K.R.Chandrasekaran v. Union of India & Ors.

Order

"The Authorized Officer Mr.N.Krishnan, of the petitionerhas filed this petition under section 14 of theSecuritisation and Reconstruction of Financial Assetsand Enforcement of Security Interest Act, 2002 fortaking possession of assets mentioned in the Descriptionof Property. Perused the records. Sworn statement ofthe Authorized Officer of the petitioner recorded.After gleaning the entire materials made available with https://hcservices.ecourts.gov.in/hcservices/

the court and upon hearing the petitioner, the court isfully satisfied with a need to render necessaryassistance to the secured creditor in taking over thesecured assets. All the legal formalities have alreadybeen complied with scrupulously and accordingly thiscourt is inclined to confer the relief sought for by thepetitioner under section 14 of the SARFAESI Act 2002.Thus, the Inspector of Police, Soora Mangalam, P.S., isrequired to render all necessary assistance to thesecured creditor (petitioner) in taking over possessionof the secured assets described in the description ofproperty."3. W.P.Nos.30184 of 2011, 104 and 105 of 2012 have been filed bythe petitioners who are stated to be tenants of various residentialportions in respect of which the respective landlords have borrowedamounts from the bank or stood as guarantor to the thirdparty/borrowers and the bank while enforcing their rights under theSARFAESI Act, after giving demand notice under Section 13(2) of theSARFAESI Act to the borrowers (or) guarantors, who have been made assecond respondent in these writ petitions, followed by possessionnotice under Section 13(4) of the SARFAESI Act, have obtained anorder of assistance from the learned Chief Judicial Magistrateconcerned under Section 14 of the SARFAESI Act appointing an AdvocateCommissioner to take possession. 4. In W.P.No.30184 of 2011, the second respondent, who is theowner of the property, is stated to have let out a residentialportion to the writ petitioner, and in respect of a borrowal by thirdparties/borrowers for which he stood as a guarantor mortgaging hisimpugned property, the first respondent/bank has issued a demandnotice under Section 13(2) of the SARFAESI Act to the secondrespondent/landlord on 15.12.2010, followed by possession noticeunder Section 13(4) of the SARFAESI Act on 22.2.2011 and thereafterobtained the impugned order of assistance from the learned ChiefJudicial Magistrate, Erode under Section 14 of the SARFAESI Act on9.4.2011 and, admittedly, in those proceedings the petitioner, who isfacing the threat of eviction, is not a party and was also not givenany notice.5. Likewise, in W.P.No.104 of 2012, the secondrespondent/landlord has availed Cash Credit facility to an extent of` 8.50 Crores and Term Loan facility to an extent of ` 3,35,95,000/-on 13.10.2009 from the first respondent/bank, in respect of which theresidential houses in Door Nos.127, 126 and 110/1 in T.S.No.69 ofKarumandi Chellipalayam Village, Perundurai, Erode District weregiven as security for repayment, and since the secondrespondent/landlord failed to pay back the amount, the firstrespondent/bank, after giving demand notice under Section 13(2) of https://hcservices.ecourts.gov.in/hcservices/ the SARFAESI Act on 15.12.2010, followed by possession notice underSection 13(4) of the SARFAESI Act on 22.2.2011, has obtained theimpugned order of assistance dated 9.4.2011 from the learned ChiefJudicial Magistrate, Erode under Section 14 of the SARFAESI Actappointing an Advocate Commissioner to take possession. In theseproceedings also, the petitioners, who claim to be tenants, have notbeen given notice and are under the threat of eviction.6. Similarly, in W.P.No.105 of 2012, the second respondent stoodas a guarantor for the borrower (second respondent in W.P.No.104 of2012) for availing from the first respondent/bank Cash Creditfacility to the extent of ` 8.50 Crores and Term Loan facility to theextent of ` 3,35,95,000/- on 13.10.2009 and due to the non paymentby the borrower (second respondent in W.P.No.104 of 2012), afterclassifying the account as a non performing asset, the firstrespondent/bank has issued a demand notice under Section 13(2) of theSARFAESI Act on 15.12.2010, followed by possession notice underSection 13(4) of the SARFAESI Act on 22.2.2011 and thereafter,obtained an order of assistance from the learned Chief JudicialMagistrate, Erode under Section 14 of the SARFAESI Act on 9.4.2011.As stated above, in this case also the petitioners, who are claimingthemselves to be tenants, have not been given any notice at any pointof time and are facing the threat of eviction.7. Barring W.P.No.950 of 2012, wherein the petitioner haschallenged the vires of Section 14 of the SARFAESI Act as null andvoid, in all other writ petitions the petitioners have challenged thevalidity and correctness of the orders passed by the Chief JudicialMagistrates under Section 14 of the SARFAESI Act. Inasmuch asW.P.No.950 of 2012 has been filed challenging the very provision ofSection 14 of the SARFAESI Act, first off, it is necessary to dealwith the said writ petition.W.P.No.950 of 20128. The petitioner in W.P.No.950 of 2012, as stated above, haschosen to challenge Section 14 of the SARFAESI Act having known thatthe validity of the SARFAESI Act has been upheld by the SupremeCourt, contending inter alia that Section 14 of the SARFAESI Actconfers an unfettered power without proper guidance to the ChiefJudicial Magistrate; that while passing an order of assistance by theChief Judicial Magistrate under Section 14 of the SARFAESI Act, thereis no necessity for him to hear the affected party who is in actualpossession of the property sought to be taken physical possessionand, therefore, it is an infraction of the principles of naturaljustice; that the occupier, who is not given any notice before anyorder of assistance is passed by the learned Chief JudicialMagistrate under Section 14 of the SARFAESI Act, is suddenlydisturbed from his possession and especially when it is dwellinghouse, it causes grave injustice to the occupant; that the said https://hcservices.ecourts.gov.in/hcservices/ Section, being penal in nature, ought to have provided opportunity ofhearing to the occupant before passing the order of assistance,especially when such power has been vested with the ChiefMetropolitan Magistrate and District Magistrate; that even otherwise,Section 14 of the SARFAESI Act has to be read down in the interest ofjustice; that the said section is arbitrary and in violation of thefundamental rights guaranteed under Articles 14, 19(1)(e), 19(1)(g)and 21 of the Constitution of India and, therefore, is liable to bestruck down.9.1. It is the contention of Mr.R.Singgaravelan, learned counselappearing for the petitioner that even though the validity of theSARFAESI Act has been upheld in the judgment of the Supreme Court inMardia Chemicals Ltd. v. Union of India, (2004) 4 SCC 311, theSupreme Court has only considered the SARFAESI Act as a whole and notparticularly Section 14 of the SARFAESI Act and, therefore, there isno impediment for this Court to decide independently the validity ofSection 14 of the SARFAESI Act.9.2. It is his contention that the validity or otherwise ofSection 14 of the SARFAESI Act was not an issue before the SupremeCourt and the judgment of the Supreme Court is binding only on thepoints raised and argued and applying the doctrine of sub silentio,it cannot be said that even the points which were not argued ordiscussed before the Supreme Court have to be followed. To buttressthe said contention, he has relied upon the decisions in (i)Municipal Corporation of Delhi v. Gurnam Kaur, (1989) 1 SCC 101; (ii)Bhuwalka Steel Industries Ltd. v. Bombay Iron and Steel Labour Board,(2010) 2 SCC 273; and (iii) Davinder Singh v. State of Punjab, (2010)13 SCC 88.9.3. It is his submission that even in Mardia Chemicals Ltd.case, supra, where the Supreme Court has upheld the validity of theSARFAESI Act, the Supreme Court has left it open to decide in futureany problem about the working of any particular provision of theSARFAESI Act and, therefore, while deciding the validity of theSARFAESI Act as a whole, the Supreme Court has not considered thevires of Section 14 of the SARFAESI Act. 9.4. It is his further submission that even otherwise, by virtueof the subsequent amendment made to Section 13 of the SARFAESI Act,by introducing sub-section 3-A, and various other judgments in UnitedBank of India v. Satyawati Tondon, (2010) 8 SCC 110; KanaiyalalLalchand Sachdev v. State of Maharashtra, (2011) 2 SCC 782, muchwater has flown and, therefore, it requires a fresh consideration.9.5. It is also his submission that the concept of judicialreview has so much developed that even the validity of the statutesmentioned in Schedule IX to the Constitution of India can be tested https://hcservices.ecourts.gov.in/hcservices/ by the Courts with the power of judicial review to decide as towhether such statutes satisfy the rule of law, as held in I.R.Coelhov. State of Tamil Nadu, (2007) 2 SCC 1. Therefore, according to him,the impugned Section 14 of the SARFAESI Act does not satisfy theprinciple of the rule of law and hence, it is liable to be struckdown.9.6. By relying upon various judgments in (i) SiddharamSatlingappa Mhetre v. State of Maharashtra, (2011) 1 SCC 694; (ii)Dev Sharan v. State of Uttar Pradesh, (2011) 4 SCC 769; (iii) K.T.Plantation (P) Ltd. v. State of Karnataka,(2011) 9 SCC 1; (iv) Stateof Haryana v. Mukesh Kumar,(2011) 10 SCC 404; (v) Greater NoidaIndustrial Development Authority v. Devendra Kumar,(2011) 12 SCC 375;(vi) State of Orissa v. Mamata Mohanty, (2011) 3 SCC 436; (vii) S.G.Jaisinghani v. Union of India, AIR 1967 SC 1427; (viii) NandiniSundar v. State of Chhattisgarh, (2011) 7 SCC 547; (ix) Brij Lal v.Commissioner of Income Tax, Jalandhar, (2011) 1 SCC 1, it is hissubmission that by virtue of the effective march of law, the impugnedprovision has to be set aside.9.7. It is his submission that it is not as if by striking