- (1.) On the earlier date we were inclined to dismiss this petition challenging the auction held by the Bank in purported exercise of power under section 13(4) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) on account of availability of alternative remedy under section 17 thereof but we were informed about a Full Bench decision of this Court on the meaning and purport of section 13(4) and 17 of the SARFAESI Act, 2002, therefore, we passed the following order on 6.2.2018 :- "Learned counsel for the parties inform that a Full Bench decision has been rendered only today, which has a bearing in the matter. List this case on 13.02.2018 with liberty to the parties learned counsel to make a make a mention for taking up the case out of turn. No further adjournment shall be granted to either of the parties. Till then, status-quo with regard to the property in question, shall be maintained by the parties."
(2.) Today we have been taken through the full Bench decision in W.P. No. 20026 (M/S) 2017 : M/s N.C.M.L. Industries Ltd. through Director and another vs. Debts Recovery Tribunal, Lucknow and others, rendered on 6.2.2018. The full bench has held that the possession talked of in section 13 (4) of SARFAESI Act, 2002 is actual physical possession and not symbolic possession. It has also held that auction sale under section 13(4)(a) could be held only after taking actual physical possession. It has further been held that an application under section 17 of the SARFAESI Act, 2002 would lie only when actual physical possession is taken under section 13(4) or 14 of the SARFAESI Act, 2002 and not on mere notice of symbolic possession. Relevant extracts of the decision are as under : "28. Next we would like to make detailed reference to the judgment of the Supreme Court in Standard Chartered Bank Vs. V. Noble Kumar & Ors., 2013 9 SCC 620, heavily relied upon by the Bank. A detailed reference to this judgment perhaps would clinch the issue that falls for our consideration. In that case, the first respondent was a guarantor to a loan transaction. The first respondent had created a mortgage on certain property owned by him to secure the loan. A notice under Section 13(2) of the Act was issued demanding repayment of the loan amount alongwith interest within a period of 60 days. The borrower neither made payment nor raised any objection to the demand. Consequently, the Bank made an application under Section 14 of the Act in the Court of Chief Judicial Magistrate, requesting him to take possession of the secured asset and to handover the same to the Bank. It was argued before the High Court as well as before the Supreme Court that a secured creditor before invoking the authority of the Magistrate under Section 14 must necessarily make an attempt to take possession of the secured assets. Only when the creditor faces resistance to such an attempt, it can resort to the procedure under Section 14 of the Act. According to the borrower, Section 17 of the Act provides an appeal only against the measures taken by the creditor under Section 13(4) of the Act and no such appeal is available against an action taken by the Judicial Magistrate under Section 14 and therefore, permitting the creditor to invoke Section 14 without first resorting to the procedure under Section 13(4) would deprive the owner of the secured assets an opportunity to prefer an appeal to have his grievance adjudicated. In this backdrop, the Supreme Court, after considering the scheme of Sections 13 and 17 of the Act, in paragraphs 26, 27 and 28 , observed thus: "26. It is in the abovementioned background of the legal frame of Sections 13 and 14, we are required to examine the correctness of the conclusions recorded by the High Court. Having regard to the scheme of Sections 13 and 14 and the object of the enactment, we do not see any warrant to record the conclusion that it is only after making an unsuccessful attempt to take possession of the secured asset, a secured creditor can approach the Magistrate. No doubt that a secured creditor may initially resort to the procedure under Section 13(4) and on facing resistance, he may still approach the Magistrate under Section 14. But, it is not mandatory for the secured creditor to make attempt to obtain possession on his own before approaching the Magistrate under Section 14. The submission that such a construction would deprive the borrower of a remedy under Section 17 is rooted in a misconception of the scope of Section 17. 27. The "appeal" under Section 17 is available to the borrower against any measure taken under Section 13(4). Taking possession of the secured asset is only one of the measures that can be taken by the secured creditor. Depending upon the nature of the secured asset and the terms and conditions of the security agreement, measures other than taking the possession of the secured asset are possible under Section 13(4). Alienating the asset either by lease or sale etc. and appointing a person to manage the secured asset are some of those possible measures. On the other hand, Section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower (sic the secured creditor). Therefore, the borrower is always entitled to prefer an "appeal" under Section 17 after the possession of the secured asset is handed over to the secured creditor. Section 13(4)(a) declares that the secured creditor may take possession of the secured assets. It does not specify whether such a possession is to be obtained directly by the secured creditor or by resorting to the procedure under Section 14. We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under Section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under Section 17 is available. 