writ petition on following amongst other grounds:

GROUNDS

A. That at the very outset, the actions initiated by the respondent NBFC including issuance of notice dated 08.07.2017, 13.09.2017, 08.11.2017, 15.01.2018 and the illegal action of taking forceful possession of the petitioner’s property on 26.12.2107 suffers from manifest illegality and deserves to be quashed and set aside.”

From the above noted facts, it is clear that the petitioners have challenged the action of the respondent No.2 of issuing notice under Section 13(4) of the SARFAESI Act in this petition.

Otherwise also, the action of the respondent No.2 of approaching the District Magistrate under Section 14 of the SARFAESI Act is only a measure taken by the secured creditor i.e. respondent No.2 for taking possession of the secured assets as per the provisions of Section 13(4) of the SARFAESI Act.

Section 17 of the SARFAESI Act provides that any person (including borrower) aggrieved by the measure referred to in sub-section 4 of Section 13 taken by the secured creditor may prefer an appeal before the Debts Recovery Tribunal. Hence, it cannot be said that the petitioners cannot avail the remedy of appeal under section 17 of the SARFAESI Act.