w w w . L a w y e r S e r v i c e s . i n



Bank of Baroda v/s R.B.S. Copper Products Pvt. Ltd.

    Appeal No. 239 of 2015

    Decided On, 26 November 2015

    At, Debts Recovery Appellate Tribunal At Mumbai

    By, THE HONOURABLE MR. JUSTICE A. ARUMUGHASWAMY
    By, CHAIRPERSON

    For the Appellant: Rathina Maravarman, Advocate. For the Respondent: A.P. Steenson, Advocate.



Judgment Text

A. Arumughaswamy, Chairperson

1. This Appeal has been filed by the Appellant Bank being aggrieved by the order dated 10th August, 2015 passed by the learned Presiding Officer, D.R.T.-II, Ahmedabad in S.A. No. 99 of 2015, whereby the learned Presiding Officer partly allowed the S.A. and the physical possession taken in pursuance of order dated 23rd March, 2015 was set aside and the Respondent Bank was directed to hand over the physical possession of the part of the property over which the factor}1 premises is situated to the Respondent herein.

2. The D.R.T. further directed the Appellant to take fresh action for taking physical possession of the property in question.

3. The contention of the learned Counsel for the Appellant is that they have taken possession of the property from the respondent who is the borrower and not the owner of the property. Under such circumstances, the respondent herein has no locus standi to file application under Section 17 of SRFAESI Act in respect of subject property in question.

4. She further contended that as per Section 14 of the Act, the CMM Court has passed an order to take physical possession of the mortgaged property and such order is in the nature of quasi judicial and thus such order cannot be challenged under Section 17 of the SRFAESI Act. She relied on the judgment of the High Court of Judicature of Bombay Bench at Aurangabad inLetters Patent Appeal No. 39 of 2009 in the case of Puran Maharashtra Automobiles v. The Sub-Divisional Magistrate, Aurangabad. Hence she prayed that the order of the D.R.T. has to be set aside.

5. The learned Counsel for the Respondent contended that admittedly the possession has been taken from the Respondent as per Section 14 of the Act, however, statutory requirement has not been complied with by them. The order passed by the D.R.T. is correct, therefore, he prayed that the Appeal has to be dismissed.

6. It is not in dispute that the Respondent company has borrowed the amount. The demand notice under Section 13 (2) of the SRFAESI Act for an amount of Rs. 5,85,23,135/- has been issued by the Bank. The borrower has Filed S.A. which has been allowed against which the Appellant Bank has filed the Appeal.

7. It is clear that the Respondent company borrowed the amount. The two issues which is required to be considered in the present Appeal are (1) whether the Additional District Magistrate has no powers to order and direct his subordinate including Police machinery to take physical possession of the mortgaged property as the Respondents have no locus standi to file application under Section 17 of the SRFAESI Act seeking relief in respect of property owned by director of the company.

8. The company is the borrower and the property in question is belonging to one of the directors of the company by name Mr. Ravinder R. Shah. The said Mr. Shah expired before filing of the S.A. His L.Rs. has not been shown as the Respondents and the Respondent company alone has filed the S.A. questioning the order passed by the CMM Court. The Counsel contended that the CMM has not deputed any person to take possession of the property as per Section 14 of this Act. Hence, in the eye of the law the order passed by the CMM is not accordance with law. Hence, the Appellant prayed that the Appeal has to be allowed. The Section 14 of the Act runs as follows:

"14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset. - (1) 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 by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of an}' such secured asset, request, in writing, the Chief Metropolitan Magistrate or the 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 asset and documents to the secured creditor.

(2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief Metropolitan 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 Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any Court or before any authority.

9. Therefore, from the reading of the section, it is clear that it is not mandatory for the Court to depute a Court person along with Bank officer with police protection at the time of implementing the order of the CMM. In this case, the police protection has been ordered. Therefore, this cannot be the reason for ordering the re-delivery of the property to the Appellant. The order dated 23rd March, 2015 was passed by the Additional District Magistrate under Section 14 of the SRFAESI Act, and directed the Bank to take physical possession of the mortgaged property in accordance with law. Therefore, I am of the view that the Respondent is not entitled to file S.A. before the CMM Court. In this Appeal the owner of the property is director of the company' who is guarantor is not the party to the proceedings.

10. This Court is of the view that without owner of the property this Court cannot pass such order for re-delivery of the property to the company who is not the owner of the property. The borrower Respondent has not repaid the amount to show their bona fideness.

11. Under such circumstances, I am of the view' that the order of the D.R.T. has to be set aside. According to this Court, the borrower could have filed the Appeal instead of the Appellant, it would have been better case for the guarantor who is also director of the company. The Respondent is not the owner of the property. Therefore, the Appellant is entitled to walk through with Appeal. Therefore, this Court is of the view that only the competent person alone is entitled to receive the possession of the property and this Court cannot take the risk of ordering re-delivery of the possession to the Respondent guarantor who is not admittedly owner of the property.

12. With these observations, the Appeal is allowed.

Appeal allowed.