M/s.Kathikkal Tea Plantations v. State Bank of India

W.P.No.10228 of 2009M/s.Merit Resorts Pvt.Ltd.,rep.by its Director Mrs.S.Shalini,No.1997, 13th Main Road,Anna Nagar, Chennai-600 040. ..Petitioner..vs..1. The Authorised Officer, Canara Bank, Teynampet Branch, Teynampet, Chennai-18.2. Sri Lakshmi Ammal Educational Trust, rep.by its Authorised Signatory S.K.Anantharaj, No.29, Tilak Street, T.Nagar, Chennai-600 017. ..RespondentsW.P.No.9043 of 2009 filed under Article 226 of the Constitutionof India, for issuance of a Writ of Certiorari, calling for theentire records on the file of the Sessions Judge, Nilgiris inCrl.M.P.No.424 of 2008 and quash the order dated 16.04.2009 grantingpolice protection to take possession of the petitioner's propertymeasuring a total extent of 14.17 acres including factory inR.S.No.163/3, 161, 210/1B, 210/2, 233/2, 121/10, 121/1, 372/3, 68/2C2in Kengarai Village, Kotagiri Taluk, Nilgiris District and 8.74 acresin R.S.No.202/2, 203/1, 203/2A1 and 457/4 in Konavakorai Village,Kotagiri Taluk, Nilgiris District.W.P.No.9044 of 2009 filed under Article 226 of the Constitutionof India, for issuance of a Writ of Certiorari, calling for theentire records on the file of the Sessions Judge, Nilgiris, inCrl.M.P.No.2 of 2009 and quash the order dated 09.04.2009 grantingpolice protection to take possession of the petitioner's propertybearing door No.401-A and 1.23 acres of land in R.S.No.500/1 and501/A, Naduhatty Panchayat, Kotagiri, The Nilgiris.W.P.No.10228 of 2009 filed under Article 226 of the Constitutionof India, for issuance of a Writ of Certiorari, calling for therecords on the file of the Sessions Judge of Nilgiris atUdhagamandalam in Crl.M.P.No.141 of 2009 and quash the order dated29.04.2009 granting police protection to take possession of thepetitioner's property measuring to an extent of 10.34 acres, namely,the land and building bearing Door No.4/278, Ooty-Kothagiri MainRoad, Doddabetta Junction, Nilgiris-643 001 comprised inR.S.No.222/1, New R.S.No.630/1 building measuring 77,222 sq.ft. https://hcservices.ecourts.gov.in/hcservices/ For Petitioners : Mr.K.Sridhar (W.P.9043 & 9044/2009) Mr.G.Desingu in W.P.10228/2009For Respondents : Mr.K.Sankaran for R1(W.P.9043/2009 Ms.A.L.Gandhimathi for R2(9043/2009) Mr.S.Sethuraman in W.P.9044/2009 Mr.B.K.Seshadri for Mr.Srinath Sridevan for R1 (W.P.10228/2009) Mr.G.Masilamani, Senior Counsel for Mr.Venkatesh Mahadevan for R2 (W.P.10228/2009) COMMON ORDERR.SUBBIAH, J.,Since the issue involved in all the writ petitions is one andthe same, they are disposed of by a common judgment.2. The core issue involved in all the writ petitions is, whetherthe respondents banks can take possession of the secured assets afterissuing sale certificates in respect of auction purchasers.3. The facts, which necessitated to raise the above question bythe writ petitioners, are as follows:The petitioner in W.P.No.9043 of 2009 is M/s.Kathikkal TeaPlantations, represented by its Managing Director. The petitionerhad availed a loan from the 1st respondent bank by mortgaging theproperty viz., the land measuring to 1.7 acres in R.S.No.163/3, 161,210/1B, 210/2, 233/2, 121/10, 121/1, 372/3, 68/2C2 in KengaraiVillage, Kotagiri Taluk, Nilgiris District and another 8.74 acres inR.S.No.202/2, 203/1, 203/2A1 and 457/4 in Konavakorai Village,Kotagiri Taluk, Nilgiris District. Since there was a default inmaking payment to the respondent bank by the petitioner, the debt isclassified as 'non-performing asset' and the respondent bank hadissued notice on 27.01.2006 under Section 13(2) of the Securitisationand Reconstruction of Financial Assets and Enforcement of SecurityInterest Act, 2002 (for short "the Act") to discharge the liabilityto the bank within sixty days from the date of notice. Subsequently,on failure to discharge the liability in full by the petitioner, asrequired under section 13(4) of the Act, the respondent bank hadissued a possession notice under Section 13(4) on 11.12.2006 to thepetitioner. Pursuant to the said notice, the respondent bank hadtaken a symbolic possession of the property and sold the saidproperty by a private treaty on 09.04.2007 to one P.Srinivasa Varma,Hyderabad, for a sale consideration of Rs.75.60 lakhs and issued asale certificate in favour of the purchaser on 09.04.2007. Sinceonly symbolic possession was taken by the bank and the secured https://hcservices.ecourts.gov.in/hcservices/ debtor, namely, the petitioner, was not actually dispossessed andhad continued to be in de facto possession of the property, evenafter issuance of the sale certificate in favour of the purchaserand, therefore, the respondent bank filed an application inCrl.M.P.No.424 of 2008 before the Chief Judicial Magistrate,Udhagamandalam, on 13.11.2008 under Section 14(1)(2) of the Act,seeking an order to take possession of the petitioner's propertywith the help of police aid and hand over the same to the respondentbank. By order dated 16.04.2009, permission was granted to therespondent bank to take possession of the property with the help ofpolice assistance. Aggrieved over the same, the petitioner has filedthe present writ petition to set aside the order dated 16.04.2009passed in Crl.M.P.No.424 of 2008. The facts in the other writpetition namely W.P.No.9044 of 2009 are also similar to the facts ofW.P.No.9043 of 2009. Hence, it is not necessary to narrate the factsof W.P.No.9044 of 2009.4. So far as W.P.No.10228 of 2009 is concerned, the writpetitioner is a Private Limited