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HON’BLE SRI JUSTICE D.V.S.S.SOMAYAJULU
and
HON’BLE SRI JUSTICE DUPPALA VENKATA RAMANA
WRIT PETITION No.14983 of 2023
ORDER: (per D.V.S.S.Somayajulu, J)
This Writ Petition is filed for the following relief:
“…to issue an appropriate Writ, order or direction
more particularly one in the nature of
a) “Writ of Certiorari” calling for the entire records
in Crl.M.P.No.122 / 2023, dated 07.06.2023 and
the entire records of Cri.Misc.36/2021 relating to
the orders passed by the Hon’ble CJM, Guntur,
and related warrants issued to the advocate
commissioners in respect of above 2 cases to take
physical possession of the same schedule
properties;
b) To pass necessary orders and set aside the orders
passed by the Hon’ble CJM, Guntur in
Crl.M.P.No.122/2023m dt.07.06.2023 and set
aside 5 warrants issued to the 5 advocate
commissioners without referring to the orders
under which the warrants are issued on the same
properties on which there is already an earlier
order dated 20.03.2021 in Crl.Misc.No.36/2021.
c) To stay the operation of the illegal orders and 5
illegal warrants, dated 07.06.2023, issued to the
5 advocate commissioners, on the same
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properties on which there is already an earlier
order dated 20.03.2021 in crti.Misc.No.36/2021.
d) To pass necessary orders on the 7 issues raised
in the above writ petition in para No.14, 18, 22,
25, 26, 27 & 32 and to pass such other order or
orders as this Hon’ble Court may deem fit and
proper in the circumstances of the case.”
2) This Court has heard Sri Nazundappa, learned
senior counsel, as instructed by Sri A.Venkata Durga Rao,
learned counsel for the petitioners, and Sri S. Satyanarayana
Moorthy learned counsel appearing for the respondent Bank.
3) This Writ Petition is filed raising number of issues
which are briefly summaries as follows:
4) In grounds from 7 to 15 it is submitted that the
Chief Judicial Magistrate has issued two sets of warrants
under Section 14 of the SARFAESI Act in Crl.M.P.No.36 of
2021 and Crl.M.P.No.122 of 2023. In paragraph 18 it is
stated that there is suppression of facts including the cases
pending before the various Tribunals. In paragraph 19 it is
stated that the affidavit which has been filed in the Court of
the Chief Judicial Magistrate is accompanied by an affidavit,
which does not fulfill the conditions laid down in Clauses 1
3
to 9 of Section 14(1) of the SARFAESI Act. From paragraph
19 these grounds are repeated till para 25, and then onwards
the classification of the account has been challenged.
General grounds are raised thereafter.
5) Learned counsel for the petitioners argued the
matter at length. It is his primary contention that two orders
were passed by the Judicial Magistrate in Crl.M.P.No.36 of
2021 and in Crl.M.P.No.122 of 2023. He contends that there
cannot be two orders to take up possession of the property.
The 2nd major ground urged is that the affidavit filed in
support of the application under Section 14 (1) is not in
accordance with law and it does not contain the necessary
disclosures. Learned counsel relied upon the judgments
including W.P.No.4430 of 2020 and the judgment of the
Hon’ble Supreme Court of India in Standard Chartered
Bank v V. Noble Kumar & Others1. Lastly he lays heavy
stress on the contents of the affidavit filed before the
Magistrate and contends that the necessary ingredients set
out in Clauses i to ix in Section 14, of the SARFAESI Act are
not visible from the affidavit. He relies on the cases which
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(2013) 9 SCC 620=2013 (2) DRTC 609 (SC)
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are mentioned in the grounds of Appeal itself. He also raised
the issue about the registration of the security interest
created. Therefore, learned counsel argues that the writ of
Certiorari should be issued and the entire records should be
summoned and the warrants should be set aside.
6) In reply, learned standing counsel for the
respondent Sri Satyanarayana Moorthy argues in line with
what is stated in the counter affidavit. It is his contention
that as earlier warrant could not be executed within the time
stipulated by the Act, fresh warrants had to be obtained by
the Bank for the sake of taking possession of the property.
He also relies upon the judgment of the Hon’ble Supreme
Court of India in the Standard Chartered Bank (1 supra)
to argue that the affidavit in question has more than
complied with Section 14 and that all the details are
furnished. He points out that substantial compliance has
been held to be enough by Division Bench of this Court in
W.P.No.4430 of 2020. He also points out that as far as the
issue of NPA is concerned the matter was already raised
before the coordinate Bench of this Court which directed that
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the issue should be raised before the DRT since there are
complicated questions of fact. He refers to the Order passed
in W.P.Nos.9080 and 9081 of 2019, and it is also stated that
against the said order the SLP filed was also rejected. It is
also pointed out that in the order filed by the writ petitioners
themselves it is clearly mentioned that the issue of NPA
would be urged before the DRT. He also submits that the
DRT had also decided the point that the classification of NPA
will have to be decided before the DRT Hyderabad and that
this order was passed in the presence of the counsels. Even
with regard to the non-registration of the charge, the DRT
had already rendered a finding and it is, therefore, said that
this issue cannot be raised once again before this Court.
