IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 3RD FEBRUARY 2011 / 14TH MAGHA 1932 WP(C).No. 15084 of 2010(I) -------------------------------------- PETITIONER(S): ------------------------ LIC HOUSING FINANCE LIMITED, AREA OFFICE, IYYATTIL JUNCTION, ERNAKULAM, COCHIN-11, REPRESENTED IN THIS PROCEEDINGS BY SRI.RAJEEV NAIR, S/O.GOPINATHAN NAIR, AGED 39 YEARS, AREA MANAGER, LIC HOUSING FINANCE LIMITED, KESAVADASAPURAM, THIRUVANANTHAPURAM. BY ADV. SRI.R.S.KALKURA, SRI.M.S.KALESH, SRI.HARISH GOPINATH, SRI.V.VINAY MENON, SMT.KVP.JAYALEKSHMY, SRI.M.AJAY (IRUMPANAM). RESPONDENT(S): ------------------------- 1. THE STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE DISTRICT COLLECTOR, COLLECTORATE, KOLLAM. 3. SUPERINTENDENT OF POLICE, KOLLAM RURAL, KOLLAM. 4. T. BHUVANACHANDRAN, T.S. MANDIRAM, KOONAYIL, PARAVOOR. P.O, KOLLAM. 5. LALY BHUVANACHANDRAN, W/O.T. BHUVANACHANDRAN, KOONAYIL, PARAVOOR. P.O, KOLLAM. WP(C).No. 15084 of 2010(I) 6. THE TAHSILDAR, TALUK OFFICE, KOLLAM. 7. SUNIL, S/O.AFISUDEEN, RESIDING AT PANAYARA VEEDU, KOTTAPPRUAM, PARAVOOR. P.O, KOLLAM. 8. SHYLAJA, W/O.SUNIL, RESIDING AT PANAYARA VEEDU, KOTTAPPRUAM, PARAVOOR. P.O, KOLLAM. * ADDL. R9 IMPLEADED ADDL. R9: THE FEDERAL BANK LTD., PARAVOOR BRANCH, KOLLAM DISTRICT, REPRESENTED BY ITS SENIOR MANAGER. * IS IMPLEADED AS ADDITIONAL 9TH RESPONDENT AS PER ORDER DATED 06/12/2010 IN I.A. NO.16740/2010. R1 TO R3 & R6 BY GOVT. PLEADER MR.BIJOY CHANDRAN. R5 BY SRI.N.N.SUGUNAPALAN, SENIOR ADVOCATE, ADV. SRI.S.SUJIN. ADDL. R9 BY ADV. SRI.GEORGE VARGHESE (MANACHIRACKEL). THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03/02/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs WP(C).No. 15084 of 2010(I) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE POWER ATTORNEY EXECUTED BY BOARD OF DIRECTORS OF THE PETITIONER IN FAVOUR OF DIRECTOR AND EXECUTIVE DATED 20/06/2005. EXT.P2: COPY OF THE LETTER OF AUTHORITY EXECUTED BY THE DIRECTOR AND CHIEF EXECUTIVE DATED 30/06/2006 IN FAVOUR OF RAJEEV NAIR, AREA MANAGER. EXT.P3: COPY OF THE ORIGINAL SALE DEED NO.3649/94 DATED 04/11/1994 IN FAVOUR OF THE 4TH RESPONDENT. EXT.P4: COPY OF THE NOTICE DATED 06/12/2006 ISSUED BY THE PETITIONER UNDER SECTION 13(2) OF THE SARFAESI ACT. EXT.P5: COPY OF THE POSTAL ACKNOWLEDGMENT INDICATING RECEIPT OF THE NOTICE CONTEMPLATED UNDER SECTION 13(2) OF THE SARFAESI ACT. EXT.P6: COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER UNDER SECTION 14 OF THE SARFAESI ACT BEFORE THE 2ND RESPONDENT. EXT.P7: COPY OF THE NOTICE DATED 24/01/2007 ISSUED BY THE 2ND RESPONDENT TO THE RESPONDENTS 4 & 5. EXT.P8: COPY OF THE ORDER NO.M2/49009/2007 DATED 21/03/2009. EXT.P9: COPY OF THE COMMUNICATION DATED 12/11/2009 ISSUED BY THE TAHSILDAR, KOLLAM TO THE DISTRICT COLLECTOR. EXT.P10: COPY OF THE LETTER DATED 21/12/2009 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. EXT.P11: COPY OF THE LETTER DATED 20/01/2010 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT. EXT.P12: COPY OF THE ENCUMBRANCE CERTIFICATE NO.4135/2009 DATED 24/09/2009. EXT.P13: COPY OF THE PLAINT IN O.S. NO.219/2005 OF THE SUB COURT, KOLLAM. RESPONDENT'S EXHIBITS: NIL. //TRUE COPY// P.A. TO JUDGE rs C.K.ABDUL REHIM, J. = = = = = = = = = = = = WP(C).No.15084 of 2010-I. = = = = = = = = = = = = Dated this the 3rd February, 2011. J U D G M E N T The petitioner company had sanctioned a loan to the 4th respondent to the tune of Rs.15 lakhs on the basis of equitable mortgage created on an immovable property having 9.60 Ares together with a building situated therein, comprised in Survey No.1899 (Re-survey No.302/21) of Paravoor Village in Kollam Taluk. The 5th respondent is the guarantor as far as the loan transaction is concerned. Consequent to default committed by the respondents 4 and 5, steps under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) was initiated. In spite of notice of demand issued under Section 13(2), the amount was not remitted. Therefore, the petitioner attempted to take over possession of the property for which jurisdiction of the 2nd respondent under Sec.14(1) of the SARFAESI Act was WP(C).No.15084/2010-I. 2 invoked by filing Ext.P6 application. The 2nd respondent, after issuing notice to respondents 4 and 5, had issued Ext.P8 order authorising the 6th respondent herein to take over possession of the property which is the secured asset and to hand over the same to the petitioner. Further, through Ext.P8, the Deputy Superintendent of Police, Kollam was directed to provide adequate assistance for implementation of the order. 2. Grievance of the petitioner is that, without complying with the directions contained in Ext.P8 order and without taking over the property in question, the 6th respondent Tahsildar had issued a letter to the 2nd respondent stating that on verification of the records and on inspection of the property in question, it was revealed that the 4th respondent had sold the property and that he is not in ownership of the property in question. It is mentioned that, as per the Register, a portion of the property is now under the 'Thandaper' of the brother of the 4th respondent WP(C).No.15084/2010-I. 3 and the remaining property is in the name of another person. On the above basis the 6th respondent had refused to take any steps to take over the possession of the property in question. 