Company. The directors of the writpetitioner company are M/s.Sarangapani, Shalini and Harshavardhan.The said petitioner company borrowed a loan from the 1st respondentto the tune of Rs.13 crores and subsequently, defaulted in making therepayment. Therefore, demand notice under section 13(2) was issuedfollowed by notice under section 13(4). After several legalproceedings, finally the bank had issued a sale certificate in favourof the 2nd respondent auction purchaser, viz., Sri Lakshmi AmmalEducational Trust on 15.10.2007 and the sale certificate was issuedand registered on 17.10.2007. One of the mortgaged properties,namely, R.S.No.222/1 in the Sub-Registration District of Ootacamundin the Doddabetta Panchayat together with a building thereonmeasuring 77.222 sq.ft.bearing door No.4/278, Ooty-Kotagiri Road,Doddabetta Junction, Nilgiris was leased out to M/s.MeritInternational Education Foundation from 15.02.2007 pursuant to alease agreement entered into between the writ petitioner company andthe said Merit International Education Foundation. But the Directorsof both the firms are one and the same. Hence, the 1st respondentbank filed an application under section 14(1) in Crl.M.P.No.141 of2009 as against the writ petitioner and its directors and also thelessee before the Sessions Judge, Udhagamandalam, seeking necessarypolice protection to take possession of the secured property and thepermission sought was also granted by order dated 29.04.2009.Aggrieved over the same, the petitioner company has filed the presentwrit petition to set aside the order passed by the learned SessionsJudge, Udhagamandalam.5. In view of the bone of contentions raised by the borrowers inthe respective writ petitions, the questions which have now arisenfor consideration before this Court are, whether the respective banksare legally entitled to take physical possession of the propertiesafter issuance of the sale certificates in favour of the auction https://hcservices.ecourts.gov.in/hcservices/ purchasers and as a follow up action, whether the respondents bankscan maintain an application under Section 14(1)(2) of the Act beforethe concerned Judicial Magistrate, seeking the police assistance totake possession of the secured assets ?6. According to the learned counsel appearing for thepetitioner/borrower in W.P.No.10228 of 2009, the Act assigns judicialpowers to the banks and they can enforce their rights under section13(4) of the Act to take possession of the property and bring thesame for sale without intervention of the Court of law, if the duesof the borrower characterised as 'non-performing assets'. If theborrower is aggrieved by the proceedings of the bank, they canapproach the Debts Recovery Tribunal under Section 17 of the Act.Under Section 13(6) of the Act, after taking possession or aftertaking over the management of the secured assets as per section 13(4)of the Act, the secured creditor or manager on behalf of the securedcreditor shall transfer the secured asset in favour of thetransferee. Section 13(8) of the Act provides that the dues of thesecured creditor tendered at any time before the date fixed for saleor transfer, the secured assets shall not be sold or transferred bythe secured creditor. Process of taking possession of the securedassets is governed by Rule 8 of the SARFAESI Rules. As per Rule 8(1), the authorised officer on behalf of the secured creditor shalldeliver a possession notice to the mortgagor prepared in form givenin Appendix IV of the Rules. Under the SARFAESI Act, if the dues ofthe borrower once characterised as 'non-performing assets', the bank,as the secured creditor, can take possession of the property andbring them for sale without the intervention of the Court of law byfollowing the various measures prescribed under Section 13 of theSARFAESI Act. Immediately after characterising the debt of theborrower as a non-performing asset, the bank, as the securedcreditor, make a demand by notice under section 13(2) of theSARFAESI Act, to pay the outstanding amount within 60 days from thereceipt of the notice, failing which, by issuing a possession notice,as per Rule 8(1) of the SARFAESI Rules, as prescribed in AppendixIV of the Rules, to the mortgagor, and then the secured creditor takepossession of the properties and for that purpose, under Rule 8(4) heshall take steps for protection of secured assets till they are soldor disposed of. After taking possession of the properties, thesecured creditor/bank can transfer the same in favour of thetransferee with all rights as if the transfer had been made by theowner of such secured asset. But, in the instant case, the bank tookonly a symbolic possession or constructive possession by issuing anotice under section 13(4). The actual physical possession of theproperty was not taken by the bank and the borrower/secured debtorwas not actually dispossessed but they were allowed to be in defacto possession of the property. After bringing the property inpublic auction and after issuing the sale certificate as per Rule 9(6) and confirming the sale in favour of the successful bidder in theform prescribed under Appendix V of SARFAESI Rules, the respondent https://hcservices.ecourts.gov.in/hcservices/ bank initiated action to dispossess the borrower from the propertyand sought the assistance of police by filing an application undersection 14(1)(2) of the SARFAESI Act. Aggrieved over the said actionof the bank, the borrower/writ petitioner now has raised a disputethat once the sale