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



Kamalkishor Kachrulal Upadhye V/S Cosmos Co-Operative Bank Ltd.


Company & Directors' Information:- E-COSMOS (INDIA) PRIVATE LIMITED [Active] CIN = U30007KA2004PTC034007

Company & Directors' Information:- THE COSMOS BANK LIMITED [Active] CIN = U99999MH1933PTC002029

    Appeal No. 147 of 2012 and M.A. Nos. 682 of 2008, 596, 683, 685 of 2009 and 516 of 2011

    Decided On, 05 March 2013

    At, Debt Recovery Appellate Tribunal At Mumbai

    By, THE HONORABLE JUSTICE: RAJ MANI CHAUHAN
    By, (CHAIRPERSON)

    For Petitioner: Party-in-person And For Respondents: H.N. Kulkarni, Advocate and Deepak Parikh



Judgment Text


1. This Appeal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act") has been filed by the original applicant (for convenience hereinafter referred to as the "appellant") against the judgment and order dated 22nd May, 2008 passed by Shri Prem Mohan Mishra, the then learned Presiding Officer (learned P.O.), Debts Recovery Tribunal (DRT), Nagpur in Securitisation Applications (S.A.) No. 04/2007 (Kamalkishor Kachrulal Upadhye v. Dr. Devi Singh Shekhawat, Mukhya Prashask, the Chief Administrator of the Amravati Peoples Co-operative Bank Ltd.), whereby he has dismissed the S.A. filed by the appellant. The relevant facts giving rise to the present appeal may be summarized as under:

The appellant who is the proprietor of a cinema theatre known as Kamal Talkies situated in Chandur Bazar, District Amravati as well as members of the Amravati People's Co-operative Bank Ltd. applied for Term Loan of Rs. 10.00 lacs to the Amravati People's Co-operative Bank Ltd. for construction of shopping complex in front of his theatre, which was sanctioned by the Chandur Bazar Branch of the Bank on 30th August, 2005. The Bank communicated to the appellant about the sanctioned loan through its letter dated 16th September, 2005.
2. It is alleged by the respondent-Bank that the amount of loan sanctioned by it was guaranteed by the guarantors and the appellant to secure the amount of loan had executed a registered Mortgage Deed creating mortgage of his following immovable properties in favour of the Bank to secure amount of term loan:

Description of the mortgaged properties--Landed property of Mauje Chandur Bazar F.S. No. 76/1B of Ward No. 7, property No. 41, admeasuring about 23925 sq. ft. (2223.52 sq. mtrs.) with constructed building and other things bounded by the following boundaries-

East: field of Suresh Pawar

West: field of Nagar Parishad, Chandur

North: road

South: field and house of Kisan Nathmal Rathi

(hereinafter referred as the Suit property).

3. It is further alleged that in pursuance to the loan sanctioned by the Bank to the appellant, the appellant and the guarantor executed the following documents:

(a) Demand Promissory Note dated 16th September, 2005;

(b) Continuing Security Letter dated 16th March, 2005;

(c) Letter of guarantee dated 16th March, 2005;

(d) Letter of Lien and set-off dated 16th March, 2005;

(e) Loan Agreement dated 16th March, 2005;

(f) Hypothecation of tangible goods dated 16th March, 2005;

(g) Undertaking of appellant dated 16th March, 2005.

4. Admittedly, the Bank issued notice to the appellant on different dates, calling upon him to pay the instalments of interests due on the sanctioned loan. But the appellant did not pay any amount (while as per allegation of the appellant, no amount of loan was disbursed to him). The respondent-Bank thereafter classified the account of the appellant as Non-Performing Asset (NPA) and proceeded under the SARFAESI Act to recover its dues from the secured assets.

5. The Authorized Officer of the Bank on 27th July, 2006 issued demand notice under Section 13(2) of the SARFAESI Act to the appellant and the guarantors, indicating outstanding dues of Rs. 9,30,408/- due as on 30th June, 2006 calling upon them to pay the amount as indicated in the notice along with interest and other charges. The notice was received by the appellant on 4th August, 2005. But the appellant did not pay the outstanding dues as demanded by the Bank in its notice. The Authorized Officer of the Bank thereafter on 11th December, 2006 took over the possession of the cinema theatre of the appellant, serving notice under Section 13(4) of the SARFAESI Act to the son of the appellant.

6. The appellant feeling aggrieved by the measures taken by the Bank under Section 13(4) of the SARFAESI Act, filed Appeal/Securitisation Application (S.A.) under Section 17 of the SARFAESI Act before DRT, Nagpur.

7. The appellant in the aforesaid S.A. has alleged that respondent-Bank had never disbursed any loan to him. The Bank prepared forged and false documents as well as made false and frivolous entries in their records showing the outstanding dues against him. The Bank has wrongly issued demand notice dated 27th July, 2006 under Section 13(2) of the SARFAESI Act to him, demanding outstanding dues as indicated therein. He after receipt of the notice, sent his representation on 3rd September, 2006 to the respondent-Bank, which was received by it. But the respondent-Bank did not care to reply to his representation, while the respondent-Bank was required to inform him about the decision taken by it on his representation. Therefore, the measures taken by the Bank under Sections 13(2) and 13(4) of the SARFAESI Act is illegal.