28. It can be noticed from the language of the proviso to Section 13(3-A) and the language of Section 17 that an "appeal" under Section 17 is available to the borrower only after losing possession of the secured asset. The employment of the words "aggrieved by ... taken by the secured creditor" in Section 17(1) clearly indicates the appeal under Section 17 is available to the borrower only after losing possession of the property. To set at naught any doubt regarding the interpretation of Section 17, the proviso to sub-section (3-A) of Section 13 makes it explicitly clear that either the reasons indicated for rejection of the objections of the borrower or the likely action of the secured creditor shall not confer any right under Section 17." 28.1 The Supreme Court also considered the Rules, in particular Rule 8 and having regard to the scheme thereof, in paragraphs 31, 32 and 33, observed thus: "31. Under Rule 8, the secured creditor is required to deliver to the borrower a notice prepared as nearly as possible in Appendix IV to the Rules and by affixing such notice to the property. Further sub-rule (2) which came to be substituted in 2007 in original provides that the notice contemplated under sub-rule (1) is required to be published in two leading newspapers having sufficient circulation in the locality of which at least one should be in verna cular language. Prior to 2007 the requirement of publication in verna cular newspaper was not there. 32. The High Court recognized that the language of Rule 8 does not expressly warrant the compliance with the procedure contemplated therein when Section 14 is resorted to for obtaining possession of the secured asset: "In the absence of the rule, the strict compliance with the provisions of Section 13(4) and Rule 8, even in case of possession taken by virtue of an order under Section 14, assumes importance." 33. We are of the opinion that the High Court clearly erred in recording such a conclusion. The language of Rule 8 does not demand such a construction. On the other hand, a Magistrate whose functioning is structured by the Code of Criminal Procedure is required to act in accordance with the provisions of the said Code unless expressly ordained otherwise by any other law. It is not a case that Cr.P.C. never prescribed for the procedure to be followed by the Magistrate in a case where the Magistrate is required to take possession of property. For example, under Section 83 of the Code, a criminal Court is authorized to attach the movable or immovable property or both belonging to a proclaimed offender. Sub-sections (3) and (4) to Section 83 specifically provide that once an order of attachment under sub-section (1) is made by the criminal Court, the property which is the subject matter of such attachment shall either be seized or taken possession of as the case may be depending upon the fact whether the property is movable or immovable. Both the sub-sections contemplate the appointment of receiver. It is declared under sub-section(6) that the powers, duties and liabilities of a receiver appointed under Section 83 are the same as those of a receiver appointed under the Code of Civil Procedure, 1908." 28.2 Then, in paragraph 36 of the judgment, the Supreme Court carved out three methods for the secured creditor to take possession of the secured assets. Paragraphs 36 and 37 of the judgment, read thus: "36. Thus, there will be three methods for the secured creditor to take possession of the secured assets: 36.1. (i) The first method would be where the secured creditor gives the requisite notice under Rule 8(1) and where he does not meet with any resistance. In that case, the authorised officer will proceed to take steps as stipulated under Rule 8(2) onwards to take possession and thereafter for sale of the secured assets to realise the amounts that are claimed by the secured creditor. 36.2. (ii) The second situation will arise where the secured creditor meets with resistance from the borrower after the notice under Rule 8(1) is given. In that case he will take recourse to the mechanism provided under Section 14 of the Act viz. making application to the Magistrate. The Magistrate will scrutinize the application as provided in Section 14, and then if satisfied, appoint an officer subordinate to him as provided under Section 14 (1-A) to take possession of the assets and documents. For that purpose the Magistrate may authorise the officer concerned to use such force as may be necessary. After the possession is taken the assets and documents will be forwarded to the secured creditor. 36.3. (iii) The third situation will be one where the secured creditor approaches the Magistrate concerned directly under Section 14 of the Act. The Magistrate will thereafter scrutinize the application as provided in Section 14, and then if satisfied, authorise a subordinate officer to take possession of the assets and documents and forward them to the secured creditor as under clause 36.2.(ii) above. 36.4. In any of the three situations, after the possession is handed over to the secured creditor, the subsequent specified provisions of Rule 8 concerning the preservation, valuation and sale of the secured assets, and other subsequent rules from the Security Interest (Enforcement) Rules, 2002, shall apply. 