certificate was issued in favour of the auctionpurchaser of the property, there is no secured debt and the bank alsoloses the character of secured creditor. Therefore, the question of'actual taking physical possession' does not arise after the issuanceof the sale certificate. The reason for raising such dispute ismainly based on the language employed under section 14(1) ofSARFAESI Act, which reads as follows:"14. Chief Metropolitan Magistrate or DistrictMagistrate to assist secured creditor in taking possessionof secured asset:-(1) Where the possession of any secured asset isrequired to be taken by the secured creditor or if any ofthe secured asset is required to be sold or transferred bythe secured creditor under the provisions of this Act, thesecured creditor may, for the purpose of taking possessionor control of any such secured asset, request, in writing,the Chief Metropolitan Magistrate or the District Magistratewithin whose jurisdiction any such secured asset or otherdocuments relating thereto may be situated or found, to takepossession thereof, and the Chief Metropolitan Magistrateor, as the case may be, the District Magistrate shall, onsuch request being made to him-(a) take possession of such asset and documentsrelating thereto; and(b) forward such assets and documents to thesecured creditor".Thus, by referring to the words used in Section 14(1), namely,'secured creditor' and 'secured asset', it was contended by thelearned counsel for the petitioner in W.P.No.10228 of 2009 that thebank ought to have taken physical possession of the secured asseteven before the issuance of the sale certificate by resorting tosection 14(1). The banks, having taken only a symbolic possession orconstructive possession of the secured asset and having failed totake the actual physical possession while resorting to the measuresunder section 13 of the SARFAESI Act, do not have a right to takephysical possession of the property after issuance of the salecertificate, since it lost the character of secured asset as definedunder section 2(zc). Further, it was contended by the learnedcounsel for the petitioner in W.P.10228 of 2009 that the object ofthe SARFAESI Act is only to recover the due amount payable and oncethe amount is recovered and the sale certificate is issued, the bank https://hcservices.ecourts.gov.in/hcservices/ goes out of the picture. Under such circumstances, the applicationunder section 14(1)(2) seeking police assistance by the bank is notmaintainable. Thus, he prays for quashing of the order.7. It is further contended by the learned counsel that thesecured creditor ought to have taken extra care to take actualphysical possession at the time of issuing notice itself undersection 13(4) because section 13 specifically says that the propertycan be transferred only after taking possession. Therefore, thepractice adopted by the banks by taking symbolic possession orconstructive possession, and then completing the entire proceedingsby issuing a sale certificate, cannot resort to take physicalpossession of the property. Learned counsel for the petitioner alsorelied on a judgment reported in TRANSCORE ..vs.. UNION OF INDIA ANDANOTHER (2006(5) CTC 753 in support of his contention that thebanks are entitled to take the actual possession of the securedassets from the borrower or from any other person in terms of section13(4) of the SARFAESI Act and the bank shall vest in the transfereeall rights in relation to the secured assets as if the transfer hasbeen made by the owner of such secured assets. Any party aggrieved bysuch dispossession, can take recourse to approach the Debts RecoveryTribunal under section 17(4) of the SARFAESI Act. If the party isdispossessed, not in accordance with the provisions of the Act, thenthe Debts Recovery Tribunal is entitled to put the clock back byresorting the status quo ante. Thus, he contended that the bank infailure of taking actual possession under section 13(4) stage, cannotresort to take actual physical possession after issuance of the salecertificate.8. Learned counsel appearing for the respondent bank inW.P.No.10228 of 2009 contended that section 13(4) empowers the bankto take possession of the secured assets and take over the managementof the business of the borrower. It does not say anything about theactual physical possession. The object of the SARFAESI Act is onlyto realise long term assets, manage problems of liquidity, assetliability mis-match and improve recovery by exercising powers to takepossession of securities, sell them and reduce non-performing assetsby adopting measures for recovery or reconstruction. In other words,the object of the SARFAESI Act is a speedy recovery of the non-performing assets. Further, Section 13 does not say that thetransfer has to be effected under section 13(6) only after takingphysical possession. If the dues of the secured creditor aretendered at any time before the date fixed for sale or transfer, thesecured assets shall not be sold or transferred by the securedcreditor. Therefore, before the confirmation of sale, the propertycan be recouped by the borrower if he tenders the amount. On failureto pay the amount only, the sale is confirmed and sale certificate isissued in accordance with Rule 9(6) of SARFAESI Rules. Nowhere insection 13 of SARFAESI Act it has been stated that the right totransfer can be effected only after taking actual physical possession https://hcservices.ecourts.gov.in/hcservices/ or that the exercise of taking over possession under section 13(4)shall be of actual physical possession. After taking symbolicpossession or constructive possession under section 13(4), theborrower continues to be in the property only in de facto possession.Learned counsel has further contended that the language found in 14(1) has to be interpreted only in consonance with the objects of theSARFAESI Act. Therefore, it cannot be said that the word 'securedcreditor' and 'secured debt' found in section 14(1) does not meanthat the bank lost the power to take actual possession, afterissuance of the sale certificate. 