9911796707
TMI Blog2007 (12) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and also violative of principles of natural justice and consequently set aside the Order of the Chief Metropolitan Magistrate passed in Crl. M.P.No.954/2002, dt. 16-3-2007 appointing an Advocate Commissioner to take over possession of the petition schedule property insofar as it concerns the petitioner's property in Flat No. 102 in 2nd Floor (Northern side) of "Murthy Mansion" admeasuring 1650 sq.ft (including balcony, car parking and common are) together with proportionate undivided share in the land measuring 49.3 sq. yds, out of the total land measuring 691 sq. yds., in the premises bearing M.C.H.No.8-3-167/D19 in Survey No. 137, on Plot No. 19, situated at Kalyan Nagar, Phase-I, Yousufguda, Hyderabad and pass such other suitable orders. 3. W.P. No. 17527/2007 is filed by M/s. Shilpa Homes, a partnership firm, represented by its Managing Partner praying for a Writ of Mandamus declaring the action of the respondent - A.P. Mahesh Cooperative Urban Bank Ltd., in filing Crl.M.P.No.954/2002 under Section 14 of the Act without issuing the mandatory notice under Section 13(4) of the Act is arbitrary, illegal and violative of the Act and also violative of principles of natural jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting his submissions had taken this Court through the sequence of events and would maintain that the Award is not non-est in the eye of law and the appeal filed by the borrowers had been allowed by the Appellate Tribunal, Chinnai. The learned Counsel also pointed out to certain other proceedings and the Orders made therein. The learned Counsel also would maintain that the Banking Institution being a Cooperative Bank, it would not fall within the meaning of the Banking Company and it is doubtful whether the provisions of the Act can be invoked in this regard. The learned Counsel also contended that notice under Section 13(4) of the Act being mandatory, without exhausting the same, Section 14 of the Act cannot be straight away invoked. Incidentally, the learned Counsel also had drawn the attention of this Court to Section 81 of the Transfer of Property Act, 1882. 9. Smt . Vedavathi, the learned Counsel representing the writ petitioner in W.P. No. 17527/2007 incidentally who is also shown as one of the respondents as R.2 in W.P.No.6846/2007, had explained the clear directions made by the D.R.A.T. and would maintain that those directions are not followed by the Banking Institution. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n carrying on business all over India and hence it is a State within the meaning of the Article 12 of the Constitution of India. While narrating the brief facts which lead to the filing of the present Writ Petition, it is averred that the petitioner had purchased Flat No. 102 in 2nd floor of "Murthy Mansion" admeasuring 1650 sq. fts. (including balcony, car parking and common area) together with proportionate undivided share in the land measuring 49.3 Sq. yds., out of the total land measuring 691 Sq. yds., in the premises bearing M.C.H.No.8-3-167/D19 in survey No. 137, on Plot No. 19 situated at Kalyan Nagar, Phase-I, Yousufguda, Hyderabad from respondents 2 to 4 herein vide registered sale deed dt.28-10-2002 bearing document No.3732 of 2002 for a valuable sale consideration. It is also stated that at present the flat is in occupation of the petitioner and also stated that he had purchased the said flat by obtaining loan from ICICI Home Finance Company Ltd., and at the time of purchase, he had made reasonable enquiry with regard to the marketable title of the respondents 2 to 4 by way of obtaining Encumbrance Certificate from the office of the Sub-Registrar, Banjara Hils, Hyderabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Schedule-B properties in Award, dt. 17-11-2003 does not include his property and that in the meanwhile, the 1st respondent filed an application before the Registrar/Arbitrator for modification of the Award, dt.17-11-2003 and obtained a modification order on 13-9-2004 from the Registrar/Arbitrator for inserting his flat in the list of immovable properties for attachment. Further it is stated that challenging the above proceedings dt. 13-9-2004 the petitioner filed W.P.No.20746/2004 on the file of this Court to set aside the order dt. 13-9-2004 through which his property was included in the mortgaged list of properties. The same was dismissed by this Court by order dt. 14-6-2005 observing as hereunder:- "There is a dispute between the contestants as to whether the petitioner herein purchased the flat on the northern side of the second floor of the apartment block known as "Murthy Mansion", after the same was released for mortgage by the second respondent-Bank at the behest of the builder. Further it is brought to the notice of this Court that after obtaining necessary modification from the first respondent, the second respondent Bank issued Bank issued a notice under Section 13( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants appears to be that they would not be allowed to raise all the contentions, which they have already raised in the application filed before the Debts Recovery Tribunal and, therefore, their right would be prejudiced. It is also further submitted that the appellants have already incurred the payment of Court fees and no cost was awarded by the Debts Recovery Tribunal and if the appellants have to