IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 26TH OCTOBER 2009 / 4TH KARTHIKA 1931 WP(C).No. 30200 of 2009(T) -------------------------- PETITIONER: --------------- UCO BANK, REPRESENTED BY ITS AUTHORIZED OFFICER, M.G.ROAD, ERNAKULAM. BY ADV. SRI.KODOTH SREEDHARAN RESPONDENTS: --------------- 1. K.H.ABDUL MAJEED, PROPRIETOR, M/S.ELLIKKAL ENTERPRISES, S/O.HASSAN, ELLIKKAL HOUSE, PATHADIPPALAM, CHANGAPUZHA NAGAR, ERNAKULAM, KOCHI-33. 2. K.H.MUHAMMAD ALI, PROPRIETOR, M/S. ELLIKKAL ENTERPRISES, S/O.HASSAN, ELLIKKAL HOUSE, PATHADIPPALAM, CHANGAPUZHA NAGAR, ERNAKULAM, KOCHI-33. 3. M/S.R.F.MOTORS (P) LTD., REP. BY ITS MANAGING DIRECTOR, F.M.FAROOK, ILLIKKAL PLOT, BLD.NO.191 A, PATHADIPPALAM, CHANGAPUZHA NAGER P.O., ERNAKULAM, KOCHI-33. 4. KALAMASSERY MUNICIPALITY, REP. BY ITS SECRETARY, P.O.CHANGAPUZHA NAGER, ERNAKULAM, KOCHI-33. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26/10/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K. ABDUL REHIM, J. - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No.30200 of 2009 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 26th day of October, 2009 J U D G M E N T 1. Petitioner is a Bank which had allowed loan facility to respondents 1 & 2. Immovable properties belonging to the respondents 1 & 2 was proceeded against under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) consequent to default committed in repayment. It is submitted that the proceedings are under the stage of Section 13 (4) and notice for taking over possession of the property has already been published. The Bank had also proclaimed sale of the immovable property. At this stage, without intimation to the Bank, the defaulters who are the owners of the secured assets, had entered into a lease with the 3rd respondent whereby the 3rd respondent is permitted to W.P.(C)No.30200 of 2009 -2- install a Motor Workshop in the property. The 3rd respondent had approached the 4th respondent Municipality for getting installation permission. The petitioner Bank as well as a neighboring 3rd party had opposed granting of installation permission. The matter was once taken up to the Tribunal for Local Self Government Institutions at the instance of the neighboring resident. The Tribunal directed the Municipality to hear objections of the parties, including the petitioner Bank, before taking a decision. Now the 4th respondent Municipality, had adopted a resolution as evidenced by Ext.P4 whereby it is decided to grant installation permission to the 3rd respondent. Petitioner is challenging Ext.P4 decision of the Municipality on the ground that the lease created subsequent to initiation of proceedings under the SARFAESI Act is totally illegal and invalid. Contention is that, since the 3rd respondent is not getting any right by virtue of the lease so created, the Municipality ought not have granted installation permission. W.P.(C)No.30200 of 2009 -3- 2. Going by provisions of Section 13 (13) of the SARFAESI Act, the borrower is prevented from transferring the secured assets by way of sale, lease or otherwise with respect to any of his assets referred to in the notice, after receipt of the notice under Section 13 (2), without prior written consent of the secured creditor. Therefore as far as the secured creditor is concerned, the lease agreement created by the borrower can be considered as a nullity and further steps under the Act can be persued ignoring creation of any such lease. 3. As far as the impugned resolution adopted by the Municipality is concerned, noticed that the Municipality had observed that the 3rd respondent is entitled to get installation permission since they had complied with all the requirements stipulated under the Municipality Act as well as the relevant Rules framed thereunder. I am not entering into the merits of the decision and deciding the question regarding sustainability of the resolution, because there is an alternate remedy provided under the Act against such W.P.(C)No.30200 of 2009 -4- decision by way of appeal to the Tribunal for Local Self Government Institutions. Further, counsel appearing for the 2nd respondent had brought to my notice that against Ext.P4 decision the 3rd party (neighbouring resident) who was objecting such grant of installation permission, had already approached this court by writ petition No.W.P.(C) No.29317/09. The petitioner Bank is a respondent in that writ petition and was represented by counsel. In the judgment rendered by this court in that case, W.P.(C) No.29317/09, dated 21.10.2009, this court had relegated the parties to approach the Tribunal against Ext.P4 order by resorting to the appellate remedy. Therefore the petitioner if aggrieved by Ext.P4 can resort to remedy by way of appeal. 4. However it is made clear that Ext.P4 will not stand in the way of the petitioner Bank proceeding with further steps under the SARFAESI Act and from taking over possession of the secured assets resorting to procedures contemplated therein. W.P.(C)No.30200 of 2009 -5- 5. Under the above circumstances the writ petition is dismissed without prejudice to the rights of the petitioner Bank to invoke the appellate remedy available against the impugned decision under Ext.P4. C.K. ABDUL REHIM JUDGE shg/