9. Learned counsel for respondent further contended that Section13(10) of the SARFAESI Act states that where the dues of the securedcreditor are not fully satisfied with the sale proceeds of thesecured assets, the secured creditors may file an application in theform and manner as may be prescribed in the Debts Recovery Tribunal.Thus, by reading relevant provisions under section 13(10), one couldunderstand that the secured creditor remains as secured creditor andhe does not cease to be so by executing a sale certificate. Insupport of his contention, the learned counsel relied on a plethoraof decisions and further contended that section 14(1) should not beread in isolation and it has to be a combined reading along withsections 13 and 14 to have a correct interpretation.10. Learned counsel appearing for the proposed party inW.P.No.9043 of 2009 submitted that the writ petitioner, who has notrepaid the loan amount, is not entitled for any discretionary remedyunder Article 226 of Constitution of India. The mortgagor, whocontinues in possession of the property, in spite of creating acharge over the property in favour of the bank, ought not to beallowed to continue in possession and squat on the property. The salecertificate is to be satisfied only after recovery of money by saleand not concerned with possession. Section 14 of the SARFAESI Act wasenacted by the Parliament only to give power to the secured creditorsto take possession of the property with the assistance of theconcerned Magistrate. Had it been the intention of the Legislaturethat the object of the Act is only for recovery of money, then theywould not have enlightened Section 14. The incorporation of theprovision should be purposeful and should be to effectuate with theobject and the purpose of the Act. The interpretation which willdefeat the object of the Act should be avoided. With regard to thecontention on interpretation, the learned counsel for the proposedparty has also relied on the decisions reported in 1992(1) SCC 361,1986(2) SCC 237 and 2001(9) SCC 673. 11. The learned counsel appearing for the borrowers/writpetitioners and the respondent banks in W.P.No.9043 and 9044 of 2009have also made the submissions similar to the submissions made inW.P.No.10228 of 2009. Heard the learned counsel appearing for all theparties. https://hcservices.ecourts.gov.in/hcservices/

12. In view of the above submissions, now the question to bedecided is whether the Respondent banks are legally entitled to takephysical possession of the property after issuance of the salecertificate in favour of the auction purchasers by filing petitionunder section 14(1)(2) of SARFAESI Act before the concernedMagistrate. The statements and reasons for SARFAESI Act seem to bethat the Act was enacted to reconstruction of financial assets andenforcement of security interest and for matters connected therein.The banks as 'secured creditor', as defined under section 2(zd) ofthe Act, are empowered under section 13(4) of the SARFAESI Act totake possession of the 'secured asset' as defined under section 2(zc)and also empowered to transfer the same under section 13(6) of theSARFAESI Act. It is relevant to extract Sections 13(4) and 13(6),which read as follows: "13. Enforcement of security interest:(4) In case the borrower fails to discharge his liabilityin full within the period specified in sub-section (2), thesecured creditor may take recourse to one or more of thefollowing measures to recover his secured debt, namely:-(a) take possession of the secured assets of theborrower including the right to transfer by way of lease,assignment or sale for realising the secured asset;(b) take over the management of the business of theborrower including the right to transfer by way of lease,assignment or sale for realising the secured asset:Provided that the right to transfer by way oflease,assignment or sale shall be exercised only where thesubstantial part of the business of the borrower is held assecurity for the debt:Provided further that where the management of whole, of thebusiness or part of the business is severable, the securedcreditor shall take over the management of such business of theborrower which is relatable to the security of the debt;(c) appoint any person (hereafter referred to as themanager), to manage the secured assets the possession ofwhich has been taken over by the secured creditor;(d) require at any time by notice in writing, anyperson who has acquired any of the secured assets fromthe borrower and from whom any money is due or may becomedue to the borrower, to pay the secured creditor, so muchof the money as is sufficient to pay the secured debt". https://hcservices.ecourts.gov.in/hcservices/ Section 13(6) reads as follows:"Any transfer of secured asset after taking possessionthereof or take over of management under sub-section (4), bythe secured creditor or by the manager on behalf of thesecured