IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1218 OF 2013
(Arising out of Special Leave Petition (Criminal) No.2038 of 2011)
Standard Chartered Bank ...Appellant
Versus
V. Noble Kumar & Others ...Respondents
WITH
CRIMINAL APPEAL NO. 1217 OF 2013
(Arising out of Special Leave Petition (Criminal) No.6560 of 2011)
Senior Manager, State Bank of India
& Another ...Appellants
Versus
R. Shiva Subramaniyan & Another ...Respondents
J U D G M E N T
Chelameswar, J.
1. Leave granted.
2. Since both the appeals raise a common question of law, the same are
being disposed of by this common judgment. For the sake of convenience, we
shall refer to the facts in Criminal Appeal arising out of Special Leave
Petition (Criminal) No.2038 of 2011.
3. This appeal arises out of judgment and order of the High Court of
Judicature at Madras in Writ Petition No.4600 of 2010 dated 23rd January,
2003.
4. The first respondent is a guarantor of the borrower to loan
transaction whereby the second respondent borrowed money from the appellant
herein.
The undisputed facts are that the first respondent created a
mortgage on certain property (Land and building comprised in Re-survey
No.493/2 lying within the sub-registration district of Saidapet hereinafter
referred to as the "secured asset") owned by him to secure the
abovementioned loan.[1]
5. On 15.11.2007, a notice under section 13(2)[2] of the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (hereinafter referred to as "the SARFAESI Act") demanding the
repayment of the loan amount along with interest within a period of sixty
days was issued inter alia to the borrower as well as the guarantor
(respondent nos.2 and 1 herein). The said notice also advised the
respondents to comply with the demand in order to avoid further action
under the Act. The first respondent neither made the payment nor raised
any objection to the said demand.
6. Consequent upon the failure of the respondents to make the payments
the appellant herein made an application under section 14[3] of the
SARFAESI Act in the Court of Chief Judicial Magistrate, Chengalpattu
requesting him to take possession of the secured asset and to handover the
same to the appellant.
7. Pursuant to the abovementioned application, the Chief Judicial
Magistrate, Chengalpattu by his proceeding dated 14.12.2009 appointed an
Advocate commissioner to take possession of the secured asset and to
handover the same to the appellant herein.
8. Challenging the legality of the proceedings dated 14.12.2009 the
first respondent approached the High Court. By the judgment under appeal,
the first respondent's writ petition came to be allowed by a Division Bench
setting aside the order impugned therein.
9. The High Court recorded the submissions made before it as follows:
"3. The learned counsel appearing for the petitioner raised two
contentions, viz.:
i) The bank cannot bypass section 13(4) of the SARFAESI Act and
invoke the provisions of section 14. He would submit, before
invoking section 14, that notice under section 13(4) is
necessary, otherwise the provisions of appeal under section 17
will become illusory, particularly when the proceedings under
section 14 cannot be questioned by filing appeal before the
Tribunal or before a Court.
ii) In the event the procedures contemplated under Rule 8 of the
Security Interest (Enforcement) Rules, 2002, are not followed
before section 14 is invoked, the order passed by the Chief
Judicial Magistrate would be contrary to the said Rules and
consequently, the order passed under section 14 is liable to be
set aside."
10. It is argued before the High Court as well as before us by the
respondent 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 asset.
Only when the creditor faces resistance to
such an attempt the creditor could resort to the procedure under section 14
of the Act. According to the first respondent, section 17[4] of the Act
provides an "appeal" only against the measures taken by the creditor under
section 13(4)[5] of the Act and no such appeal is available against an
action taken by the Judicial Magistrate under section 14 of the Act.
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 asset an opportunity to prefer an "appeal" to have his
grievances adjudicated. It is further argued that Rule 8 of the Security
Interest (Enforcement) Rules, 2002 (hereinafter referred to as "the Rules")
contemplates a procedure to be followed which includes a certain mode of
publicity of taking possession to be made, and therefore, even a Magistrate
exercising power under section 14 of the Act is also required to follow the
procedure contemplated under Rule 8 though the Rule does not expressly say
so. Failure to comply with the requirement of Rule 8 in the instant case
vitiated the order of the Magistrate.