8. The appellant has further alleged that on 11th December, 2006 the matinee show (noon show) was going on in his theatre. The viewers were watching the movie. The Authorized Officer of the Bank along with other Officers of the Bank and the Police Force came to his cinema theatre in his absence. He forced the employees of the appellant to stop the movie show. He forcibly took over the possession of the cinema theatre, furnitures, fire instrument unit, lens, valuable amplifier and speakers, battery chargers, generator, bundle of wires, and other valuable articles lying in the theatre premises. The Authorized Officer of the Bank had taken this measure only to humiliate and defame him at the instance of his political opponents, while he had been Mayor of the city and enjoyed high standard of respect/reputation. The viewers were forced to leave the cinema hall. His son was present at the time when the Authorized Officer of the Bank along with the Police force was taking over the possession of his cinema hall along with the articles lying therein. He asked the Authorized Officer of the Bank, as to what was going on. The Authorized Officer thereafter gave him possession notice bearing the same date i.e. 11th December, 2006.

9. The appellant has further alleged that the income from the cinema theatre was the only source of his livelihood as well as livelihood of his family. The Authorized Officer by taking forceful possession of the cinema theatre has deprived him of his livelihood as well as the livelihood of his family. He has suffered huge financial loss, mental pain and suffering on account of the wrongful act of the Bank. The appellant has therefore challenged the measures taken by the respondent-Bank under Section 13(4) of the SARFAESI Act by filing S.A. under Section 17 of the SARFAESI Act, praying for the following reliefs:

(a) That the Hon'ble Appellate Tribunal be pleased to set aside the order passed by DRT, Nagpur dated 22nd May, 2008 in S.A. No. 04/2007 allow the Appeal with costs to the appellant.

(b) Declare that the Bank is not entitled to recover any amount from the appellant on the basis of the notice issued under Section 13(2) of the Act and that the said action of the Bank is absolutely illegal and arbitrary.

(c) To direct the Bank to return the property seized by the Bank under Section 13(4) of the SARFAESI Act in the same condition it was taken possession.

(d) That the Hon'ble Appellate Tribunal be pleased to grant to the appellant such other and further reliefs that the applicant may pray for from time-to-time and this Hon'ble Tribunal may deem fit and proper to grant.

(e) That the appellant be granted the cost of this Appeal from the Bank.

10. The respondent Nos. 1 to 4, 6 and 9 opposing the aforesaid S.A. filed by the appellant filed their written reply. They alleged that the respondent-Bank had issued demand notice under Section 13(2) of the SARFAESI Act on 27th July, 2006 to the appellant which was received by the appellant on 4th August, 2006. But the appellant has filed the present S.A. on 23rd January, 2007. The period for filing the Appeal under Section 17 of the SARFAESI Act, is 45 days from the date of the measures taken by the Bank under Section 13(4) of the SARFAESI Act. In this way, the S.A. filed by the appellant is barred by limitation. The respondent-Bank after issuing Demand Notice under Section 13(2) of the SARFAESI Act to the appellant, proceeded under Section 13(4) of the SARFAESI Act to take over possession of the secured assets, as the appellant did not pay the amount demanded by the respondent-Bank in its notice issued under Section 13(2) of the SARFAESI Act.

11. The respondent-Bank on 11th December, 2006 had taken over the possession of the secured assets and prepared Panchanama on the spot and informed the Police Station, Chandur Bazar, that it had taken over the possession of the secured assets. The respondents have further alleged that the Amravati People's Co-operative Bank Ltd. is registered under the Maharashtra State Societies Act, 1960 and involved in carrying on Banking business as per the direction of R.B.I. It has its head office at Jalaram Market, Jawahar Road, Amravati and branch office at Chandur Bazar, State of Amravati. The appellant is a member of the Amravati People's Co-operative Bank Ltd. and is resident of Chandur Bazar. He had applied for Term Loan on 1st July, 2005 for construction of shopping complex. The Bank had sanctioned to the appellant a term loan of Rs. 10.00 lacs on 30th August, 2005 as per Resolution No. 1 of its Meeting of the Board of Directors. The Bank thereafter vide its letter dated 16th September, 2005 informed the appellant about the sanctioned loan. The appellant as per requirement of the Bank had executed the relevant documents i.e. Demand Promissory Note, Continuing Security Letter, etc. The amount of loan was guaranteed by two guarantors, who had also executed deed of guarantee and other documents. The appellant had created mortgage of his Suit properties in favour of the Bank to secure the amount of the loan. He accordingly, executed mortgage deed. He had also executed Power of Attorney in favour of the Bank.