creditors shall vest in the transferee all rightsin, or in relation to, the secured asset transferred as ifthe transfer had been made by the owner of such securedasset".13. Hence, it is clear from the above proviso, after takingpossession under section 13(4), the secured creditors can transferthe property or take over the management and they shall vest in thetransferee all rights. Under section 13(8), if the borrower paid thedue amount with all costs, charges and expenses incurred by him aretendered to the secured creditor before the date fixed for sale, thenthe property shall of his own. Section 13(10) defines that if thedues of the secured creditor are not full satisfied with the saleproceeds of the secured assets, he may file an application in theform and manner as may be prescribed to the Debtors Recovery Tribunalfor recovery of the balance amount.14. So far as in the present cases are concerned, the securedcreditors, namely, the banks had taken only a symbolic possessionunder section 13(4). Thereafter, by selling the property in publicauction, they issued sale certificates in favour of the auctionpurchasers. Subsequently, the secured creditors proceeded to takepossession since the secured debtors continue to be in de factopossession, by filing an application under section 14(1) seeking theassistance before the District Magistrate as per the manner providedin the said proviso. The secured creditors are forced to go undersection 14(1) only when the borrowers/secured debtors are reluctantto hand over the possession even after issuance of the salecertificate. As reported in 2008(1) SCC 125 (cited supra) thedichotomy between symbolic and physical possession does not findplace in the SARFAESI Act. Only possession notice has to be issued asper Rule 8(1) of SARFAESI Rules as prepared in terms of the AppendixIV of the Rules. Thereafter, by affixing the notice under Rule 8(1),the symbolic possession or constructive possession of the property isbeing taken up by the secured creditor as in the case of these writpetitions. Thereafter, after selling the property in public auctionsale certificates were issued by the secured creditors as per Rule 9(6) in favour of the purchasers in the form given in Appendix V ofthe Rules. Now, the contention of the writ petitioners is that thebanks ought to have taken due care while taking recourse to themeasures provided under section 13(4) itself to recover theirsecured debt. Once the sale certificate was issued and the money wasrecovered, the purpose is over and therefore, it cannot be termed asa 'secured creditor' and the property cannot be a 'secured debt'.Hence, the banks cannot take actual physical possession after https://hcservices.ecourts.gov.in/hcservices/ issuance of the sale certificate by seeking assistance from theMagistrate under section 14(1). The submissions of the learnedcounsel for the petitioners are based on the language employed insection 14(1), namely, the secured creditor and secured debt. Section2(zc) defines 'secured asset' means the property on which securityinterest is created;section 2(zd) defines 'secured creditor' as follows:'Secured creditor' means any bank or financial institution orany consortium or group of banks or financial institutions andincludes-(i)debenture trustee appointed by any bank or financialinstitution; or(ii) securitisation company or reconstruction company,whether acting as such or managing a trust set up by suchsecuritisation company or reconstruction company for thesecuritisation or reconstruction, as the case may be; or(iii) any other trustee holding securities on behalf of abank or financial institution, in whose favour securityinterest is created for due repayment by any borrower of anyfinancial assistance"15. Now, the question is whether the submission made by thelearned counsel for the petitioners based on the language found insection 14(1) is correct and entertainable? In this regard, thesubmissions made by the learned counsel appearing for the banks andthe auction purchasers can be taken into consideration for answeringthe submissions made by the petitioners based on the judgmentreported in 2008(1) SCC 125 (Transcore ..vs.. Union of India) (citedsupra). The relevant passage from the said judgment is as follows:"74. Keeping the above conceptual aspect in mind, wefind that Section 13(4) of the NPA Act proceeds on the basisthat the borrower, who is under a liability, has failed todischarge his liability within the period prescribed underSection 13(2), which enables the secured creditor to takerecourse to one of the measures, namely, taking possession ofthe secured assets including the right to transfer by way oflease, assignment or sale for realising the secured assets.Section 13(4-A) refers to the word “possession” simpliciter.There is no dichotomy in sub-section (4-A) as pleaded onbehalf of the borrowers. Under Rule 8 of the 2002 Rules, theauthorised officer is empowered to take possession bydelivering the possession notice prepared as nearly aspossible in Appendix IV to the 2002 Rules. That notice isrequired to be affixed on the property. Rule 8 deals with https://hcservices.ecourts.gov.in/hcservices/ sale of immovable secured assets. Appendix IV prescribes theform of possession notice. It inter alia states that noticeis given to the borrower who has failed to repay the amountinforming him and the public that the bank/FI has takenpossession of the property under Section 13(4) read with Rule9 of the 2002 Rules. Rule 9 relates