11. The abovementioned submissions found favour with the High Court.
12. The learned counsel appearing for the appellant argued before us that
the Act provided for two alternative procedures for taking possession of
the secured assets under sections 13(4) and 14 respectively.
While section
13(4) authorises the creditor himself to take possession of the secured
assets without the aid of the State's coercive power, section 14 enables
the secured creditor to seek the assistance of the State's coercive power
for securing the possession of the secured assets.
It is submitted that it
is always open to the secured creditor to choose one of the abovementioned
two procedures in a given case to obtain possession of the secured asset
depending upon his own assessment of the situation regarding the
possibility of resistance (by the debtor or guarantor as the case may be)
for taking possession of the secured assets. It is also submitted that the
fact that an "appeal" under section 17 is available against the measures
taken under section 13(4) and such an "appeal" is not available against the
measures taken by the Magistrate under section 14 does not necessarily mean
that the procedure under section 14 cannot be resorted to without first
exhausting the measures contemplated under section 13(4). Lastly, it is
submitted on behalf of the appellant that the High Court completely erred
in recording a conclusion:
"3. In the event the secured creditor bypassing the provision of
section 13(4) and the rule 8 and files an application under section
14, a situation may arise that the advocate commissioner may straight
away take possession without there being compliance of any of the
provisions of section 13(4) or rule 8. When both the provisions are
read together, we could only come to the conclusion that the
legislature had not intended to create such a situation. The
objection of section 14 is only to be invoked in case the secured
creditor faces obstruction and not as a routine, bypassing the
provisions of section 13(4).
13. On the other hand, the learned counsel appearing for the first
respondent reiterated the submissions made by him before the High Court.
14. To decide the correctness of the judgment under appeal, it is
essential that we examine the purpose and the scheme of the Act. One of
the professed purposes sought to be achieved by the enactment as evidenced
by the Objects and Reasons appended to the Bill is as follows:-
"....Further, unlike international banks, the banks and financial
institutions in India do not have power to take possession of
securities and sell them. Our existing legal framework relating to
commercial transactions has not kept pace with the changing
commercial practices and financial sector reforms. This has
resulted in slow place of recovery of defaulting loans and mounting
levels of non-performing assets of banks and financial
institutions."
15. In order to achieve the said purpose, sections 13, 14 and 15 are
enacted. Only sections 13 and 14 are relevant for the present appeal.
Section 13(1)[6] enables the secured creditor to enforce a security
interest which such creditor has in a secured asset without intervention of
the Court or Tribunal. The expression "security interest" is defined under
section 2 (zf) as follows:-
"security interest" means right, title and interest of any kind
whatsoever upon property, created in favour of any secured creditor
and includes any mortgage, charge, hypothecation, assignment other
than those specified in section 31;
16. Sub-section (2) authorises the secured creditor to exercise any of
the rights under sub-section (4). Sub-section (2) reads as follows:-
(2) Where any borrower, who is under a liability to a secured
creditor under a security agreement, makes any default in
repayment of secured debt or any instalment thereof, and his
account in respect of such debt is classified by the secured
creditor as non-performing asset, then, the secured creditor may
require the borrower by notice in writing to discharge in full his
liabilities to the secured creditor within sixty days from the
date of notice failing which the secured creditor shall be entitled
to exercise all or any of the rights under subsection (4).
18. It can be seen from the said sub-section that for the secured
creditor to take possession of the secured assets, the following conditions
must be satisfied: (i) That there must be a security agreement[7] which
creates the liability of the borrower to make repayment to the secured
creditor of the secured debt, (ii) The secured creditor is required to
demand the borrower by notice in writing to discharge the full liability
within a period of 60 days from the date of the notice.
