2010 (2) TMI 1251 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the action under Section 14 of the Securitisation Act amounts to taking measures under Section 13(4) of the Act.
2. The maintainability of appeals under Section 17 of the Act against actions taken under Section 14.

Summary:

Issue 1: Whether the action under Section 14 of the Securitisation Act amounts to taking measures under Section 13(4) of the Act.

The High Court examined whether the steps taken by the District Magistrate under Section 14 of the Securitisation Act could be considered as measures under Section 13(4) of the Act. The court referred to the Supreme Court's decision in Transcore vs. Union of India, which clarified that the concept of "possession" under the Act does not distinguish between symbolic and physical possession. The court noted that Section 14 prescribes the manner in which possession of secured assets is to be taken by the secured creditor and that such possession is a measure under Section 13(4). Therefore, actions under Section 14 are indeed measures under Section 13(4).

Issue 2: The maintainability of appeals under Section 17 of the Act against actions taken under Section 14.

The appellants had initially challenged the District Magistrate's order under Section 14 by filing appeals under Section 17, which were dismissed by the Debt Recovery Tribunal (DRT) as premature. The High Court held that the DRT erred in its decision, as measures taken under Section 14 are indeed measures under Section 13(4) and thus can be challenged under Section 17. The court also noted that the learned Single Judge should not have decided the legality of the measures taken under Section 14, as the appellants had a forum to challenge such actions before the DRT under Section 17.

Consequently, the High Court set aside the orders of the learned Single Judge and the DRT, restoring the appeals to the DRT for a decision on merits after notice and hearing the parties. Both appeals were allowed with no order as to costs.