downSection 14 of the SARFAESI Act as ultra vires, the entire SARFAESIAct will be negated and, therefore, even if the vires of theparticular provision is challenged, the same would not affect thevalidity of the SARFAESI Act as upheld by the Supreme Court in MardiaChemicals Ltd. case, supra, and thus, he sought to read down the saidprovision.9.8. He has also contended that due to various conflicting viewsexpressed by various High Courts in respect of Section 14 of theSARFAESI Act and in order to save the bona fide occupants fromarbitrary eviction by obtaining the order of assistance by thesecured creditor by approaching the Chief Judicial Magistrate underSection 14 of the SARFAESI Act, the validity of the said provisionneeds a re-look.9.9. He has also submitted that Section 14 of the SARFAESI Actapart from making the Chief Metropolitan Magistrate or DistrictMagistrate as an agent of the secured creditor for the purpose oftaking possession by using force, has, in effect, taken away therights of the affected party granted even under the Code of CriminalProcedure.9.10. Inasmuch as it has been held that Section 14 of theSARFAESI Act is not a judicial power exercised by the Chief JudicialMagistrate and when once such power impinges on the fundamentalrights guaranteed to a citizen, according to the learned counsel, itis liable to be struck down as unconstitutional and ultra vires, byrelying upon the judgments in (i) Maneka Gandhi v. Union of India, https://hcservices.ecourts.gov.in/hcservices/ AIR 1978 SC 597; and (ii) A.P.Dairy Development CorporationFederation v. B.Narasimha Reddy, (2011) 9 SCC 286.9.11. It is his further submission that while under Section 14(2)of the SARFAESI Act the Chief Judicial Magistrate is entitled todirect the police to use necessary force for the purpose of takingpossession, there are absolutely no guidelines for the purpose ofusing force and such unrestrained right may tend to arbitraryexercise of the power by the Chief Judicial Magistrate at theinstance of the secured creditor, for whose benefit or assistanceSection 14 of the SARFAESI Act has been provided.9.12. He submits that in cases where the occupant is a tenant ora person other than a borrower, such person has a statutory rightunder the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 oreven under the Transfer of Property Act, 1882 not to be evictedexcept under certain circumstances and indeed such eviction shouldonly be after following the procedure contemplated under the saidActs and, therefore, there is every possibility for an unscrupulouslandlord, who is unable to evict a tenant, to take the aid of Section14 of the SARFAESI Act for the purpose of taking physical possessionby using force with the assistance of the Chief Judicial Magistrate.9.13. He adds that inasmuch as the tenant is having a statutoryprotection under the local laws and his lawful occupation can beevicted by the landlord only under certain circumstances, the tenant,who is not a borrower and who has never entered into any contractualobligation with the bank or financial institution, cannot be thrownaway even without his knowledge, which will be affecting thefundamental rights.9.14. It is his submission that insofar as it relates to theborrower, Section 14 of the SARFAESI Act cannot be straightawayinvoked, since it requires a demand notice under Section 13(2) of theSARFAESI Act, by which the borrower must be given sixty days time forpayment; thereafter, by virtue of the subsequent amendmentintroducing sub-section 3-A to Section 13 of the SARFAESI Act, theborrower himself has got a right to give proper representation, whichis considered, and of course, against rejection of the same, noapplication can be filed under Section 17 of the SARFAESI Act; andultimately, it is only after giving possession notice under Section13(4) of the SARFAESI Act, the secured creditor can approach theChief Judicial Magistrate for taking possession under Section 14 ofthe SARFAESI Act, while such notice is not contemplated to anoccupier other than the borrower and, therefore, according to him,the purport of the SARFAESI Act is unjust and he would submit that atleast a notice is required to an occupant/tenant by relying upon ajudgments of this Court in V.Noble Kumar v. Authorised Officer, https://hcservices.ecourts.gov.in/hcservices/ Standard Chartered Bank and others, 2011 (1) CTC 513 andR.Sivasubramaniyan v. Senior Manager, SBI, 2011 (4) CTC 492.9.15. It is also his submission that what is contemplated underthe SARFAESI Act is symbolic possession and Section 14 of theSARFAESI Act, virtually enables the bank or financial institution toexecute an order which is not permissible in any civil law. Hesubmitted that even for recovery and execution of a civil decree, theCivil Court cannot direct an occupant to vacate and even for thepurpose of enabling a purchaser under the Specific Relief Act toenforce his right under the agreement, the person who succeeds in thespecific performance suit alone has to take action under the TamilNadu Buildings (Lease and Rent Control) Act, 1960 to evict thetenant, and while so, under the impugned provision, namely Section 14of the SARFAESI Act, by using the administrative fiat of the order ofthe learned Chief Judicial Magistrate, a bona fide occupier is thrownout mercilessly.9.16. His submission is that when rule of law contemplatesfairness and legitimacy of any action without arbitrariness, Section14 of the SARFAESI Act, which is totally arbitrary, cannot be held tobe valid in the eye of law. To substantiate his contention, he wouldrely upon some of the passages of the judgments of the Supreme Courtin State of Orissa v. Mamata Mohanty, (2011) 3 SCC 436; S.G.Jaisinghani v. Union of India, AIR 1967 SC 1427; and K.T. Plantation(P) Ltd. v. State of Karnataka, (2011) 9 SCC 1.9.17. He would also submit that when the march of law is so muchin respect of the principles of natural justice that even in caseswhere a statute is silent about affording an opportunity to the otherside such opportunity, which is treated to be noble, is deemed to beinherent in any law, it is not known as to how under Section 14 ofthe SARFAESI Act a Chief Judicial Magistrate can pass anadministrative order to assist the bank or financial institutiondirecting the police to remove the occupant by using force, withouteven knowing as to whether the person in occupation is a borrower orany other person like tenant, for even a trespasser cannot be evictedwithout giving him an opportunity. Such forceful eviction from aresidential property is totally against Article 300-A of theConstitution of India, which though is not a fundamental right,remains a constitutional right based on human rights and rule of law.9.18. He would also rely upon the judgment in SiddharamSatlingappa Mhetre v. State of Maharashtra, (2011) 1 SCC 694 tosubmit that right to property which has been guaranteed under Article300-A of the Constitution of India in respect of tenants and otheroccupiers must be read with Article 21 of the Constitution of Indiaas a right to life. To bolster the said contention, he also relied onthe decision in Dev Sharan v. State of Uttar Pradesh, (2011) 4 SCC https://hcservices.ecourts.gov.in/hcservices/

769.9.19. The learned counsel has also elaborately taken us throughvarious other judgments, including some of the judgments of theAmerican Supreme Court, to insist that there is no impediment on thepart of this Court in holding Section 14 of the SARFAESI Act asunconstitutional.10.1. Per contra, it is the contention of Mr.Omprakash ofM/s.Ramalingam Associates, learned counsel appearing for the secondrespondent/bank that the power of the Chief Metropolitan Magistrateor District Magistrate conferred under Section 14 of the SARFAESI Actis purely executive and administrative in nature and it does notrelate to the rights of any parties.10.2. It is submitted that when the SARFAESI Act has been upheldby the Supreme Court in Mardia Chemicals Ltd. case, supra, there isno scope for this Court to go into the correctitude of one of thesections. It is not as if the Supreme Court was oblivious of theprovisions of Section 14 of the SARFAESI Act and, in fact, there hasbeen a reference and the Supreme Court has consciously made anobservation that there are certain sections which are monstrous, butnevertheless taking into consideration the object of the SARFAESI Actsuch difficulties are to be condoned. 10.3. It is his submission that Section 14 of the SARFAESI Actcannot be read independently and it is in continuation of the noticesand various steps taken by the bank, namely (i) classifying the debtas a non performing asset due to the consistent failure on the partof the borrower in payment after following certain procedure inaccordance with the Reserve Bank of India Guidelines; (ii) givingdemand notice under Section 13(2) of the SARFAESI Act giving sixtydays time so as to enable the borrower to make payment and also giverepresentation; and (iii) finally taking possession by way of anotice under Section 13(4) of the SARFAESI Act, and it is only incases where the bank itself is unable to take possession, itapproaches the Chief Metropolitan Magistrate or District Magistrateunder Section 14 of the SARFAESI Act for assistance to takepossession and, therefore, Section 14 of the SARFAESI Act hinges uponSection 13 of the SARFAESI Act and it cannot be read in isolation andmoreover, Section 14 of the SARFAESI Act also forms part of ChapterIII of the SARFAESI Act.10.4. He contends that under the SARFAESI Act there is nodichotomy between symbolic possession and physical possession.10.5. He would compare the power of the Chief Judicial Magistrateunder Section 14 of the SARFAESI Act to that of the power under https://hcservices.ecourts.gov.in/hcservices/ Section 29 of the State Financial Corporations Act, 1951. It is hissubmission that it is not as if the power under Section 14 of theSARFAESI Act is revealed to the occupant for the first time when thebank or financial institution try to take possession. While it