to time of sale, issue ofsale certificate and delivery of possession. Rule 9(6) statesthat on confirmation of sale, if the terms of payment arecomplied with, the authorised officer shall issue a salecertificate in favour of the purchaser in the form given inAppendix V to the 2002 Rules. Rule 9(9) states that theauthorised officer shall deliver the property to the buyerfree from all encumbrances known to the secured creditor ornot known to the secured creditor. (emphasis supplied)Section 14 of the NPA Act states that where the possession ofany secured asset is required to be taken by the securedcreditor or if any of the secured asset is required to besold or transferred, the secured creditor may, for thepurpose of taking possession, request in writing to theDistrict Magistrate to take possession thereof. Section 17(1)of the NPA Act refers to the right of appeal. Section 17(3)states that if DRT as an appellate authority after examiningthe facts and circumstances of the case comes to theconclusion that any of the measures under Section 13(4) takenby the secured creditor are not in accordance with theprovisions of the Act, it may by order declare that therecourse taken to any one or more measures is invalid, andconsequently, restore possession to the borrower and can alsorestore management of the business of the borrower.Therefore, the scheme of Section 13(4) read with Section 17(3) shows that if the borrower is dispossessed, not inaccordance with the provisions of the Act, then DRT isentitled to put the clock back by restoring the status quoante. Therefore, it cannot be said that if possession istaken before confirmation of sale, the rights of the borrowerto get the dispute adjudicated upon is defeated by theauthorised officer taking possession. As stated above, theNPA Act provides for recovery of possession by non-adjudicatory process; therefore, to say that the rights ofthe borrower would be defeated without adjudication would beerroneous. Rule 8, undoubtedly, refers to sale of immovablesecured asset. However, Rule 8(4) indicates that wherepossession is taken by the authorised officer before issuanceof sale certificate under Rule 9, the authorised officershall take steps for preservation and protection of securedassets till they are sold or otherwise disposed of. UnderSection 13(8), if the dues of the secured creditor togetherwith all costs, charges and expenses incurred by him aretendered to the creditor before the date fixed for sale ortransfer, the asset shall not be sold or transferred. The https://hcservices.ecourts.gov.in/hcservices/ costs, charges and expenses referred to in Section 13(8) willinclude costs, charges and expenses which the authorisedofficer incurs for preserving and protecting the securedassets till they are sold or disposed of in terms of Rule 8(4). Thus, Rule 8 deals with the stage anterior to theissuance of sale certificate and delivery of possession underRule 9. Till the time of issuance of sale certificate, theauthorised officer is like a Court Receiver under Order 40Rule 1 CPC. The Court Receiver can take symbolic possessionand in appropriate cases where the Court Receiver finds thata third-party interest is likely to be created overnight, hecan take actual possession even prior to the decree. Theauthorised officer under Rule 8 has greater powers than evena Court Receiver as security interest in the property isalready created in favour of the banks/FIs. That interestneeds to be protected. Therefore, Rule 8 provides that tillissuance of the sale certificate under Rule 9, the authorisedofficer shall take such steps as he deems fit to preserve thesecured asset. It is well settled that third-party interestsare created overnight and in very many cases those thirdparties take up the defence of being a bona fide purchaserfor value without notice. It is these types of disputes whichare sought to be avoided by Rule 8 read with Rule 9 of the2002 Rules. In the circumstances, the drawing of dichotomybetween symbolic and actual possession does not find place inthe scheme of the NPA Act read with the 2002 Rules".16. From the above, the submission made by the learned counselfor the respondents that section 14 of the Act cannot be read inisolation and has to be viewed in the context of all other provisionsof the Act, such as Sections 13(4)(6)(8),15,17, 18 Rule 8(9) ofSARFAESI Rules and section 55 of the Transfer of Property Act isacceptable. These provisions are in conjunction with Section 14 ofthe Act for the purpose of interpretation, to be adopted, to achieveand sub-serve the object of the SARFAESI Act. Any other approach orinterpretation will defeat the object of the Act. The object of theAct is only to enable the secured creditor, financial institutions torealise the long term assets, manage problems of liquidity, assetliability mis-match and improve recovery by exercising powers to takepossession of securities, sell them and reduce non-performing assetsby adopting measures for recovery or reconstruction. Therefore, itcould be understood that the Act was brought for recovering theamount in speedy manner in taking possession of the properties and inrealising the money. The third party, who comes forward to purchasethe secured asset, must have a confidence that he would get the titleto the property at the earliest. If the transferring of the propertyby way of title is going to be delayed endlessly, then the object ofthe Act which is meant for speedy recovery, would be defeated