THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION NO.28363 OF 2011 DATED:20.10.2011 Between: K. Ashok Rao … Petitioner And State Bank of India Stressed Assets Recovery Branch Nampally, Hyderabad Rep. by its Authorized Officer Sri M. Sathaiah, S/o. Sri M. Kuchaiah and another … Respondents … Respondents THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION NO.28363 OF 2011 ORDER: In this writ petition, the petitioner called in question the correctness and validity of an order passed by the Chief Metropolitan Magistrate, Cyberabad, at L.B. Nagar, on 26.5.2011 in Crl.M.P. No.390 of 2011. Case of the petitioner is that the second respondent herein was the absolute owner and possessor of a house property bearing No.2- 11, Plot No.3 admeasuring 228 sq. yards in Sys. No.118 and 120 situated at Medipally Village, Ghatkesar Mandal, Ranga Reddy District, the title of which he acquired through a registered sale deed No.5465 of 1999. On 23.7.2008, it appears, the second respondent and the writ petitioner had entered into an agreement pursuant to which the petitioner has agreed to develop the said property of the second respondent by constructing residential flats. It is also asserted that the petitioner has paid an amount of Rs.3,00,000/- to the second respondent as a refundable advance amount. It is further stated that the petitioner has constructed flats in the said premises and handed over possession of three flats to the second respondent and retained three flats with him. At this stage, on 21.9.2011 first respondent - Bank, armed with the impugned order and accompanied by the Advocate Commissioner appointed by the said Court, took possession of the entire complex comprising of six flats, and hence this writ petition is instituted. It is further pointed out that the second respondent has secured loan from the first respondent Bank in a sum of Rs.6,00,000/- and created a mortgage, as a security for the said loan by depositing the title deeds of his house property, which has since been developed by the petitioner. The first respondent banker has proceeded against the second respondent under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for the purpose of convenience, henceforth called as ‘the Securitisation Act’), but in that process, the petitioner has not been put on notice at all. It is therefore contended that the action of the first respondent bank as well as that of the Chief Metropolitan Magistrate, Cyberabad, in proceeding with the matter without even affording an opportunity to the petitioner to contest the matter, is bad in law. The Securitisation Act has been ushered in by the Parliament to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith. As per the definition of ’bank’ contained in Section 2(1)(c) of the Securitisation Act, State Bank of India is one of such which falls within the said definition. The expression ‘borrower’ has been defined in Section 2(1)(f) in very broad terms and whoever has been granted financial assistance by any bank or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank, answers the description of a borrower. The expression ‘financial asset’ in Section 2(1)(d) makes it very clear that any debt or receivables, including a mortgage, charge, hypothecation or pledge of movable as well as immovable property, is a financial asset. As per sub-section (1) of Section 13 of the Act, any security interest created in favour of any secured creditor may be enforced, without the intervention of Court or Tribunal, by such creditor in accordance with the provisions of the Securitisation Act. Sub-section (4) of Section 13 envisages that in case the borrower fails to discharge his liability in full within the period specified under sub-section (2), the secured creditor may take recourse to one or more of the stipulated measures to secure his secured debt. One of those measures being taking possession of the secured assets of the borrower, including right to transfer by way of lease, assignment or sale for realising the secured asset. Under sub-section (2) of Section 13, if the borrower has committed any default in repayment of secured debt and as soon as such debt is classified as non-performing asset, the secured creditor may require the borrower to repay the liability in that regard by issuing notice in writing to liquidate the said liability within a period of sixty days. Therefore, it is only the borrower who is required to be put on notice in terms of sub-section (2) of Section 13 of the Act and rest of the persons, with whom he enters into any further transactions concerning the secured asset, are not required to be put on notice. Therefore, the contention canvassed by the learned counsel for the petitioner that the petitioner has not been put on notice by the first respondent banker before proceeding against the second respondent, is ill-founded. Further, Section 14 of the Securitisation Act enables the secured creditor to approach the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset is situated, for the purpose of taking possession of any secured asset. It is therefore manifestly clear that the action resorted by the first respondent banker in terms of Sections 13 and 14 of the Securitisation Act, is, perfectly legitimate and legal. Section 17 of the Securitisation Act has provided for an appellate remedy for any aggrieved person against any such measures taken by the secured creditor. When an effective alternative remedy is provided, as a rule of prudence and practice, the exercise of jurisdiction under Article 226 of the Constitution of India is not liable to be ordinarily resorted to, particularly when a special piece of legislation like that of Securitization Act provides for an effective appellate remedy, by creating a Tribunal which has been entrusted with the specific task of collecting evidence. It would all the more be appropriate that such a remedy should be exhausted first, so that all the necessary facts can be gathered by the said Tribunal. I, therefore, do not see any valid or justifiable reason to exercise the extraordinary jurisdiction under Article 226 of the Constitution, in this case. Therefore, this writ petition is dismissed at the admission stage. No costs. _________________________ NOOTY RAMAMOHANA RAO, J 20.10.2011 bnr