istrue that notice under Section 13(2) of the SARFAESI Act need not begiven to an occupier other than the borrower, because it is only ademand based on a contractual obligation between the bank and theborrower, when once the bank resorts to possession notice underSection 13(4) of the SARFAESI Act, which is mandatory before movingthe Chief Judicial Magistrate under Section 14 of the SARFAESI Act,the Security Interest (Enforcement) Rules, 2002, especially Rule 8 ofthe Rules, contemplates affixture of such possession notice on thedoors of the property and, therefore, the occupier or tenant or ownercannot plead that unbeknownst to him suddenly an order is obtainedunder Section 14 of the SARFAESI Act.10.6. It is his submission that by dint of Section 35 of theSARFAESI Act which gives overriding effect based on the basic objectof the SARFAESI Act, a tenant cannot claim any superior right thanthat of the borrower.10.7. It is his submission that even as against the order underSection 14 of the SARFAESI Act an effective alternative remedy isavailable under Section 17 of the SARFAESI Act by way of an appeal tothe Debts Recovery Tribunal. He would submit that the judgment ofthe Supreme Court in Maneka Gandhi v. Union of India, AIR 1978 SC597 is applicable only in respect of punitive action.10.8. He would rely upon the decisions in Forward ConstructionCo. v. Prabhat Mandal (Regd.), (1986) 1 SCC 100 and S. Nagaraj v.B.R. Vasudeva Murthy, (2010) 3 SCC 353 to contend that by virtue ofthe judgment of the Supreme Court in upholding the validity of theSARFAESI Act, the principle of constructive res judicata isapplicable against the petitioner.10.9. He would insist that the steps taken under Section 14 ofthe SARFAESI Act are only a measure to enable the secured creditor toenforce his right of possession under Section 13(4) of the SARFAESIAct and, therefore, it is not an order. As long as possession noticeunder Section 13(4) of the SARFAESI Act cannot be challenged by thepetitioner, the petitioner is obviated from challenging the vires ofSection 14 of the SARFAESI Act. He would also refer to some of thepassages of the judgment of the Supreme Court in United Bank ofIndia v. Satyawati Tondon, (2010) 8 SCC 110. He would also submitthat in the latest judgment of the Supreme Court in KanaiyalalLalchand Sachdev v. State of Maharashtra, (2011) 2 SCC 782, theSupreme Court has clearly held that even against the order underSection 14 of the SARFAESI Act there is an effective appeal and,therefore, it can never be said that the order passed under Section https://hcservices.ecourts.gov.in/hcservices/ 14 of the SARFAESI Act is final.11. Mr.M.S.Krishnan, learned Senior Counsel even though appearsfor the 1st respondent/bank in W.P.Nos.30184 of 2011 and 104 and 105of 2012, which are relating to the validity of the orders passed bythe Chief Judicial Magistrates under Section 14 of the SARFAESI Act,has also made submissions in support of the validity of Section 14 ofthe SARFAESI Act, apart from supporting the individual orders passedby the Chief Judicial Magistrates concerned under Section 14 of theSARFAESI Act. Mr.Ramesh, learned Central Government StandingCounsel appearing for the Union of India adopted the argumentsadvanced by Mr.Om Prakash, learned counsel for the secondrespondent/bank.12. We have heard the respective counsel and given our anxiousthought to the issue involved in the above said writ petitionchallenging the vires of Section 14 of the SARFAESI Act.13. Before adverting to the rival contentions, since thepetitioner has chosen to challenge the validity of Section 14 of theSARFAESI Act, it is necessary to extract the said provision of theSARFAESI Act which is as follows:"Section 14. Chief Metropolitan Magistrate orDistrict Magistrate to assist secured creditor intaking possession of secured asset .- (1) Where the possession of any secured asset isrequired to be taken by the secured creditor orif any of the secured asset is required to besold or transferred by the secured creditor underthe provisions of this Act, the secured creditor may,for the purpose of taking possession or control of anysuch secured asset, request, in writing, the ChiefMetropolitan Magistrate or the District Magistratewithin whose jurisdiction any such secured asset orother documents relating thereto may be situated orfound, to take possession thereof, and the ChiefMetropolitan Magistrate or, as the case may be,the District Magistrate shall, on such requestbeing made to him- (a) take possession of such asset and documentsrelating thereto; and (b) forward such asset and documents to thesecured creditor. (2) For the purpose of securing compliance withthe provisions of sub-section (1), the ChiefMetropolitan Magistrate or the District Magistrate maytake or cause to be taken such steps and use, or cause https://hcservices.ecourts.gov.in/hcservices/ to be used, such force, as may, in his opinion, benecessary. (3) No act of the Chief Metropolitan Magistrateor the District Magistrate done in pursuance ofthis section shall be called in question in any court orbefore any authority." 14. The SARFAESI Act has been enacted with an object ofregulating securitisation and reconstruction of financial assets andenforcement of security interest empowering banks and financialinstitutions to take possession of the securities and to sell themwithout the intervention of the Court. The SARFAESI Act, as it stoodoriginally in the year 2002, enacted by replacing the Securitisationand Reconstruction of Financial Assets and Enforcement of SecurityInterest Ordinance, 2002 provides for legal provisions forfacilitating securitisation of financial assets of the banks andfinancial institutions. In fact, the Law-makers having realised thatthe then existing methods for recovery as provided under the Recoveryof Debts Due to Banks and Financial Institutions Act, 1993 (Act 51 of1993) have not provided for such method of recovery without resortingto court proceedings, has enacted the SARFAESI Act in addition to thesaid Act 51 of 1993 stated above, even though the SARFAESI Act hasbeen given an overriding effect. 15. While Section 35 of the SARFAESI Act, which is as follows:"Section 35. The provisions of this Act to overrideother laws.- The provisions of this Act shallhave effect, notwithstanding anything inconsistenttherewith contained in any other law for the time beingin force or any instrument having effect by virtue ofany such law.", gives overriding effect to the SARFAESI Act notwithstanding anythinginconsistent contained in any other law, under Section 37 of theSARFAESI Act, which is as follows:"Section 37. Application of other laws not barred.- Theprovisions of this Act or the rules made thereundershall be in addition to, and not in derogation of, theCompanies Act, 1956 (1 of 1956), the SecuritiesContracts (Regulation) Act, 1956 (42 of 1956), theSecurities and Exchange Board of India Act, 1992 (15of 1992), the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993 (51 of 1993) or anyother law for the time being in force.", among many other Acts, the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993 (Act 51 of 1993) or any other lawfor the time being in force is made applicable in addition to theSARFAESI Act. https://hcservices.ecourts.gov.in/hcservices/

16. When the vires of the SARFAESI Act was challenged, theSupreme Court in Mardia Chemicals Ltd. v. Union of India, (2004) 4SCC 311 has upheld the validity of the SARFAESI Act, except Section17(2) of the SARFAESI Act which required depositing of 75% of theamount claimed before entertaining an appeal under Section 17 of theSARFAESI Act, and the operative portion of the said decision is asfollows:"82. We, therefore, subject to what is provided in para80 above, uphold the validity of the Act and itsprovisions except that of sub-section (2) of Section 17of the Act, which is declared ultra vires Article 14 ofthe Constitution of India."It is no doubt true that in the said case the main questions thatarose for consideration before the Supreme Court, as framed by theSupreme Court, are as follows:"(i) Whether it is open to challenge the statute on theground that it was not necessary to enact it in theprevailing background particularly when another statutewas already in operation?(ii) Whether provisions as contained under Sections 13and 17 of the Act provide adequate and efficaciousmechanism to consider and decide the objections/disputesraised by a borrower against the recovery, particularlyin view of bar to approach the civil court under Section34 of the Act?(iii) Whether the remedy available under Section 17 ofthe Act is illusory for the reason it is available onlyafter the action is taken under Section 13(4) of the Actand the appeal would be entertainable only on deposit of75% of the claim raised in the notice of demand?(iv) Whether the terms or existing rights under thecontract entered into by two private parties could beamended by the provisions of law providing certainpowers in a one-sided manner in favour of one of theparties to the contract?(v) Whether provision for sale of the properties withoutintervention of the court under Section 13 of the Act isakin to the English mortgage and its effect on the scopeof the bar of the jurisdiction of the civil court?(vi) Whether the provisions under Sections 13 and 17(2)of the Act are unconstitutional on the basis of theparameters laid down in different decisions of thisCourt?(vii) Whether the principle of lender's liability hasbeen absolutely ignored while enacting the Act and itseffect?"Therefore, it is true that the validity or otherwise of Section 14 ofthe SARFAESI Act was not specifically the subject matter ofconsideration, even though the entire SARFAESI Act was challenged. https://hcservices.ecourts.gov.in/hcservices/ The Supreme Court while holding that the SARFAESI Act is intra viresexcept Section 17(2), as stated above, has clarified that whiledeciding about classification of an account as a non performingasset, any disputes regarding the same should be resolved by internalmechanism, suggesting certain safeguards for the borrowers beforemaking such classification. It was also held that as against themeasure of taking possession by issuing notice under Section 13(4) ofthe SARFAESI Act, the affected person has a right of appeal underSection 17 of the SARFAESI Act to the Debts Recovery Tribunal. 