challenge the measures that would be taken by the respondent once again under section 13(4), they have to pay Court fee once again, which would unnecessarily burden the appellants. As far as the first contention of the appellant is concerned, I would like to make it clear that the appellants are always at liberty to raise all the contentions, which they have already raised and they are also entitled to raise further contentions on the measures that would be taken by the respondent under Section 13(4) and they would not be precluded at all from raising all the contentions and therefore the first contention of the appellants is answered accordingly. As far as the second contention of the appellants that they have to spend amount for the Court fee for the second time, if they we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s peaceful possession enjoyment of the property and on 29-3-2006 an order of status quo was granted. The said order is still in force. The respondents are contesting the suit. Further it is stated by the petitioner that to his shock and surprise, suppressing all the above mentioned facts and without maki ng the petitioner as a party respondent to the proceedings, the 1st respondent filed an application under Section 14 of the Act before the Court of the Chief Metropolitan Magistrate, Hyderabad bearing Crl. M.P. No. 954/2007 praying for taking of physical possession of the property described in the schedule of property and hand over the same to it. Incidentally, the petitioner's property was also shown and the learned Chief Metropolitan Magistrate, by order dt. 16-3-2007 appointed one Smt. A. Anantha Laxmi as Advocate-Commissioner and issued Advocate-Commissioner's Warrant directing her to take physical possession of the property and handover the same to the 1st respondent Bank. Pursuant to the said order, the learned Advocate Commissioner had issued a letter, dt.26-3'-2007 fixing the date for taking physical possession of the scheduled property, which also includes the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1122/2006 in O.S. N o. 107/2006. It is also stated that the claim of the 1st respondent in the affidavit filed in Crl. M.P.No.954/2007 before the Chief Metropolitan Magistrate that they went to the petition schedule property on 27-12-2006 which is factually incorrect as there is no occasion for the Bank to approach the premises to take possession without following the due process of law and that the petitioner had been informed by his tenant that nobody visited the premises on 27-12-2006 and he had received only on 27-3-2007 the letter of the Advocate Commissioner, dt.26-3-2007 along with order dt. 16-3-2007. Further it is stated that the 1st respondent should have seen that there is a dispute as to whether the petitioner had purchased the property after release of the same from mortgage or not and the same is yet to be decided by a competent Court. It is also stated that the 1st respondent should have seen that as per the Award of the Registrar/Arbitrator, dt.17-11-2003, there are other valuable properties mentioned in Schedule-A to the said order which are mortgaged with the 1st respondent Bank towards security for the loan obtained by the respondents 2 to 4 and that the 1st re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the Vendors of the petitioner approached the 1st Bank and requested to sanction loan of Rs. 50.00 lakhs for development of their construction business and accordingly, the 1st Bank sanctioned loan for an amount of Rs. 50.00 lakhs in their favour and that as security for the loan, the vendors of the petitioner executed a Mortgage Deed on 14-6-2002 in favour of Bank mortgaging the semi-finished flats situated on the northern side of I Floor, II Floor and V Floor and the Flat situated on the southern side of the V Floor each admeasuring 1650 sq. ft., along with undivided share of land admeasuring 276.4 sq. yards out of total land admeasuring 698 sq. yards in 'Murthy Mansion' in the premises MCH No.8-3-167/D/19 in S. Nos. 52, 138 and 139 situated at Yousufguda, Hyderabad and also stated that at that particular point of time, Flat numbers were not assigned as they were in semi-finished stage. Further it is also stated that in the mortgage deed, the Floor numbers were counted as Stilt plus five upper floors as stated by the Vendors of the petitioner and that in the mortgage deed it was agreed that the mortgagee i.e., 1st respondent Bank would release one Flat on payment of 25% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. No. 137 on Plot No. 19 situated at Kalyan Nagar, Yousufguda, Hyderabad. Further it is averred that the petitioner is questioning the action of the 1st respondent Bank in filing Crl.M.P.No.954/2002 before the Chief Metropolitan Magistrate, on the ground that the 1st respondent Bank without first taking recourse to Section 13(4) of the Act and also stated that it is necessary to submit here that as per Section 13(2) of the Act, a notice has to be issued by the 1st respondent Bank to borrower to discharge his debt within sixty days from the date of notice, failing which the Bank is entitled to exercise all or any of the rights under sub-Section (4). Further it is stated that the 1st respondent Bank issued notice under Section 13(2) of the Act to the vendors of the petitioner on 25-4-2003 and that the vendors of the petitioner did not repay the loan amount even after receiving the said notice