3. According to the petitioner, the inaction on the part of the 6th respondent in not giving proper assistance for taking over physical possession of the property is highly illegal. The reason mentioned in Ext.P9 letter for refusing such action is totally unsustainable and irrelevant when evaluated with the relevant provisions of the SARFAESI Act, is the contention. 4. The persons to whom the 4th respondent had allegedly transferred the property are included in the party array as respondents 7 and 8. It is further stated that they created a mortgage in favour of the additional 9th respondent Bank and that the said Bank is also proceeding against the property since the said loan was also defaulted payment. WP(C).No.15084/2010-I. 4 5. The relief sought for in this writ petition is against respondents 2, 3 and 6 to implement Ext.P8 order and to render all necessary assistance to take over possession of the property concerned. The issue to be considered is as to whether the 6th respondent was justified in not implementing Ext.P8 order stating that the property is in question had already been transferred by the secured debtor. Going by the provisions contained in Sec.14(1) of the SARFAESI Act it is evident that the secured creditor was given right to approach the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction the secured asset is situated for the purpose of taking physical possession of the assets or control of the assets and the Magistrate on the basis of such request shall take possession of such assets and documents relating to their and forward such assets to the secured creditor. Under Sec.14(2) the District Magistrate or the Chief Metropolitan Magistrate as the case may be are entitled to WP(C).No.15084/2010-I. 5 take steps to use or caused to be used such force as may in his opinion be necessary for such taking over possession. From the Statute it is evident that the jurisdiction vested with the District Magistrate in exercise of the powers under Sec.14 is only on a limited premise to assist the secured creditor to take over possession of the property. On the other hand he is noted vested with any jurisdiction to decide any claim with respect to the rights of any parties upon the property in question which is the secured asset. The Magistrate in such cases is not suppose to have any adjudication on merits of any claim raised by the secured debtor or any person with respect to the secured asset. At the most, Magistrate is empowered only to make a verification in or to convince himself that the secured creditor has properly complied with the conditions regarding steps contemplated under Sec.13(2) and 13(3). 6. In the case at hand, in exercise of powers conferred under Sec.14(1) the District Magistrate had WP(C).No.15084/2010-I. 6 issued direction to the 6th respondent to take over possession of the property. As such the 6th respondent is the delegated authority of the 2nd respondent to take the needful steps to implement Ext.P8 order. Therefore, the authority to whom the matter was assigned, at any rate, is not at all empowered to look into any claim regarding the rights of the parties, either the secured debtors or that of any other persons. 7. Under such circumstances refusal on the part of the 6th respondent to act on the basis of Ext.P8 to take over possession of the property for the reason that the secured debtor had transferred ownership on the property, is absolutely beyond the scope and ambit of the powers conferred under Sec.14(1). It is to be noted that any alienation made by the guarantor after creating the mortgage on the property will not in any manner affect the rights of the mortgagee. Therefore, it is evident that despite any such transfer, the petitioner is entitled to WP(C).No.15084/2010-I. 7 proceed against the property in question. 8. On the basis of the discussions as above, I am of the view that the 6th respondent need be directed to take effective steps for implementation of Ext.P8 order despite the fact that the property was transferred by the 4th respondent or to any person. Therefore, the writ petition is disposed of directing respondents 2 and 6 to take effective steps for implementing Ext.P8 order and to hand over possession of the property in question to the petitioner. 9. Learned counsel for the addl.9th respondent Bank points out that with respect to the loan sanctioned by them in favour of the 7th respondent they have already instituted an Original Application before the Debt Recovery Tribunal. It is made clear that in this writ petition I am not entering upon any adjudication with respect to the rights and liabilities of the petitioner vis-a-vis the addl.9th respondent. It is always left open to the addl.9th respondent to pursue remedies available under law to realise the amount WP(C).No.15084/2010-I. 8 disbursed by them to the 7th respondent. Rights if any available to the addl.9th respondent to challenge the proceedings initiated under the SARFAESI Act by the petitioner is also left open for adjudication. 10. Respondents 2 and 6 shall take effective steps in accordance with the directions contained herein above at the earliest possible, at any rate within two weeks from the date of receipt of a copy of this Judgment. C.K.ABDUL REHIM, (Judge) Kvs/-