37. In this connection, it is material to refer to the judgment in Mardia Chemicals wherein the Court was concerned with the legality and validity of the SARFAESI Act. The Court held the Act to be valid except Section 17(2) thereof as it then stood. In paras 59, 62 and 76 of the judgment the Court in terms held that in remedy under Section 17 of the Act was essentially like filing a suit in a civil court though it was called an appeal. It is also relevant to note that in the ultimate conclusions in para 80 of the judgment this Court held in sub-para (2) thereof as follows: (SCC p. 362) "80. (2) As already discussed earlier, on measures having been taken under sub-section (4) of Section 13 and before the date of sale/auction of the property it would be open for the borrower to file an appeal (petition) under Section 17 of the Act before the Debts Recovery Tribunal." The grievance of the respondent that it will be left with no remedy is, therefore, misplaced. As held by a Bench of three Judges in Mardia Chemicals, it would be open to the borrower to file an appeal under Section 17 any time after the measures are taken under Section 13(4) and before the date of sale/auction of the property. The same would apply if the secured creditor resorts to Section 14 and takes possession of the property with the help of the officer appointed by the Magistrate." 28.3 Thereafter, in the concluding paragraph 40, the Supreme Court observed thus: "40. In view of our conclusion on the scope of Section 17 recorded earlier it would normally have been open to the respondent to prefer an appeal under Section 17 raising objections regarding legality of the decision of the Magistrate to deprive the respondent of the possession of the secured asset. But in view of the fact that the respondent chose to challenge the decision of the Magistrate by invoking the jurisdiction of the High Court under Article 226 of the Constitution and in view of the fact that the respondent does not have any substantive objection as can be discerned from the record, we make it clear that the respondent in the instant case would not be entitled to avail the remedy under Section 17 as the respondent stalled the proceedings for a period of almost 4 years. It is worthwhile remembering that the respondent did not even choose to raise any objections to the demand issued under Section 13(2) of the Act. However, we make it clear that it is always open to the respondent to seek restoration of his property by complying with sub-section 8 of Section 13 of the Act." 28.4 The Supreme Court in this case made it absolutely clear that no remedy under Section 17(1) can be taken by the borrower unless he loses actual possession of the secured assets. In other words, the borrower is entitled to prefer an appeal under Section 17 after possession of the secured asset is actually handed over to the secured creditor. The Supreme Court observed that Section 13(4)(a) declares that the secured creditor may take possession of the secured assets and it could be obtained directly by the secured creditor or by restoring to the procedure under Section 14 of the Act. In whatever manner, the secured creditor obtains possession, either through the process contemplated under Section 14 or without restoring to such a process, it is always a measure contemplated by Section 13(4), against which a remedy under Section 17 is available. In other words, before losing actual possession or unless the secured creditor obtains physical possession of the secured asset it is not open to the borrower to take a remedy under Section 17(1) of the Act. The Supreme Court in this judgment has also noticed the safeguards provided to the borrower to protect his property including seeking restoration thereof. 29. The upshot of legal position that emerges from the judgments of the Supreme Court, insofar as the question referred to for our consideration is concerned, briefly stated, is as under: (a) The remedy of an application under Section 17(1) is available only after the measures under Section 13(4) have been taken by the Bank/FIs against the borrower. (b) The issue of notice under Section 13(2) to the borrower and communication contemplated by Section 13(3-A) stating that his representation/objection is not acceptable or tenable, does not attract the application of principles of natural justice. In other words, no recourse to an application under Section 17(1), at that stage, is available/maintainable. (c) The borrower/person against whom measures under Section 13(4) of the Act are likely to be taken, cannot be denied to know the reason why his application or objections have not been accepted, as a fulfillment of the requirement of reasonableness and fairness in dealing with the same. (d) One of the reasons for providing procedure under Section 13(4) read with Rule 8 for taking possession is that the borrower should have a clear notice before the date and time of sale/transfer of the secured assets, in order to enable him to tender the dues of the secured creditor with all other charges or to take a remedy under Section 17, at appropriate stage. (e) The time of 60 days is provided after the "measures" under Section 13(4) have been taken so as to enable the borrower to approach DRT and in such an eventuality, the DRT shall have a jurisdiction to pass any order/interim order, may be subject to conditions, on the application under Section 17(1) of the Act. (f) The scheme of relevant provisions of the Act and the Rules shows that the Bank/FIs have been conferred with powers to take physical (actual) possession of the secured assets without interference of the Court and the only remedy open to the borrower is to approach DRT challenging such an action/measure and seeking appropriate relief, including restoration of possession, even after transfer of the secured assets by way of sale/lease, on the ground that the procedure for taking possession or dispossessing the borrower was not in accordance with the provisions of the Act/Rules. (g) If the dues of the secured creditor together with all costs, charges and expenses incurred by them are tendered to them (secured creditors) before the date fixed for sale or transfer, the assets shall not be sold or transferred and in such an eventuality, possession can also be restored to the borrower. (h) If the possession is taken before confirmation of sale, it cannot be stated that the right of the borrower to get the dispute adjudicated upon is defeated. The borrower's right to get back possession even after the sale remains intact or stands recognised under the scheme of the provisions of the Act. (i) The borrower is not entitled to challenge the reasons communicated or likely measure, to be taken by the secured creditor under Section 13(4) of the Act, unless his right to approach DRT, as provided for under Section 17(1), matures. The borrower gets all the opportunities, at different stages, either to clear the dues or to challenge the measures under Section 13(4) or even to challenge the reasons rejecting his objections/not accepting the objections, after the measures under Section 13(4) have been taken. (j) While the banks have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting DRT with authority, after conducting an adjudication into the matters, to declare any such action invalid and also to restore even though the possession may have been made over to the transferee. (k) The safeguards provided under the scheme make it further clear that if the Bank/FIs proceeds to take actual possession of the assets that cannot be stalled by the interference of a Court. (l) If DRT after examining the facts and circumstances of the case and on the basis of evidence produced by the parties, comes to the conclusion that any of the measures referred to in Section 13(4), taken by the secured creditor is not in accordance with the provisions of the Act, it may by order declare that the recourse taken to any one or more measures is invalid and restore possession to the borrower. (m) Any transfer of secured asset after taking possession thereof by the secured creditor shall vest in the transferee all rights in, or in relation to the secured asset as if the transfer had been made by the owner of such secured assets. (n) No remedy under Section 17(1) can be taken by the borrower unless he loses actual (physical) possession of the secured assets. In other words, before losing actual possession or unless the secured creditor obtains physical possession of the secured asset under Section 13(4), it is not open to the borrower to take a remedy under Section 17(1) of the Act. 30. It can thus be clearly seen that unless a notice under Section 13(2) of the Act is issued to the borrower, giving him an opportunity to discharge in full his liabilities to the secured creditor within sixty days (from the date of notice), the secured creditor shall not be entitled to exercise all or any of the rights under sub-section (4). Sub-section (3-A) of Section 13 of the Act, as observed earlier, was introduced after the Mardia Chemicals judgment, which gives further opportunity to the borrower, on receipt of the notice under sub-section (2), to make any representation or raise any objection, which the secured creditor is obligated not only to consider but also to record its reasons if it comes to the conclusion that such representation or objection is not acceptable or tenable and communicate the reasons for non-acceptance to the borrower. Though such a procedure is so prescribed, it is also made clear, by adding proviso to sub-section (3-A) and Explanation to sub-section (1) of Section 17 that unless the "measures" under sub-section (4) are taken, the borrower shall not have any right to take recourse under Section 17(1) of the Act, by making an application to DRT for any relief. Thus, under the provisions of the Act, it is not open to the borrower to file an application at any stage till the "measures" under Section 13(4) are taken by the secured creditor. 31. Section 13(4) of the Act provides that if the borrower fails to discharge his liability within the period prescribed under Section 13(2), the secured creditor can take recourse to one of the measures, such as taking possession of the secured assets, including the right to transfer by way of lease, assignment or sale for realising the secured asset. From the language of this provision, it is further clear that taking measure under Section 13(4)(a) would mean taking actual (physical) possession, and if we do not read it in the said provision to say so, the right and power of the secured creditor to transfer the assets by way of lease, assignment or sale for realizing the secured assets, as provided for therein, would render redundant. In other words, putting such an interpretation on the language of Section 13(4) of the Act would be atrocious and would defeat the very objective of bringing the legislation. It is, therefore, not possible to hold that taking "measures" under Section 13(4)(a) also means taking only "symbolic possession" and not "physical possession". We record further reasons to say so in following paragraph. From the scheme of Section 13(4) and Sections 14 and 17 of the Act and the relevant Rules 8 and 9 of the Rules, it appears to us that unless physical possession is taken, the measure, contemplated under Section 13(4), cannot be stated to have been taken. 