inwhole. Therefore, as contended by the learned counsel for the banks,that if interpretation is given by taking the words in isolation from https://hcservices.ecourts.gov.in/hcservices/ section 14, it would defeat the whole object. Only on a combinedreading of section 14 along with the other sections, it would give aclear picture of the object. In this regard, a useful reference couldbe placed on the decisions relied on by the learned counsel appearingfor the impleaded party. (i) (1986) 2 SCC 237 (M/s.Girdhari Lal and Sons ..vs.. Balbir NathMathur and others(ii) (1992) 1 SCC 361 (Administrator, Municipal Corporation ..vs..Dattatraya Dahankar)(iii) 2001(9) SCC 673: (Nirathilingam ..vs.. Annaya Nadar and Others; 17. The relevant passages from the said decision (1986) 2 SCC237 are as follows:"7. Parliamentary intention may be gathered from severalsources. First, of course, it must be gathered from the statuteitself, next from the preamble to the statute, next from theStatement of Objects and Reasons, thereafter from parliamentarydebates, reports of committees and commissions which precededthe legislation and finally from all legitimate and admissiblesources from where there may be light. Regard must be had tolegislative history too.8. Once parliamentary intention is ascertained and theobject and purpose of the legislation is known, it then becomesthe duty of the court to give the statute a purposeful or afunctional interpretation. This is what is meant when, forexample, it is said that measures aimed at social ameliorationshould receive liberal or beneficent construction. Again, thewords of a statute may not be designed to meet the severaluncontemplated forensic situations that may arise. The draftsmanmay have designed his words to meet what Lord Simon of Glaisdalecalls the "primary situation". It will then become necessary forthe court to impute an intention to Parliament in regard to"secondary situations". Such "secondary intention" may beimputed in relation to a secondary situation so as to best servethe same purpose as the primary statutory intention does inrelation to a primary situation.9. So we see that the primary and foremost task of a courtin interpreting a statute is to ascertain the intention of thelegislature, actual or imputed. Having ascertained theintention, the court must then strive to so interpret thestatute as to promote or advance the object and purpose of theenactment. For this purpose, where necessary the court may evendepart from the rule that plain words should be interpretedaccording to their plain meaning. There need be no meek and mute https://hcservices.ecourts.gov.in/hcservices/ submission to the plainness of the language. To avoid patentinjustice, anomaly or absurdity or to avoid invalidation of alaw, the court would be well justified in departing from the so-called golden rule of construction so as to give effect to theobject and purpose of the enactment by supplementing the writtenword if necessary".18. The relevant passage from the said decision (1992)1 SCC 361is as follows:"4. “It seems to us that the High Court had a mechanicalapproach to construction. The mechanical approach toconstruction is altogether out of step with the modern positiveapproach. The modern positive approach is to have a purposefulconstruction that is to effectuate the object and purpose ofthe Act. Section 127-A must, therefore, receive a purposefulconstruction. Sub-section (1) contains a table for taxation.There is no provision for taxation in respect of a buildinghaving annual letting value less than Rs 1800. Clause (b) ofsub-section (2) expressly exempts buildings and lands, theannual letting value of which does not exceed Rs 1800. Theproviso permits adding up of annual letting value of all suchbuildings or lands owned by a single individual in theMunicipality. The proviso no doubt states that the annualletting value aggregated shall be deemed to be “for the purposeof this clause” meaning thereby for the purpose of clause (b),that is for exemption. But the purpose of the proviso is todeny exemption to buildings or lands owned by the same personand of which the total annual letting value exceeds Rs 1800".19. The relevant passages from 2001(9) SCC 673 are as follows:20. "The principle is well settled that an interpretationof the statutory provision which defeats the intent and purposefor which the statute was enacted should be avoided. Thedecision of the Madras High Court in K.V.S.P. Subramanian case1holding that since the creditor had already filed suits forrecovery of the mortgage amount and the suits were pending, thedebtor, who is the defendant in those suits, has to seekadjudication before the civil court on the question as towhether he is entitled to the benefit and if the court comes tothe conclusion that he is entitled to the benefit of the Actthen the court has to dispose of the suit in accordance withSection 4 of the Act, in our view, does not lay down the lawcorrectly. Accepting this view will render the provisionregarding abatement of the suit redundant.21. We are conscious of the position that the view takenby the Division Bench of the Madras High Court in K.V.S.P. https://hcservices.ecourts.gov.in/hcservices/ Subramanian case1 has held the field for a good length of time.But as discussed earlier, the decision runs counter to the veryintent and purpose for which the enactment was made. In such asituation the decision needs to be corrected and this has to bedone despite the lapse of time".20. A