1. This Appeal is preferred against order dated 28.11.2019 in Securitization Application (S.A.) No. 49/2019 on the file of Debts Recovery Tribunal No. I, Ahmedabad (the Tribunal below). Brief facts that are necessary for the purpose of this Appeal are as follows.
2. Respondents herein filed S.A. No. 49/2019 challenging the actions of Bank dated 19.01.2019 through which Appellant is said to have taken symbolic possession of the property. Appellant herein filed reply to the said S.A. on 09.03.2019. When the S.A. was pending for hearing, on 23.09.2019 Appellant took physical possession of the very same property. Respondents filed application to amend the S.A. to include the action of taking of physical possession. On hearing both sides Tribunal below directed Bank to restore physical possession. Aggrieved by the said direction present Appeal is preferred.
3. Heard both sides.
4. Advocate for Appellant contended that the impugned order is completely contrary to law and the Tribunal below exceeded its jurisdiction. It is further submitted that the Tribunal below passed impugned order thinking that it has inherent powers, but the statute does not provide any such power. It is further submitted that Tribunal below granted final relief at the interim stage which is illegal. It is further submitted that while considering the amendment application and granting time for reply, giving direction to restore physical possession is absolutely incorrect. Advocate for Appellant further submitted that mere pendency of S.A. does not operate as stay and as such the Bank has every right to take further steps. It is further submitted that the Tribunal below applied decision of Honble Supreme Court in Standard Chartered Bank V/s. V. Noble Kumar & Ors. [(2013) 9 SCC 620] as if it a statute.
5. On the other hand, Advocate for Respondents submitted the Tribunal below passed the order by exercising its power u/s 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act) and nowhere in the said section it is stated that only under final order, restoration of possession has to be given. It is submitted that Bank has already exercised its option u/s
13 (4) of the SARFAESI Act and because of resistance it restricted with recording symbolic possession and in such circumstances, the remedy available for the Bank is to invoke Section 14 as per the V. Noble Kumars case (Supra) and as the Bank without availing such remedy, high handedly with the help of muscle men took forceful possession which was recognized by the Tribunal below and ordered for restoration of possession. It is submitted that the order of the Tribunal below is proper and correct and that there are no grounds to interfere.
6. Both sides relied on some judgments and I would refer to them as and when necessary.
7. When arguments were in progress, it was put to Advocate for Appellant to clarify whether there are any two steps like symbolic possession and physical possession for taking measures u/s 13 (4) of SARFAESI Act. Advocate Ms. Nalini Lodha took time to clarify it. On the next date of hearing, Mr. Percy Kavina, Sr. Advocate appeared on behalf Appellant and continued arguments and to the query pointed out, he submitted that u/s 13 (4) of SARFAESI Act only one step for taking possession is provided and in this case taking of possession commenced on 19.01.2019 and concluded on 23.09.2019, but he conceded that as per settled law there is no dichotomy between symbolic possession and physical possession. Now it may be relevant to examine possession notice dated 19.01.2019 to know what kind of action Bank initiated on that day. This document is dated 26.02.2019 with nomenclature of possession notice for immovable property. The actual wording used in this document as to possession that was taken on 19.01.2019 is as follows: The Borrower having failed to repay the amount, notice is hereby given to the borrower / guarantor and the public in general that the undersigned has taken Symbolic possession of the property described herein below in exercise of powers conferred on him / her under sub section 4 of Section 13 of the Act read with Rule 8 of the Security Interest Enforcement Rules, 2002 on this 19th day of January of the year 2019.
8. From the above it is clear that Authorized Officer has taken symbolic possession of the property. Said action is challenged before the Tribunal below u/s 17 of the SARFAESI Act by filing S.A.
9. Now the challenge is about the order passed on 28.11.2019 which relates to action taken by Bank on 23.09.2019.
10. Advocate for Appellant while referring to judgment of Madras High Court in M/s. Lakshmi Shankar Mills (P) Ltd. & Ors. V/s. Authorized Officer / Chief Manager, Indian Bank & Ors. reported in AIR 2008 Madras 181 submitted that the Tribunal has no power to pass any interim mandatory order referring to restoration of possession and as the impugned order is only a interim order restoring the possession, as per this decision, it is an illegal order and the same is liable to be set aside. On the other hand Advocate for Respondents submitted in para 15 of the very judgment, Madras High Court has observed that there is no specific provision u/s 17 of the SARFAESI Act empowering the Tribunal to pass interim orders and if Section 17 (7) of the SARFAESI Act is read along with Section 19 (12) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDDB&FI Act), it would be clear that the Tribunal has also jurisdiction to pass interim order u/s 17 (7) of the SARFAESI Act in appropriate cases. Referring to above observation, Advocate for Respondents submitted the case on hand is appropriate case to exercise powers and Tribunal below rightly exercised them. In the above referred Madras High Court decision, a petition u/s 17 of the SARFAESI Act is filed challenging action u/s 13 (4) and in that application an interim application is filed seeking the very same relief and the DRT granted interim relief while main case was pending for the very same relief and in those circumstances Madras High Court held that DRT has no power to order restoration of possession without passing final order. As rightly pointed by Advocate for Respondents, that decision has no application here. Because when the S.A. was pending, with the help of a private agency Bank took possession during the absence of borrower. In those circumstances, Tribunal below directed restoration of possession.