19. Sub-section (3)[8] stipulate that such notice shall give the details
of (i) the amount payable by the borrower (ii) the interest in the secured
asset intended to be enforced by the secured creditor. Sub-section (4)[9]
provides for various measures which can be resorted to by the secured
creditor in order to recover his debt. Such measures are (1) taking
possession of the secured asset or (2) taking over the management of the
business of the borrower.[10] The secured creditor is also given the
right either to make a further assignment of his interest or lease out the
secured assets or sell the same in order to realise his debt. Such right
of the secured creditor is hedged with limitations/safeguards designed to
protect interest of the borrower so that the secured creditor may not abuse
his rights i.e. except to take a possession of the property and alienate
the same only to the extent necessary to realise the actual amount due to
him. Details of which may not be necessary for the purpose of this case.
We are only concerned in this case with the method and manner in which
possession of the secured assets could be obtained and the conditions
precedents that are required to be satisfied for taking possession of the
secured assets.
20. Section 13, as originally enacted, did not contain any provision for
consideration of objections (if any) the borrower may have to the demand
made under sub-section (2). However, this Court in Mardia Chemials
Limited v. Union of India [(2004) 4 SCC 311], where the constitutionality
of the Act fell for the consideration of this Court, noticed that section
13(2) is a very stringent provision and opined:-
"77. It is also true that till the stage of making of the demand
and notice under Section 13(2) of the Act, no hearing can be
claimed for by the borrower. But looking to the stringent nature of
measures to be taken without intervention of court with a bar to
approach the court or any other forum at that stage, it becomes
only reasonable that the secured creditor must bear in mind the say
of the borrower before such a process of recovery is initiated so
as to demonstrate that the reply of the borrower to the notice
under Section 13(2) of the Act has been considered applying mind to
it. The reasons, howsoever brief they may be, for not accepting the
objections, if raised in the reply, must be communicated to the
borrower. True, presumption is in favour of validity of an
enactment and a legislation may not be declared unconstitutional
lightly more so, in the matters relating to fiscal and economic
policies resorted to in the public interest, but while resorting to
such legislation it would be necessary to see that the persons
aggrieved get a fair deal at the hands of those who have been
vested with the powers to enforce drastic steps to make recovery."
21. Consequent upon the said decision, Parliament introduced sub-section
3A[11] by Act 30 of 2004, which now provides for consideration of the
objections, if any raised by the borrower. By definition under section
2(f) of the Act a borrower includes the guarantor of the debt.
22. Section 3A further provides that if the secured creditor reaches a
conclusion that the objections raised by the borrower are not acceptable or
tenable, the creditor shall communicate the reasons for non-acceptance of
the objections within a period of 15 days. The proviso to the said sub-
section declares that the rejection of the objections does not confer any
right on the borrower to resort to the proceedings, contemplated either
under section 17 or 17A.
We may indicate here both sections 17 and 17A
afford an opportunity to the borrower to approach the Debts Recovery
Tribunal or (in the cases of Jammu & Kashmir) the concerned District Court
against any measure taken under section 13(4).
23. In every case where the objections raised by the borrower are
rejected by the secured creditor, the secured creditor is entitled to take
possession of the secured assets. In our opinion, such action - having
regard to the object and scheme of the Act - could be taken directly by the
secured creditor. However, visualising the possibility of resistance for
such action, Parliament under section 14 also provided for seeking the
assistance of the judicial power of the State for obtaining possession of
the secured asset, in those cases where the secured creditor seeks it.
24. Under the scheme of section 14, a secured creditor who desires to
seek the assistance of the State's coercive power for obtaining possession
of the secured asset is required to make a request in writing to the Chief
Metropolitan Magistrate or District Magistrate within whose jurisdiction,
secured asset is located praying that the secured asset and other documents
relating thereto may be taken possession thereof. The language of section
14 originally enacted purportedly obliged the Magistrate receiving a
request under section 14 to take possession of the secured asset and
documents, if any, related thereto in terms of the request received by him
without any further scrutiny of the matter.
25. However, the Bombay High Court in the case of Trade Well v. Indian
Bank [2007 CriLJ 2544] opined;
"2 ...CMM/DM acting under Section 14 of the NPA Act is not required
to give notice either to the borrower or to the 3rd party.