17. Ergo, it is clear that while the bank or financialinstitution resorts to take possession and enforce the security bysale, it has to first classify the account of the borrower as a nonperforming asset depending upon various internal mechanism, includingthe resolution of dispute as contemplated under Section 11 of theSARFAESI Act either by conciliation or arbitration, as provided underthe Arbitration and Conciliation Act, 1996, apart from the directionsof the Reserve Bank of India which is empowered under Section 12 ofthe SARFAESI Act to determine policy and issue directions.18. The SARFAESI Act also provides for assets reconstruction byconstituting securitisation company and reconstruction companyregistered under the Companies Act. The word "securitisation", asdefined under Section 2(z) of the SARFAESI Act, is as follows:"Section 2(z) "securitisation" means acquisition offinancial assets by any securitisation company orreconstruction company from any originator, whetherby raising of funds by such securitisationcompany or reconstruction company from qualifiedinstitutional buyers by issue of security receiptsrepresenting undivided interest in such financial assetsor otherwise"and the word "originator" used in the definition of securitisationmeans the owner of a financial asset which is acquired by asecuritisation company and Section 2(r) of the SARFAESI Act, whichdefines the word "originator", is as follows:"Section 2(r) "originator" means the owner of afinancial asset which is acquired by asecuritisation company or reconstruction companyfor the purpose of securitisation or assetreconstruction"19. The securitisation company or reconstruction company is toact as an agent for any bank or financial institution for makingrecovery of dues from the borrower on payment of charges or fees asmutually agreed upon to act as a manager for the purpose of effectingpossession under Section 13(4)(c) of the SARFAESI Act or to act as areceiver appointed by any Court or Tribunal as contemplated underSection 10 of the SARFAESI Act. https://hcservices.ecourts.gov.in/hcservices/

20. Sections 13 to 19 of the SARFAESI Act, which are in ChapterIII, relate to the enforcement of security interest by the bank orfinancial institution. Section 13(1) of the SARFAESI Act clearlyshows that the power conferred under the said provision isnotwithstanding the powers under Section 69 or 69-A of the Transferof Property Act, 1882. Therefore, when the bank or financialinstitution resorts to proceed to enforce the security interestagainst the borrower, the first step taken by the bank afterclassifying the due as a non performing asset is requiring theborrower by a notice in writing to discharge in full his liabilitiesby giving sixty days time from the date of issuance of notice,stating that in case of default the bank is entitled to take recourseto Section 13(4) of the SARFAESI Act. It is relevant to note thatunder Section 13(2) of the SARFAESI Act, which is as follows:"Section 13(2). Where any borrower, who is under aliability to a secured creditor under a securityagreement, makes any default in repayment of secureddebt or any instalment thereof, and his account inrespect of such debt is classified by the securedcreditor as non-performing asset, then, thesecured creditor may require the borrower by noticein writing to discharge in full his liabilities to thesecured creditor within sixty days from the date ofnotice failing which the secured creditor shall beentitled to exercise all or any of the rights under sub-section (4).",the obligation of the bank or financial institution to give suchnotice is to the "borrower".21. By virtue of an amendment which was inserted to the SARFAESIAct under Act 30 of 2004 with effect from 11.11.2004, a new sub-section was introduced as sub-section 3-A to Section 13 of the Act,which is as follows:"Section 13(3-A). If, on receipt of the noticeunder sub-section (2), the borrower makes anyrepresentation or raises any objection, the securedcreditor shall consider such representation or objectionand if the secured creditor comes to theconclusion that such representation or objectionis not acceptable or tenable, he shall communicatewithin one week of receipt of such representationor objection the reasons for non-acceptance of therepresentation or objection to the borrower: PROVIDED that the reasons so communicated or thelikely action of the secured creditor at the https://hcservices.ecourts.gov.in/hcservices/ stage of communication of reasons shall notconfer any right upon the borrower to prefer anapplication to the Debts Recovery Tribunal under section17 or the Court of District Judge under section 17-A.", which enables the borrower on receipt of notice under Section 13(2)of the SARFAESI Act to give his representation or objection, whichshall be considered by the bank and the decision of the bank as tothe acceptability or tenability of such representation or objectionshall be communicated to the borrower within one week of receipt ofsuch representation or objection. At the same time, the said newlyintroduced provision specifically states that as against suchdecision taken on the representation, no appeal shall be filed underSection 17 or Section 17-A of the SARFAESI Act.22. In case the borrower after receiving the notice under Section13(2) of the SARFAESI Act fails to make payment, or, as stated above,after the amendment if the bank or financial institution rejects therepresentation as not acceptable or tenable, by virtue of the powerunder Section 13(4) of the Act, which is as follows:"Section 13(4). In case the borrower fails to dischargehis liability in full within the period specified insub-section (2), the secured creditor may take recourseto one or more of the following measures to recover hissecured debt, namely:- (a) take possession of the secured assets of theborrower including the right to transfer by way oflease, assignment or sale for realising the securedasset; (b) take over the management of the business ofthe borrower including the right to transfer byway of lease, assignment or sale for realising thesecured asset: PROVIDED that the right to transfer by way oflease, assignment or sale shall be exercised onlywhere the substantial part of the business of theborrower is held as security for the debt: PROVIDED FURTHER that where the management ofwhole of the business or part of the business isseverable, the secured creditor shall take over themanagement of such business of the borrower which isrelatable to the security for 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; https://hcservices.ecourts.gov.in/hcservices/ (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 ormay become due to the borrower, to pay the securedcreditor, so much of the money as is sufficient to paythe secured debt.", the bank or financial institution can resort to the measures torecover the secured debt either by taking possession of the securedassets of the borrower or by taking over the management of thebusiness of the borrower, in which case the bank is entitled toappoint a manager, as stated therein, and in cases where the securedasset is an immovable property, the possession notice has to beaffixed on the outer door or at a conspicuous place of the propertyas per Rule 8(1) of the Security Interest (Enforcement) Rules, 2002,which is as follows: "Rule 8. Sale of immovable secured assets. (1) Where the secured asset is an immovable property,the authorised officer shall take or cause to betaken possession, by delivering a possessionnotice prepared as nearly as possible in Appendix-IV tothese rules, to the borrower and by affixing thepossession notice on the outer door or at suchconspicuous place of the property." 23. There are various other sub-sections under Section 13 of theSARFAESI Act from Section 13(5) to Section 13(13) which are in effectto facilitate the taking of possession under Section 13(4) of theAct, which includes that when a transfer is made by virtue of thepower under Section 13(4) of the SARFAESI Act by the securedcreditor, the entire right shall vest with the transferee in respectof the secured asset. It also states under Section 13(13) of theSARFAESI Act that after the borrower receives a notice under Section13(2) of the SARFAESI Act, no transfer or sale, etc. shall beeffected without the prior written consent of the secured creditor.It is as against the measure taken under Section 13(4) of theSARFAESI Act, as stated above, the Supreme Court has held in MardiaChemicals Ltd. case, supra, that an appeal lies to the Debts RecoveryTribunal under Section 17 of the Act.24. Section 31 of the SARFAESI Act specifically excludes certaincases from the application of the SARFAESI Act, which are in effectrestrictions imposed on the powers of the bank or financialinstitution in enforcing the security interest.25. After taking possession under Section 13(4) of the SARFAESIAct, as stated above, if the bank is able to successfully takepossession itself without any hindrance or obstruction, it is notnecessary for the bank or financial institution to invoke Section 14 https://hcservices.ecourts.gov.in/hcservices/ of the SARFAESI Act and straightaway it can proceed with the sale ofthe secured assets. But in cases where taking possession of thesecured assets by the secured creditor requires certain assistance,the secured creditor is entitled to apply by way of a request inwriting to the Chief Metropolitan Magistrate or District Magistrate,who, by passing an order, is entitled to assist the secured creditorin taking possession of the secured assets. Therefore, while readingSection 14(1) of the Act, extracted above, there is no difficulty toconclude that the power of the bank or financial