2015 (10) TMI 92 - HC - Companies Law

Challenging of order under Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Petitioner contends that they were not given any opportunity of being heard before passing of the said order Petitioner further holds that the amount due towards the Respondent was not verified and permission for possession of assets of the Petitioner was not justified Held That - There was no dispute regarding the amount due as the same has not been paid and neither the notice issued earlier under Section 13(2) was challenged - Section 14 does not contemplate any notice to be given by the District Magistrate nor does it contemplate any opportunity of being heard - Possession of the assets of the Petitioners was compliance of Section 14 Petition being devoid of merits was dismissed - Decided in favour of the Respondent.

Summary

Issues:
Challenge to order under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Violation of principles of natural justice - Opportunity of hearing - Compliance with Section 14 of the Act.

Analysis:
The petitioners challenged an order dated 10.11.2009 passed by the District Magistrate (Collector), Jaipur, under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Initially, the petitioners filed a writ petition, which directed them to approach the Debts Recovery Tribunal under Section 17 of the Act based on a Supreme Court decision. Subsequently, the petitioners filed a securitisation application before the DRT, which was dismissed on the grounds that the order under Section 14 was not appealable under Section 17. The present petition was filed again challenging the initial order under Section 14 of the Act.

The learned counsel for the petitioners argued that the impugned order violated the principles of natural justice as the petitioners were not given an opportunity of hearing. He contended that the District Magistrate did not verify the correctness of the amount due from the petitioners. Referring to Section 14(1) of the Act and a Supreme Court decision, it was argued that the District Magistrate should not have allowed the respondent to take possession of the petitioners' assets without proper verification.

The Court noted that the petitioners had not paid the outstanding dues to the bank since 2007, amounting to over Rs. 40 lacs. The petitioners did not challenge the proceedings under Section 13 or the notice issued under Section 13(2) of the Act. As there was no dispute regarding the dues and no payment made since 2007, it was presumed that the petitioners were avoiding payment. The Court emphasized that Section 14 does not mandate notice or an opportunity of hearing by the District Magistrate to defaulters. It was held that the District Magistrate's decision to allow the respondent to take possession with police assistance was in compliance with Section 14 of the Act. Consequently, the Court found no illegality in the impugned order.

Therefore, the petition was dismissed as it lacked merit, and the stay application was also dismissed accordingly.