(1.) THE residential property being Flat No. 203-A, Amit Darshan Co-operative Housing Society Ltd., Bajaj Road, Vile Parle (W), Mumbai 400056 is involved in this Appeal under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SRFAESI Act'),
(2.) The appeal has second time come up before this Tribunal. The first round ended with this Tribunal's judgment dated 10.9.2004 dismissing the appeal since not maintainable on the ground that (i) impugned order dated 16.4.2004 passed by learned Chief Metropolitan Magistrate (C.M.M.), Mumbai in C.C. No. 39/Misc/2004 under Section 14 of the SRFAESI Act in respect of possession cannot be challenged in law; (ii) recourse to Section 13(4) of the SRFAESI Act was not taken. On 5.3.2005 said order is set aside by Hon'ble Division Bench of Parent High Court in Notice of Motion No. 106 of 2005 with Writ Petition No. 3190 of 2004 with observation that the question of non-receipt of notice by the appellants under Section 13(2) of the SRFAESI Act shall be looked into.
3 In the appeal memo, the appellants, who are inter se husband and wife, have contended several facts viz. filing O.A. No. 254 of 2003 for recovery of Rs. 1,10,10,320/-, payments made from time-to-time by filing of writs in the Hon'ble High Court of Judicature at Bombay, etc. which (facts) however are not material within the ambit and scope of this appeal. The facts which constitute grounds of appeal proper are that the appellants did not receive any notice under Section 13(2) of the SRFAESI Act. Suddenly, however, on 22.5.2004 a letter from the Deputy Registrar, C.M.M., Mumbai was received in respect of taking possession of the flat. It is also contended that the proceedings before C.M.M. were also not served upon the appellants. Thus, the appellants were not given opportunity either by the Bank or by C.M.M. of presenting their case. Therefore, this appeal for quashing order passed by learned C.M.M. on 16.4.2004. By the amendment letter dated 15/21.2.2005 issued by the Deputy Registrar, C.M.M., Mumbai in respect of the possession is also challenged. The purported notice under Section 13(2) of the SRFAESI Act dated 10.7.2003 is also sought to be quashed.
4. By reply (Exh. 9) in the nature of affidavit of Mr. R.P. Satam, the respondent No. 1 contended that the Act of the C.M.M., Mumbai cannot be challenged in view of the provisions of Section 14(3) of the SRFAESI Act. The respondent No. 1 has contended that notice under Section 13(2) of the SRFAESI Act was personally served on appellant No. 1 while the notice is served by R.P.A.D. on appellant No. 2. The further contention is that the Bank has yet not taken measures under Section 13(4) of the SRFAESI Act which is why the appeal cannot be filed. By further reply (after amendment in the memo of appeal) at Exh. 12 in the nature of affidavit of above named officer, the respondent has reiterated above contentions.
5. The appellant No. 1 gave rejoinder (Exh. 23) in the nature of his affidavit confirming the facts.
6. I have heard arguments of learned Counsel representing the rival parties. I have perused the copies of the record including the orders of the Hon'ble High Court of Judicature at Bombay in 3 Writ Petitions.
7. This contentious aspects in this appeal can be formulated as below:
(i) Whether the CMM's action under Section 14 of the SRFAESI Act is challengeable?
(ii) Whether the appeal is maintainable before respondent No. 1 Bank's taking recourse to under Section 13(4) of the SRFAESI Act?
(iii) Whether the notice dated 10.7.2003 under Section 13(2) of the SRFAESI Act was duly served on the appellants?
8. It may be recounted at the very outset that the appellants have sought to quash letter dated 17.5.2004 issued by respondent No. 2 pursuant to the order passed by learned C.M.M., Mumbai on 16.4.2004 in C.C. No. 39/Misc/2004 under Section 14 of the SRFAESI Act. Now, Section 14 of the SRFAESI Act enables the secured creditor to approach C.M.M., Mumbai inter alia for the purpose of taking possession of the secured asset. Upon such application, the CMM, Mumbai has to take possession. The impugned order passed by C.M.M., Mumbai is under Section 11 of the SRFAESI Act directing respondent No. 2 to take possession of the flat, if necessary with police help.
9. The learned defence Counsel has raised two points, the first being that the learned C.M.M., Mumbai has not (as he cannot) done any adjudication and as such has not determined rights of the parties. His order is executive in nature for facilitating the Bank to take possession. Bare reading of Section 14(1) (quoted below) supports this submission:
14(1) Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured assets is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured assets, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him-
(a) take possession of such asset and documents relating thereto; and
(b) forward such asset and documents to the secured creditor.