12. The loan was sanctioned by the respondent-Bank to the appellant for construction of shopping complex, but the appellant, did not utilize the fund towards construction of the shopping complex. He also failed to repay the instalments of the term loan as per the Term Loan Agreement. The respondent-Bank repeatedly made demand of the outstanding dues of instalment from the appellant. But the appellant failed to repay the instalments. Therefore, the respondent-Bank after classifying his account as Non-Performing Assets (NPA) issued demand notice on 27th June, 2006 to the appellant and guarantors under Section 13(2) of the SARFAESI Act, calling upon them to pay the outstanding dues of Rs. 9,30,408/- due as on 30th June, 2006, which was served to them. But they did not pay any amount. Therefore, the Authorized Officer of the respondent-Bank further proceeded under Section 13(4) of the SARFAESI Act to take over possession of the secured assets. The Authorized Officer of the respondent-Bank on 11th December, 2006 took over the possession of the secured assets i.e. cinema hall and other movable properties lying therein in the presence of the son of the appellant and Panchas, The Authorized Officer after taking over the possession of the secured assets/cinema theatre prepared Panchanamas, The Authorized Officer legally took over possession of the secured assets in accordance with provision under the SARFAESI Act and the Rules framed thereunder. Therefore, the measures taken by the respondent-Bank under Section 13(4) of the SARFAESI Act is not liable to be quashed. The respondents have sought for dismissal of the S.A. filed by the appellant.

13. The parties in support of their contentions, filed their affidavits and documentary evidence. The learned P.O. after going through the affidavits and documentary evidence filed by the parties, found no illegality in the measures taken by the Bank under Section 13(4) of the SARFAESI Act. The learned P.O. also found that the appellant had alleged that the Bank had committed forgery, preparing false documents and played fraud with him. But the issue of committing fraud by the Bank cannot be adjudicated by the D.R.T., rather it can be adjudicated by competent Civil Court. The learned P.O. did not find any force in the S.A. filed by the appellant. Consequently, he dismissed the S.A. filed by the appellant vide impugned judgment and order dated 29th June, 2007.

14. The appellant instead of challenging the aforesaid judgment and order dated 29th June, 2007 by filing appeal under Section 18(1) of the SARFAESI Act, filed Review Application (R.A.) before the learned P.O. to review the judgment inter alia on the ground that he had sent his objection/representation to the notice issued by the respondent-Bank under Section 13(2) of the SARFAESI Act, which was received by the Bank. But the Bank did not reply to his objection while it was mandatory on the part of the Bank to reply to his representation. This fact was not properly considered by the learned P.O. while passing the judgment and order dated 29th June, 2007.

15. The appellant in his R.A. prayed for the following reliefs:

(1) Review the judgment delivered on 29th June, 2007, in Appeal/S.A. No. 04/2007 (Kamalkishor Kachrulal Upadhye v. Dr. Devisingh Shekhawat, Mukya Prashask, The Chief Administrator of the Amravati People's Co-operative Bank Ltd.) and further be pleased to allow the Appeal No. 4/2007 in terms of the prayer clauses by quashing the action under Section 13(4) as well as 13(2) of the Act of 2002 vide Annexures 17 and 12 to the Memo of Appeal.

(2) Direct the respondents to hand over the possession of the cinema theatre seized vide alleged possession notice dated 11th December, 2006 at Annexure-17.

(3) Hold and declare that the appellant was not paid a single rupee towards TLPM No. 3 by respondent-Bank.

(4) Direct the respondents to pay to the appellant a compensatory costs and damages for illegal possession and withholding the properties, quantifying the same to the tune of Rs. 50 lacs.

(5) Grant a penal interest on the compensatory costs for the mental agony caused to the appellant due to an apparent illegality of respondents @ 12% p.a.

16. The learned P.O. after hearing the learned Counsel for the parties found in the R.A. and consequently, allowed the R.A. vide judgment and order dated 14th November, 2007.

17. The respondent-Bank feeling aggrieved by the aforesaid judgment and order dated 14th November, 2007 passed by the learned P.O., filed Appeal under Section 18(1) of the SARFAESI Act before this Appellate Tribunal. This Appellate Tribunal after hearing the learned Counsel for the parties, dismissed the Appeal (Lodging No. 615/2007) filed by the respondent-Bank vide order dated 19th December, 2007 with Rs. 3,000/- as costs, payable, by the appellant to the respondent.

18. Thereafter the learned P.O. heard the S.A. filed by the appellant and dismissed the S.A. vide impugned judgment and order dated 22nd May, 2008.

19. The appellant being aggrieved by the impugned order passed by the learned P.O., has filed the present Appeal under Section 18(1) of the SARFAESI Act.

20. During pending Appeal, the Amravati People's Co-operative Bank Ltd. merged with Cosmos Co-operative Bank Ltd. which has been substituted in place of Amravati People's Co-operative Bank Ltd.

21. Heard the appellant in person and the learned Counsel for the respondent-Bank and perused the material available on record. The parties have filed their written submission too along with the cited case laws which have been taken on record.

22. The first submission of the appellant in person is that although he had applied for the term loan for construction of shopping complex and the erstwhile Amravati People's Co-operative Bank Ltd. had sanctioned term loan of Rs. 10.00 lacs to him, but the loan amount was never disbursed to him. The Bank had manipulated, forged and fabricated documents as well as made false entry in his account showing disbursement of the loan. In fact, no amount of loan was due against him. The demand notice issued by the Authorized Officer of the respondent-Bank under Section 13(2) of the SARFAESI Act is illegal and no further measures under the Act could be taken by the Authorized Officer on the basis of such notice.