Lastly, he submits that the writ petition is not a proper
remedy and that more than once this Writ Petitioner was told
to approach the DRT for his grievance. He submits that
huge outstanding is due to the bank and on one ground or
the other cases are being raised before this Court to delay
the recovery.
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COURT:
7) It is important to note that no rejoinder has been
filed to counter affidavit.
8) After hearing both the counsel, this Court notices
that there is a serious issue raised by the writ petitioner with
heavy emphasis on the contents of the affidavits which are
filed before the CJM under Section 14 of the SARFAESI Act.
This very same section and the contents of the affidavit etc.,
were also discussed threadbare by the Hon’ble Supreme
Court of India in the case of Standard Chartered Bank
case ( 1supra). Both the counsel relied upon the same. The
following are the findings of the Hon’ble Supreme Court of
India in paras 23 to 25 of this judgment:
“23. We must make it clear that these provisions were not
in existence on the date of the order impugned [V. Noble
Kumar v. Standard Chartered Bank, (2010) 8 MLJ 282 :
(2011) 1 CTC 513] in the instant proceedings. These
amendments are made to provide safeguards to the
interest of the borrower. These provisions stipulate that a
secured creditor who is seeking the intervention of the
Magistrate under Section 14 is required to file an affidavit
furnishing the information contemplated under various
sub-clauses (i) to (ix) of the proviso and obligates the
Magistrate to pass suitable orders regarding taking of the
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possession of the secured assets only after being satisfied
with the contents of the affidavits.
24. An analysis of the nine sub-clauses of the proviso
which deal with the information that is required to be
furnished in the affidavit filed by the secured creditor
indicates in substance that:
24.1. (i) there was a loan transaction under which a
borrower is liable to repay the loan amount with interest,
24.2. (ii) there is a security interest created in a secured
asset belonging to the borrower,
24.3. (iii) that the borrower committed default in the
repayment,
24.4. (iv) that a notice contemplated under Section 13(2)
was in fact issued,
24.5. (v) in spite of such a notice, the borrower did not
make the repayment,
24.6. (vi) the objections of the borrower had in fact been
considered and rejected,
24.7. (vii) the reasons for such rejection had been
communicated to the borrower, etc.
25. The satisfaction of the Magistrate contemplated under
the second proviso to Section 14(1) necessarily requires
the Magistrate to examine the factual correctness of the
assertions made in such an affidavit but not the legal
niceties of the transaction. It is only after recording of his
satisfaction the Magistrate can pass appropriate orders
regarding taking of possession of the secured asset.”
9) A coordinate Bench of this Court in W.P.No.4430
of 2020 also had an occasion to consider the very same
issue. Paragraph 5 of this Judgment makes it very clear that
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the core issue before the Court was about the contents of the
affidavit to be filed.
10) The judgment of the Hon’ble Supreme Court of
India referred to above was not cited but before the Division
Bench the other judgments were cited. In paragraph 11 of
the said judgment the Division Bench relied upon the Kerala
High Court judgment in Canara bank Limited v Stephen
John and Others2 and approved the findings of the
judgment of the Kerala High Court. The following passages
of the Division Bench, wherein Kerala High Court‘s order was
approved, are relevant for this case:
“…..it is obligatory for the Chief Judicial Magistrate
exercising power under section 14 of the Act to satisfy
that the secured creditor has made a declaration in the
form of an affidavit as regards matters specifically
mentioned in the first proviso to sub-section (1) of
Section 14. In other words, after the amendments, if the
secured creditor does not file an affidavit declaring all the
facts required to be declared in terms of the first proviso,
the Chief Judicial Magistrate is not obliged to render
assistance to them. The correctness or otherwise of the
declaration, going by the scheme of the provision, is not a
matter at all for the Chief Judicial Magistrate to
adjudicate. As taking possession of the secured asset
2
2018 (3) KHC 670
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through the process under section 14 of the Act is also
one of the measures contemplated under sub- section (4)
of section 13 of the Act, the correctness, if any, of the
declaration made by the secured creditor for the purpose
of availing assistance under Section 14 of the Act is a
matter for the Debts Recovery Tribunal exercising power
under Section 17 of the Act to adjudicate upon, if raised.
8. It is seen that confusion arose as regards the
jurisdiction under Section 14 on account of the fact that
the Chief Judicial Magistrate entrusted with judicial
functions is exercising that jurisdiction. Merely for the
reason that the power under Section 14 is exercised by
the Chief Judicial Magistrate, it cannot be argued that
the power is judicial as it is now settled that the fact that
the power is entrusted or wielded by a person who
functions as a court is not decisive of the question
whether the act or decision is administrative or judicial.