3. He has to only verify from the bank or financial institution
whether notice under Section 13(2) of the NPA Act is given or not
and whether the secured assets fall within his jurisdiction.
There is no adjudication of any kind at this stage.
4. It is only if the above conditions are not fulfilled that the
CMM/DM can refuse to pass an order under Section 14 of the NPA act
by recording that the above conditions are not fulfilled. If
these two conditions are fulfilled, he cannot refuse to pass an
order under Section 14."
The said judgment was followed by the Madras High Court in the case of
Indian Overseas Bank v. M/s. Sri Aravindh Steels Ltd. [AIR 2009 Mad. 10].
Subsequently, Parliament inserted a proviso to section 14(1)[12] and also
sub-section 1A[13] by Act 1 of 2013.
26. We must make it clear that these provisions were not in existence on
the date of the order impugned in the instant proceedings. These
amendments are made to provide safeguards to the interest of borrower.
These provisions stipulate that a secured creditor who is seeking the
intervention of the Magistrate under section 14 is required to file an
affidavit furnishing the information contemplated under various sub-clauses
(i) to (ix) of the proviso and obligates the Magistrate to pass suitable
orders regarding taking of the possession of the secured assets only after
being satisfied with the contents of the affidavits.
27. An analysis of the 9 sub-clauses of the proviso which deal with the
information that is required to be furnished in the affidavit filed by the
secured creditor indicates in substance that (i) there was a loan
transaction under which a borrower is liable to repay the loan amount with
interest, (ii) there is a security interest created in a secured asset
belonging to the borrower, (iii) that the borrower committed default in the
repayment, (iv) that a notice contemplated under section 13(2) was in fact
issued, (v) in spite of such a notice, the borrower did not make the
repayment, (vi) the objections of the borrower had in fact been considered
and rejected, (vii) the reasons for such rejection had been communicated to
the borrower etc.
28. The satisfaction of the Magistrate contemplated under the second
proviso to section 14(1) necessarily requires the Magistrate to examine the
factual correctness of the assertions made in such an affidavit but not the
legal niceties of the transaction. It is only after recording of his
satisfaction the Magistrate can pass appropriate orders regarding taking of
possession of the secured asset.
29. It is in the above-mentioned 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.
30. The "appeal" under section 17[14] 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. Therefore, the borrower is always entitled to prefer an
"appeal"[15] 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.
31. It can be noticed from the language of the proviso to section 13(3A)
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[16] to sub-section (3A) 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.
32. The same principle is re-emphasised with the newly added explanation
in section 17(1) which came to be inserted by Act No.30 of 2004:
"Explanation : For the removal of doubts, it is hereby declared that
the communication of the reasons to the borrower by the secured
creditor for not having accepted his representation or objection or
the likely action of the secured creditor at the stage of
communication of reasons to the borrower shall not entitle the person
(including borrower) to make an application to the Debts Recovery
Tribunal under sub-section 1 of section 17."
33. The High Court opined that Rule 8[17] of the Security Interest
(Enforcement) Rules, 2002 provides for certain (i) procedure to be followed
by the secured creditor taking possession of the secured asset. The High
Court opined that even in a case where procedure contemplated under section
14 is resorted to for obtaining possession of the secured assets,
compliance with Rule 8 is mandatory. Such a requirement according to the
High Court arises because in view of the High Court:
"The object of Section 14 is only to be invoked in case the secured
creditor faces obstruction and not as a routine bypassing the
provisions of Section 13(4)."
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 vernacular language.
Prior to 2007 the requirement of publication in
vernacular newspaper was not there.
34. 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 of 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."
