SARFAESI ACT - LIMITATION & REQUIREMENT
(Querist) 07 July 2008
This query is : Resolved
Is there any period of limitation to file application before Distt. Magistrate to obtain physical possession after issuing notice under S. 13(2) of the Act?
Should the SARFAESI COURT i.e. court of DM issue notice to borrower?
Please refer citations.
(Expert) 07 July 2008
There is no period for limitation to approach the CMM except the 60 days peiord given under Section 13 (2) of SARFAESI Act. The CMM is not bound to issue notice to the borrower because the word used under Section 14 says "SHALL" and not "MAY". The CMM shall appoint a receiver.
There is no such citation till date on this issue.
(Expert) 08 July 2008
IN THE HIGH COURT OF DELHI AT NEW DELHI
SUBJECT : Sections 13(2) of the Securitisation and
Reconstruction of Financial Assets and Enforcement
of Securities Interest Ordinance (II) 2002
Date of Decision: 11th April, 2008.
MAYUR COIRS P. LTD. and ORS. ... Petitioners
Through Mr. Hemant Chaudhary, Mr. Dhananjay
DEVELOPMENT CREDIT BANK LTD. ..... Respondent
HON'BLE MR. JUSTICE T.S. THAKUR
HON'BLE MS. JUSTICE ARUNA SURESH
In this petition for a writ of certiorari, the petitioner calls in question the
validity of an order dated 6th December, 2007 passed by the Debt Recovery
Appellate Tribunal, Delhi whereby Misc. Appeal No. 182/2006 arising out
of O.A. No. 31/2004 (DRT-II, Delhi) has been dismissed. The petitioners
further seek a declaration to the effect that proceedings initiated against them
by the respondent bank under the Securitisation Act, 2002 have become void
and stand withdrawn with a direction to the bank to de-seal the first floor of
property No. R-82/5, Ramesh Park, Laxmi Nagar Illaka, Shahdara, Delhi.
The controversy arises in the backdrop of the following facts:
2. Upon the failure of the petitioners to liquidate an outstanding debt of
Rs.78,34,862.39, the respondent bank invoked the provisions of Sections
13(2) of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Securities Interest Ordinance (II) 2002 and called upon the
petitioners herein to pay the amount mentioned above with interest @ 19%
p.a. with effect from 1st February, 2003 compounded quarterly till the date
of payment within a period of 60 days from the receipt of the notice failing
which the bank threatened to exercise the powers vested in it under Section
13(3) of the Act by taking possession and management of the secured assets
referred to in para 3 of the notice. On receipt of the said notice, the
petitioners submitted their objections which were disposed of by the bank in
terms of a communication dated 26th August, 2004, whereby the bank
turned down the objections raised by the petitioners and reiterated its claim
and demand for payment of the outstanding amounts failing which it
threatened action under the provisions of the Act mentioned above. Since no
payment was made by the petitioners, an application under Section 14 of the
Act aforementioned was made by the respondent bank before the Chief
Metropolitan Magistrate, Delhi who passed an order on 5th May, 2003
appointing Sh. Rajender Tuteja as a Receiver to take possession of the entire
immovable property No. R-82/5 situate in village Khreji Khas and first,
second and third floor portions of property bearing No. 32 in Block K of the
same village. The receiver was also authorised to take possession of the
hypothecated stocks mentioned in the order.
3. It is common ground that in pursuance of the above order, the possession
of the first floor of property No. R-82/5, Ramesh Park, Laxmi Nagar, Delhi
was taken over by the receiver and the property sealed by him. Aggrieved by
the said order, the petitioners filed Writ Petition No. 3964/2003 in this Court
in which the parties were directed to maintain status quo. The petitioners
also moved an application before the CMM for vacation of her order dated
5th May, 2003 which was dismissed by the said court on 12th January, 2004
with the observation that since the High Court had already directed
maintenance of status quo, it would be inappropriate to pass any order on the
application moved by the petitioners.
4. While the proceedings under the Securitisation Act were still pending, the
respondent bank filed OA No. 31/2004 before the DRT-II for recovery of a
sum of Rs.96,44,283.18p which included the principal amount and interest
due up to the date of the application. In the meantime, Writ Petition No.
3964/2003 was dismissed by this Court in the light of the decision of the
Supreme Court in Transfer