and that therefore, the 1st respondent Bank issued Possession Notice under Section 13(4) of the Act on 25-4-2004. It is also stated that the vendors of the petitioner filed S.A.No.85/2004 and the petitioner filed S.A. No. 119/2004 before the Debts Recovery Tribunal, Hyderabad and that the Debts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 13(4) of the Act, the 1st respondent Bank filed the above Crl. M.P. and that this contention of the petitioner is not correct and misconceived. Section 13 of the Act deals with enforcement of security interest. Section 13(4) of the Act reads as follows: "In case the borrower fails to discharge his liability in full within the period specified in sub-Section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely - (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset; (b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt: Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontemplated that notice is to be issued either to the borrower or to any person before taking steps under Section 13(4) of the Act. However, the Advocate Commissioner issued notices to the borrowers and also to the tenant of the petitioner, who is in possession of the said Flat. It may be appropriate to have a look at Rule 8 and Rule 9 of the Security Interest (Enforcement) Rules, 2002. Rule 8 dealing with sale of immovable secured assets reads as hereunder:- (1) Where the secured asset is an immovable property, the authorised officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property. (2) The possession notice as referred to in sub-rule (1) shall also be published in two leading newspaper, one in vernacular language having sufficient circulation in that locality, by the authorised officer. (3) In the event of possession of immovable property is actually taken by the authorised officer, such property shall be kept in his own custody or in the custody of any person authorised o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of sale, issue of sale certificate and delivery possession, etc., reads as hereunder:- (1) No sale of immovable property under these rules shall take place before the expiry of thirty days from the date on which the public notice of sale is published in newspapers as referred to in the proviso to sub-rule (6) or notice of sale has been served to the borrower. (2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorised officer and shall be subject to confirmation by the secured creditor: Provided that no sale under this rule shall be confirmed, if the amount offered by sale price is less than the reserve price, specified under sub-rule (5) of rule 9 : Provided further that if the authorised officer fails to obtain a price higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the safe at such price. (3) On every sale of immovable property, the purchaser shall immediately pay a deposit of twenty five per cent of the amount of the sale price, to the authorised officer conducting the sale and in default of such deposit, the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsue two remedies simultaneously in relation to the same cause of action and further holding that "as there are questions of fact involved in the matter, it would be in the interest of the petitioner himself to pursue the remedy under the Act and seek redressal. " After dismissal of the above Writ Petition, the writ petitioner himself had withdrawn S.A .No. 119/2004 filed by him before the Debts Recovery Tribunal. The same principles laid down by this Court in the order dt. 14-6-2005 passed in W.P.No.20746/2004 is applicable in this Writ Petition also. It is also stated that the petitioner filed O.S .No. 10 7/2006 before the II-Additional Chief Judge, City Civil Court, Hyderabad and the orders were granted by the Civil Court in I.A. No. 1122/2006 in O.S. No. 107/2006 on 29-3-2006 to maintain status quo till 19-4-2006. The petitioner had not filed any orders to show that the status quo order is extended thereafter and that the petitioner can pursue his remedies before the Civil Court and that he cannot pursue two remedies simultaneously for the very same cause of action. Further in pars 14, 15 and 16 it was averred that the allegation of the petitioner that at the time of purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter availing the said loan facilities the applicant firm repaying the amounts regularly and thereafter upon the demand made by the respondent Bank, the applicant offered additional security of the immovable property of four Flats each admeasuring a total area of 1650 sq.ft., out of total land admeasuring 691 sq. yds., situated in Sy.No.52, 138 & 139 of Yousufguda, Hyderabad and got registered the mortgage in favour of the respondent Bank on 14-6-2002. Further it is stated that as on 14-6-2002, the day on which the petitioner executed the mortgage deed in favour of the respondent Bank, the outstanding liability of the applicant is only Rs. 43,47,015/- and the clause 10 of the said agreement entitles the petitioner to get release of the property so mortgaged to the Bank upon the payment of 25% of the outstanding amount. It is also averred that adhering to the terms of the mortgage deed the petitioner paid the amounts and wrote letters to the respondent Bank on 15-7-2002 and 21-10-2002 requesting them to release the property and that the respondent had appropriate the amounts but not released the property as per the agreement. However, on