IN THE HIGH COURT OF GUJARAT AT AHMEDABAD WRIT PETITION (PIL) No. 68 of 2012 With CIVIL APPLICATION No. 6945 of 2012 In WRIT PETITION (PIL) No. 68 of 2012 For Approval and Signature:
HONOURABLE THE CHIEF JUSTICE MR.BHASKAR BHATTACHARYA AND HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================= ================
========================================= ================ CONSUMER PROTECTION AND ANALYTIC COMMITTEE Versus STATE OF GUJARAT & ORS.
========================================= ================ Appearance :
MR VISHWAS K SHAH with MR MASOOM K SHAH for PETITIONER . MR PK JANI, GOVERNMENT PLEADER with MS. KRINA CALLA for RESPONDENTS: 1,2 MR KI SHAH for RESPONDENT : 3 ========================================= ================ Date : 11/10/2012
CAV JUDGMENT
(Per : HONOURABLE THE CHIEF JUSTICE MR.BHASKAR BHATTACHARYA)
1. By this Public Interest Litigation, the writ-petitioner, which is an organization functioning for the welfare of consumers and registered under the Gujarat Co-Operative Societies Act, 1961 and the Bombay Public Trusts Act, 1950, has prayed for a direction upon the respondent No.2, the District Magistrate, Ahmedabad, to dispose of all the applications under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [“the Securitisation Act”] by Banks and Financial Institutions within a time-bound programme strictly in accordance with the law laid down by a Division Bench of this Court in the case of IDBI Bank Ltd. v. Hytaisun Magnetics Ltd & Ors. in Special Civil Application No. 15084 of 2010 reported in AIR 2011 GUJ.
129. The petitioner has also prayed for a direction upon all Executive Magistrates / District Magistrates that applications under section 14 of the Securitisation Act should be decided in the light of the aforesaid decision of the Division Bench of this Court.
2. According to the writ-petitioner, the District Magistrate has no right to issue any notice for adjudicating the application under Section 14 of the Securitisation Act and the same is against the decision dated 9th February 2011 of the Division Bench of this Court in the case of IDBI Bank Ltd. v. Hytaisun Magnetics Ltd & Ors. in Special Civil Application No. 15084 of 2010 reported in AIR 2011 GUJ. 129.
3. The District Magistrate, Ahmedabad has filed an affidavit-in- reply and according to it, there are 69 applications pending before it as on 17th April 2012. It is further stated in the affidavit that the District Magistrate, while disposing of the applications under section 14 of the Securitisation Act calls for records/documents to verify basically the following two aspects:
[1]. The place where the property is situated; the said aspect is necessary for the District Magistrate to consider, for the reason that the order under section 14 has to be with respect to the property situated within the jurisdiction of the District Magistrate.
[2]. The District Magistrate verifies the ownership of the property against which order under section 14 is to be passed, to be more precise, District Magistrate verifies that the property belongs to the loanee against which an order under section 14 is required to be passed.
4. We have heard the learned counsel for the parties and after going through the materials on record, we find that in the past this very Division Bench in the case of MANSA SYNTHETIC PVT. LTD. & ORS. vs. UNION OF INDIA & ANR. in SPECIAL CIVIL APPLICATION NO. 1829 of 2012, while dismissing an application under Article 226 of the Constitution of India challenging the validity of section 14 of the Securitisation Act, arrived at the following conclusions:-
“20. Our final conclusions are summarised thus :
(i) Section 14 of the Act is a valid piece of legislation and is declared intra vires.
(ii) The District Magistrate or Chief Metropolitan Magistrate, as the case may be, is bound to assist the secured creditor in taking possession of the secured assets and is not empowered to decide the question of legality and propriety of any of the actions taken by the secured creditor under Section 13(4) of the Act.
(iii) Though Section 14 of the Act provides that no act of the Chief Metropolitan Magistrate or District Magistrate done in pursuance of Section 14 shall be called in question in any Court or before any authority, the right of judicial review under Articles 226 and 227 of the Constitution of India cannot be taken away, but that power can be exercised only in cases where the concerned Magistrate or the Commissioner, as the case may be, exceeds his power or refuses to exercise his jurisdiction vested in him under the law.
(iv) Absence of an appeal does not necessarily render the legislation unreasonable as only because no appeal is provided under the Act against the order passed under Section 14 of the Act will not render Section 14 ultra vires the provisions of the Constitution of India.”
5. Therefore, once an application under section 14 of the Securitisation Act is filed before a District Magistrate or Chief Metropolitan Magistrate, as the case may be, he has no right of adjudicating the validity or propriety of any action taken by the secured creditor under section 13(4) of the Securitisation Act.
6. However, we are quite conscious of the fact that in a given circumstance, a debtor may, by practising fraud, create illegal mortgage in favour of a secured creditor or may even fraudulently mortgage a property over which he had no right or over which he has only a partial right, by suppressing such facts. In those cases, the real owner of the property or the person in lawful occupation thereof, would not be bound by such mortgage, and if straightway police assistance is given for taking the possession of the entire property, the real owner or the person having substantial interest over the property or the person in lawful possession of such property who are not bound by the mortgage created by the debtor will be seriously prejudiced.
7. We are, therefore, of the view that whenever an application under section 14 of the Securitisation Act is filed, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, should first affix a notice of taking possession on a conspicuous part of the property in question and should also give a notice to the person who is in actual possession thereof indicating its intention of taking possession after a period of a fortnight so that in case of any fraud or collusion at the instance of either the debtor or the secured creditor, an innocent person in lawful possession may not be thrown out of the property with the help of the police and he can get an opportunity to move appropriate forum for securing interim order for protection of his possession.
7.1 If, even after affixation of such notice, the person in actual possession fails in obtaining any interim order from the appropriate forum, the District Magistrate or Chief Metropolitan Magistrate should assist the secured creditor in taking possession of the secured assets with the help of the police. It is, however, needless to mention that such possession will abide by the adjudication in any lawful forum where the title to the third-party would be adjudicated.
8. We, therefore, dispose of this application by directing the State Government to issue appropriate directions to all District Magistrates and the concerned officers who are acting as an authority under section 14 of the Securitisation Act to comply with the directions of the Division Bench of this Court in the case of IDBI Bank Ltd. [supra] and also to give notice of atleast 14 days by serving the same on the person in actual occupation or by affixing the same in a conspicuous part of the property in question and wait for 14 days before taking actual possession. If within 14 days, the concerned Magistrate comes to know of any interim order passed by any competent forum, it should act according to the directions given by such competent forum.
9. The writ-petition is disposed of with the aforesaid directions.
9.1 In view of the above order passed in the main writ-petition, the Civil Application does not survive and it stands disposed of accordingly.
[BHASKAR BHATTACHARYA, C.J.] mathew [J.B.PARDIWALA. J.]