23. The second submission of the appellant in person is that the Authorized Officer of the erstwhile Amravati People's Co-operative Bank Ltd. had issued demand notice dated 27th June, 2006 under Section 13(2) of the SARFAESI Act to him which was received by him on 4th August, 2005. He had replied to the notice raising his detailed objection/representation. But the Bank did not reply to his objection/representation. The appellant contended that when a borrower replies to the notice issued by the Bank under Section 13(2) of the SARFAESI Act, raising his objection, it is obligatory on the part of the Bank to reply to the said objection raised by the borrower in his reply within a week from the date of receipt of the reply. In this case, he had sent his reply to the notice issued by the Authorized Officer under Section 13(2) of the SARFAESI Act, but the Bank did not reply to his objections. The notice issued by the Bank under Section 13(2) of the SARFAESI Act was not in accordance with law. It did not satisfy the mandatory requirement under Section 13(3) of the SARFAESI Act, as such the same was illegal. The subsequent measures taken by the Bank under Section 13(4) of the SARFAESI Act was, therefore, also not in accordance with law and is therefore, liable to be quashed.

24. The third submission of the appellant in person is that the learned P.O. has dismissed the S.A. vide order dated 29th June, 2007. The learned P.O. had failed to deal with the main contention raised by him in his S.A. The learned P.O. had dealt with some of his contentions against the evidence on record for e.g. he had sent his objection/representation to the notice issued by the Bank under Section 13(2) of the SARFAESI Act. But the same was not replied by the Bank as contemplated under Section 13(3A) of the SARFAESI Act. The learned P.O. held that the Bank had specifically denied that the reply of the notice sent by the Bank was not received by it. There is no documentary evidence on record to show that the appellant had filed his objection/representation to the notice issued by the Bank under Section 13(2) of the SARFAESI Act. If the Bank had not received any objection/representation sent by the appellant in response to its notice issued by its Authorized Officer under Section 13(2) of the SARFAESI Act, it was not required to reply to the objection/representation sent by the applicant. This finding of the learned P.O. was against the documentary evidence available on record. While he had already filed copy of the objection/representation, postal receipt, to show that he had sent his objection/representation to the notice issued by the Bank under Section 13(2) of the SARFAESI Act, but the learned P.O. overlooked those documentary evidence. Consequently, he filed M.A. i.e. Review Application (R.A.) No. 11/2007 before the learned P.O. to review his judgment. The R.A. was opposed by the respondent-Bank, The learned P.O. after going through the documentary evidence on record, found that the appellant had filed copy of the objection/representation sent by him in response to the notice issued by the Authorized Officer of the Bank under Section 13(2) of the SARFAESI Act. The learned P.O., therefore, found force in the R.A. filed by him. Consequently, he allowed the R.A. vide judgment and order dated 14th November, 2007.

25. The Bank aggrieved by the aforesaid judgment and order dated 14th November, 2007 passed by the learned P.O. filed Appeal (Lodging) No. 615/2007 before this Appellate Tribunal under Section 18 of the SARFAESI Act, which was dismissed by the Appellate Tribunal vide order dated 19th December, 2007 with Rs. 3,000/- as costs, payable by the appellant to the respondent. The appellant in person argued that the R.A. filed by him was allowed by the learned P.O. which was approved by Appellate Tribunal in the Appeal filed by the Bank. The S.A. filed by him finally stood disposed of. In view of the judgment and order dated 14th November, 2007 passed by the learned P.O. it has to be presumed that the earlier judgment dated 29th June, 2007 passed by the learned P.O. was set aside and the R.A. was allowed in toto. Consequently, the S.A. filed by the appellant was deemed to have been allowed. This Appellate Tribunal while dismissing the Appeal filed by the respondent-Bank against the order dated 14th November, 2007 passed by the learned R.O. did not remand the matter back for fresh hearing. Therefore, the learned P.O. could not hear the S.A. again on merit after dismissal of the Appeal filed by the Bank against judgment and order dated 14th November, 2007 passed by the learned P.O. The S.A. filed by him could be heard on merit only when the R.A. had been partly allowed and the S.A. could have been kept for re-hearing. The learned P.O., therefore, could not re-hear the matter and pass the impugned judgment and order. The impugned order passed by the learned P.O. is, therefore, bad in the eyes of law and is liable to be quashed.

26. The fourth submission of the appellant in person is that the Authorized Officer of the respondent-Bank on 11th December, 2007, all of a sudden reached at his cinema theatre at about 1.00 p.m. in his absence. The matinee show was going on. Around 1,000 movie-viewers were present in the cinema hall watching movie. The Authorized Officer forcibly took over possession of the cinema theatre, ousting the viewers from the hall. The authorized officer took over the possession of not only his cinema hall, but furniture, tools, equipments, etc. lying therein. He after taking over the possession of his cinema hall, handed over the possession notice under Section 13(4) of the SARFAESI Act to his son who was present there. This action on the part of the Authorized Officer of the respondent-Bank was illegal. The Authorized Officer could not take forcible possession of the appellant's cinema hall during his absence. Therefore, the measures taken by the Bank under Section 13(4) of the SARFAESI Act is illegal and is liable to be quashed.

