Priya v. The Authorised Officer Indian Overseas Bank Erode Main Branch 12/1, Apt Road, Erode – 3.2. C.Shanmugam

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 03.01.2012CORAMTHE HONOURABLE MR.JUSTICE P.JYOTHIMANIandTHE HONOURABLE MR. JUSTICE M. DURAISWAMYW.P.No.15961 of 2011 &M.P.No.2 of 2011 Priya .. Petitioner v. 1.The Authorised Officer Indian Overseas Bank Erode Main Branch 12/1, Apt Road, Erode – 3.2. C.Shanmugam ... RespondentsWrit petition filed under Article 226 of the constitution ofIndia for the issuance of a writ of Certiorarified Mandamus, callingfor the records culminated to the notice dated 29.06.2011 on the file ofthe 1st Respondent and quash the same as being arbitrary and violative ofPrinciples of Natural Justice and Article 21 Constitution of India andconsequently direct the first respondent to return the movable propertybelonging to the Petitioner.For Petitioner : Mr.K.Kumaresh Babu for Mr.K.Surendar For Respondents : Ms.Ananda Gomathy Sivakumar – for R-1 Mr.V.T.Narendran -for R-2ORDER (order of the Court was made by P.JYOTHIMANI, J) The writ petition is filed challenging the notice dated29.06.2011 issued to the petitioner by the first respondent/Bank for saleof the movables listed therein, by invoking the powers under theSecuritisation and Reconstruction of financial Assets and Enforcement ofSecurity Interest Act, 2002 (hereinafter referred to as 'SARFAESI Act').Admittedly, the movable goods are belonging to the petitioner, who is atenant in the property, belonging to the second respondent. https://hcservices.ecourts.gov.in/hcservices/

2. It is also not in dispute that the above said movablesmentioned in the impugned notification are not the subject matter ofsecurity for the borrowal from the bank and the petitioner has not stoodas a guarantor in respect of the amount stated to have been borrowed fromthe bank by one Samsen Papli, from whom the second respondent haspurchased the property for repayment under the SARFAESI Act. 3. The petitioner, after giving notice under section 13(4) ofthe Act has approached the Chief Judicial Magistrate, Erode undersection 14 of the Act and there are certain orders passed by the ChiefJudicial Magistrate for possession. Since the petitioner/tenant haslocked the premises by keeping the movables inside the house, therewas further direction given by the Chief Judicial Magistrate appointingan Advocate Commissioner to brake open and take possession of themovables. Based on the said order passed by the Chief JudicialMagistrate, Erode, the house resided by the petitioner was brake openedand the goods were taken to the custody of the first respondent/Bank. Itis, at that stage, invoking the powers under SARFAESI Act, the firstrespondent/Bank has issued the impugned notification brining the movablesfor sale. The present writ petition is filed challenging the saidnotification.4. The impugned challenges is on the ground that when themovables, which are the subject matter of the impugned notification, arenot the subject matter of security for the payment of loan obtained fromthe first respondent by the second respondent and when the petitioner hasnever stood as a guarantor for the payment of the amount availed bySamsen Papli from the first respondent/Bank, there is absolutely nojurisdiction on the part of the bank to invoke the SARFAESI Act againstthe petitioner. It is seen that notice under section 13(2) was not givento the petitioner but it was given to the second respondent. When themovable properties, which are the subject matter stated in the impugnednotification does not belong to the second respondent, there is noquestion of bringing such movables for sale. The very act of the firstrespondent/Bank in approaching the Chief Judicial Magistrate, Erode undersection 14 of the Act to take the movables belonging to the petitioneris alienation to the principles enunciated under the SARFAESI Act.5. The first respondent/Bank in the counter affidavit hasspecifically admitted that they are not proceeding to sell the movableproperties under the provisions of the SARFAESI Act and they areprepared to withdraw the notification unconditionally. Further, in thecounter affidavit, the first respondent/Bank has chosen to state verystrangely that the bank is willing to handover the movables back to thepetitioner provided the charges incurred by the bank being paid to them.The relevant portion is extracted below:-"10. I have been advised not to proceed with the sale ofthe movables under the provision of SARFAESI Act and I hereby https://hcservices.ecourts.gov.in/hcservices/ withdraw the said notice unconditionally, but however I amwilling to handover the movables back to the petitionerprovided the charges incurred by us towards the safe keeping ofthe said articles are paid to the bank."6. It is also seen in the counter affidavit that the followingcharges are claimed by the first respondent/Bank against the petitioneras a matter of reimbursement, which are as follows:(i) Charges towards Security Guard:Rs.1,09,200/-(ii)Paper Publication Charges:Rs. 2,050/-(iii) Paper Publication chargs:Rs. 6,050/-(iv) Building rent (Rs.3000 x 6 months):Rs. 18,000/-(v) Insurance Premium amount:Rs. 803/-(vii) Legal charges and lawyer fees:Rs. 2,500/- -----------------Total:Rs.1,38,803/- -----------------7. The learned counsel for the first respondent/Bank wouldvehemently contend that eventhough the movable goods never stood as asecurity for the repayment of the loan borrowed by Samsen Papli, fromwhom the second respondent has purchased the property, the petitionerbeing the tenant under the second respondent, having come to know aboutthe steps taken by the Bank under section 14 of the Act, has chosen tolock the premises unlawfully and that has only made the Bank to approachthe Chief Judicial Magistrate for brake open and it was only a matter ofnecessity and therefore, when possession was taken, it was only preservedand for preserving the goods, the expenses were incurred. According tothe learned counsel for the first respondent/Bank, the charges claimedabove has to be reimbursed to the first respondent/Bank.8. Even though the contention of the learned counsel for thefirst respondent/Bank is attractive and she has taken strenuous steps topursue this court to accept her plea, we are unable to accept the samefor the simple reason that the goods which are taken by the firstrespondent/Bank are not the subject matter of the security. In suchcircumstances, in all fairness, the first respondent/Bank should nothave taken any steps under the SARFAESI Act to take the goodsbelonging to the petitioner, who is a third party. The petitioner isneither a guarantor for the repayment of the loan stated to have beenreceived by the said Samsen Papli, from the first respondent/Bank northe movable goods belonging to the petitioner were given as a securityfor repayment. In such circumstances, taking possession through courtof law does not mean that the SARFAESI Act enables the firstrespondent/Bank to take possession lawfully. Therefore, the question ofindemnifying the Bank for having kept the same on behalf of thepetitioner does not arise. https://hcservices.ecourts.gov.in/hcservices/