institution toresort to the said provision is only in continuation and after takingpossession as per the process enumerated under Section 13(4) of theSARFAESI Act. Ergo, it cannot be said that straightaway the securedcreditor can approach the Chief Metropolitan Magistrate or DistrictMagistrate under Section 14 of the SARFAESI Act. 26. A reading of Section 14 of the SARFAESI Act also makes itvery clear that even though such assistance can be rendered by theChief Metropolitan Magistrate or District Magistrate, such assistanceis only by way of an order. Therefore, it is clear that beforepassing any order of assistance, the Chief Metropolitan Magistrate orDistrict Magistrate has to be satisfied as to whether the bank hasfollowed the provisions of the SARFAESI Act, namely the sequence ofclassifying the asset as non performing asset; issuing notice underSection 13(2) of the SARFAESI Act giving the required time to theborrower; and thereafter issuing a notice of possession under Section13(4) of the SARFAESI Act. If the Chief Metropolitan Magistrate orDistrict Magistrate is not satisfied as to the following of theprocedure, certainly the Chief Metropolitan Magistrate or DistrictMagistrate can reject such request, in which event, it will be forthe secured creditor to follow the procedure as contemplated underthe SARFAESI Act. In cases where the Chief Metropolitan Magistrateor District Magistrate is satisfied about the procedure having beenfollowed by the secured creditor, but is of the view that certainmore steps are to be taken for the purpose of taking possession byusing force, the Chief Metropolitan Magistrate or District Magistratepasses further order directing the police authorities to usenecessary force. As Section 14 of the SARFAESI Act, on the face ofit, does not contemplate notice to any person before passing suchorder of assistance, it is naturally left to the discretion of theChief Metropolitan Magistrate or District Magistrate to decide thenature of force to be used. Moreover, it is also clear that Section14 of the SARFAESI Act is not independent and it hinges upon themeasures taken by the secured creditor under Section 13(4) of theSARFAESI Act. It is true that no guidelines are contemplated tothe Chief Metropolitan Magistrate or District Magistrate as to thenature of force to be used in his opinion.27. In the judgment in Mardia Chemicals Ltd. case, supra, the https://hcservices.ecourts.gov.in/hcservices/ Supreme Court has taken note of the fact that the measurescontemplated under the SARFAESI Act are no doubt stringent and heldthat it is the duty of the secured creditor to consider therepresentation of the borrower. The Supreme Court was also cognizantof the fact that regarding the workable nature of some of theprovisions of the SARFAESI Act there may be doubts, but neverthelessheld that such difficulties are insufficient to hold the statuteinvalid or unconstitutional and observed that in any particularfactual situation, if any difficulty arises, the same may beconsidered. It is relevant to extract paragraphs 77 to 82 of thesaid judgment, which are as follows:"77. It is also true that till the stage of making ofthe demand and notice under Section 13(2) of the Act, nohearing can be claimed for by the borrower. But lookingto the stringent nature of measures to be taken withoutintervention of court with a bar to approach the courtor any other forum at that stage, it becomes onlyreasonable that the secured creditor must bear in mindthe say of the borrower before such a process ofrecovery is initiated so as to demonstrate that thereply of the borrower to the notice under Section 13(2)of the Act has been considered applying mind to it. Thereasons, howsoever brief they may be, for not acceptingthe objections, if raised in the reply, must becommunicated to the borrower. True, presumption is infavour of validity of an enactment and a legislation maynot be declared unconstitutional lightly more so, in thematters relating to fiscal and economic policiesresorted to in the public interest, but while resortingto such legislation it would be necessary to see thatthe persons aggrieved get a fair deal at the hands ofthose who have been vested with the powers to enforcedrastic steps to make recovery.78. It was sought to be argued that fairness cannot be aone-way street. The plea of absence of natural justicelies ill in the mouth of chronic defaulters who have notpaid the principal amounts admittedly due to the banks.The said argument presupposes admission of the liabilityby the borrowers and all of them to be chronicdefaulters. It would only be prejudging an issue. Wehope it was not meant to be said that all those whodefaulted according to the banks and financialinstitutions must be condemned unheard who might notdeserve any hearing to place their side of the case,unless they must go through the crushing preconditionsof deposit of 75% of the amount demanded over and abovetheir secured assets already having been taken https://hcservices.ecourts.gov.in/hcservices/ possession of. We feel this can well be one example ofhitting below the belt.79. Some submissions have been made pointing out that incertain circumstances it would not be clear as to inwhat manner the provisions of the Act would be workable.We feel the objections pointed out are not such whichrender the statute invalid or unconstitutional. Suchproblems about working of any particular provision ofthe Act in any particular factual situation, may beconsidered as and when they may arise. We, therefore, donot think it necessary to go into those questions.80. Under the Act in consideration, we find that beforetaking action a notice of 60 days is required to begiven and after the measures under Section 13(4) of theAct have been taken, a mechanism has been provided underSection 17 of the Act to approach the Debts RecoveryTribunal. The abovenoted provisions are for the purposeof giving some reasonable protection to the borrower.Viewing the matter in the above perspective, we findwhat emerges from different provisions of the Act, is asfollows:1. Under sub-section (2) of Section 13 it isincumbent upon the secured creditor to serve 60days' notice before proceeding to take any of themeasures as provided under sub-section (4) ofSection 13 of the Act. After service of notice,if the borrower raises any objection or placesfacts for consideration of the secured creditor,such reply to the notice must be considered withdue application of mind and the reasons for notaccepting the objections, howsoever brief theymay be, must be communicated to the borrower. Inconnection with this conclusion we have alreadyheld a discussion in the earlier part of thejudgment. The reasons so communicated shall onlybe for the purposes of the information/knowledgeof the borrower without giving rise to any rightto approach the Debts Recovery Tribunal underSection 17 of the Act, at that stage.2. As already discussed earlier, on measureshaving been taken under sub-section (4) ofSection 13 and before the date of sale/auction ofthe property it would be open for the borrower tofile an appeal (petition) under Section 17 of theAct before the Debts Recovery Tribunal.3. That the Tribunal in exercise of its ancillary https://hcservices.ecourts.gov.in/hcservices/ powers shall have jurisdiction to pass anystay/interim order subject to the condition as itmay deem fit and proper to impose.4. In view of the discussion already held in thisbehalf, we find that the requirement of depositof 75% of the amount claimed before entertainingan appeal (petition) under Section 17 of the Actis an oppressive, onerous and arbitrary conditionagainst all the canons of reasonableness. Such acondition is invalid and it is liable to bestruck down.5. As discussed earlier in this judgment, we findthat it will be open to maintain a civil suit incivil court, within the narrow scope and on thelimited grounds on which they are permissible, inthe matters relating to an English mortgageenforceable without intervention of the court.81. In view of the discussion held in the judgment andthe findings and directions contained in the precedingparagraphs, we hold that the borrowers would get areasonably fair deal and opportunity to get the matteradjudicated upon before the Debts Recovery Tribunal. Theeffect of some of the provisions may be a bit harsh forsome of the borrowers but on that ground the impugnedprovisions of the Act cannot be said to beunconstitutional in view of the fact that the object ofthe Act is to achieve speedier recovery of the duesdeclared as NPAs and better availability of capitalliquidity and resources to help in growth of the economyof the country and welfare of the people in generalwhich would subserve the public interest.82. We, therefore, subject to what is provided in para80 above, uphold the validity of the Act and itsprovisions except that of sub-section (2) of Section 17of the Act, which is declared ultra vires Article 14 ofthe Constitution of India."In such circumstances, the contention made by Mr.R.Singgaravelan,learned counsel for the petitioner that the Supreme Court has notspecifically considered the validity of Section 14 of the SARFAESIAct and, therefore, there is no bar for this Court to consider thesame, in our considered opinion, is not tenable.28. By authorizing a judicial authority in the rank of the ChiefMetropolitan Magistrate or District Magistrate to do theadministrative work of providing assistance to the secured creditor,it appears to be not necessary to consider the claim or case of a https://hcservices.ecourts.gov.in/hcservices/ party likely to be affected by applying the principles of naturaljustice, which certainly is monstrous, especially in the light of thejudgment of the Supreme Court in Maneka Gandhi v. Union of India, AIR1978 SC 597, wherein the Supreme Court has held that even in caseswhere the statute does not explicitly provide for the following ofthe principles of natural justice, following the same is implied, inthe following terms:"32. It is well established that even