27. The appellant argued that this important aspect of the matter has not been dealt with by the learned P.O. in the impugned judgment and order. The impugned judgment and order is therefore, bad in the eyes of law and is liable to be quashed. Consequently, the S.A. filed by him deserves to be allowed. The respondent-Bank therefore, be directed to restore the possession of his cinema hall to him.

28. Per contra, the learned Counsel for the respondent, Cosmos Co-operative Bank Ltd./SICOM supporting the impugned order passed by the learned P.O. argued that admittedly, the appellant had applied for Term Loan for construction of shopping complex. The erstwhile respondent-Bank, Amravati Peoples Co-operative Bank Ltd. admittedly had sanctioned Term Loan of Rs. 10.00 lacs to the appellant, which was disbursed by the Bank to him. The process contemplated under the SARFAESI Act is not adjudicatory process. The liability of the borrower cannot be crystallized by DRT using adjudicatory process, when the Bank is proceeding under the SARFAESI Act. In this case, although the appellant has challenged that no amount of loan was disbursed to him, but as per the copy of account of the appellant submitted by the Bank, the loan amount was disbursed to him and the outstanding dues is shown therein. The DRT while dealing with the S.A. filed by the appellant under Section 17 of the SARFAESI Act, was not required to adjudicate about the liability of the borrower, rather it had only to see, as to whether the measures taken by the respondent-Bank under Section 13(4) of the SARFAESI Act was in accordance with the law or not. The applicant in his S.A. filed under Section 17 of the SARFAESI Act cannot challenge the amount of outstanding dues indicated by the Authorized Officer of the respondent-Bank in the demand notice issued by him under Section 13(2) of the SARFAESI Act. The contention of the appellant that no amount of loan was disbursed to him and there is no outstanding dues against him, has got no force.

29. The learned Counsel contended that the appellant in his S.A. has alleged that the erstwhile respondent-Bank had fabricated and forged the documents relating to the loan transaction, The Bank also prepared false account. But the inquiry about the alleged fraud is not within the domain of DRT, rather it falls within the exclusive domain of the Civil Court. The learned P.O., DRT has held that the appellant cannot challenge before DRT that the respondent-Bank has prepared forged and fabricated false documents and it has made false entries in the account of the appellant. This fact cannot be gone into by the DRT, rather the appellant has to approach before the competent Civil Court for redressal of such grievances.

30. The learned Counsel for the respondent-Bank further contended that although the appellant had sent his representation to the Authorized Officer of the respondent-Bank to the notice sent by him under Section 13(2) of the SARFAESI Act, but his representation was dealt with by the Bank and the Bank had given written reply to the representation sent by the appellant. The learned P.O. had dealt with this aspect in the impugned order and has held that the representation sent by the appellant against the demand notice issued by the Authorized Officer of the respondent-Bank under Section 13(2) of the SARFAESI Act was dealt with and replied by the Bank. Therefore, the measures under Sections 13(2) and 13(4) of the SARFAESI Act taken by the respondent-Bank, cannot be said contrary to the law. The learned Counsel further contended that in this case, admittedly the Bank had issued demand notice under Section 13(2) of the SARFAESI Act on 27th June, 2006 indicating an amount of Rs. 9,30,408/- (Rupees nine lacs thirty thousand four hundred eight only) as outstanding dues due as on 30th June, 2006. The appellant submitted his objection/representation to the aforesaid notice. When the appellant did not pay the outstanding dues indicated in the demand notice, the Authorized Officer on 11th December, 2006 reached at the theatre hall of the appellant which was mortgaged by him in favour of the Bank. Although the appellant was not present there, but his son was present there. He voluntarily handed over the possession of the cinema theatre to the Authorized Officer of the respondent-Bank. The Authorized Officer had taken over the possession of the secured assets in accordance with the procedure provided under Section 13(4) of the SARFAESI Act. No illegality had been committed by him in taking over the possession of the secured assets. The learned P.O. has twice dealt with the matter and he did not find that the Authorized Officer of the respondent-Bank had taken over the forcible possession of the Suit property. The learned P.O. found that the measures taken by the respondent-Bank under the SARFAESI Act was in accordance with the law. He therefore, did no find any force in the S.A. filed by the appellant. Consequently, the learned P.O. dismissed the S.A. filed by the appellant by the impugned judgment and order which does not suffer from any illegality or infirmity, as such the same does not call for any interference.

31. I have given active consideration to the submission advanced by the appellant in person and the learned Counsel for the respondent-Bank.

