Securitisation act
s b krishna
(Querist) 29 June 2013
This query is : Resolved
whether a borrower can challenge an order under section 14 of the securitisation act before the DRT ? Any recent decisions ?
c.p.s. ramachary
(Expert) 30 June 2013
Borrower cannot challenge order of magistrate passed under Sec. 14 of the Act before taking possession. But he can challenge the validity of order only after possession of secured asset is taken.
However borrower can file writ petition if the order of the magistrate is erroneous if he has to suffer dispossession illegally.
See Madras High Court's Judgment:in
R.Shiva Subramaniyan vs Senior Manager SBI dated 10 June, 2011 passed by
The Hon'ble Mr.Justice D.MURUGESAN and The Hon'ble Mr.Justice K.K.SASIDHARAN in W.P.No. 9072 of 2011and M.P.Nos.1 and 2 of 2011
DEFENSE ADVOCATE.-firmaction@g
(Expert) 30 June 2013
Borrowers of TAMILNADU can take benefit of this citation.
Far others STATES if you can show illegality on face of it than only HC may entertain writ.
Normal option is to go through DRT route where earlier only officers of finance ministry were appointed but now JUDGES are being appointed.
ajay sethi
(Expert) 30 June 2013
agree with mr ramachary
DEFENSE ADVOCATE.-firmaction@g
(Expert) 01 July 2013
But Mr Ramachary the citation is not only for the situation when possession is taken but all orders though passed and possession not taken.
c.p.s. ramachary
(Expert) 02 July 2013
The settled law is that writ jurisdiction cannot be invoked when alternative remedy is available. But the right of invoking DRT's jurisdiction u/s 17 SARFAESI Act arises only after possession of secured asset is taken by the secured creditor. In some genuine cases, the borrower has to suffer dispossession in order to invoke Sec.17 of the Act as some secured creditors opt to take physical possession instead of going first for symbolic possession and then for physical possession. This is more painful to imagine the situation of dis-possesion even though possession is restored back to the borrower after judicial scrutiny of the action of the secured creditor by DRT and fiding that the possession taken is not correct. Hence some High Courts tend to exercise writ jurisdiction calling it as 'self imposed restriction' to exercise writ jurisdiction and there is no bar in such extreme cases.
Supreme Court in Transcore Vs. Union of India held that there is no dichotomy between symbolic possession and actual possession. Hence if physical possession of secured asset is taken u/s.14 it is also subject to scrutiny under Sec 17 of SARFAESI Act. DRT has to scrutinise even the veracity of the magistrate's order under Sec. 14 of the Act. Thus the right to invoke Sec.17 ripens. Therefore there is no citation required for each State. But the right to invoke Sec 17 arises only when possession of secured asset is taken.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 02 July 2013
Well your opinion is good in theory but not applicable at ground level.The lender is hell bent to take possession against the defaulted amount so plays all tricks for quick possession and its sale to recover amount.
That why I HAD said the citation referred has limited application for TAMILNADU.
But during the same time frame SC citation has come and it has put to rest all actions through HIGH COURT without first following the DRT AND ADRT route.
Following is the important portion of SACHDEV case of 2011 from SC.
In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well-settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See: Sadhana Lodh Vs. National Insurance Co. Ltd. & Anr.5; Surya Dev Rai Vs. Ram Chander Rai & Ors.6; State Bank of India Vs. Allied Chemical Laboratories & Anr.7). In City and Industrial Development Corporation Vs. Dosu Aardeshir Bhiwandiwala & Ors.8, this Court had observed that:
"The Court while exercising its jurisdiction under Article 226 is duty-bound to consider whether:
(a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;
5 (2003) 3 SCC 524
6 (2003) 6 SCC 675
7 (2006) 9 SCC 252
8 (2009) 1 SCC 168
1
(d) person invoking the jurisdiction is guilty of unexplained delay and laches;
(e) ex facie barred by any laws of limitation;
(f) grant of relief is against public policy or barred by any valid law; and host of other factors.
"
22.In the instant case, apart from the fact that admittedly certain disputed questions of fact viz. non-receipt of notice under Section 13(2) of the Act, non-communication of the order of the Chief Judicial Magistrate etc. are involved, an efficacious statutory remedy of appeal under Section 17 of the Act was available to the appellants, who ultimately availed of the same. Therefore, having regard to the facts obtaining in the case, the High Court was fully justified in declining to exercise its jurisdiction under Articles 226 and 227 of the Constitution.
prabhakar singh
(Expert) 02 July 2013
The distinction put forward by Mr. c.p.s. ramachary is fine Mr.ADVOCATE DEFENSE.which you yourself have already appreciated.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 03 July 2013
Yes but my contention was simply and only for Tamilnadu .
More over the legal tactics do not work on theory alone. You have to remain nimble footed to trap the other side at every possible opportunity.
When he made sweeping statement that the citation is applicable every where than I had to give the current
SC citation.
RAJU O.F.,
(Expert) 14 July 2013
As per the amendment effective from 4th Jan., 2013,[The Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012]amendment of Sec.14 is to be satisfied by the Dist. Magistrate or the Chief Matropolitan Magistrate before passing any suitable Orders for taking possession of properties.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 14 July 2013
The amendment referred by you provides the procedure for application u/s 14 which was missing earlier in the act.
The query was whether the order u/s 14 can be challenged before DRT and the answer is provided in above discussion.
