1. This appeal has been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SARFAESI Act”) against the order dated 09.09.2019 passed by the Presiding Officer, DRT, Lucknow, whereby the securitization application (S.A.) filed by the appellants was dismissed.
2. Briefly stated the facts of the matter are, that the appellant no. 1 availed certain credit facilities from the respondent- Bank. The loan was secured by the collateral security of the immovable property in the form of equitable mortgage. Since the loan was not repaid in terms of the loan agreement, therefore, the demand notice dated 9.4.2013 was issued under section 13(4) of the SARFAESI Act after classifying the account as NPA. Thereafter, the sale notice was issued on 22.02.2014, which was challenged by the appellants by filing S.A. No. 179/2014 before the Tribunal below.
3. During the pendency of S.A., the respondent-Bank approached before the District Magistrate (DM) under section 14 of the SARFAESI Act and obtained the order dated 28.02.2015 for possession of the property. The sale notice dated 22.02.2014 became redundant, therefore, fresh sale notice dated 3.6.2019 was issued. The S.A.- applicants amended the pleadings challenging the DM’s order dated 28.02.2015 as well as the fresh sale notice dated 3.6.2019. The Tribunal below vide impugned order observed that the demand notice was duly served and the sale notices dated 22.02.2014 and 03.06.2019 became infructuous for want of bids. With regard to the DM’s order, it was observed that the Tribunal is not competent to examine the validity of the DM’s order and ultimately dismissed the S.A. Being aggrieved by the later part of the judgment, the appellants have preferred the present appeal.
4. Learned counsel for the appellants submits that the DM, Ghaziabad has passed the order dated 28.02.2015 under section 14 of the SARFAESI Act without providing opportunity of hearing to the appellants and there are so many other infirmities in the order. The said order is challengeable before the DRT in the application filed under section 17 of the SARFAESI Act, but the Tribunal below has rejected the plea on the ground that the Tribunal below is not competent to decide the issue. The finding is erroneous, as the DRT is the only competent authority to examine the validity of DM’s order passed under section 14 of the SARFAESI Act. In support of the contention, the learned counsel relies upon a judgment passed by the Hon’ble Supreme Court in Kanaiyalal Lal Chand Sachdev & Others Vs. State of Maharashtra and others, (2011) 2 Supreme Court Cases 782.
5. The learned counsel further submits that more than Rs. 61.00 lacs has been deposited by the borrowers after issuance of demand notice and if there remains any outstanding, the borrowers are ready to deposit the same, therefore, the matter be remanded back to the DRT for deciding the issue of DM’s order and till then the Bank be restrained from taking the possession of the property under the garb of DM’s order dated 28.02.2015.
6. On the contrary, the learned counsel for the Bank supports the impugned judgment and contends that still substantial amount is to be recovered from the borrowers, therefore, even in case of remand, the appellants are not entitled for any interim relief.
7. Having heard the learned counsels for the parties and considering the material available on record, it is obvious that the Tribunal below has not recorded any finding on the DM’s order dated 28.02.2015 passed under section 14 of the SARFAESI Act and has rejected the pleadings on the ground that the Tribunal is not competent to examine the order in view of section 14(3) of the SARFAESI Act. In my opinion, the Tribunal below has erred in interpreting the provisions of section 14(3) of the SARFAESI Act. This provision does not restrict the powers of DRT enshrined under section 17 of the SARFAESI Act. The Hon’ble Supreme Court has laid down in Kanaiyalal Lal Chand Sachdev Vs. State of Maharasthtra(Supra) that “any action under section 14 constitutes action taken after stage of section 13(4) of the SARFAESI Act” and falls within the ambit of section 17(1) of the SARFAESI Act.
8. Similar view has been taken by the Hon’ble Allahabad High Court in Manoj Dwivedi and another Vs. District Magistrate, Lucknow & others, Writ Petition No. 17467(M/B) of 2018. Thus, any order passed under section 14 of the SARFAESI Act is a measure taken under or after section 13(4), as such is challengeable before the DRT under section 17(1) of the SARFAESI Act. The provision of section 14(3) restricts any other court or authority, where the act of CMM or DM cannot be called in question, but it does not include the DRT, for which the specific jurisdiction has been given under section 17(1) of the SARFAESI Act to scrutinize and examine the validity of the DM’s order. The Tribunal below has not appreciated the legal provision in right perspective and has passed the impugned order without considering the settled proposition of law, as laid down by the Hon’ble Supreme Court and the Hon’ble Allahabad High Court.
9. Thus, the order impugned to the extent of DM’s order dated 28.02.2015 is set aside and the matter is remanded back to the Tribunal below to decide the validity of DM’s order dated 28.02.2015 afresh, after affording opportunity of hearing to the parties concerned. The parties shall appear before the DRT on 05.05.2021.
10. Since more than Rs. 61.00 lacs has been stated to have been deposited by the appellants and they have also shown their willingness to repay the dues and also that the validity of DM’s order is yet to be decided on merits, therefore, I deem it appropriate to restrain the Bank from taking physical possession till next date of hearing. However, it is made clear that this ord
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er shall stand vacated on 05.05.2021. The appellants may pray for interim relief before the DRT and the DRT shall decide the same independently without being influenced by the observations made by this Tribunal. 11. Further, the matter pertains to the year 2014, therefore, the Tribunal below is also directed to decide the S.A. as expeditiously as possible preferably within two months from the date of receipt of this order. 12. With these observations, the appeal stands disposed off with no order as to costs. 13. A copy of this judgment be sent to the parties as well as the DRT concerned and be also uploaded on the e-DRT portal.