where there is nospecific provision in a statute or rules made thereunderfor showing cause against action proposed to be takenagainst an individual, which affects the rights of thatindividual, the duty to give reasonable opportunity tobe heard will be implied from the nature of the functionto be performed by the authority which has the power totake punitive or damaging action. This principle waslaid down by this Court in the State of Orissa v. Dr(Miss) Binapani Dei (AIR 1967 SC 1269) in the followingwords:“The rule that a party to whose prejudice anorder is intended to be passed is entitled to ahearing applies alike to judicial tribunals andbodies of persons invested with authority toadjudicate upon matters involving civilconsequences. It is one of the fundamental rulesof our constitutional set-up that every citizenis protected against exercise of arbitraryauthority by the State or its officers. Duty toact judicially would, therefore arise from thevery nature of the function intended to beperformed: it need not be shown to be super-added. If there is power to decide and determineto the prejudice of a person, duty to actjudicially is implicit in the exercise of suchpower. If the essentials of justice be ignoredand an order to the prejudice of a person ismade, the order is a nullity. That is a basicconcept of the rule of law and importance thereoftranscends the significance of a decision in anyparticular case.”In the said judgment, the principle of arbitrariness was held to besworn enemy to the concept of equality enshrined under Article 14 ofthe Constitution of India, apart from the principles of naturaljustice, in the following paragraphs:"56. Now, the question immediately arises as to what isthe requirement of Article 14 : what is the content andreach of the great equalising principle enunciated inthis article? There can be no doubt that it is afounding faith of the Constitution. It is indeed the https://hcservices.ecourts.gov.in/hcservices/ pillar on which rests securely the foundation of ourdemocratic republic. And, therefore, it must not besubjected to a narrow, pedantic or lexicographicapproach. No attempt should be made to truncate its all-embracing scope and meaning, for to do so would be toviolate its activist magnitude. Equality is a dynamicconcept with many aspects and dimensions and it cannotbe imprisoned within traditional and doctrinaire limits.We must reiterate here what was pointed out by themajority in E.P. Royappa v. State of Tamil Nadu (AIR1974 SC 555) namely, that “from a positivistic point ofview, equality is antithetic to arbitrariness. In factequality and arbitrariness are sworn enemies; onebelongs to the rule of law in a republic, while theother, to the whim and caprice of an absolute monarch.Where an act is arbitrary, it is implicit in it that itis unequal both according to political logic andconstitutional law and is therefore violative of Article14”. Article 14 strikes at arbitrariness in State actionand ensures fairness and equality of treatment. Theprinciple of reasonableness, which legally as well asphilosophically, is an essential element of equality ornon-arbitrariness pervades Article 14 like a broodingomnipresence and the procedure contemplated by Article21 must answer the test of reasonableness in order to bein conformity with Article 14. It must be “right andjust and fair” and not arbitrary, fanciful oroppressive; otherwise, it would be no procedure at alland the requirement of Article 21 would not be satisfied.How far natural justice is an essential element ofprocedure established by law....58. We may commence the discussion of this question witha few general observations to emphasise the increasingimportance of natural justice in the field ofadministrative law. Natural justice is a greathumanising principle intended to invest law withfairness and to secure justice and over the years it hasgrown into a widely pervasive rule affecting large areasof administrative action. Lord Morris of Borth-y-Gestspoke of this rule in eloquent terms in his addressbefore the Bentham Club:“We can, I think, take pride in what has been done inrecent periods and particularly in the field ofadministrative law by invoking and by applying theseprinciples which we broadly classify under thedesignation of natural justice. Many testing problems as https://hcservices.ecourts.gov.in/hcservices/ to their application yet re-remain to be solved. But Iaffirm that the area of administrative action is but onearea in which the principles are to be deployed. Nor arethey to be invoked only when procedural failures areshown. Does natural justice qualify to be described as a‘majestic’ conception? I believe it does. Is it just arhetorical but vague phrase which can be employed, whenneeded, to give a gloss of assurance? I believe that itis very much more. If it can be summarised as beingfair-play in action — who could wish that it would everbe out of action? It denotes that the law is not only tobe guided by reason and by logic but that its purposewill not be fulfilled; it lacks more exaltedinspiration. (Current Legal Problems, 1973 Vol.26 p.16).”And then again, in his speech in the House of Lords inWiseman v. Borneman, 1971 AC 297 the learned Law Lordsaid in words of inspired felicity:“... that the conception of natural justice should atall stages guide those who discharge judicial functionsis not merely an acceptable but is an essential part ofthe philosophy of the law. We often speak of the rulesof natural justice. But there is nothing rigid ormechanical about them. What they comprehend has beenanalysed and described in many authorities. But anyanalysis must bring into relief rather their spirit andtheir inspiration than any precision of definition orprecision as to application. We do not search forprescriptions which will lay down exactly what must, invarious divergent situations, be done. The principlesand procedures are to be applied which, in anyparticular situation or set of circumstances, are rightand just and fair. Natural justice, it has been said, isonly ‘fair play in action’. Nor do we wait fordirections from Parliament. The common law has abundantriches : there may we find what Byles, J., called ‘thejustice of the common law’ ”.Thus, the soul of natural justice is “fair-play inaction” and that is why it has received the widestrecognition throughout the democratic world. In theUnited States, the right to an administrative hearing isregarded as essential requirement of fundamentalfairness. And in England too it has been held that“fair-play in action” demands that before anyprejudicial or adverse action is taken against a person,he must be given an opportunity to be heard. The rulewas stated by Lord Denning, MR in these terms in Schmidtv. Secretary of State or Home Affairs (1969) 2 Ch.D. 149 https://hcservices.ecourts.gov.in/hcservices/ — “where a public officer has power to deprive a personof his liberty or his property, the general principle isthat it has not to be done without his being given anopportunity of being heard and of making representationson his own behalf”. The same rule also prevails in otherCommonwealth countries like Canada, Australia and NewZealand. It has even gained access to the United Nations(vide American Journal of International Law, Vol. 67, p.479). Magarry, J., describes natural justice “as adistillate of due process of law” (vide Fontaine v.Chastarton (1968) 112 Sol Gen 690. It is thequintessence of the process of justice inspired andguided by “fair-play in action”. If we look at thespeeches of the various Law Lords in Wiseman case itwill be seen that each one of them asked the question“whether in the particular circumstances of the case,the Tribunal acted unfairly so that it could be saidthat their procedure did not match with what justicedemanded”, or, was the procedure adopted by the Tribunal“in all the circumstances unfair?” The test adopted byevery Law Lord was whether the procedure followed wasfair in all the circumstances and “fair-play in action”required that an opportunity should be given to thetaxpayer “to see and reply to the counter-statement ofthe Commissioners” before reaching the conclusion that“there is a prima facie case against him”. The inquirymust, therefore, always be: does fairness in actiondemand that an opportunity to be heard should be givento the person affected?"The Supreme Court has also held that in applying the principles ofnatural justice there is no distinction between a quasi judicialfunction and administrative function in the following words:"59. Now, if this be the test of applicability of thedoctrine of natural justice, there can be no distinctionbetween a quasi-judicial function and an administrativefunction for this purpose. The aim of bothadministrative inquiry as well as quasi-judicial inquiryis to arrive at a just decision and if a rule of naturaljustice is calculated to secure justice, or to put itnegatively, to prevent miscarriage of justice, it isdifficult to see why it should be applicable to quasi-judicial inquiry and not to administrative inquiry."29. The said view has been reiterated by the Supreme Court in itslatest judgment in A.P.Dairy Development Corporation Federation v.B.Narasimha Reddy, (2011) 9 SCC 286, wherein it was held as under:"29. It is a settled legal proposition that Article 14of the Constitution strikes at arbitrariness because anaction that is arbitrary, must necessarily involve https://hcservices.ecourts.gov.in/hcservices/ negation of equality. This doctrine of arbitrariness isnot restricted only to executive actions, but alsoapplies to the legislature. Thus, a party has to satisfythat the action was reasonable, not done in unreasonablemanner or capriciously or at pleasure without adequatedetermining principle, rational, and has been doneaccording to reason or judgment, and certainly does notdepend on the will alone. However, the action of thelegislature, violative of Article 14 of theConstitution, should ordinarily be manifestly arbitrary.There must be a case of substantive unreasonableness