1 wp-4344-11.sxw dgm IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4344 OF 2011 The Saraswat Co-operative Bank Limited .... Petitioner vs The State of Maharashtra and anr. .... Respondents Mr. Bhupesh Samant for the petitioner. Mr. R. P. Behre, Additional Government Pleader for respondents 1 and 2. CORAM: DR.D.Y.CHANDRACHUD & ANOOP V. MOHTA, JJ. DATE : July 28, 2011 ORAL JUDGMENT (Per Dr. D. Y. Chandrachud,J.): These proceedings have been instituted by the Saraswat Cooperative Bank Limited seeking directions to the Collector and District Magistrate, Sangli, to provide administrative assistance on an expeditious basis under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“Securitisation Act, 2002”) for taking possession of the secured assets more particularly set out in Exhibit “A” to the 2 wp-4344-11.sxw Petition. The grievance of the Petitioner is that six applications are pending before the Collector, some of them for several years and despite this, the Collector has not taken expeditious steps under Section 14. The Petitioner addressed a letter dated 12 May 2010 to the Second Respondent and on 16 November 2010 to the Divisional Commissioner. On 23 February 2011 the Collector, the Second Respondent was directed by the Divisional Commissioner, Pune to take appropriate action inspite of which no action, it is stated, has been taken. As a result, according to the Petitioner, the recovery of a large amount of more than Rs.270.75 lacs due to the Bank has been held up. It has been stated that the Deputy General Manager, Sangli Zone, personally met the Second Respondent when the Second Respondent orally declined to render administrative assistance as required. According to the Petitioner, the Second Respondent is not following any procedure known to law in disposing of applications under Section 14. No dates are fixed for the attendance of Bank officers and no communication is furnished regarding the status of the applications. On many occasions, the defaulters were allowed to intervene and their applications are entertained. In several cases, the proceedings are found to be missing and no information could be provided by the staff of the Second Respondent. In these 3 wp-4344-11.sxw circumstances, the Bank has been constrained to move this Court under Article 226 of the Constitution. 2 On 20 July 2011, this Court, after considering the record, was prima facie of the view that the conduct of the Second Respondent was in clear breach and dis-regard of the law laid down by this Court. The Court observed that the Second Respondent is duty bound to act in accordance with the letter and spirit of the legislation enacted by Parliament under Section 14 of the Securitisation Act, 2002. On the request of the learned AGP an adjournment was granted to enable the First and Second Respondents to file their replies. 3 A reply has been filed by the Residential Naib Tahsildar for and on behalf of the Collector. In the reply, an attempt has been made to deal with each one of the six applications which have been filed by the Petitioner before the Collector. The first application in respect of a borrower was filed on 26 May 2007. The narration of events by the Collector shows that the application was heard in 2007-08 and on 13 May 2008, the borrower agreed to repay the loan. Time was accordingly granted at the instance of the Bank. The Bank, by its letter dated 26 October 2010, sought possession of the secured assets 4 wp-4344-11.sxw as the amount was not repaid. Despite this letter of the Bank, it would appear that it was only six months later on 30 April 2011 that the Collector directed the Tahsildar to take possession of the secured assets. Absolutely no explanation is forthcoming as to why nearly six months had to elapse before the Collector took action under Section 14. 4 For the purposes of these proceedings, it is not necessary to advert to each one of the cases which have been referred to in Exhibit “A” to the Petition or the reply by the Collector. It would suffice to note that in several of those cases, the Collector at Sangli has not taken action for nearly three years. In certain cases, action was not taken merely on the ground that a Suit was pending. The law in respect of the jurisdiction which is conferred upon the District Magistrate under Section 14 is settled by a judgment of a Division Bench of this Court consisting of Smt. Ranjana Desai and Shri Anoop V. Mohta, JJ. in Trade Well vs. Indian Bank1. The Division Bench has held as follows :- “1 The bank or financial institution shall, before making an application under section 14 of the NPA Act, verify and confirm that notice under section 13(2) of the NPA Act is 1 2007(1) Bom. C.R. (Cri) 783 5 wp-4344-11.sxw given and that the secured asset falls within the jurisdiction of CMM/M before whom application under section 14 is made. The bank and financial institution shall also consider before approaching CMM/DM for an order under section 14 of the NPA Act, whether section 31 of the NPA Act excludes the application of sections 13 and 14 thereof to the case on hand. 2 CMM/DM acting under section 14 of the NPA Act is not required to give notice either to the borrower or to the 3rd party. 3 He has to only verify from the bank or financial institution whether notice under section 13(2) of the NPA Act is given or not and whether the secured assets fall within his jurisdiction. There is no adjudication of any kind at that stage. 4 It is only if the above conditions are not fulfilled that the CMM/DM can refuse to pass an order under section 14 of the NPA Act by recording that the above conditions are not fulfilled. If these two conditions are fulfilled, he cannot refuse to pass an order under section 14. 5 Remedy provided under section 17 of the NPA Act is available to the borrower as well as the third party. 6 Remedy provided under section 17 is an efficacious alternative remedy available to the third party as well as to the borrower where all grievances can be raised.” 5 The Collector would be bound to follow the principle of law which has been laid down in the judgment of the Division Bench. It does not lie within the jurisdiction of the Collector under Section 14 to enter upon an adjudication of the merits of the claim of the Bank. The limited parameters of his jurisdiction have been explained by the 6 wp-4344-11.sxw Division Bench in Trade Well. In this view of the matter, we direct that the Second Respondent shall expeditiously conclude the pending applications, and in any event, within a period of one month from the date on which an authenticated copy of this order is produced on his record. We also direct that in all future cases, all Collectors and District Magistrates shall maintain a record of applications received and endeavour to conclude the hearing of those applications and pass final orders thereon as expeditiously as possible and in any event within a period of two months. We clarify that we have not entered upon the merits of the individual applications concerning borrowers in the present case who are not parties to these proceedings. We have entered upon the grievance of the Petitioner since it related to the failure of the Collector to adhere to the legal principles enunciated in the judgment of this Court in relation to the exercise of the powers under Section 14. 6 The Petition is accordingly disposed of with the aforesaid directions. There shall be no order as to costs. 7 We direct that a copy of this order shall be circulated by the State Government to all the District Magistrates who are vested with 7 wp-4344-11.sxw jurisdiction under Section 14 of the Act so as to facilitate compliance. 8 The Registrar(Judicial) shall forward copies of the present judgment to the Chief Metropolitan Magistrates for information. (ANOOP V. MOHTA, J.) (DR.D. Y. CHANDRACHUD,J.)