An administrative order would be one which is directed to
the regulation or supervision of matters as distinguished
from an order, which decides the rights of parties or
confers or refuses to confer rights to property, which are
the subjects of adjudication by the court. One of the
surest tests would be whether a matter which involves
the exercise of discretion is left for the decision of the
authority, particularly if that authority were a court [see
Shankarlal Aggarwala v. Shankarlal Poddar (AIR 1965 SC
507)]. In the instant case, there is no discretion
whatsoever for the Chief Judicial Magistrate exercising
power under Section 14 and the power is conferred only
for the regulation of matter as distinguished from a power
to decide the rights of parties. If the scope of the
jurisdiction of the Chief Judicial Magistrate under
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Section 14 is understood in this fashion, there is no
difficulty in arriving at the conclusion that the power is
only administrative and not judicial."
11) Later a coordinate Bench also referred to the
judgment in Tulsi Rocks Pvt. Ltd., v Bank of India3 and
held as follows:
“16) In Tulsi Rocks Pvt. Ltd. v. Bank of India delivered by
a Division bench of the combined High Court for the
States of Telangana and Andhra Pradesh, in Writ Petition
No.5018 of 2019, dealt with the issue as to what
amounts to compliance of Section 14 of the SARFAESI
Act. In the said case, the Court, after considering the
affidavit filed and the documents filed along with the
M.P., held that if the parameters indicated in clauses (i)
to (ix) of the first proviso to Section 14(1) are broadly
complied with, the court is bound to invoke the doctrine
of 'substantial compliance'. The Court further held that
clauses (i) to (ix) of the first proviso to Section 14(1) of the
Act merely provide the form in which the essential
averments for an application under Section 14 of the Act
are to be made. Therefore, what is important is the
substance and not the form. It will be useful to extract
the relevant paragraphs of the judgments, which is as
under:
16. While reiterating our finding that all the
ingredients of Clauses (i) to (ix) of the first proviso to
Section 14(1) of the Act find a place in the affidavit
of the authorized officer filed in support of the
application under Section 14 of the Act, we would
3
2019 (3) ALD 254
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also add that in cases of this nature, la substantial
compliance would be sufficient. As pointed out by
the Supreme Court in Commissioner of Central
Excise v. Mrs. Harichand Shri Gopal, the Courts
have always invoked the doctrine of 'substantial
compliance', to avoid hardship in cases where a
party does all that can reasonably be expected of it,
but failed or faulted in some minor or inconsequent
aspects which cannot be described as the essence or
the substance of the requirements. The Supreme
Court pointed out in the said case that the court
should determine whether the Statute has been
followed sufficiently so as to carry out the intent for
which the statute was enacted and not a mirror
image type of strict compliance."
12) Even if the leading judgment of the Hon’ble
Supreme Court of India in paragraph 24 of the Standard
Chartered Bank judgment (1 supra) is examined, which is
cited by the Supreme Court of India, the following details
must be mentioned in the affidavit as per Para 26:
(i) there was a loan transaction under which a borrower is
liable to repay the loan amount with interest,
(ii) there is a security interest created in a secured asset
belonging to the borrower,
(iii) that the borrower committed default in the repayment,
(iv) that a notice contemplated under Section 13(2) was in
fact issued,
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(v) in spite of such a notice, the borrower did not make the
repayment,
(vi) the objections of the borrower had in fact been considered
and rejected,
(vii) the reasons for such rejection had been communicated to
the borrower, etc.
13) It is also clarified in the subsequent paragraphs
that the Magistrate is not under an obligation to examine the
factual correctness made in the affidavit but not the legal
niceties of the transaction. It is also apparent that while
dealing with the application under Section 14, the Magistrate
is not required to decide the “rights” of the parties. An issue
about the rights of the parties is not capable of being decided
by the learned Magistrate in the course of an order under
Section 14. As pointed out by the Hon’ble Supreme Court of
India in order to ensure that certain procedural safeguards
which may benefit the borrower are followed, an amendment
was brought to Section 14 of the Act.
14) This Court holds that what is necessary is the
substantial compliance of the various issues mentioned in
Section 14 of the SARFAESI Act and not the compliance
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beyond reasonable doubt as urged by the learned counsel for
the petitioner.
15) If the affidavit which is filed in the present case is
examined against the backdrop of the cases mentioned above
it is clear that the affidavit contain the following details:
a) Amount borrowed (Rs.8,00,00,000/-), principle and
interest outstanding (Rs.8,11,19,173/-);
b) Execution of the loan documents including the
deposit of title deeds as security and execution of
necessary security documents; execution of
confirmation letter etc., (09.01.2018 / 27.04.2018)
c) Details of the payment of loan and classification as
NPA on 30.04.2019;
d) Issuance of a demand notice in May, 2019 and
receipt of the same by the respondents on
16.05.2019; the failure of borrowers to repay etc.
