Decided on July 27,2006



A.Vijay Kumar, - (1.) THE present application has been filed by the applicant challenging the action initiated by the respondent Bank conferred under Sub-section (4) of Section 13 of Securitisation Act, 2002 dated 23.3.2004. A detailed counter has been filed by the respondent and the matter has been argued by both the parties.
(2.) Counsel appearing for applicant has submitted that as per the provisions of Securitisation Act the secured creditor can invoke the provisions for enforcement of security interest only after the registration of security interest in Central Registry set up for the purpose. In the instant case as the security interest has not been created, the proceedings initiated under the Securitisation Act is null and void. Further the 2nd respondent namely, UCO Bank, Branch situated at Palani Road, Dindigul initiated proceedings under Section 13(2) of the Securitisation Act by issue of notice to the applicant on 23.8.2002 demanding a sum of Rs. 14,08,926/- with further interest. The said notice was not issued by any 'Authorised Officer' of the respondent Bank. The said notice was signed by Manager of 2nd respondent who is not an Authorised Officer as defined under the Security Interest (Enforcement) Rules, 2002. Therefore the said notice is liable to be quashed as the same has been issued without any authority. It was further argued that the notice under Section 13(2) does not contain the details such as the total amount due, how the same has been arrived at and the interest charged, etc. It has been submitted that the applicant has already repaid a sum of Rs. 13,64,300/- as against the total amount due of Rs. 5 lakh. Therefore the demand in the present notice under Section 13(2) is also not correct. It has been further argued that the applicant has several times approached the respondent Bank for one time settlement. But however, the respondent Bank did not consider the same. The publication of notice for possession in 'Dinamalar' as well as 'Hindu' on 8.2.2004 has not only damaged the reputation of the applicant but also been issued without authority. Since the notice issued under Section 13(2) is illegal as stated above, the subsequent proceeding including paper publication under Section 13(4) shall also become null and void. It has been further averred that the security documents on the basis of which the demand notice was issued were executed on 3.3.1999. Therefore the claim made now is barred by limitation. It has been further argued that the respondent Bank has not considered the written objections sent by the applicant on 15.12.2004 as per the principles enumerated in the case of Mardia Chemicals v. UOI. II (2004) BC 397 (SC) : II (2004) SLT 991 : 110 (2004) DLT 665 (SC). Therefore the appellant has submitted that the present application be allowed in view of the arguments made by him and in the interest of justice. The Counsel appearing for the respondent Bank submitted that the present appeal has been filed without any basis and shall be dismissed in limine. As far as the payments made by the applicant are concerned, the applicant has got more than one account and therefore after adjustment of the amount so far paid by him in the present account as well as other accounts, the balance still payable is Rs. 14,08,926/- for which the respondent Bank issued a demand notice dated 23.8.2002. Therefore it is not correct to say that the applicant has paid 14 lakh and odd against the claim of 15 lakh. Further the applicant has not at all calculated the interest and straightaway given credit the amounts paid to the principal alone. As far as OTS is concerned, it was extended for only a limited period and hence the same cannot be given effect throughout. As far as proceeding under Securitisation Act is concerned, the applicant did not obtaining stay of recovery proceedings either in WP filed by him vide W.P. No. 10450/04 or from this Tribunal. As far as non-registration of security interest with the Central Registry has been done by all the Banks. Since there are about 20,000 branches of the respondent Bank, the registration of each branch has been avoided. The possession and the sale notice has been issued to the applicant by the authorised officer as required under Securitisation Act. As far as technical grounds raised by the applicant in respect of notice under Section 13(2), as they are lack of merits and same are liable to be rejected. Accordingly the Counsel submitted that the appeal should be dismissed with heavy cost.
(3.) I have heard the arguments advanced by both the parties and also gone through proceedings of the Tribunal. The major question to be answered is that whether the proceedings initiated under Section 13(2) of Securitisation Act by the respondent Bank is valid or not. If the same is not valid, all the subsequent actions initiated under Section 13(4) become null and void. Section 13 under Chapter III of Securitisation Act, 2002, deals with enforcement of security interest. Sub-section (4) of Section 13 clearly indicates that, in case, if the borrower fails to discharge the liability within the period specified in Sub-section (2), the secured creditor may take recourse to one or more of the measures specified therein. Sub-section (12) of the said section also stipulates that the rights of the secured creditor under this Act may be exercised by one or more officers authorised in such manner as may be prescribed. Therefore it is mandatory that the rights conferred under Section 13 of the Act shall be exercised only by such officers who has been authorised in this behalf. In exercise of the aforesaid power, the Central Government has notified the Security Interest (Enforcement) Rules, 2002 vide notification bearing S.O. 1020 (E) dated 20.9.2002. Under Clause (a) of Rule 2, the word "Authorised Officer" has been defined. An Authorised Officer means, an officer not less than Chief Manager of a public sector Bank or equivalent, as specified by Board of Directors or Board of trustees of the secured creditors. Therefore it is amply clear that the power to be exercised under Section 13 of the Securitisation Act has been conferred only with an officer not less than a Chief Manager of public sector Bank. In the present case the notice issued under Section 13(2) dated 23.8.2002 has been issued by the manager of the respondent Bank, Dindigul. No proof has been produced by the respondent Bank that the said manager is equivalent to the Chief Manager of the said Bank. Therefore notice issued under Section 13(2) in the present case in without authority and hence liable to be quashed. Since the notice under Section 13(2) has been issued by an officer without authority, the subsequent actions namely, possession notice under Section 13(4) and all other further actions are also liable to, be quashed. Therefore I am of the view that the action initiated by the respondent Bank is without authority and hence the notice issued under Section 13(2) and all other subsequent proceedings are liable to be quashed and accordingly quashed. Therefore, the other grounds raised in the appeal, need not be discussed and left open.;

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