32. The appellant in his S.A. has alleged that although he had applied for term loan to the Amravati Peoples Co-operative Bank Ltd. and the amount of Rs. 10.00 lacs was sanctioned to him, but no amount was ever disbursed by the Bank to him. Whether any amount was ever disbursed by the Bank to the appellant, cannot be gone into by the Tribunal or Appellate Tribunal, as process under SARFAESI Act is non-adjudicatory process. The liability of the applicant to pay the outstanding dues cannot be adjudicated in the proceeding under the SARFAESI Act. Of course, the Tribunal or Appellate Tribunal can see, as to whether there is any apparent mistake like clerical or any kind of similar mistake in the description of the out-standing dues and secured assets in the notice issued by the secured creditor or the Authorized Officer under Section 13(2) of the SARFAESI Act, but the Tribunal or Appellate Tribunal cannot adjudicate the outstanding dues. However, from a perusal of the impugned judgment dated 22nd May, 2008 passed by the learned P.O., DRT, it appears that the learned P.O. in Para 7 of the Judgment has observed that the withdrawal voucher indicates that on 16th September, 2005, the appellant had withdrawn Rs. 5,71,500/- and Rs. 2,50,000/-. The appellant has put his signatures on the reverse of the vouchers and details of the notes are also written on the withdrawal vouchers. The revenue stamp is also affixed on the vouchers. The Statements of Accounts of TLMP filed by the respondent-Bank also indicates that on 16th September, 2005, the applicant had deposited Rs. 5,30,000/- in the said account. In this way, prima facie, it has been proved by the Bank that the appellant had withdrawn the amounts. I do not find any perversity in the finding of the learned P.O. I am therefore, of the view that the appellant has failed to establish that the Bank has not disbursed any amount towards the loan sanctioned to him.

33. The appellant has further alleged that the Bank has made fabricated, false and forged documents and has played fraud with him which has been denied by the Bank.

34. The learned P.O. in Para-10 of his judgment dated 29th June, 2007 observed that this question, as to whether the Bank has committed any fraud or not, cannot be gone into by the DRT. Such question can be gone into by Civil Court. Of course, the Tribunal can enter into such question for limited purpose. But it cannot thoroughly probe into the matter. The appellant, therefore, can approach to the competent authority/Forum for redressal of his grievance. I do not find any illegality in the above findings of the learned P.O.

35. The appellant argued that the learned P.O. while passing the judgment and order dated 29th June, 2007 had observed that there was no documentary evidence on record to show that the appellant had submitted any objection/representation to the notice issued by the Authorized Officer of the respondent-Bank under Section 13(2) of the SARFAESI Act. This finding of the learned P.O. was contrary to the evidence available on record, while he had filed copy of the objection/representation and postal receipts to show that he had submitted objection/representation to the notice issued by the Bank under Section 13(2) of the SARFAESI Act. He, therefore, filed M.A./R.A. No. 11/1007 to review the judgment and order dated 29th June, 2007, which was allowed by the learned P.O. vide judgment and order dated 14th November, 2007. The Bank being dissatisfied with the order passed by the learned P.O. on his R.A., filed Misc. Appeal (Lodging No. 615/2007) before this Appellate Tribunal which was dismissed by this Appellate Tribunal vide judgment and other dated 19th December, 2007 with Rs. 3,000/- as costs. The learned P.O. had finally disposed of the S.A. along with the R.A. vide order dated 14th November, 2007. Therefore, he had got no jurisdiction to rehear the matter afresh after final disposal of his R.A.

36. The learned Counsel for the respondent argued that the R.A. was allowed by the learned P.O. on a limited point, holding that the appellant had submitted his objection/representation to the notice issued by the Bank under Section 13(2) of the SARFAESI Act. Rest of the matter was required to be reheard by the learned P.O. When the learned P.O. proceeded with the matter for fresh hearing, the appellant never objected that the matter could not be heard, as the matter shall be deemed to have been finally disposed of after his R.A. was allowed. The appellant and respondent, both argued the matter at length before the learned P.O. The learned P.O. thereafter disposed of the matter i.e. S.A. filed by the appellant by impugned judgment and order dated 22nd May, 2008. Now the appellant is estopped by his conduct argue that the learned P.O. could not rehear the matter.

37. From a perusal of the impugned judgment, it appears that the appellant and respondent participated in the hearing before the learned P.O. to argue the matter at length. The appellant did not raise any objection that the learned P.O. after disposal of his R.A., could not rehear the matter. The learned P.O. after hearing the appellant and the learned Counsel for the respondents, disposed of the matter. Now it is not open to the appellant to argue that the learned P.O. after disposal of the R.A., could not rehear the matter afresh.

38. One of the main grounds taken by the appellant in his S.A. challenging the measures taken by the respondent-Bank under Section 13(4) of the SARFAESI Act, is that the Authorised Officer of the Bank without serving any prior notice to him and calling upon him to hand over the possession of the secured assets, all of a sudden on 11th December, 2007 took over the forcible possession of his cinema theatre along with the furnitures, including equipments and other articles lying therein. The appellant has alleged that the Authorized Officer of the respondent-Bank along with the officers of the Bank and Police force on 11th December, 2007 reached at his cinema theatre in his absence. His son was present there. The matinee show was going on and the movie was being shown to the viewers, who were sitting in the cinema hall. The Authorized Officer forcibly entered into the cinema hall along with the Police force and compelled the viewers to leave the cinema hall. The Authorized Officer took over the possession of his cinema hall along with the furnitures, fire instrument unit, lens, valuable amplifier and speakers, battery chargers, generator, bundle of wires, and other valuable articles lying therein and handed over the possession notice under Section 13(4) of the SARFAESI Act to his son. The Authorized Officer of the Bank could not take forcible possession of his cinema hall. The action of the Authorized Officer in taking over the forcible possession of his cinema hall is contrary to the provisions under Sections 13(4) and 14 of the SARFAESI Act. Therefore, the measures taken by the Authorized Officer in taking over the possession of his cinema hall is illegal and liable to be quashed.