inthe statute itself for declaring the act ultra viresArticle 14 of the Constitution. [Vide Ajay Hasia v.Khalid Mujib Sehravardi, (1981) 1 SCC 722, RelianceAirport Developers (P) Ltd. v. Airports Authority ofIndia, (2006) 10 SCC 1, Bidhannagar (Salt Lake) WelfareAssn. v. Central Valuation Board, (2007) 6 SCC 668,Grand Kakatiya Sheraton Hotel and Towers Employees andWorkers Union v. Srinivasa Resorts Ltd., (2009) 5 SCC342 and State of T.N. v. K. Shyam Sunder, (2011) 8 SCC737.]30. In State of A.P. v. P.Sagar, AIR 1968 SC 1379, thisCourt examined the case as to whether the list ofbackward classes, for the purpose of Article 15(4) ofthe Constitution has been prepared properly, and afterexamining the material on record came to the conclusionthat there was nothing on record to show that theGovernment had followed the criteria laid down by thisCourt while preparing the list of Other BackwardClasses. The Court observed as under: (AIR p.1384-85,para 9)“9. … Honesty of purpose of those who preparedand published the list was not and is notchallenged, but the validity of a law whichapparently infringes the fundamental rights ofcitizens cannot be upheld merely because thelawmaker was satisfied that what he did was rightor that he believes that he acted in mannerconsistent with the constitutional guarantees ofthe citizen. The test of the validity of a lawalleged to infringe the fundamental rights of acitizen or any act done in execution of that lawlies not in the belief of the maker of the law orof the person executing the law, but in thedemonstration by evidence and argument before thecourts that the guaranteed right is not https://hcservices.ecourts.gov.in/hcservices/ infringed.”31. In Indra Sawhney (2) v. Union of India, (2000) 1 SCC168, while considering a similar issue regardingpreparing a list of creamy layer OBCs, this Court heldthat legislative declarations on facts are not beyondjudicial scrutiny in the constitutional context ofArticles 14 and 16 of the Constitution, for the reasonthat a conclusive declaration could not be permissibleso as to defeat a fundamental right."30. A Constitution Bench of the Supreme Court presided over bythe Hon'ble Chief Justice of India in K.T. Plantation (P) Ltd. v.State of Karnataka, (2011) 9 SCC 1 has analyzed the entire concept ofRule of Law in the context of the constitutional provisions,especially with reference to Articles 14 and 19(1)(g) of theConstitution of India. While holding that the principle of rule oflaw is the basic structure, it was asserted that violation ofprinciples of natural justice may debilitate the rule of law, in thefollowing words:"217. The rule of law as a principle contains noexplicit substantive component like eminent domain buthas many shades and colours. Violation of principle ofnatural justice may undermine the rule of law resultingin arbitrariness, unreasonableness, etc., but suchviolations may not undermine the rule of law so as toinvalidate a statute. Violation must be of such aserious nature which undermines the very basic structureof our Constitution and our democratic principles. Butonce the court finds, a statute undermines the rule oflaw which has the status of a constitutional principlelike the basic structure, the above grounds are alsoavailable and not vice versa. Any law which, in theopinion of the court, is not just, fair and reasonable,is not a ground to strike down a statute because such anapproach would always be subjective, not the will of thepeople, because there is always a presumption ofconstitutionality for a statute."In fact, in the said judgment, the Supreme Court declared loudly tothe world about the existence of rule of law in this country asfollows:"219. One of the fundamental principles of a democraticsociety inherent in all the provisions of theConstitution is that any interference with the peaceful https://hcservices.ecourts.gov.in/hcservices/ enjoyment of possession should be lawful. Let themessage, therefore, be loud and clear, that the rule oflaw exists in this country even when we interpret astatute, which has the blessings of Article 300-A." 31. It is no doubt true that by applying the above saidcelebrated concept, which has been throughout well established byjudicial precedents in this country, the consequences of an orderpassed by the Chief Metropolitan Magistrate or District Magistrateunder Section 14 of the SARFAESI Act, especially relating to theforce to be used for the purpose of taking possession under Section14(2) of the SARFAESI Act without giving opportunity to the personwho is in occupation, is ostensibly draconian. But, in the light ofthe decision of the Supreme Court in Mardia Chemicals Ltd. case,supra, upholding the validity of the SARFAESI Act, in our view, it isnot for this Court to reexamine one of the provisions of the SARFAESIAct. Needless to state that it is for the Supreme Court inappropriate case to decide about the said situation or for the law-makers to take appropriate action. 32. The above said observation had to be made in the context ofsome of the events like cases where the possession of the securedasset is in the hands of a bona fide tenant, who was inducted by theborrower long before either the borrowal of the amount by thelandlord or any action taken by the bank under the provisions of theSARFAESI Act. In such unfortunate event, since the tenant inoccupation is not entitled to know about the classification of thedues as non performing asset, or a notice under Section 13(2) of theAct, apart from possession notice under Section 13(4) of the Act,certainly he may be in the dark about the entire event, except forthe first time when the secured creditor approaches the tenant inoccupation with the help of an order passed by Chief MetropolitanMagistrate or District Magistrate under Section 14(2) of the SARFAESIAct to use force to throw him away. 33. Even if an appeal can be filed by such a tenant to the DebtsRecovery Tribunal under Section 17 of the SARFAESI Act, which usesthe words "any person", the jurisdiction of the Debts RecoveryTribunal is restricted to find out as to whether the provisions ofthe SARFAESI Act have been followed scrupulously or not and there isno provision for the Debts Recovery Tribunal to decide as to whetherthe occupant, being a bona fide tenant, is liable to be removed fromthe place for the purpose of securing the secured asset by thesecured creditor. Even assuming such power is available to the DebtsRecovery Tribunal to put such tenant back to possession, the factremains that damage has been done to an innocent person with the aid https://hcservices.ecourts.gov.in/hcservices/ of law unbeknownst to him. It is equally true that there may beunscrupulous landlords/borrowers who have inducted any person as atenant by creating unregistered lease deeds. There is alsopossibility for certain unscrupulous landlords to take advantage ofthe draconian provision of Section 14 of the SARFAESI Act in order totake possession from a tenant, who is entitled to protection underthe Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, byborrowing an amount from a bank of financial institution; wantonlycommitting default; and thereby obtaining an order through thesecured creditor under Section 14 of the SARFAESI Act to throw awaythe bona fide tenant.34. In this regard, it is relevant to refer to another latestjudgment of the Supreme Court in United Bank of India v. SatyawatiTondon, (2010) 8 SCC 110, wherein the Supreme Court has held that itis not only against the possession notice under Section 13(4) of theSARFAESI Act but also against the order passed under Section 14 ofthe SARFAESI Act an application can be filed under 17(1) of theSARFAESI Act. Strongly denouncing the conduct of the High Court ininterfering under Article 226 of the Constitution of India with anorder passed under Sections 13(4) and 14 of the SARFAESI Act, theSupreme Court has observed as follows:"42. There is another reason why the impugned ordershould be set aside. If Respondent 1 had any tangiblegrievance against the notice issued under Section 13(4)or action taken under Section 14, then she could haveavailed remedy by filing an application under Section 17(1). The expression “any person” used in Section 17(1)is of wide import. It takes within its fold, not onlythe borrower but also the guarantor or any other personwho may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the AppellateTribunal are empowered to pass interim orders underSections 17 and 18 and are required to decide thematters within a fixed time schedule. It is thus evidentthat the remedies available to an aggrieved person underthe SARFAESI Act are both expeditious and effective.43. Unfortunately, the High Court overlooked the settledlaw that the High Court will ordinarily not entertain apetition under Article 226 of the Constitution if aneffective remedy is available to the aggrieved personand that this rule applies with greater rigour inmatters involving recovery of taxes, cess, fees, othertypes of public money and the dues of banks and other https://hcservices.ecourts.gov.in/hcservices/ financial institutions. In our view, while dealing withthe petitions involving challenge to the action takenfor recovery of the public dues, etc. the High Courtmust keep in mind that the legislations enacted byParliament and State Legislatures for recovery of suchdues are a code unto themselves inasmuch as they notonly contain comprehensive procedure for recovery of thedues but also envisage constitution of quasi-judicialbodies for redressal of the grievance of any aggrievedperson. Therefore, in all such cases, the High Courtmust insist that before availing remedy under Article226 of the Constitution, a person must exhaust theremedies available under the relevant statute."Therefore, it is clear that even against an order of possession takenthrough the administrative fiat from the Chief MetropolitanMagistrate or District Magistrate an application under Section 17 ofthe SARFAESI Act can be filed by any person affected, which includesa tenant