16) Thus, it is clear that points 1 to 5 of paragraph 24
of the Standard Chartered Bank judgment (1 supra) are
complied with in letter and spirit. It is also clear that the
borrowers – writ petitioners did not issue any representation
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or objection to the Section 13 (2) Notice. In addition, another
coordinate Division Bench of this Court in W.P.No.3950 of
2022 clearly held that the mere non-mentioning of total
outstanding amount as on the date of filing of the application
is not a ground to hold that the Bank followed the statutory
provisions of sub-section 1 of Section 14 of the SARFAESI
Act. This judgment was passed by coordinate Bench after
considering the Standard Chartered Bank judgment (1
supra) and also other judgments on the subject including
the C.Bright, Managing Trustee v District Collector4.
17) This Court, therefore, concludes on this issue
that what is necessary is that the basic ingredients must
have been mentioned in the affidavit like the borrowing, the
failure to repay, security interest created, the outstanding, a
notice demanding the outstanding and the failure to pay.
Substantial compliance is enough. It is also evident that an
objection has been given to the borrower to make a
representation / raise an objection at that stage itself after
receipt of a notice under Section 13 (2).
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2020 Lawsuit SC 692
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18) This Court on examining the entire issue in this
case is of the opinion that there is more than substantial
compliance with the law in the affidavit filed before the
learned Magistrate and the facts mentioned are crystal clear.
19) Lot of argument was also advanced by the learned
counsel for the writ petitioner on the classification of the
account as an NPA. Learned counsel also refers to the
prudential norms etc., for schedule classification and tried to
convince this Court that the classification of NPA itself is
contrary to law. A closer reading of the facts and the
counter affidavits filed show that in W.P.Nos.9080 of 2019
and 9081 of 2019 this issue was raised by the present writ
petitioner. The classification of the account as an NPA and
the issuance of notice on 08.05.2019 are the subject matters
of the decision. The Division Bench clearly held in
paragraph 17 of the order dated 13.03.2020 in W.P.Nos.9080
and 9081 of 2019 that this classification of act as an NPA is
a seriously disputed fact and that the same cannot be
decided under Article 226 of the Constitution of India.
Against this order an SLP was filed bearing Diary No.11071
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of 2020, which was rejected by the Hon’ble Supreme Court of
India by orders dated 06.10.2020.
20) Thereafter, in a related W.P.No.24409 of 2020 a
direction was given based on the consent of the learned
counsel for the parties that the writ petition should be
disposed of with a direction to the 1st respondent-DRT
Visakhapatnam, to dispose of S.A.No.193 of 2021 and
S.A.No.194 of 2021 within three months. This order was
passed on 26.10.2021. Thereafter, the DRT, Visakhapatnam
by its order dated 27.06.2022 disposed of S.A.No.193 of
2021 and S.A.No.194 of 2021. In the said order it was
clearly mentioned that the issue of NPA will be decided by
the DRT, Hyderabad, in S.A.No.131 of 2020. This was visible
from the conclusion by paragraph 5 of the said order.
21) It is noticed that despite the same, vehement
arguments were advanced on the classification of account as
a NPA. This Court is of the opinion that in view of the
authoritative pronouncements of the coordinate Bench,
against which an SLP was also rejected, the same cannot be
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agitated once again before this Court nor can findings be
invited from this Court.
22) As far as non-registration of the security with the
central registry again arguments were advanced but the
same is not pleaded. Nevertheless it is noticed that the DRT,
Visakhapatnam in the course of its order in S.A.No.193 and
194 of 2021 has already dealt these issues and held that the
non-registration of the mortgage is not fatal to the case.
23) After considering all the submissions of the
learned counsel, this Court is of the opinion that the
petitioner has not made out any case whatsoever for
issuance of an order as prayed for. A writ of certiorari is to
be issued when the Tribunal or a Court, before whom the
matter is pending, has failed to exercise its jurisdiction or
exercised its jurisdiction totally in arbitrary manner etc.
This Court on the basis of the material fact is of the opinion
that there is absolutely no ground to issue a certiorari. Time
and again the Hon’ble Supreme Court of India has cautioned
the High Court against exercising jurisdiction in such
SARFAESI matters and held that the High Court should be
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extremely careful and circumvent in interfering in such
matters.
24) With these observations, the Writ Petition is
dismissed. There shall be no order as to costs.
25) Consequently, Miscellaneous Applications
pending, if any, shall also stand dismissed.
__________________________
D.V.S.S.SOMAYAJULU, J
_________________________________
DUPPALA VENKATA RAMANA, J
Date:21.07.2023.
Ssv