39. The appellant argued that the Authorized Officer was required to call upon him to hand over the possession of the secured assets. If he was not ready to hand over the possession of the secured assets, then he could take recourse to Section 14 of the SARFAESI Act i.e. he could move an application before the District Magistrate, Amravati, to take over possession of the secured assets and thereafter hand over to him. This was legal process which the Authorized Officer was expected to follow. The Authorized Officer could not take over the possession of the secured assets in his absence without his consent. Although the Authorized Officer had taken over the possession of his cinema theatre in the presence of his son, but neither his son had consented for taking over the possession nor he was authorized by him to do so. Moreover, he could not take over the possession of his cinema theatre during the running cinema show, as the viewers were watching the movie after purchasing the ticket which included payment of entertainment tax too, payable to the State Government. In this way, the measures taken by the Authorized Officer of the respondent-Bank under Section 13(4) of the SARFAESI Act is illegal and is liable to be quashed.

40. The appellant further argued that he had specifically challenged the action of the Authorized Officer of the respondent-Bank that he had taken over the forcible possession of the secured assets i.e. the cinema theatre. But this ground has not been dealt with by the learned P.O. while passing the impugned judgment and order. The impugned order is therefore, bad in the eyes of law and is liable to be quashed and the S.A. filed by him deserves to be allowed.

41. Per contra, the learned Counsel for the respondent-Bank contended that the Authorized Officer of the Bank had not taken over the forcible possession of the secured assets of the cinema theatre, rather he had taken over the possession of the cinema theatre in the presence of the son of the appellant. The Authorized Officer after taking over the possession of the cinema theatre had served possession notice under Section 13(4) of the SARFAESI Act to the son of the appellant. The measures taken by the appellant under Section 13(4) of the SARFAESI Act, cannot be said to be contrary to the provisions under the SARFAESI Act as well as the Rules framed thereunder.

42. After going through the documentary evidence available on record and keeping in view of the facts and circumstances of the case, I agree with the submission of the appellant in person. Section 13(4) of the SARFAESI Act provide that when a 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 measures to recover his secured debt. It will be, therefore, relevant to mention here at this stage the provisions under Section 13(4) of the SARFAESI Act, which reads as under:

13(4). 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 debts, namely:

(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

[(b) take over the management of the business of the borrower including the right to transfer way of lease, assignment or sale for realising 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 is relatable to the security for the debt.]
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;

(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.

43. From a perusal of the above provisions, it appears that when a borrower fails to pay the outstanding dues as demanded by the secured creditor in its demand notice issued under Section 13(2) of the SARFAESI Act, the secured creditor may take any of the measures as narrated above. The first measure is that the secured creditor can take over the possession of the secured assets of the borrower. There are two modes for taking over the possession of the secured assets of the borrower by the secured creditor or its Authorized Officer, The first mode is that the secured creditor may call upon the borrower/mortgagor to hand over the possession of the secured assets voluntarily. The second mode is that if the borrower/mortgagor declines to hand over the possession of the secured assets voluntarily, the Authorized Officer can take over the possession of the secured assets through Chief Metropolitan Magistrate or the District Magistrate as the case may be, invoking the provisions under Section 14 of the SARFAESI Act, which reads as under:

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 assets 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 any such secured asset, request, in writing, the Chief Metropolitan Magistrate or 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 District 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 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 District Magistrate done in pursuance of this section shall be called in question in any Court or before any authority.

44. From a perusal of the above provision, it appears that the secured creditor may move an application before the Chief Metropolitan Magistrate (CMM) or the District Magistrate as the case may be, to take over possession of the secured assets and the same be handed over to him. In view of the above provision, it is clear that the secured creditor cannot straightaway take over the forcible possession of the secured assets, if the borrower or mortgagor is not ready to hand over the possession of the secured assets to him voluntarily.

45. In this case, it has to be seen as to whether the Authorized Officer of the respondent-Bank had taken over the possession of the secured assets/cinema theatre forcibly?

46. In this case, admittedly the secured creditor had never called upon the appellant/the borrower to hand over the possession of the secured assets. The Authorised Officer admittedly had taken over the possession of the secured assets on 11th December, 2006 in the absence of the appellant. The respondents have alleged that the Authorized Officer had taken over the possession of the secured assets in the presence of the son of the appellant. But nothing has been alleged by the Bank that the son of the appellant was authorized by him to hand over the possession of the secured assets to the Authorized Officer. The respondents have also not alleged that the son of the appellant had voluntarily handed over the possession of the secured assets to the Authorized Officer. The appellant in Para Nos. 4, 5, 6 and 7 of the S.A. has specifically alleged that the Authorized Officer of the respondent-Bank had forcibly taken over the possession of secured assets, stopping the exhibition of the movie show. The respondents in their reply have stated that the Bank had obtained the possession of cinema theatre on 11th December, 2006 and from that date onwards, the respondents are in possession of the same. The relevant averments of the respondents finds place in Para-2 of the written reply which is being extracted below:

It is true that the Bank obtained possession of the cinema theatre on 11th December, 2006 and from that the respondents are in possession of the same.
47. The respondents have alleged nothing, as to how and from whom the Authorized Officer had taken over the possession of cinema theatre. They have also not alleged that they had taken over the possession of cinema hall from the borrower or his son. The allegation of the appellant in his S.A. that the Authorized Officer of the respondent-Bank had taken over the forcible possession of his cinema theatre is uncontroverted. The Authorized Officer of the respondent-Bank had served the possession notice under Section 13(4) of the SARFAESI Act to the son of the appellant on the date of taking over the possession of secured assets at 3.45 p.m.

48. The appellant in support of

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his allegation has filed his affidavit stating that the Authorized Officer had taken over the forcible possession of his cinema theatre. The appellant had filed affidavit of one, Shri Amitkumar Nanulal Agarwal, who was one of the movie viewers at the time when the Authorized Officer took over the possession of his cinema theatre. He in his affidavit has stated that on 11th December, 2006 he was watching movie in Kamal Talkies situated at Chandur Bazar, Amravati. He had purchased balcony class ticket for Rs. 10/-. At about 1.30 p.m., six to seven persons entered into the cinema hall and ousted the cinema viewers from the cinema hall. The Policemen were also present there. They stopped the movie show which was going on. The Panchanama was prepared by those persons. He was asked to sign a paper which was said to be the Panchanama. Since the Police were present there, he was frightened and he without knowing the contents of the Panchanama, had signed the same. 49. After going through the pleadings of the parties and documentary evidence available on record and keeping in view of the entire facts and circumstances of the case, I find that the Authorized Officer had taken over the possession of the secured assets/cinema theatre on 11th December, 2006 forcibly, while he could not take over the forcible possession, rather he was expected to invoke the provision under Section 14 of the SARFAESI Act, approaching to the District Magistrate, Amravati, to take over possession of the secured assets if the appellant was not ready to hand over the possession of his cinema theatre voluntarily. 50. From a perusal of the impugned judgment dated 22nd May, 2008 and the earlier judgment dated 29th June, 2007 passed by the learned P.O., it appears that the learned P.O. did not deal with the above issue, despite there being specific pleadings of the appellant in his S.A. 51. The Authorized Officer of the respondent-Bank had taken over forcible possession of cinema theatre of the appellant against the provision under the SARFAESI Act. This aspect has not been dealt with by the learned P.O. The impugned judgment and order passed by the learned P.O., therefore, suffers from non-proper application of the mind, which is bad in the eyes of law and is liable to be quashed. The Appeal, therefore, deserves to be allowed. 52. Since the Authorized Officer of the respondent-Bank had taken over the possession of the secured assets/cinema hall forcibly, therefore, the measures taken by the respondent-Bank under Section 13(4) of the SARFAESI Act is illegal and is liable to be quashed and the S.A. filed by the appellant deserves to be allowed. The appellant is therefore, entitled to get the possession of his cinema hall restored back. 53. The appellant has alleged that the Authorized Officer of the respondent-Bank had taken over the possession of his cinema theatre forcibly during the running show. Therefore, the appellant would have naturally suffered huge financial loss, humiliation, defamation, mental shock and suffering, as he had been Mayor of the city enjoying high standard of respect and reputation. The appellant thus, deserves to be compensated for the financial loss, mental suffering, etc. But this is not the proper Forum to award damages to him, rather he may approach to the appropriate forum for the compensation/damages for financial loss, defamation and mental pain and suffering, etc. if he wants to do so. As observed above, the Appeal deserves to be allowed and the impugned order is liable to be set aside, accordingly, the S.A. filed by the appellant, deserves to be allowed. ORDER The Appeal is allowed with costs throughout and the impugned judgment and order dated 22nd May, 2008 passed by learned P.O., DRT Nagpur, in Securitisation Application (S.A.) No. 04/2007 (Kamalkishor Kachrulal Upadhye v. Dr. Devisingh Shekhawat, Mukhya Prashask, the Chief Administrator of the Amravati Peoples Co-operative Bank Ltd.) is set aside. The S.A. filed by the appellant is accordingly, allowed and the measures taken by the respondent-Bank under Section 13(4) of the SARFAESI Act is quashed. The respondent-Bank i.e. Cosmos Co-operative Bank Ltd., Amravati is directed to restore back the possession of the secured assets/cinema hall to the appellant along with furnitures and other articles as described in the Panchnama dated 11th December, 2006 within thirty days from today. It is however, observed that the respondent-Bank will be at liberty to proceed afresh under the SARFAESI Act to recover its dues. If the respondent-Bank proceeds under the SARFAESI Act, it will be proper for the Bank to proceed under the SARFAESI Act, after issuing fresh demand notice under Section 13(2) of the SARFAESI Act. The appellant will be at liberty to approach to the proper Forum for compensation for financial loss as well as for damages for defamation, mental shock, pain and sufferings, etc. suffered by him.
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