11. One of the contentions of Advocate for Appellant is that Noble Kumar case (Supra) is relied on by Tribunal below as if it is statute and a judgment cannot be read as statute. For that proposition he relied on judgment of Honble Supreme Court in Goan Real Estate & Construction Ltd. & Anr. V/s. Union of India through Secretary, Ministry of Environment & Ors. reported in 2010 SCC 388. In the above said judgment observation is made that it is trite and should not be read in isolation and out of context. In Noble Kumar case (Supra), the issue raised before the Honble Supreme Court was that the Bank cannot bypass Section 13 (4) of the SARFAESI Act and invoke provision of Section 14 of the Act. In other words in that case it was contended only after invoking Section 13 (4) of the Act the Authorized Officer has to resort to Section 14 of the Act and clarifying this Honble Supreme Court has formulated three methods for the secured creditor to take possession of the secured assets which are as follows :
(i) The first method would be where the secured creditor gives the requisite notice under rule 8(1) and where he does not meet with any resistance. In that case, the authorised officer will proceed to take steps as stipulated under rule 8(2) onwards to take possession and thereafter for sale of the secured assets to realise the amounts that are claimed by the secured creditor.
(ii) The second situation will arise where the secured creditor meets with resistance from the borrower after the notice under rule 8(1) is given. In that case he will take recourse to the mechanism provided under section 14 of the Act viz. making application to the Magistrate. The Magistrate will scrutinize the application as provided in section 14, and then if satisfied, appoint an officer subordinate to him as provided under section 14 (1)(A) to take possession of the assets and documents. For that purpose the Magistrate may authorise the officer concerned to use such force as may be necessary. After the possession is taken the assets and documents will be forwarded to the secured creditor.
(iii) The third situation will be one where the secured creditor approaches the Magistrate concerned directly under section
14 of the Act. The Magistrate will thereafter scrutinize the application as provided in section 14, and then if satisfied, authorise a subordinate officer to take possession of the assets and documents and forwards them to the secured creditor as under clause (ii) above.
12. So, the provision u/s 13 (4) and 14 of the Act are comprehensively examined and the methods to be followed by secured creditor are enumerated in the above referred Noble Kumars case. As per Article 141 of the Constitution, this decision is binding and the Tribunal below rightly followed it and the objection of Bank on this aspect is not at all tenable.
13. Some decisions are cited to show that simply because S.A. is filed the bank is not prevented from taking further steps. There cannot be any second opinion about this principle because unless there is specific stay the Bank need not stop its further action. But the crucial point is what is further action. Section 13 (4) of Act contemplates only one step of taking possession. So it is for the secured creditor to make up its mind at the time of initiating this measure, whether it can be satisfied with symbolic possession or whether it require physical possession to proceed further of selling property. Only after making up its mind it should proceed further. Here from the notice dated 19.01.2019 the secured creditor contemplated of taking possession but evidently it has not succeeded in taking physical possession contained with symbolic possession. When that is the situation, having availed the measure u/s 13 (4) of the Act, it cannot again take the very same measure for a different purpose viz. physical possession particularly when that action was challenged and the matter was pending. In my view, minimum expected from the Bank is to seek permission of the Tribunal below to go for the very same step. When Bank has to take recourse under Section 14 of the Act seeking assistance of District Magistrate or Chief Judicial Magistrate, taking assistance of private agency, in my view, is completely malafied action. Admittedly, no remedy is provided under the statute to take assistance of private agency. But for the reasons best known, the Authorized Officer opted for private agency services ignoring the fact that it has remedy u/s 14 of the Act. If the Bank has proceeded further of issuing Sale Notice and putting the property for sale in pursuance of symbolic possession taken on 19.01.2019 pending of S.A. would not come in the way. But what the Bank did was same measure was again taken by interpreting it as further course of action which cannot be accepted. So under these circumstances, the Tribunal below was perfectly right in ordering for restoration of possession as the action of the Authorized Officer is arbitrary and illegal. Appellant Bank, in spite of correcting its malafied action, vehemently supported such arbitrary and illegal action through this Appeal.
14. For these reasons, I do not find any wrong in the order of the Tribunal below, therefore, Appeal is liable to be dismissed. Accordingly Appeal is dismissed with costs.
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