repeated requests, on 15-4-2004 the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,29,000/- and that the respondent Bank is in receipt of the letter, however till date had not paid any amount nor communicated anything to the petitioner and therefore the inaction of the respondent for not paying the costs though ordered by the appellate authority itself shows carelessness and negligence attitude towards the orders of the Tribunal. Further it is also stated that having suffered with an order to initiate steps under Section 13(4) of the Act, the respondent had invoking rights under Section 14 of the Act would itself shows the intention of the Bank to harass the petitioner. It is also stated that the action of the respondent in approaching the Court of Chief Metropolitan Magistrate under Section 14 of the Act without first taking recourse to Section 13(4) of the Act is arbitrary and illegal and violative of principles of natural justice and that as per the Act it is mandatory that the action under Section 14 must be preceded by notice under Section 13(4) of the Act. Further it is stated that the respondent should have seen that the earlier notice issued under Section 13(4) dated 25-8-2004 was set aside by the Debts Recovery Tribunal, Hyderabad and the same was up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge or Appellate Tribunal or the High Court referred to in Section 18B. " Further it is stated that the order passed by the Chief Metropolitan Magistrate under Section 14 of the Act cannot be called in question before any Court, more particularly before the Debts Recovery Tribunal under Section 17 of the Act and hence the petitioner has no other alternative remedy except to approach this Court. Section 17 of the Act deals with Right to appeal reads as hereunder:- "Right to appeal:- (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-Section (4) of Section 13 taken by the secured creditor or his authorized officer under this Chapter, may make an application along with such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty five days from the date on which such measures had been taken. Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower. Explanation:- For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under sub-section (1). (6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any party to the application may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal. (7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder. " In such circumstances, being left with no other alternate, it is stated that the writ petitioner approached this Court. 16. In the counter affidavit filed almost similar averments were made as made in W.P.No.6846/2007. It is stated that without prejudice to the above contentions, it is submitted that the petitioner approached the respondent Bank and request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very of the loan amount. The petitioner knowing fully well that the above Flat was mortgaged in favour of the respondent Bank, sold the said Flat. It is further stated that the petitioner filed this Writ Petition questioning the action of the respondent Bank in filing Crl.M.P.No.954/2002 before the Chief Metropolitan Magistrate, Hyderabad on the ground that the respondent Bank without first taking recourse to Section 13(4) of the Act, filed the above Crl. M.P. and it is stated that that as per Section 13(2) of the Act, a notice has to be issued by the respondent Bank to borrower to discharge his debt within sixty days from the date of notice, failing which the Bank is entitled to exercise all or any of the rights under sub-Section (4). Further it is stated that the respondent Bank issued notice to the petitioner under Section 13(2) of the Act on 25-4-2003 and that the petitioner did not repay the loan amount even after receiving the said notice and that ther efore, the respondent Bank issued Possession Notice under Section 13(4) of the Act on 25-4-2004. It is also stated that the petitioner filed S.A.No.85/2004 before the Debts Recovery Tribunal, Hyderabad and that the Debts Recove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to. It is also stated that therefore, in view of the same, it is clear that only after taking possession of the property, notice is to be issued to the borrower and general public. It is also stated that this procedure is being adopted by all the Banks and Financial Institutions for realization of the loan amounts under the Act and that the respondent Bank will take steps under Rules 8 and 9 of the Rules framed under the said Act after taking possession of the property. It is also stated that the petitioner filed this Writ Petition on misconception that he is to be issued notice before taking steps under Section 13(4) of the Act, but nowhere in the Act, it is contemplated that notice is to be issued either to the borrower or to any person before taking steps under Section 13(4) of the Act. However, the Advocate Commissioner issued notices to the borrowers and also to the tenant of the petitioner's vendee, who is in possession of the said Flat. In paras 13, 14 and 15 of the counter affidavit, similar averments as made in the counter affidavit in W.P.No.6846/2007 had been made. 17. Though specific stand had been taken that A.P. Mahesh Cooperative Urban Bank Ltd., does not fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the appellants, do not have any bearing on the adjudication of