2019 (11) TMI 114 - HC - Indian Laws

Maintainability of application - lack of availability of the regular appellate forum - principle of ubi jus ibi remedium - whether separate notices under Section 13(4) of the SARFAESI Act, pertaining to different secured assets for a single debt, can be challenged in a single application under Section 17 of the said Act? HELD THAT - Section 17(1) of the SARFAESI Act provides that any person, including the borrower, aggrieved by any of the measures referred to in Section 13(4), may make an application along with such fee, as may be prescribed, to the Debts Recovery Tribunal having jurisdiction in the matter within the time as specified therein - The Debts Recovery Tribunal, upon an examination of the facts and circumstances and evidence produced by the parties, has the power to set at naught such measures under Section 13(4). It may also hold that such measures were taken in accordance with law, which shall entitle the secured creditor to take recourse to the measures to recover his secured debt. A perusal of Section 19(1) of the DRT Act, in conjunction with Section 17(1A) of the SARFAESI Act, indicates that the primary consideration for ascertaining the jurisdiction of the tribunal is not restricted to the situs of the secured asset but is primarily based on the debt itself, be it with regard to the place where the cause of action, wholly or in part, arises or the branch or any other office of a bank or financial institution where it is maintaining an account in which the debt claimed is outstanding for the time being or (in the DRT Act) the defendant resides or works. In the present situation, if the argument of the opposite parties is to be accepted, the borrowers/petitioners have to file several different applications under Section 17(1) of the SARFAESI Act before the different tribunals respectively having territorial jurisdiction over the secured assets, for the same debt, each time paying the amount of fees specified for such debt, since there is no provision for segregation or apportionment of the fees payable within the scope of Rule 13(2) of the said Rules. The said proposition, ipso facto, is absurd, since for the same grievance, the applicant cannot be expected to deposit fees several times over - Hence, the argument as to the petitioners avoiding fees returns as a boomerang against the opposite parties themselves inasmuch as the relevant provisions, as discussed above, indicate that the fees have to be put in on the basis of the debt alone. Thus, it is obvious that, for a single debt, the borrowers have to file a single application under Section 17(1) in a tribunal having jurisdiction of the borrowers choice, as provided in Section 17(1A) of the SARFAESI Act, putting in a single fee pertaining to the debt‐in‐question, in consonance with the chart provided under Rule 13(2) of the aforesaid Rules of 2002. The several notices, be those under Section 13(2) or Section 13(4) of the SARFAESI Act, pertain to the same debt and since the petitioners challenged measures taken under Section 13(4) in respect of a single debt, the cause of action of the said application is a composite bundle of facts, taking within its fold all the said three separate notices, since those emanate from the same single debt, permitting the petitioners to file a single application under Section 17(1) of the SARFAESI Act before a tribunal of their choice within the latitude provided under Section 17(1A) of the SARFAESI Act, which was precisely done by the petitioners in the present case. Application allowed.

Summary

Issues Involved:
1. Maintainability of a single application under Section 17 of the SARFAESI Act for multiple secured assets.
2. Jurisdiction of the Debts Recovery Tribunal (DRT) in relation to the location of secured assets and the debt.
3. Fee determination for applications under Section 17 of the SARFAESI Act.

Issue-wise Detailed Analysis:

1. Maintainability of a Single Application under Section 17 of the SARFAESI Act for Multiple Secured Assets:
The primary issue was whether a single application under Section 17 of the SARFAESI Act can challenge multiple notices under Section 13(4) pertaining to different secured assets for a single debt. The petitioners argued that Section 17 allows for a single application since the debt is singular. The court observed that Section 17(1) provides for an application to the DRT having jurisdiction in the matter, and it is tied to the debt, not the secured assets. The tribunal had erroneously directed the petitioners to file separate applications for each notice, which was set aside by the court. The court concluded that for a single debt, a single application is maintainable, even if multiple secured assets are involved.

2. Jurisdiction of the Debts Recovery Tribunal (DRT) in Relation to the Location of Secured Assets and the Debt:
The court examined the jurisdiction of the DRT under Section 17(1A) of the SARFAESI Act, which allows the application to be filed where the cause of action arises, where the secured asset is located, or where the bank maintains the account. The court emphasized that the jurisdiction is primarily based on the debt itself, not the location of the secured assets. The measures under Section 13(4) are related to the recovery of the secured debt, and the tribunal's jurisdiction is determined by the debt, not the assets. The court held that the location of the assets is irrelevant for deciding the jurisdiction of the tribunal.

3. Fee Determination for Applications under Section 17 of the SARFAESI Act:
The court addressed the argument regarding the avoidance of fees by filing a single application. According to Rule 13(2) of the Security Interest (Enforcement) Rules, 2002, the fee payable is based on the amount of debt due, not the valuation of the assets. The court noted that if the petitioners were required to file multiple applications, they would have to pay the fee multiple times for the same debt, which is unreasonable. The court concluded that the fee is tied to the debt, and a single fee is payable for a single application under Section 17, regardless of the number of secured assets involved.

Conclusion:
The court allowed the petition, setting aside the tribunal's order and directing it to dispose of the application under Section 17 afresh on merits. The court held that a single application is maintainable for a single debt, even if it involves multiple secured assets, and the jurisdiction of the tribunal is based on the debt, not the location of the assets. The fee for the application is determined by the debt amount, not the asset valuation.