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TMI Blog2019 (11) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act"), thereby clubbing challenges to three different notices, to save court fee. Upon upholding such objection, the tribunal disposed of the said application of the petitioners with a direction to file fresh SARFAESI application. 3. The question which falls for consideration in the instant revisional application is, 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. 4. Learned counsel for the petitioners argues that, since Section 17 of the SARFAESI Act contemplates an application against measures to recover secured debts and gives the right to any person, including the borrower, aggrieved by any of the measures referred to in sub‐section (4) of Section 13, to approach the tribunal, a single application was maintainable in view of the secured debt being a single one. 5. Placing reliance on Section 13 of the SARFAESI Act, learned counsel for the petitioners argues that the same contemplated enforcement of security interest. 6. Sub‐section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub‐section (4). Provided that - (i) the requirement of classification of secured debt as non‐performing asset under this sub‐section shall not apply to a borrower who has raised funds through issue of debt securities; and (ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as provide under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee; (3) The notice referred to in sub‐section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non‐payment of secured debts by the borrower. (3A) If, on receipt of the notice under sub‐section (2), the borrower makes any representation or raises any objection, the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied, has been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for any officer of the secured creditor, if so authorised by the secured creditor in this behalf, to bid for the immovable property on behalf of the secured creditor at any subsequent sale. (5B) Where the secured creditor, referred to in sub‐section (5A), is declared to be the purchaser of the immovable property at any subsequent sale, the amount of the purchase price shall be adjusted towards the amount of the claim of the secured creditor for which the auction of enforcement of security interest is taken by the secured creditor, under sub‐section (4) of section 13. (5C) The provisions of section 9 of the Banking Regulation Act, 1949 (10 of 1949) shall, as far as may be, apply to the immovable property acquired by secured creditor under sub‐section (5A). (6) Any transfer of secured asset after taking possession thereof or take over of management under sub‐section (4), by the secured creditor or by the manager on behalf of the secured creditors shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of a company being wound up on or after the commencement of this Act, the secured creditor of such company, who opts to realise his security instead of relinquishing his security and proving his debt under proviso to subsection (1) of section 529 of the Companies Act, 1956 (1 of 1956), may retain the sale proceeds of his secured assets after depositing the workmenʹs dues with the liquidator in accordance with the provisions of section 529A of that Act: Provided also that the liquidator referred to in the second proviso shall intimate the secured creditors the workmenʹs dues in accordance with the provisions of section 529A of the Companies Act, 1956 (1 of 1956 ) and in case such workmenʹ s dues cannot be ascertained, the liquidator shall intimate the estimated amount of workmenʹ s dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositing the amount of such estimated dues with the liquidator: Provided also that in case the secured creditor deposits the estimated amount of workmenʹs dues, such creditor shall be liable to pay the balance of the workm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him- (a) take possession of such asset and documents relating thereto; and (b) forward such assets and documents to the secured creditor: Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that- (i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application; (ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period; (iii) the borrower has created security interest over various properties giving the details of properties referred to in sub‐clause (ii) above; (iv) the borrower has committed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. (3) No act of the Chief Metropolitan Magistrate or the District Magistrate any officer authorised by the Chief Metropolitan Magistrate or District Magistrate done in pursuance of this section shall be called in question in any court or before any authority. .... .... .... .... 17. Application against measures to recover secured debts. - (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 authorised 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one or more of the measures specified under sub‐section (4) of section l3 to recover his secured debt. (4A) Where‐ (i) any person, in an application under sub‐section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy, ‐ (a) has expired or stood determined; or (b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or (c) is contrary to terms of mortgage; or (d) is created after the issuance of notice of default and demand by the Bank under sub‐section (2) of section 13 of the Act; and (ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub‐clause (a) or sub‐clause (b) or sub‐clause (c) or sub‐clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises; (b) where the secured assets is located; or (c) the branch or any other office of a bank or financial institution is maintaining an account in which debt is claimed is outstanding for the time being. 15. 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. 16. Section 13, on the other hand, as per its caption, pertains to enforcement of security interest. The measures taken thereunder all relate to the recovery of the secured debt, as is evident both from sub‐section (2) and sub‐section (4), inter alia, of Section 13. The possession of the secured assets being taken over is a consequence of such recourse, but the measures are resorted to for the recovery of the debt. 17. The expression "security interest", used in the caption of Section 13 of the SARFAESI Act, has been defined in Section 2(1)(zf) of the said Act as right, title or interest of any kind, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the expression "debt" from the fetter of assets. 23. Again, probing into the meaning of "Debts Recovery Tribunal", as defined in the SARFAESI Act, Section 2(1)(i) of the said Act defines it as the Tribunal established under sub‐section (1) of Section 3 of the DRT Act. 24. Moving on to Section 3(1) of the DRT Act, it is found that the same provides for the establishment of Tribunal. 25. Section 17(1) of the DRT Act provides that a tribunal shall exercise the jurisdiction, powers and authority to entertain and decide applications from banks and financial institutions for recovery of debts due to such banks and financial institutions. Section 19(1) of the DRT Act, on the other hand, provides as follows: "19. Application to the Tribunal. - (1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction, ‐ (a) the branch or any other office of the bank or financial institution is maintaining an account in which debt claimed is outstanding, for the time being; or (aa) the defendant, or each of the defendants where there are more than one, at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e forums. 29. In such view of the matter, the location of the asset cannot be the sole determinant of the jurisdiction of the tribunal. 30. Moreover, Section 14 of the SARFAESI Act contemplates a situation postadjudication under Section 17, in case of such an application being filed. such post facto action cannot be a determinant of the initial jurisdiction of the tribunal to entertain an application under Section 17 of the SARFAESI Act, which is attracted immediately after any measure under Section 13(4) is taken. 31. Even the measures under Section 13(4) relate to the debt and the security interest arising therefrom and cannot be determined on the basis of the assets, possession of which would come into play only in the event the borrower fails to pay the debt. Even enforcement under Section 14 has to await the adjudication under Section 17 of the SARFAESI Act, if an application is filed under the said provision. Hence, the territorial location of the assets is irrelevant for the purpose of deciding the jurisdiction of the tribunal. Jurisdiction of the tribunal, however, is a primary determinant for deciding as to whether the applicant under Section 17 has to approach diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assets. 38. Hence, 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. 39. 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. 40. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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