Court No. - 21
Case :- WRIT - C No. - 7523 of 2018 Petitioner :- M/S Bhagwati Grah Udhyog(Indore) And Another Respondent :- Authorised Officer, Bank Of Maharashtra And 4 Others Counsel for Petitioner :- Sanjay Kumar Gupta,Ankur Gupta Counsel for Respondent :- C.S.C. Hon'ble Krishna Murari,J. Hon'ble Ajay Bhanot,J.
Heard learned counsel for the petitioners, Sri Sanjay Singh, learned counsel for the respondents No.1 and 2 and learned Standing Counsel appearing for the respondents No.3 and 4.
Petitioners allege that since the application made by the respondent-bank under the provision of Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short 'SARFAESI Act') was not supported by an affidavit as required under the provision of Section 14(1) of the said Act, the entire proceedings and the impugned order are rendered illegal in view of the law laid down by Division Bench of this Court in the case of Shiv Charan Lal Sharma Vs. Allahabad Bank A.M.U. Branch Aligarh and others, reported in 2015(5) ADJ 121.
Sri Sanjay Singh, learned counsel for the respondent-bank does not propose to file any counter affidavit. During the course of hearing, Sri Sanjay Singh, learned counsel for the respondent-bank made a concession that since the bank did not file affidavit as required by the provision under Section 14(1) of the said Act, therefore, the entire proceedings of the impugned order are rendered illegal in view of the law laid down by the Division Bench of this Court in the case of Shiv Charan Lal Sharma Vs. Allahabad Bank A.M.U. Branch Aligarh and others, reported in 2015(5) ADJ 121, wherein after considering the provisions of Section 14 of the SARFAESI Act, it has been held as under:
"6. Having heard the learned counsel for the parties, we find that Section 14 (1) gives power to the District Magistrate or to the Chief Metropolitan Magistrate to assist the secured creditor in taking possession of the secured assets. Section 14 (1A) provides that the District Magistrate or the Chief Metropolitan Magistrate may authorize any officer subordinate to him to take possession of such assets and document relating thereto and to forward such assets and documents to secured creditor. This Sub Section (1A) to Section 14 of the Act was inserted by Act No. 1 of 2013. In the light of this provision, it is clear that the District Magistrate could delegate the power to any officer subordinate to him for the purpose of taking possession of such secured assets to the secured creditor. In the light of the aforesaid, the submission of the learned counsel for the petitioner on this issue cannot be accepted.
7. By Act No. 1/2013 a proviso was also added to Section 14(1) which required that where an application is filed by a secured creditor for the purpose of taking possession of a secured asset, the said application shall be accompanied by an affidavit duly affirmed by the authorized officer of the secured creditor which would contain nine ingredients. For facility, proviso to Section 14(1) is extracted hereunder:
"Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorized 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 default in repayment of the financial assistance granted aggregating the specified amount;
(v) Consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a non performing asset;
(vi) affirming that the period of sixty days notice as required by the provisions of sub-section (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower.
(vii) The objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower'
(viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer, therefore, entitled to take possession of the secured assets under the provisions of sub- section (4) of section 13 read with section 14 of the principal Act;
(ix) that the provisions of this Act and the rules made thereunder had been complied with:
8. This provision was considered by the Supreme Court in Standard Chartered Bank Vs. V. Noble Kumar and others [2013 (9) SCC 620] whereas the Supreme Court analysed the nine sub clauses of the proviso indicating that the following information must be furnished in the affidavit, namely that there was a loan transaction under which a borrower is liable to repay the loan amount with interest; that there was a security interest created in a secured asset belonging to the borrower; that the borrower committed a default in the repayment; that a notice contemplated under Section 13(2) was in fact issued; that in spite of such a notice, the borrower did not make the repayment; that the objections of the borrower was considered and rejected and the reasons was communicated to the borrower.
10. From the aforesaid decision of the Supreme Court in Standard Chartered Bank (Supra), we are of the opinion that the word 'shall' used in the first proviso to Section 14(1) of the Act is mandatory. It is an essential requirement for the Bank that the application filed under Section 14 must be accompanied by an affidavit duly affirmed by the authorized officer of the secured creditor indicating the ingredients contemplated under sub clause (i) to sub clause (ix) to the first proviso. Non filing of the affidavit in our opinion would be fatal."
In view of the law laid down by the Division Bench of this Court, which squarely applies in the facts of this case, this writ petition is liable to be allowed. Accordingly, the writ petition is allowed.
The impugned order dated 01.05.2017 passed by the respondent No.4-Additional District Magistrate (Finance & Revenue), District-Agra under Section 14 of the SARFAESI Act, 2002 (Annexure-1 to the writ petition) is hereby quashed. It is open to the respondent bank to proceed afresh in accordance with law.
Order Date :- 27.2.2018 Ashish Tripathi