HON'BLE SRI JUSTICE GHULAM MOHAMMED AND HON'BLE SRI JUSTICE K.G. SHANKAR WRIT PETITION NO. 26696 OF 2010 Between: M/s Ham Marketing represented by its Authorized Signatory Mr. Abdul Gaffur Khan ………….Petitioner AND HDFC Bank Limited ………….Respondent ORDER: (Per Hon'ble Sri Justice Ghulam Mohammed) This Writ Petition has been filed seeking to issue an order particularly one in the nature of Writ of Certiorari calling for the records relating to and connected with the orders dated 14.10.2010 in Criminal M.P.No. 3188 of 2010 on the file of II Additional Chief Metropolitan Magistrate, Hyderabad and quash the same as illegal. Brief facts of the case are that the petitioner- Firm herein for the purpose of its business had availed Working Capital facility with a limit of Rs. 1,35,00,000/-. It is stated that the petitioner committed default in payment and therefore, the respondent-bank issued notice dated 18.6.2010 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the SRFAESI Act”). It is also stated that the respondent- Bank approached the Chief Metropolitan Magistrate under Section 14 of the SRFAESI Act in Criminal M.P.No. 3188 of 2010 with false representations that they have complied with all statutory requirements of issuing notice as contemplated under Section 13(2) and Section 13(4) of SRFAESI Act. The main grievance of the petitioner is that the respondent even without taking the statutory proceedings under Section 13(4) of the SRFAESI Act has fraudulently proceeded under Section 14 of the Act for possession of the property without following the due process of law. On the other hand the learned counsel appearing for the respondent submits that the remedy under Section 17 of the Act is always open to the petitioner even after filing application under Section 14 of the Act and the Statute is providing right to the respondent to proceed under Section 14 in case of barrower failed to deliver the possession when demanded. Heard the learned counsel appearing for both sides and also perused the material made available on record. It is on record that after the expiry of the notice period under Section 13(2) of the SRFAESI Act, the secured creditor is expected to take measures under Section 13(4) within a reasonable time, depending upon the facts and circumstances of the case. The Bombay High Court in JAIBHARAT SYNTHETICS LIMITED, A PUBLIC LIMITED COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND OTEHRS VS. STATE BANK OF INDIA, A GOVERNMENT OF INDIA UNDERTAKING, NATIONALISED UNDER THE PROVISIONS OF THE BANKING NATIONALIZATION (acquisition and Transfer of Undertaking) Act, 1971, The Assets Reconstruction Company Limited (ARCIL), a Company incorporated under the Companies Act, 1956 and registered as a Securitization Assets Reconstruction Company pursuant to Section 3 of the SRFAESI Act and Office of the Collector[1] observed as under: “Therefore, Section 14 of the Act provides for an assistance which the secured creditor may seek from the Chief Metropolitan Magistrate or the District Magistrate having jurisdiction over the local area where the secured assets are situated. In order to take possession of assets and documents, the provisions under Section 14 enables the secured creditor to request the Chief Metropolitan Magistrate or the District Magistrate having jurisdiction in the local limits of the area to take requisite steps, including using or causing necessary force to be used for taking possession of the secured assets and documents and forwarding them to the secured creditor. The said provision is intended to ensure that the proceedings initiated under Section 13(2) of the Act are carried to its logical outcome. The provision do not contemplate judicial process or work as it does not involve any adjudicatory process and as such, therefore, the principles of natural justice are not attracted. In view of the observations by the Supreme Court in (in para 56) of its decision in M/s Transcore v. Union of India (supra), if a borrower is dispossessed unlawfully or not in accordance with the provisions of the Act, then the Debts Recovery Tribunal is entitled to put the clock back by restoring the status quo ante. Therefore, it cannot be said that if possession is taken before the confirmation of sale, the rights of the borrower to get the dispute adjudicated upon is defeated by the authorised officer taking possession. In view of the non-adjudicatory process under Section 14, it would be erroneous to say that the rights of the borrower would stand defeated without adjudication.” The Supreme Court in KANAIYALAL LALCHAND SACHDEV AND OTHERS VS. STATE OF MAHARASHTRA AND OTHERS[2], observed at paragraph 20 of the judgment as under: “20. We are in respectful agreement with the above enunciation of aw on the point. It is manifest that an action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4), and therefore, the same would fall within the ambit of Section 17(1) of the Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT.” It is no doubt true that the petitioner herein committed default in repayment of the loan taken from the Bank. Therefore, the Act has conferred statutory power on the Banks and Financial Institutions to take possession of the assets as mentioned. Under the Act after service of a Demand Notice by the Bank, if the petitioner does not discharge his liabilities in full within 60 days from the date of notice, the Bank shall be entitled to exercise all the rights to take possession of the assets including the right to transfer by way of lease, assignment or sale and realize payment. Therefore, this Writ Petition is misconceived and the same is liable to be dismissed. Accordingly, the Writ Petition is dismissed. There shall be no order as to costs. ________________________ GHULAM MOHAMMED, J _____________________ K.G. SHANKAR, J DATE: 09.03.2011 KA ... REGISTRAR // TRUE COPY // SECTION OFFICER To 1. 2 CD copies. [1] 2010 (112) BomLR2199 [2] 2011 STPL (WEB) 111 SC