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TMI Blog2006 (5) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... ises i.e., Shop No. 18, New Sabzi Mandi, Jalandhar City. Both the firms had availed overdraft limits from M/s. Punjab Sind Bank (hereinafter referred to as Bank ) for running of their business and in order to secure the repayment, the shop was mortgaged with the Bank. 3. It was the case of the petitioners that there was a dispute between petitioner No. 1 and his brother respondent No. 4 who was also partner in both the firms and in order to recover the dues respondent-Bank served a notice dated 22-5-2003 under section 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter called "Securitisation Act, 2002") wherein the claim was that a sum of Rs. 1,96,952 was due. Along with this notice another notice was also served on the same date under section 13(2) of the Securitisation Act, 2002 for recovery of Rs. 8,16,213.09 paise. The petitioner firm paid a sum of Rs. 1,11,210 to the Bank on 17-1-2004, thus leaving behind a balance of Rs. 85,000 against the first notice, whereas against the second notice, a sum of Rs. 4,59,790 was paid. 4. The case of the petitioners is that after making the above-said payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession specially when he has cleared all the dues in the account of M/s. Partap Trading Company. A direction was also issued to open the seal of the secured asset (shop) with immediate effect. The said order was challenged by way of Miscellaneous Appeal No. 214 of 2005 by the Bank before the Debts Recovery Appellate Tribunal, New Delhi. The Appellate Tribunal by way of order dated 23-9-2005 disposed of the appeal by directing the Debts Recovery Tribunal, Chandigarh, to decide the main application and it was further directed that order dated 5-9-2005, impugned in the said appeal, shall not be given effect to till the application filed under section 17 of the Securitisation Act, 2002 is decided on merits. The petitioner thereafter moved an application in IA No. 927 of 2005 in S. A. No. 69 of 2005 under section 22 of the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993 read with rule 18 of the Debts Recovery Tribunal (Procedure) Rules, 1993 for restoration of the possession of the secured asset. 8. The said application was hotly contested by the Bank. However, vide order dated 20-1-2006, the Debts Recovery Tribunal, Chandigarh, Camp at Delhi, ordered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal by considering the judgment passed by this Court in the case of Kalyani Sales Co. ( supra ) and judgment of Hon ble Supreme Court in Mardia Chemicals Ltd. v. Union of India [2004] 51 SCL 513 , held as under : "In view of the discussion, I am inclined to agree with the submission made on behalf of the appellant that the physical possession of the property in question taken by the appellant bank is only after following the due procedure provided under section 14 of the Securitisation Act which step is in tune with the ratio laid down by the Hon ble Punjab and Haryana High Court in Kalyani Sales Company v. Union of India . In that view of matter, this appeal is allowed. Consequently, the impugned order is set aside." 10. The petitioners have challenged this order of the Debts Recovery Appellate Tribunal primarily on the plea that the same is outcome of misreading of the judgment of this Court in Kalyani Sales Company s case ( supra ). The case was contested by respondent Nos. 2 and 3 and a detailed written statement was filed by them alleging that the petitioners had not approached this Court with clean hands and were guilty of suppression of material fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have taken actual physical possession of the secured assets of the borrower in terms of section 13(4) of the Act, whereas in some cases, only symbolic possession has been taken. We are of the opinion that if the physical possession is taken soon after the expiry of 60 days; the remedy of an application under section 17 of the Act becomes illusory and meaningless. The person is dispossessed even before adjudication of the objections by the first adjudicatory authority. On the other hand, sub-section (8) of section 13 of the Act provides that the secured assets shall not be sold if the dues of the secured creditor together with all costs, charges and expenses are tendered to the secured creditor at any time before the date fixed for sale or transfer. The possession is taken as per notice appended as Appendix IV in terms of rule 8(1) of the Security Interest (Enforcement) Rules, 2002. The notice, in fact, cautions the borrower in particular and the public in general not to deal with the property. Undoubtedly, the notice is in the nature of attachment and only contemplates a symbolic possession. The actual physical possession of immovable property under sub-rule (3) of rule 8 can be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be physically dispossessed at the time of issuing notice under section 13(4) of the Act so as to defeat the adjudication of his representation or objection by the Debts Recovery Tribunal. The physical possession can be taken by the bank or the financial institution by following the procedure laid down in section 14 of the Act or after sale is confirmed in terms of rule 9 particularly sub-rule (9) of Rule 9 of Security Interest (Enforcement) Rules, 2002." 15. The contention of the learned counsel for the petitioners is that section 14 of the Securitisation Act, 2002 authorises the Bank to get the possession by making a request in writing to the District Magistrate which has been done in the present case and, therefore, the Debts Recovery Appellate Tribunal was right in allowing the appeal as action of the respondents was protected even by this Court in view of para 43 of this Court s judgment in Kalyani Sales Co. s case ( supra ) reproduced above. Section 14(1) of the Securitisation Act, 2002 reads as under : "Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset (1) where the possession of any secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners. During the pendency of the application under section 17 of the Act, as the petitioners were admittedly in physical possession of the property and running their business from the said property. Section 14 of the Securitisation Act, 2002 cannot be interpreted to defeat the rights granted to a party, who under section 17 of the Act is entitled to have their objections adjudicated. A reading of section 14 of the Securitisation Act, 2002 itself makes it clear that it is only when the possession of asset is required to be taken by the secured creditor or the same is required to be sold or transferred by the secured creditor under the provisions of the Act, it is then that an application can be made. Section 14 of the Act has to be read with the provisions of sections 34 and 17 of the Act and cannot be interpreted to defeat the right of the parties under section 17 of the Act, as is sought to be done by the Bank and, therefore, we do not agree with the contention raised by the respondent-Bank or with the findings recorded by the Debts Recovery Appellate Tribunal that the possession has been taken in consonance with the law laid down by this Court. 19. It may also be noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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