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2016 (1) TMI 281 - HC - Indian LawsValidity of proceedings under SARFAESI Act - taking possession or interfering with the rights and ownership of the petitioner in property - It is averred that the petitioner was shocked to see the said notice as the petitioner had not taken any loan on the said property in question nor mortgaged the property to respondent No.1 Federal Bank Limited. It is urged that the petitioner is not an overnight inductee, inducted by the borrower to defeat the rights of respondent No.1. Held that - The facts of the present case are that the petitioner claims to be a bona fide purchaser of the property without knowledge of the prior alleged mortgage by the borrower in favour of respondent No.1. The contentions of the petitioner would necessarily have to be adjudicated upon under Section 17 of the SARFAESI Act by the DRT. It would not be for the CMM to adjudicate on the rights of the petitioner. Hence, there is no merit in the submission of the petitioner about illegality of the order of CMM dated 6.7.2015. The petitioner has an alternative remedy which he has availed. Hence, this Writ Petition would not be maintainable (Re Kanaiyalal Lalchand Sachdev & Ors. v. State of Maharashtra & Ors. (2011 (2) TMI 1277 - SUPREME COURT OF INDIA) . It would be open for the petitioner to raise all his objections before the DRT in the petition under Section 17(1) which is pending being SA 43/2015. The concerned Tribunal may deal with the said petition of the petitioner in accordance with law. Keeping in view the above facts it would be in the interest of justice that adjudication takes place on the contentions of the petitioner before any adverse steps are taken against the property. We accordingly direct that parties will continue to maintain status quo as on 4.8.2015 when interim orders were passed by this Court till adjudication of S.A.43/2015 filed under section 17 of the Act by the petitioner which is pending before DRT. However, respondent No. 1 is given liberty to approach DRT with an appropriate application for vacation/modification of the present directions passed by us in case it so desires.
Issues Involved:
1. Constitutional validity of Section 14 of the SARFAESI Act. 2. Legality of the order dated 06.07.2015 passed by the Chief Metropolitan Magistrate (CMM) under Section 14 of the SARFAESI Act. 3. Maintainability of the writ petition in the presence of an alternative remedy. Detailed Analysis: 1. Constitutional Validity of Section 14 of the SARFAESI Act: The petitioner challenged the constitutional validity of Section 14 of the SARFAESI Act, claiming it violated Articles 14, 21, and 300A of the Constitution of India. The court referenced the Supreme Court judgment in *Mardia Chemicals Ltd. vs. Union of India* (2004), which upheld the constitutional validity of the SARFAESI Act, except for Section 17(2). The court concluded that the constitutional validity of Section 14 had been upheld by the Supreme Court, and thus, the petitioner's contention was not accepted. 2. Legality of the Order Dated 06.07.2015 by CMM: The petitioner argued that the order passed by the CMM was illegal as no notice was issued to the petitioner before passing the order. The court referred to the Supreme Court judgment in *Standard Chartered Bank v. V. Noble Kumar* (2013), which clarified that the CMM is only required to examine the factual correctness of the assertions made in the affidavit accompanying the application under Section 14. The CMM is not obligated to issue notices to the borrower or any other party before passing the order. The court also noted that the petitioner's remedy against the order of the CMM lies under Section 17(1) of the SARFAESI Act before the Debt Recovery Tribunal (DRT). 3. Maintainability of the Writ Petition: The respondents argued that the writ petition was not maintainable due to the availability of an alternative remedy under Section 17(1) of the SARFAESI Act. The court highlighted that the petitioner had already filed an appeal under Section 17 of the SARFAESI Act before the DRT, which was pending. The court cited the Supreme Court judgments in *United Bank of India vs. Satyawati Tondon* (2010) and *Kanaiyalal Lalchand Sachdev v. State of Maharashtra* (2011), which emphasized that the remedy under Section 17(1) is both expeditious and effective. Hence, the writ petition was not maintainable. Conclusion: The court found no merit in the petitioner's challenge to the constitutional validity of Section 14 of the SARFAESI Act and the legality of the CMM's order dated 06.07.2015. The court directed the parties to maintain the status quo as on 04.08.2015 until the adjudication of the petitioner's appeal under Section 17 of the SARFAESI Act by the DRT. The court also granted liberty to respondent No.1 to approach the DRT for vacation or modification of the interim order if desired. The petition was disposed of with these directions.
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