9. According to us, the first respondent/Bank has no right torecover even if the amount stated to have been spent sought to beindemnified as per sections 13(7) and 13(10) of the SARFAESI Act whichreads as follows:"Section 13(7) : Where any action has been taken against aborrower under the provisions of sub-section (4), all costs,charges and expenses which, in the opinion of the securedcreditor, have been properly incurred by him or any expensesincidental thereto, shall be recoverable from the borrower andthe money which is received by the secured creditor shall, inthe absence of any contract to the contrary, be held by him intrust, to be applied, firstly, in payment of such costs,charges and expenses and secondly, in discharge of the dues ofthe secured creditor and the residue of the money so receivedshall be paid to the person entitled thereto in accordance withhis rights and interests.Section 13(10) : Where dues of the secured creditor arenot fully satisfied with the sale proceeds of the securedassets, the secured creditor may file an application in theform and manner as may be prescribed to the Debts RecoveryTribunal having jurisdiction or a competent court, as thecase may be, for recovery of the balance amount from theborrower."10. It is not the case of the petitioner that the petitionervoluntarily given possession of these goods to the bank so as to enablethe bank to keep it and the bank has taken steps without even givingnotice to the petitioner, who is not liable to pay any amount in respectof the borrowal made by the said Samsen Papli,. In view of the above,we are unable to accept the contention raised by the firstrespondent/Bank.11. Accordingly, the writ petition stands allowed and theimpugned notification dated 29.6.2011 stands set aside. As per theundertaking given by the first respondent/Bank in their counter affidavitparagraph No.10 (extracted above), the first respondent/bank shallhandover all the goods to the petitioner immediately, in any event,within a period of two weeks from the date of receipt of a copy of thisorder. No costs. Consequently, connected miscellaneous petition isclosed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ rj ToThe Authorised OfficerIndian Overseas BankErode Main Branch12/1, Apt Road Erode – 3.+1cc to Mr.K.Surendar, Advocate Sr 968+1cc to Mr.Ananda Gomathy Sivakumar, Advocate Sr 363VSV(CO)km/18.1. W.P.No.15961 of 2011