reading of the dictum laid down in the above judgmentswould give a clear picture that the mechanical way of interpretingthe provisions made in the statute will lead to defeat the object ofthe Act. Here, when the object is to speedy recovery of debt, by wayof taking possession on transferring the property in favour of thirdparty and issued a sale certificate, it cannot be contended that oncethe sale certificate is issued, physical possession cannot be takenby the secured creditors. Further, in this regard, a usefulreference could be placed on the judgment reported in KOTTAKKAL CO-OP.URBAN BANK LTD ..vs.. BALAKRISHNAN (2008(2)KLT 456). In that case,after taking a symbolic possession under section 13(4) and sellingthe property in favour of the auction purchaser, the secured creditorapproached the Chief Judicial Magistrate seeking the assistance fortaking possession. The petition filed by the secured creditor undersection 14(1) was dismissed by the Magistrate holding that that theprovision contained in section 14 only enables the secured creditorto seek assistance of Court to take possession or control of propertyfor effecting sale. Since the secured creditor had taken possession,effected sale and issued sale certificate, the provision cannot beinvoked. Aggrieved over the same, the secured creditor preferred awrit petition before the High Court. The High Court while dealingwith the case has held that there is no stipulation in section 13 orelsewhere that the right to transfer can be exercised only aftertaking over the actual physical possession or that the exercise oftaking over possession under section 13(4) shall be of actualphysical possession, resulting in complete dispossession of thesecured debtor, de facto and de jure. The relevant passage inparagraph 5 is extracted hereunder:"5....to complete a transfer by a secured creditor infavour of a third party, the necessary pre-condition is thatpossession is taken in terms of S.13(4) of the Act. A closereading of S.13(4)(a) would show that what is authorisedthereby is the taking of possession of the secured asset,including the right to transfer. While taking over ofpossession is authorised and such taking over of possessionincludes the taking over of the right to transfer, there is nostipulation in section 13 or elsewhere that the right totransfer can be exercised only after taking over the actualphysical possession or that the exercise of taking overpossession under section 13(4) shall be of actual physicalpossession, resulting in complete dispossession of the secureddebtor, de facto and de jure....At any rate, a secured debtor,continuing to hold on de facto possession on the ground of not https://hcservices.ecourts.gov.in/hcservices/ having been dispossessed, would only be one who would have beengiven the advantage to continue to hold on de facto possessionfor the time during which different steps would have followed,resulting in the confirmation of sale in favour of a thirdparty auction purchaser. In the absence of any jurisdictionalrequirement for de facto possession to make a transfer in termsof S.13(6), there is no legal or jurisdictional error in thesale being held by the secured creditor on the strength of dejure possession. Such a sale or transfer would have thecomplete support of S.13(6).21. Therefore, in our opinion, in the absence of any specificstipulation in Section 13, the properties could be sold only aftertaking physical possession and also the combined reading of sections13 and 14 with the background of the object would show that it cannotbe said that the secured creditor cannot take actual physicalpossession after issuing sale certificates merely for the reason thatthe language found in section 14 refers to the secured creditor andsecured asset. Further more, as contended by the learned counsel forthe petitioner in W.P.No.10228 of 2009, that under sectio1n 13(10)even after sale, the bank can approach the Debts recovery Tribunal byfiling application having jurisdiction or a competent court, forrecovery of the balance amount. Further, the contention of thelearned counsel for the banks that the character of the securedcreditor cannot be said to be ceased by executing the salecertificate also cannot be ignored.22. In view of the above discussions, we hereby hold thattherespondents banks are entitled to take possession under section 14(2)of the SARFAESI Act and the issuance of sale certificate is not a barto take physical possession and the writ petitioners are not entitledfor the reliefs sought for. Consequently all the writ petitions failand are dismissed. No costs. Connected M.Ps.are closed.sd/-Asst.Registrar/true copy/Sub Asst.RegistrarglTo1. The Chief Manager, State Bank of India 5/273, Kil-Kotagiri Branch, Kil-Kotagiri Bazaar Post, The Nilgiris. https://hcservices.ecourts.gov.in/hcservices/

2. The Authorised Officer, Corporation Bank, Coonoor Branch, No.88, 89, Sims Park Road, Gray's Hill, Coonoor.3. The Authorised Officer, Canara Bank, Teynampet Branch, Teynampet, Chennai-18.+ 2 c.cs. to M/s. K. Sridhar Associates. Advocates. S.R.No.33828.+ 2 c.cs. to Mr. G. Desingu, Advocate. S.R.No.33350.+ 1 c.c. to Mr. S. Srinath Sridevan, Advocate. S.R.No.33685.+ 1 c.c. to Mr. Venkatesh Mahadevan, Advocate. S.R.No.33899.+ 1 c.c. to Mr. S. Sethuraman, Advocate. S.R.No.33846.+ 1 c.c. to Ms. AL. Ganthimathi, Advocate. S.R.No.33689.+ 1 c.c. to Mr. K. Sankaran, Advocate. S.R.No.33792.Common order in W.P.Nos.9043, 9044and 10228 of 2009MSM (CO)GSK 17.08.2009.