31.1 One of the rights conferred on a secured creditor is to transfer by way of lease, the secured asset, possession or management whereof has been taken under clauses (a) or (b) of sub-section (4) of Section 13. We have already held that sale or assignment of the secured assets could only be undertaken if actual physical possession has been taken over by the bank/FI's. If we pose a question whether right to transfer the secured assets by way of lease could be exercised without taking actual physical possession of the secured asset or management of the business of the borrower, our answer would be obviously in the negative. 32. It is necessary to bear in mind that while the banks and financial institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such "action/measure" invalid and also to "restore possession" even though possession may have been made over to the transferee. Sub-section (3) of Section 17 vest the DRT with authority to even set aside the transaction including sale or to restore possession to the borrower in appropriate cases. The provisions contained in Rules 8 and 9, lay down the procedure to take possession of immovable secured assets from the borrower, to conduct its sale and to deliver possession thereof to the transferee. As observed by the Supreme Court in Noble Kumar , there are three methods for the secured creditor to take possession of the secured assets, firstly, to give notice under Rule 8(1) of the Rules and take possession where the secured creditor does not meet with any resistance, secondly, after notice under Rule 8(1), if the secured creditor meets with resistance it would take recourse to the mechanism provided under Section 14 of the Act, and thirdly, to directly approach the Magistrate under Section 14 of the Act to take possession. These observations further support our view that mere issuing a notice in Appendix IV under 8(1) of the Rules, would not, in a given case, amounts to taking "physical possession" particularly when the secured creditor meets with resistance. After notice in Appendix IV, the borrower may resist the attempt of a secured creditor to take "physical possession" and in which case the act of taking actual possession would stand postponed/deferred. In other words, merely because possession notice in Appendix IV is issued, does not mean the measure under Section 13(4) is complete. 33. The possession notice in Appendix IV under Rule 8(1), appended to the Rules, though states that the secured creditor has taken possession of the secured asset, it informs the borrower and the public in general that possession is taken and they are cautioned not to deal with the property. The employment of the language of the notice in Appendix IV further supports our view that giving notice itself would not mean taking physical possession. The word "possession notice" undoubtedly means a notice for taking actual possession or otherwise. The language of Rule 8(3) clearly demonstrates that mere issuance of possession notice (Appendix IV) does not mean the borrower loses possession. This provision starts with the expression "In the event of possession of immovable property is actually taken", which means the first method of taking possession as observed by the Supreme Court in Noble Kumar , where borrower hands over possession or does not resist the attempt to take possession by serving the possession notice in Appendix IV. The process of taking measure under sub-section (4) of Section 13 would be complete only when "physical possession" is taken and not either "constructive" or "symbolic" possession. The scheme of the Act and the judgment of the Supreme Court in Noble Kumar , thus, would show that in a given case the borrower may resist the attempt or act of the secured creditor to take actual possession of the secured assets and in which case one may approach the Magistrate under Section 14 of the Act. Taking steps under Rule 8 by issuing possession notice, thus, by itself would not mean the borrower loses possession. Issuing notice in Appendix IV and taking steps, where the secured creditor meets with resistance, in our opinion, would not confer any right on the borrower to prefer any application under sub-section (1) of Section 17 of the Act. If we hold that even taking steps or an attempt of the bank of taking "measures" meeting with resistance under Section 13(4) also attracts the provisions of sub-section (1) of Section 17, that would be disastrous in the sense the very objective of the Act would stand defeated/frustrated and no bank would ever be able to recover the dues on time. 34. Thus, the scheme of the provisions of Sections 13 and 17 of the Act, read with Rules 8 and 9 of the Rules, would show that the "measure" taken under Section 13(4)(a) read with Rule 8 would not be complete unless actual (physical) possession of the secured assets is taken by the Bank/Financial Institutions. In our opinion, taking measure under Section 13(4) means either taking actual/physical possession under clause (a) of sub-section (4) of Section 13 or any other measure under other clauses of this Section and not taking steps to take possession or making unsuccessful attempt to take measure under Section 13(4) of the