35. 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[18] 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. Order XL of the Code of Civil Procedure deals with
the appointment of the receiver. Rule 1 authorizes the Court to appoint a
receiver:
"1. Appointment of Receivers.-(1) Where it appears to the Court to
be just and convenient, the Court may by order-
a) appoint a receiver of any property, whether before or after
decree;
b) remove any person from the possession or custody of the
property;
c) commit the same to the possession, custody or management of the
receiver, and
d) confer upon the receiver all such powers, as to bringing and
defending suits and for the realisation, management, protection,
preservation and improvement of the property, the collection of
the rents and profits thereof, the application and disposal of
such rents and profits, and the execution of documents as the
owner himself has, or such of those powers as the Court thinks
fit.
(2) Nothing in this rule shall authorise the Court to remove from
the possession or custody of property any person whom any party to the
suit has not a present right so to remove."
It can also be noticed from Rule (1) that the power of the Civil Court to
appoint a receiver could be exercised either before or after passing of the
decree.
36. Therefore, there is no justification for the conclusion that the
receiver appointed by the Magistrate is also required to follow Rule 8 of
the Security Interest (Enforcement) Rules, 2002. The procedure to be
followed by the receiver is otherwise regulated by law.
Rule 8 provides
for the procedure to be followed by secured creditor taking possession of
the secured asset without the intervention of Court. Such a process was
unknown prior to the SARFAESI Act. So, specific provision is made under
Rule 8 to ensure transparency in taking such possession. We do not see any
conflict between different procedures prescribed by law for taking
possession of the secured asset. The finding of the High Court in our view
is unsustainable.
37. Thus, there will be three methods for the secured creditor to take
possession of the secured assets:-
(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.
(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.
(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 forwards
them to the secured creditor as under clause (ii) above.
38. 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.
39. In this connection, it is material to refer to the judgment in Mardia
Chemicals (supra) 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 paragraphs 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
paragraph 80 of the judgment this Court held in sub-para 2 thereof as
follows:-
"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 (supra), 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.
40. Coming to the facts of this case, a notice under section 13(2) was in
fact served on the respondent for which the respondent did not choose to
respond. Therefore, there was no occasion for the appellant to consider
the objections as there was none of the respondent against the demand made
in the said notice. It is brought to our notice that even while making
application under section 14 the appellant filed an affidavit substantially
providing for the necessary information contemplated under the newly
introduced proviso to section 14 (1). We have already noticed that there
was no statutory requirement as on the date when the application under
section 14 was made in the instant case either to give such an affidavit or
regarding the content of the affidavit. Nonetheless the appellant chose to
give such an affidavit. A copy of which is placed before us. We have
perused the affidavit and it substantially complies with the conditions
stipulated in the newly introduced proviso. May be the appellant did it by
way of abundant caution to avoid any litigation.
41. However, the respondent submitted before us that there is nothing in
the impugned order of the Magistrate which indicates that the Magistrate
applied his mind to such an affidavit and satisfied that it is necessary to
deliver possession of the secured asset to the appellant. No doubt that
there is no material on record to show that the Magistrate applied his mind
to the facts stated in the affidavit filed by the appellant. On the date
of the impugned order the law did not oblige the Magistrate to undertake
any such exercise. Apart from that we are satisfied on examination of the
content of the affidavit that all the basic requirements necessary for
granting the request of the appellant of delivery of the possession of the
secured asset are asserted to have existed on the date of application.
Therefore, we do not see any illegality in the impugned order. The appeal
is allowed. The order of the High Court is set aside.
42. 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 worthwhileremembering that the respondent did not even choose to raise any objectionsto the demand issued under section 13(2) of the Act.
However, we make itclear that it is always open to the respondent to seek restoration of hisproperty by complying with sub-section 8 of section 13 of the Act.
Criminal Appeal arising out of SLP (Crl) No. 6560 of 2011
43. The first respondent in this appeal is the borrower in a transaction
to which V. Noble Kumar, the first respondent in Criminal Appeal arising
out of SLP(Crl) No. 2038 of 2011 was the surety. The issue in the appeal
is identical. Therefore, for the reasons stated above, this appeal is also
allowed.
...............................................J.
(H.L. Gokhale)
...............................................J.
(J. Chelameswar)
New Delhi;
August 22, 2013.
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