legality and correctness of the orders under challenge. In Merdia Chemicals v. Union of India (2004) 4 SCC 311) the Supreme Court considered challenge to the vires of some of the provisions of the Act and substantially negatived the same. In Transcore v. Union of India (AIR 2007 S.C., 712) the Supreme Court considered the inter relationship between the Act and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and held that the secured creditors can resort to both the enactments for recovery of their dues. In Sundaram Home Finance Ltd. v. Tehsildar, Hosur (2007 (1) D.R.T.C.592 (Mad) the Division Bench of the Madras High Court held that once objection filed under Section 13(3) is overruled, there is no impediment in taking action under Sections 13(4) and 14 of the Act. In none of these cases, the Supreme Court and Madras High Court considered the legality and justification of interim order passed by the learned Single Judge in the proceedings initiated by the Bank and/or other secured creditor under Sections 13 and 14 of the Act. In the result, the appeals are dismissed. However, liberty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken possession of the property under Section 13(4) read with Rule 9 of the 2002 Rules. Rule 9 (9) relates to time of scale, issue of sale certificate and delivery of possession. Rule 9(6) states that on confirmation of sale, if the terms of payment are complied with, the authorized officer shall issue a sale certificate in favour of the purchaser in the form given in Appendix V to the 2002 Rules. Rule 9(9) states that the authorized officer shall deliver the property to the buyer free from all encumbrances known to. the secured creditor or not known to the secured creditor, (emphasis supplied). Section 14 of the NPA Act states that where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred, the secured creditor may, for the purpose of taking possession, request in writing to the District Magistrate to take possession thereof. Section 17(1) of NPA Act refers to right of appeal. Section 17(3) states that if the DRT as an appellate authority after examining the facts and circumstances of the case comes to the conclusion that any of the measures under Section 13(4) taken by the secure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, Rule 8 provides that till issuance of the sale certificate under Rule 9, the authorized officer sha ll take such steps as he deems fit to preserve the secured asset. It is well settled that third party interests are created overnight and in very many cases those third parties take up the defence of being a bona fide purchaser for value without notice. It is these types of disputes which are sought to be avoided by Rule 8 read with Rule 9 of the 2002 Rules. In the circumstances, the drawing of dichotomy between symbolic and actual possession does not find place in the scheme of the NPA Act read with the 2002 Rules. Whether ad valorem court fee prescribed under Rule 7 of the DRT(Procedure) Rules, 1993 is payable on an application under Section 17(1) of the NPA Act in the absence of any rule framed under the NPA Act. Mr. N.C. Sahni supplemented by Mr. Pankaj Gupta, learned advocates appearing on behalf of the borrower submitted that by virtue of the amending Act 30 of 2004 with effect from 11-11-2004, the persons aggrieved against the action of the bank or FI initiated under Section 13(4) of the NPA Act have a right to adjudication by way of an application to the DRT un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not an appellate remedy. It is further submitted that after 11-11-2004, fees could be levied only vide Rules and not by an Order removing Difficulties. It is true that Section 17(1) of the NPA Act states inter alia t hat a borrower aggrieved by action taken under Section 13(4) may make an application along with fees, as may be prescribed to the DRT having jurisdiction in the matter. It is true that, the marginal note states that Section 17(1) is a right to appeal. In our view, the marginal note to Section 17(1) cannot control the text and the content of Section 17(1) which, as stated above, states that the borrower aggrieved by any of the measures in Section 13(4) may make an application to the DRT. The judgment of this Court in Mardia Chemicals (supra) states that the DRT acts in an Original Jurisdiction under Section 17 of the NPA Act. In our opinion, as far as the levy of fee is concerned, the terminology makes no difference. In fact, the proviso to Section 17(1) indicates that different fees may be prescribed for making a n application by the borrower. The reason is obvious. Certain measures taken under Section 13(4) like taking over the management of the fee vis-a-vis th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. We are afraid that the contention is totally misconceived. The provisions of Section 17(1) of the Act provide remedy for the borrower/guarantor/mortgagor to challenge the action of the Bank under Section 13(4) of the Act before the Debt Recovery Tribunal. The Debt Recovery Tribunal is required to decide whether the action of the Bank/Financial institutions, under Section 13(4) is in accordance with the provisions of the Act and the rules framed thereunder. It is open to the borrower/guarantor/mortgagor to demonstrate before the Debt Recovery Tribunal that resort to Section 13 of the Act is not permissible by law. In a given case, the claim of the Bank/Financial Institutions