10. A party such as the appellants can in my view challenge only substantive act and not acts which are done for carrying forward the directions in the substantive acts. Moreover, Section 14(3) of the SRFAESI Act (reproduced below) also forbids anyone from calling in question before a Court or this Tribunal any act done by C.M.M.
14(3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any Court or before any authority.
The above discussion is enough for giving negative reply to the first point.
11. It is a common ground amongst the parties that the Bank has not taken recourse to any of the 4 measures contemplated by Section 13(4) of the SRFAESI Act. In fact the Bank had moved the C.M.M., Mumbai for resorting to one of the measures (under Section 13(4)(a) of the SRFAESI Act) namely taking possession. The question is whether the appeal is tenable under Section 17 of the SRFAESI Act. The opening words of Section 17(1) extracted below provide answer to the question:
17. Right to appeal.-(1) Any person (including borrower), aggrieved by any of the measures referred to in Sub-section (4) of Section 13 taken by the secured creditor or his authorized officer under this chapter (may make an application along with such fee, as may be prescribed) to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken.
A bare reading of the above provision reveals that a person can be said to be aggrieved if any of the measures referred to in Sub-section 4 of Section 13 of the SRFAESI Act are taken. Thus, for tenability of the appeal, it is imperative that action under Section 13(4) should have been taken. Admittedly, no action has been taken which means that the point in question is liable to be given negative finding.
12. That brings me to the issue of service of notice under Section 13(2) of the SRFAESI Act. The Hon'ble Division Bench of the parent High Court of Judicature at Bombay in Notice of Motion No. 106 of 2005 with Writ Petition No. 3190 of 2004 has directed for consideration of this aspect. The respondent No. 1 Bank has filed xerox copy of such notice dated 10.7.2003 as Exh. 'C' to the reply (Exh. 9) to the appeal memo. The Bank's case is that the notice is personally served on appellant No. 1. The xerox copy of the notice purportedly bearing appellant No. 1's signature is on the record. The xerox copy of postal acknowledgement showing the receipt of notice of appellant No. 2 is also annexed to Exh. 9. The appellants have categorically denied to have received the notice by appellant No. 1. Mr. Dave, learned Counsel for the appellants has in this connection drawn my attention to Rule 3 of the Security Interest (Enforcement) Rules, 2002 reproduced below for ready reference:
Demand notice-(1) The service of demand notice as referred to in Subsection (2) of Section 13 of the Ordinance shall be made by delivering or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents on behalf of the borrower, actually and voluntarily resides or carries on business or personally works for gain, by registered post with acknowledgement due, addressed to the borrower or his agent empowered to accept the service or by Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service.
13. It is correctly pointed out on behalf of the appellants that said provision prescribes certain mode of service of notice namely by registered post with acknowledgement due. It is submitted that when the Legislatures have prescribed certain mode, the act should be done in that manner only. It is also rightly submitted that Rule 3 does not provide for personal service of the notice. Therefore, it cannot be said that the notice was properly served on the appellant No. 1. That apart, the Bank has not even tried to prove personal service of notice on appellant No. 1 and service by R.P.A.D. on appellant No. 2. For that the Bank ought to have filed copy of the notice bearing original signature of the appellant No. 1 and also the postal acknowledgement. In fact, the Bank ought to have filed affidavit of the person who did the personal service on appellant No. 1. But, for the reasons best known to it, the Bank did not do any of the above things. Therefore, relying on mere xerox copies showing purported personal service on appellant No. 1 and service by R.P.A.D. on appellant No. 2, it cannot be held that notice under Section 13(2) of SRFAESI Act is served. In law, the effect would be that the Bank cannot take any of the recourses under Section 13(4) of the SRFAESI Act. The order of C.M.M., Mumbai passed under Section 14 of the SRFAESI Act of taking possession is also therefore not sustainable. Unfortunately for the appellants, I cannot make declaration as above since the appeal itself is misconceived being premature. Nonetheless, I do not think that the Bank would proceed to take action without proper service of notice under Section 13(2) of the SRFAESI Act and without following procedure as prescribed by the SRFAESI Act or else it may land in deep trouble.
14. The result of the above discussion is following order:
The appeal is disallowed with no order as to costs being misconceived and premature having been filed before taking recourse to Section 13(4)of the SRFAESI Act.