Cri. Public Interest Litigation No. 24 of 2011. Case: International Asset Reconstruction Company Pvt. Ltd Vs Union of India and Ors. High Court of Bombay (India)
| Case Number | Cri. Public Interest Litigation No. 24 of 2011 |
| Counsel | For Appellant: Ms. Revati Mohite Dere, Adv. and For Respondents: Pol, Public Prosecutor, Cyrus Ardeshir, Nikhil Rajani i/b Ms. V. Deshpande and Co. Ashish Kamat i/b Meenakshi Mhapankar, Adv. |
| Judges | Mrs. R. S. Dalvi, J. and R. V. More , J. |
| Issue | Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (54 of 2002) - Section 14(1) |
| Citation | AIR 2011 Bom 163 |
| Judgement Date | August 20, 2011 |
| Court | High Court of Bombay (India) |
Judgment:
Smt. Ranjana Desai, J.
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Criminal Writ Petition No. 184 of 2011 was filed by International Asset Reconstruction Company Private Limited, who is the petitioner in the instant petition, praying that learned District Magistrates, Dadra and Nagar Haveli, Silvassa be directed to pass appropriate orders under Section 14(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the SARFAESI Act") for taking possession of the secured assets and for handing over the same to the petitioners. It was noticed by the Division Bench of this Court presided over by A. M. Khanwilkar, J. that the subject-matter of the application under Section 14 of the SARFAESI Act had been disposed of. Learned counsel for the petitioner, however, submitted that a number of such applications are pending before the Courts across the State and since public money is involved, appropriate directions need to be issued to the concerned Magistrates asking them to dispose of the said applications expeditiously. The said petition was, therefore, permitted to be converted into public interest litigation and has been renumbered as Public Interest Litigation No. 24 of 2011.
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By amending the petition, the petitioners have added Union of India through the District Magistrate, Daman and Diu and State Maharashtra as respondents 2 and 3. Kotak Mahindra Bank Limited, the Shamrao Vithal Co-operative Bank Limited and Janakalyan Sahakari Bank Limited had filed intervention applications. Their intervention was granted by this Court and pursuant to the liberty granted by this Court, they have been brought on record as respondents 4 to 6 respectively. The prayer clause has been suitably amended. We must, at the outset, note that though at first blush, it appears that through this petition, the banks and financial institutions are trying to serve their personal interest as they are seeking possession of secured assets, we cannot lose sight of the fact that ultimately, the banks and financial institutions deal with public money and it is in the interest of general public to see that they take possession of the secured assets and recover money advanced by them where the borrower is under liability and his account has become non-performing. If any guidelines are issued, that purpose would be served. The petition is, therefore, perfectly maintainable as a public interest litigation.
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Before we go to the relevant judgments, it is necessary to state that admittedly, there is huge pendency of applications filed under Section 14 of the SARFAESI Act in some districts. The data collected by the petitioners, which covers the period from 1-1-2005 to 31-12-2010, has not been disputed by the State. The maximum number of applications are pending in Mumbai, Pune and Thane. We are informed that disposal of such applications take excessively long time.
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Mr. Ardeshir, learned counsel for respondent 3 and Mr. Kamat, learned counsel for respondents 4 and 5 have supported Ms. Mohite-Dere, learned counsel for the petitioners. Counsel submitted that in Transcore v. Union of India and Anr. (2008) 1 SCC 125: (AIR 2007 SC 712), the Supreme Court has made the scope of Section 14 of the SARFAESI Act, clear. The Division Bench of this Court to which one of us (Smt. Ranjana Desai, J.) was a party, has in Ms. Trade Well and Anr. v. Indian Bank and Anr., 2007 Cri LJ 2544, after following the judgments of the Supreme Court in Transcore and in Mardia Chemicals Limited v. Union of India (2004) 4 SCC 311: (AIR 2004 SC 2371), laid down certain guidelines which the District Magistrates (for short, "the DMs") and Chief Metropolitan Magistrates (for short, "the CMMs") are expected to follow while disposing of applications under Section 14 of the SARFAESI Act. The view taken by the Supreme Court in Transcore has been reiterated by it in United Bank of India v. Satyawati Tondon and Ors. (2010) 8 SCC 110: (AIR 2010 SC 3413) and in Kanaiyalal Lalchand Sachdev and Ors. v. State of Maharashtra and Ors. (2011) 2 SCC 782: (2011 AIR SCW 1194). Counsel submitted that the functions performed by the DMs and CMMs under Section 14 of the SARFAESI Act are ministerial in nature. No hearing is supposed to be given to the borrowers. It is not even necessary to issue notices to them. Counsel submitted that in the teeth of the law laid down by the Supreme Court, the intervention applications of persons who with oblique motive try to obstruct the banks' efforts to take possession of the secured assets are granted, the borrowers and intervenors are unnecessarily asked to submit large number of documents and the DMs and the CMMs enter into adjudication of various issues which they cannot, in law, do. The entire exercise is given trappings of a civil suit. This leads to delay in disposal of the applications and it defeats the purpose of the SARFAESI Act. Counsel relied on the judgment of the Division Bench of this Court in Union Bank of India v. State of Maharashtra and Ors., AIR 2010 Bom 150 and judgment of learned single Judge of this Court in Kotak Mahindra Bank Limited v. State of Maharashtra and Ors. decided on 26-9-2008 in Criminal Writ Petition No. 161 of 2008. Counsel also relied on the judgment of the Delhi High Court in Sajay Bansal v. Rakesh K. Ahlawat and Ors. (2006) 130 Comp Cases 634: (AIR 2005 (NOC) 528) (Delhi) and judgment of the Madras High Court in Sree Lakshmi Products v. State Bank of India, AIR 2007 Mad 148. Written submissions were submitted by the petitioners and by respondents 4 and 5, which we have carefully perused.
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In order to find out what could be the difficulties faced by the DMs and CMMs while disposing of applications under Section 14 of SARFAESI Act and what leads to such phenomenal pendency of the said applications, we had directed the Registrar (Judicial) to call for the report from CMM, Esplanade, Mumbai and DM, Thane. We felt that the said reports would give a general pattern of the difficulties faced by all the DMs and CMMs across the States and Union Territories. Both the reports state that the law is correctly understood by the concerned DMs and CMMs. Difficulties faced by them are set out in the said reports.
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Mr. Pol, learned Public Prosecutor has, relying on Report dated 6-7-2011 submitted by Chief Metropolitan Magistrate, Esplanade, Mumbai, Report dated 11-7-2011 submitted by...
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