may be barred by limitation or there may be cases, where the adjustment of the amount paid is not reflected in the notice or the calculation of interest may not be in accordance with the contract between the parties. Needless to say that all such grounds, which render the action of the Bank/Financial Institutions illegal can be raised in the proceedings under Section 17 of the Act before the Debt Recovery Tribunal. Learned Additional Solicitor General and the learned counsel appearing for banks and fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined under sub-section (4) of Sec. 13. At the same time, more importantly, we must make it clear unequivocally that communication of the reasons for not accepting the objections taken by the secured borrower may not be taken to give occasion to resort to such proceedings which are not permissible under the provisions of the Act. But communication of reasons not to accept the objections of the borrower, would certainly be for the purpose of his knowledge which would be a step forward towards his right to know as to why his objections have not been accepted by the secured creditor who intends to resort to harsh steps of taking over the management/business of viz. secured assets without intervention of the Court. Such a person in respect of whom steps under Sec. 13(4) of the Act are likely to be taken cannot be denied, the right to know the reason of non-acceptance and of his objections. It is true, as per the provisions under the Act, he may not be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the D.R. T. as provided under Sec. 17 of the Act matures on any measure having been taken under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by mortgage must clearly disclose a fraud or irregularity on the basis o f which relief is sought-Adams V. Scott, 1859(7) W.R. 213, 249. I need not point out that this restraint on the exercise of the power of sale will be exercised by Courts only under the limited circumstances mentioned above because otherwise to grant such an injunction would be to cancel one of the clauses of the deed to which both the parties had agreed and annual one of the chief securities on which persons advancing moneys on mortgages rely. (See Ghose, Rashbehary - Law of Mortgages, Vol.11, 4th Edn.,p.784)\ In regard to the submissions made by the parties as indicated in the preceding paragraphs, we would like to make it clear that issue of a notice to the debtor by the creditor does not attract the application of the principles of natural justice. It is always open to tell the debtor what he owes to repay. No hearing can be demanded from the creditor at this stage. So far as the provision of appeal is concerned, we have already discussed in the earlier part of the judgment that proceedings under Sec. 17 of the Act have been wrongly described as appeal before the D.R. T. It is in fact a forum where procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sures contemplated under Sec. 13(4) have been taken. It is clear from the paragraphs extracted above from Mardia Chemical's case that the communication of the reasons may not be taken to give an occasion to resort to such proceedings which are impermissible under the Act. A person who does not respond to the notice under Sec. 13(2) of the Act should be considered to be aware of the consequences that will follow. In any event, it is not possible to hold that a borrower who has not responded to the notice under Sec. 13 (2) will be entitled to a notice under Sec. 13(4), whereas, in respect of a borrower who has responded to a notice under Sec. 13 (2) and has had the rejection communicated by the bank, the bank can proceed straightaway to take the measures contemplated under Sec. 13(4). There is no room for visualizing two such courses of action. This will be reading words into the section, which the Legislature had not used. It is not our duty to legislate. The Supreme Court also was aware that "some of the provisions may be a bit harsh for some of the borrowers ", yet has not, in its judgment, held that a pre-Sec 13(4) notice must be issued. We are unable to read a requirement of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to a borrower at the stage of communication will not confer on the person including borrower any right to make an application to DRT u/S.17(1). Section 18 again confers right on any person aggrieved by an order of DRT u/S.17 to file an appeal before the Appellate Tribunal against the said order. Therefore, third party was in the mind of legislature when it enacted the Act. Wherever necessary reference is made to third party. Nothing prevented the legislature from specifically making a provision in Section 14 for notice to the borrower or third party. It purposely did not make provision for notice or hearing being given to the borrower or third party at the stage of Sections 14. Looking to the scheme of the Act, notice or hearing to the borrower or third party is excluded at the stage of Section 14 by necessary implication. However the bank or financial institution shall, before making an application u/S. 14 of the Act, verify and confirm that notice u/S.13(2) of the Act is given and that the secured asset falls within the jurisdiction of CMM/DM before whom application u/S.14 is made. The bank and financial institution shall also consider before approaching CMM/DM for an order u/S ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