Act. Similarly, following the procedure laid down under Section 14 and/or Rules 8 and 9, where the Bank meets with resistance, would only mean taking steps to seek possession under Section 13(4)(a) and the "measure" under sub-section (4)(a) of Section 13 would stand concluded only when actual/physical possession is taken or the borrower loses actual/physical possession. It is at this stage alone or thereafter, the borrower can take recourse to the provisions of Section 17(1) of the Act. The transfer of possession is an action. Mere declaration of possession by a notice, in itself, cannot amount to transfer of possession, more particularly where such a notice meets with resistance. When the possession is taken by one party, other party also loses it. In the present case, adversial possession in being claimed by the secured creditor against the borrower. It is not possible that both will have possession over the secured assets. The possession of the secured creditor would only come into place with the dispossession of the borrower. We may also observe that in a securitisation application under Section 17(1), the borrower will have to make a categoric statement that he lost possession or he has been dispossessed and pray for possession. 35. Issuance of possession notice, as observed earlier, gives borrower and the public in general an intimation that the secured creditor has taken possession of the property and at that stage, it is quite possible, may be in view of resistance or if the Banks chooses to take only symbolic possession, to state that the secured creditor has taken symbolic/constructive possession and not physical possession, but that by itself would not entitle the borrower to raise challenge under Section 17(1) of the Act, as held by the Supreme Court in Noble Kumar . Unless the borrower loses actual (physical) possession, he cannot take recourse to provisions of Section 17(1). Even while taking steps under Section 13(4) of the Act read with Rule 8 of the Rules, in a given case, the bank may not physically dispossess the borrower and wait till it takes steps to conduct actual sale/auction of the secured assets i.e. till he issues notice under Rule 8(6) of the Rules. Even that by itself, from the scheme of the Act and the Rules, in the backdrop of the objective of the Act, in our opinion, does not confer any right to take recourse to Section 17(1). The borrower can file securitisation application under Section 17(1) only when he physically loses possession. 36. Though the provisions of Section 13(4) show that the banks and financial institutions have been vested with stringent powers for recovery of dues, it is seen from various judgments of the Supreme Court, interpreting the provisions of the Act, lots of safeguards are provided at different stages, and when the right to make an application under Section 17(1) matures and the borrower approaches DRT, it is open to the DRT, if it comes to the conclusion that any of the measures referred to in sub-section (4) of Section 13, taken by the secured creditor, are not in accordance with the provisions of the Act, to restore possession of the secured asset to the lessee. In other words, in order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the banks or financial institutions, checks and balances have been introduced in Section 17, which allow any person, including the borrower, aggrieved by any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor, to pass such an order that may be necessary in the interest of justice including restoration of possession, even after sale/transfer of the secured assets. 37. In the present case, it appears that the bank had issued notice under Rule 8, read with Appendix IV of the Rules, for possession, and it was specifically mentioned therein that a "symbolic possession" of their immovable secured assets, as described in the Schedule to the notice had been taken under Section 13(4) of the Act. We are not on the language used by the bank in the notice and we are also not considering merits of the case. We are only looking into the provisions of the Act and the judgments of the Supreme Court, interpreting the provisions of the Act and the Rules, so as to answer the question referred to for our consideration. The Bank's wrong, if any, would certainly not guide us in interpreting the provisions of law and to answer the question referred to for our consideration. The right to make an application, as observed earlier, would get matured only when actual (physical) possession is taken under Section 13(4) of the Act. Mr. Mathur, learned counsel for the borrower, vehemently submitted that "every action (including issuing notice under Rule 8 in Appendix V) taken under Section 13(4)" of the Act is amenable to challenge under Section 17 and that there is no justification for making an artificial distinction between the taking of "actual/physical" possession and taking of "symbolic/constructive" possession. The submission "every action taken under Section 13(4)" would, in our opinion, not mean steps taken for taking action/measure under Section 13(4)(a). Merely taking step to take possession is not amenable to challenge under Section 17. The action of taking possession is not an automatic process, in the sense that the moment notice is issued, means "physical possession" is taken or the borrower stands dispossessed physically or loses possession. The expression "symbolic possession" means "constructive possession" or in other words "paper possession" and not "physical" or "actual possession". 