IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 1.9.2008 CORAM THE HON'BLE MR.JUSTICE S.J.MUKHOPADHAYA AND THE HON'BLE MR.JUSTICE V.DHANAPALAN Writ Appeal No.926 of 2008 1. The Authorised Officer Indian Overseas Bank Trichy Main Branch 127, LKS Towers West Bouleward Road Thiruchirapalli 620 008. 2. The Chairman & Managing Director Indian Overseas Bank Head Office, Mount Road Chennai 600 002. .. Appellants/Respondents Vs. M/s. Ashok Saw Mill rep. by Mr.Haresh Patel, Partner No.46/4-A, Bye Pass Anyamangalam Trichy 620 010. .. Respondent/Petitioner Appeal against the order of the learned Single Judge dated 23.6.2008 made in Rev.Appln.(Writ) No.165 of 2007. Review petition against the order dted 18.9.2007 made in W.P.No.27472/07 on the file of this court W.P.No.27472/07 presented to this court under Article226 of the Constitution of India to issue a Writ of Certiorarified Mandamus to call for the records on the file of the 1st respondent pretaining to the impugned notice of sale dated 26.7.2007 under security interet (enforcement) rules 2002 and quash the same For Appellants : Mr.F.B.Benjamin George For Respondent : Mr.S.Sethuraman J U D G M E N T (Delivered by S.J.MUKHOPADHAYA,J.) The respondent is the borrower of the appellant/Indian Overseas Bank (for brevity "the Bank"). The secured asset is common, pursuant https://hcservices.ecourts.gov.in/hcservices/ to which, loans have been given to another by the same Bank. The account having become NPA, the bank issued notice under Section 13(2) of the SARFAESI Act. Since the borrower failed to pay, the bank had to take action under Section 13(4) of the SARFAESI Act for possession of the secured asset. 2. At that stage, the borrower (respondent herein) moved before this Court and ultimately, he was asked to move before the DRT under Section 17 of the SARFAESI Act, but, the borrower did not choose to move. The notice for auction sale having not acted upon by the Bank and a fresh notice for auction sale having been issued, the borrower had challenged the same in a writ petition in W.P.No.27472 of 2007. The learned single Judge was of the view that the party should move under Section 17 of the SARFAESI Act and allowed the borrower to move the DRT under Section 17 of the SARFAESI Act. 3. The bank, being aggrieved, preferred a review application (Writ) No.165 of 2007 in W.P.No.27472 of 2007. It was submitted that the borrower having not taken steps to prefer an appeal under Section 17 of the SARFAESI Act at the time of possession, he should not be allowed second time to move before the DRT under Section 17 of the SARFAESI Act. The learned single Judge, having noticed two Division Bench decisions, which were affirmed by a Full Bench, was of the view that there was subsequent cause of action for which the borrower could be allowed to work out his remedy under Section 17 of the SARFAESI Act. The said review order is under challenge in this writ appeal. 4. Similar submission has been made by the learned counsel for the respondent. This was supported by the auction purchaser whose auction could not be affirmed in view of the pendency of the appeal preferred by the borrower under Section 17 of the SARFAESI Act. 5. A similar question arose for consideration before this Court, as noticed by the learned single Judge, in Ramco Super Leathers Ltd. v. UCO Bank (2007 (5) MLJ 986). In fact, in the said case also, the fact discloses that after issuance of notice under Section 13(2) of the SARFAESI Act, notice under Section 13(4) of the SARFAESI Act came to be issued on 15.12.2004. Thereafter, the bank took possession of the secured asset and issued a sale notice on 24.9.2005, which was not given effect due to interim order of stay. Subsequently, after the stay got vacated, reassessment was made on 13.3.2007 fixing 16.4.2007 as the date for re-auction. It was, at that point of time, the borrower moved DRT under Section 17 of the SARFAESI Act. While dealing with the issue, the Division Bench has held in para 13 as under: "13. From a plain reading of sub-section (1) to Section 17, it will be evident that a person, including borrower, could make an application under Section 17 to the DRT, if https://hcservices.ecourts.gov.in/hcservices/ aggrieved by any of the measures referred to in sub-section (4) to Section 13 as taken by the secured creditor. That means, only if one or other measure is taken by the secured creditor, a cause of action arises for any person or the borrower to prefer appeal (application) under Section 17. Under sub-section (2), the Tribunal is bound to consider whether any of the measures referred to under sub- section (4) to Section 13 taken by the secured creditors are in accordance with the provisions of this Act. Under sub- section (3) to Section 17, after examining the facts and circumstances of the case, and evidence produced by the parties, if the Tribunal comes to a conclusion that any of the measures referred to under sub-section (4) to Section 13 taken by the secured creditor are not in accordance with the provisions of the Act and the rules and require restoration of the management of the business to the borrower, or restoration of possession of the secured assets to the borrower, it may declare such action as invalid and restore possession of secured assets to the borrower or restore the management of the business to the borrower, as the case may be. From the aforesaid Section 17, it will be evident that any person, including borrower, could file an appeal (application) under Section 17 at any stage, including the stage when management of business is taken or possession of secured assets of the borrower, including right to transfer is taken over by the secured creditor. In such case, the Tribunal has power to restore possession in favour of the borrower, if such action taken under sub-section (4) to Section 13 is declared invalid. Merely because a secured creditor has taken possession of secured asset, or issued notice inviting application for sale of secured asset, or issued a sale certificate in favour of one or other auction purchaser, will not render the Tribunal powerless to restore possession in favour of the borrower, if such action taken under sub-section (4) to Section 13 is found not in accordance with the Acts and the Rules framed thereunder, and is declared invalid." 6. In the decision in Indian Overseas Bank v. G.S.Rajashekaran (2008 (4) MLJ 1012), the Division Bench took similar view as under: "8. From the aforesaid facts, it would be evident that the respondent-writ petitioner had not challenged the notice issued under Section 13(2) of the SARFAESI Act, but challenged the action of the appellant-Bank in taking possession of the secured asset for realising the same and such action of taking the possession of the secured asset https://hcservices.ecourts.gov.in/hcservices/ though started on 13.11.2007, the cause of action continued till the notice dated 26.12.2007 was issued for auction- sale of the secured asset under Section 13(4) of the SARFAESI Act. 9. Section 13(4) of the SARFAESI Act enables the secured creditor to take recourse to one or more of the measures to recover the secured debt as shown under clauses (a), (b), (c) and (d) of Section 13(4). The cause of action takes place as and when one or other such measure to recover the secured debt is taken by the secured creditor. 10. In the present case, the first cause of action started when the possession was taken, vide notice dated 13.11.2007, followed by the subsequent cause of action taken place on 26.12.2007 when the auction-sale notice under Section 13(4)(a) of the SARFAESI Act was published by the secured creditor-appellant-Bank. There being a continuous cause of action having lastly taken on 26.12.2007, and as the writ petition was filed on 08.1.2008, we are of the view that the writ petition was filed before this Court well within the period of limitation of 45 days." 7. The aforesaid decisions have been upheld by the Full bench of this Court in M/s. Lakshmi Shankar Mills (P) Ltd. & Others v. The Authorised Officer/Chief Manager, Indian Bank & Others (2008 (2) LW 381). From the decision in the case of Ramco Super Leathers Ltd. v. UCO Bank, it would be evident that the said decision is based on a Supreme Court decision. 8. In view of the findings of the Division Bench and Full bench, which are based on Supreme Court decision, we find no case made out to interfere with the impugned order. Finding no merit, the writ appeal is dismissed. Consequently, the order of stay granted on 14.8.2008 is vacated. However, there is no order as to costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar kpl https://hcservices.ecourts.gov.in/hcservices/ To 1.The Authorised Officer, Indian Overseas Bank, Trichy Main Branch, 127,LKS Towers, West Bolueward Post, Thiruchirapalli-620 008. 2.The Chairman & Managing director, Indian Overseas Bank,Head Office, Mount Road, Chennai-2 1 CC To Mr.F.B.Benjamin George, Advocate, SR NO.49347 1 CC To Mr.S.Sethuraman, Advocate, SR NO.49624 W.A.No.926 OF 2008 VSV(CO) PMK/29.9.2008. https://hcservices.ecourts.gov.in/hcservices/