38. The concept of "symbolic possession" needs to be understood in the light of the scheme of the Act and Rules and also the object in introducing the Act. As observed earlier, the primary objective of the Act was not only to bring into existence special procedural mechanism for speedy recovery of the dues of the banks and financial institutions, but also for ensuring that defaulting borrowers are not able to frustrate the proceedings initiated by the banks and other financial institutions. Even in the Statement of Objects and Reasons, after making reference to the Narasimham Committee and Andhyarujina Committee, it was stated that these Committees, inter alia, have suggested enactment of new legislation for securitisation and empowering the banks and financial institutions to take possession of the securities and sell them without intervention of the Court. The Statement of Objects and Reasons further state that the provisions in the Act would enable banks and financial institutions to realise long term assets, manage problems of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of the securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction. Having regard to the objective of the Act and the Rules framed thereunder and also considering the scheme of the relevant provisions, it is not possible for us to hold that taking "symbolic possession" means taking a measure under sub-section (4) of Section 13 so as to attract the provisions of Section 17(1) of the Act. If we so hold, that would only mean that the moment "symbolic possession" is taken and before further steps for seeking actual (physical) possession for recovery of outstanding dues are taken including for transferring the assets by way of lease, assignment or sell, the borrower would be entitled to challenge the action of taking symbolic possession by way of an application under Section 17(1) of the Act, and in which case the DRT would have powers to grant stay of all further proceedings at that stage. This is not the intent of the Legislature. 39. As observed by the Supreme Court in Noble Kumar the grievance of the respondent that it will be left with no remedy, is misplaced. We have also observed in the foregoing paragraphs that there are several stages at which the safeguards are provided in interest of the borrower. The last such a safeguard is to give a notice of thirty days for sale of immovable assets as per sub-rule (6) of Rule 8 so as to enable the borrower to arrange the dues and seek release of the property. We have also seen from the judgments of the Supreme Court and even while looking into the provisions of the Act that how the safeguards are provided in the scheme of the Act and the Rules and why, under any circumstance, it can not be stated that the borrower is not left with any remedy. The borrower is always entitled to prefer an application under Section 17 even after the actual possession of the secured assets is taken and/or handed over to the secured creditor. In our opinion, at the cost of repetition, the scheme of the Act shows that even if the notice under Appendix IV under the Rules is given, it would not mean that actual or physical possession is taken. Such an attempt, if there is a resistance from the borrower, would only amount to taking steps to take physical possession, and therefore, the borrower will have to wait till he loses actual/physical possession for taking recourse to Section 17(1) of the Act. In case of resistance, the secured creditor can file an application, in writing, to the District Magistrate or Chief Metropolitan Magistrate, for the purpose of taking possession of such secured assets. The difference between "taking measures or initiating the measures" and "completing the measures" needs to be understood in the light of the objective of the Act. Till actual (physical) possession is taken, it cannot be stated that the measures taken under Section 13(4) are complete and unless the "measures" are taken that is to say "physical/actual" possession is taken or the borrower loses possession, he shall not have any right to approach DRT under Section 17(1) of the Act on any ground whatsoever. 40. We are, therefore, of the firm and considered opinion that taking "symbolic possession" or issuance of possession notice under Appendix IV of the Rules, meeting with any resistance, cannot be treated as "measure"/s taken under Section 13(4) of the Act and, therefore, the borrower at that stage cannot file an application under Section 17(1) before DRT. In other words, a securitisation application under Section 17(1) of the Act is maintainable only when actual/physical possession is taken by the secured creditor or the borrower loses actual/physical possession of the secured assets. Once the right to approach DRT matures and securitisation application under Section 17(1) is filed by the borrower, it is open to DRT to deal with the same on merits and pass appropriate orders in accordance with law. Thus, the question referred to for our consideration stands answered in terms of this judgment. The judgment of this Court in Aum Jewels , in our opinion, does not enunciate the correct law."
(3.) On being asked, the counsel for the Bank informed that auction had been held on the basis of symbolic possession and that actual physical possession had not been taken as yet. He also informed that the auction purchaser had deposited 25% of the bid amount but sale certificate had not been issued and the sale has not been confirmed.;