in lawful occupation, to the Debts Recovery Tribunal.35. It is no doubt true, as contended by the learned counsel forthe petitioner, that a judgment, as is well known, is the authorityfor the proposition which it decides and not what can logically bededuced therefrom, as it was held by the Supreme Court in Union ofIndia v. Major Bahadur Singh, (2006) 1 SCC 368, from which paragraph(9) was quoted with approval in the latest judgment of the SupremeCourt in Davinder Singh v. State of Punjab, (2010) 13 SCC 88 asfollows:"18. A judgment, as is well known, is the authority forthe proposition which it decides and not what canlogically be deduced therefrom. This Court in Union ofIndia v. Major Bahadur Singh, (2006) 1 SCC 368 hasobserved: '9. … The courts should not place reliance ondecisions without discussing as to how thefactual situation fits in with the fact situationof the decision on which reliance is placed.Observations of the courts are neither to be readas Euclid's theorems nor as provisions of thestatute and that too taken out of their context.These observations must be read in the context inwhich they appear to have been stated. Judgmentsof the courts are not to be construed asstatutes. To interpret words, phrases andprovisions of a statute, it may become necessaryfor Judges to embark into lengthy discussions butthe discussion is meant to explain and not todefine. Judges interpret statutes, they do notinterpret judgments. They interpret words of https://hcservices.ecourts.gov.in/hcservices/ statutes; their words are not to be interpretedas statutes.'"36. It was in Delhi Airtech Services (P) Ltd. v. State of U.P.,(2011) 9 SCC 354, by referring to an earlier judgment in MunicipalCorporation of Delhi v. Gurunam Kaur, (1989) 1 SC 101, the SupremeCourt has held that when a point does not fall for decision butincidentally arises for consideration, it does not form part of theratio of the case and the same is to be treated as a decision passedin sub silentio. The Supreme Court by referring to Gurunam Kaurcase, supra, also considered the text from Salmond on Jurisprudenceexplaining the concept of sub silentio as follows:"42. It has been held in the decision of this Court inMCD v. Gurnam Kaur, (1989) 1 SCC 101 that when a pointdoes not fall for decision of a court but incidentallyarises for its consideration and is not necessary to bedecided for the ultimate decision of the case, such adecision does not form a part of the ratio of the casebut the same is treated as a decision passed subsilentio.43. The concept of “sub silentio” has been explained bySalmond on Jurisprudence, 12th Edn. as follows: (GurnamKaur case, SCC pp. 110-11, para 11)“11. …‘A decision passes sub silentio, in thetechnical sense that has come to be attached tothat phrase, when the particular point of lawinvolved in the decision is not perceived by theCourt or present to its mind. The Court mayconsciously decide in favour of one party becauseof Point A, which it considers and pronouncesupon. It may be shown, however, that logicallythe court should not have decided in favour ofthe particular party unless it also decided PointB in his favour; but Point B was not argued orconsidered by the Court. In such circumstances,although Point B was logically involved in thefacts and although the case had a specificoutcome, the decision is not an authority onPoint B. Point B is said to pass sub silentio.’ ”44. The aforesaid passage has been quoted with approvalby the three-Judge Bench in Gurnam Kaur. This Court inGurnam Kaur, in order to illustrate the aforesaidproposition further relied on the decision of theEnglish Court in Gerard v. Worth of Paris Ltd., (1936) 2All ER 905 (CA). In Gerard, the only point argued was on https://hcservices.ecourts.gov.in/hcservices/ the question of priority of the claimant’s debt. TheCourt found that no consideration was given to thequestion whether a garnishee order could be passed.Therefore, a point in respect of which no argument wasadvanced and no citation of authority was made is notbinding and would not be followed. This Court held thatsuch decisions, which are treated having been passed subsilentio and without argument, are of no moment. TheCourt further explained the position by saying that oneof the chief reasons behind the doctrine of precedent isthat once a matter is fully argued and decided the sameshould not be reopened and mere casual expressions carryno weight."37. But when the Supreme Court has considered the validity of theSARFAESI Act as a whole, even though no express opinion has been madeby the Supreme Court about Section 14 of the SARFAESI Act, and thevires of the SARFAESI Act has been upheld, in the guise of applyingthe principle of sub silentio it is not possible for this Court to gointo the validity of Section 14 of the SARFAESI Act. As stated bySalmond on Jurisprudence, elicited above, may be in cases where apoint of law involved in the decision is not perceived by the Courtand the Court while deciding a particular point has made a referenceabout another point, the principle of sub silentio may be madeapplicable in respect of another point relating to which a referencehas been made. But in the case on hand, when the SARFAESI Act as awhole has been upheld, in our view, the principle of sub silentio maynot be of much use to the petitioner while challenging the provisionof the SARFAESI Act. But at the same time, we are of the view thatwhen once greater power has been conferred on the Chief MetropolitanMagistrate or District Magistrate under Section 14 of the Act, thesame has to be exercised by the Chief Metropolitan Magistrate orDistrict Magistrate with greater care and onerous responsibility.38. Even though it is true that it is only after exercise of itspower under Section 13(4) of the SARFAESI Act by giving notice ofpossession by the bank or financial institution, such securedcreditor can proceed under Section 14 of the SARFAESI Act only incases where it is necessary to obtain such assistance from the ChiefMetropolitan Magistrate or District Magistrate, in our view, beforeexercising such power under Section 14 of the SARFAESI Act, whichobviously does not require any notice to anyone, the authority mustcogitate on and analyze the following aspects:(i)that even after giving notice under Section 13(4) ofthe SARFAESI Act, the secured creditor requiresassistance from the Chief Metropolitan Magistrate orDistrict Magistrate under Section 14 of the SARFAESIAct; https://hcservices.ecourts.gov.in/hcservices/ (ii)that while classifying the due as non performingasset, the bank or financial institution has followedthe procedure contemplated under the SARFAESI Act;(iii)that notice under Section 13(2) of the SARFAESI Actwas, in fact, given to the borrower in accordance withthe Rules, including paper publication, affixture,etc., by giving him sixty days time as contemplatedtherein and such notice has been received by theborrower and it contains the details of the amountpayable by the borrower, etc.;(iv)that in case any representation has been made by theborrower under Section 13(3-A) of the SARFAESI Act, thesecured creditor – bank or financial institution hasreplied within one week;(v)that notice of possession under Section 13(4) of theSARFAESI Act has been given; and(vi)that in cases where the borrower or guarantor is notin possession of the secured asset, whether the bankor financial institution has scrupulously followed Rule8(1) of the Security Interest (Enforcement) Rules, 2002in affixing the possession notice and if necessary,direct the bank or financial institution to informabout the affixture of possession notice under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002to the tenant in occupation and also in that eventdirect the bank or financial institution to give suchtenant sufficient time to file appeal under Section 17of the SARFAESI Act to the Debts Recovery Tribunal, and thereafter the Chief Metropolitan Magistrate or DistrictMagistrate should pass appropriate orders and such order shallcontain laconically the above said considerations to evince thatthere has been an application of mind by the authority. This isnecessary as the Supreme Court has held that even against thepossession notice under Section 13(4) and order under Section 14 ofthe SARFAESI Act, a person aggrieved can approach the Debts RecoveryTribunal under Section 17 of the SARFAESI Act. A consideration ofthe above said aspects will be helpful to prevent a bona fide tenant,who has been in occupation for a long time, from being thrown outarbitrarily without his knowledge due to the default committed by theborrower, who happens to be a landlord. It behooves us to lay downthe above said exhaustive guidelines as an extraordinary power hasbeen conferred on the Chief Metropolitan Magistrate or DistrictMagistrate under Section 14 of the SARFAESI Act, of course in orderto achieve the main goal of the SARFAESI Act itself, as stated above. 39. By referring to the real power of the Court, the SupremeCourt has held that the responsibility of the Court in passing orders https://hcservices.ecourts.gov.in/hcservices/ must be more when greater powers are given. That was in State ofU.P. v. Jasvir Singh and Others, (2011) 4 SCC 288. In paragraph (15)of the said judgment, it was held as follows:"15. This Court has repeatedly noticed that the realpower of courts is not in passing decrees and orders,nor in punishing offenders and contemnors, nor insummoning the presence of senior officers, but in thetrust, faith and confidence of the common man in thejudiciary. Such trust and confidence should not befrittered away by unnecessary and unwarranted show orexercise of power. Greater the power, greater should bethe responsibility in exercising such power."40. The nature of care to be taken as suggested by us, in ourview, is in consonance with the concept of a Welfare State, apartfrom the principle of rule of law enunciated above. In addition tothe enforcement of the object of the SARFAESI Act, the ChiefMetropolitan Magistrate or District Magistrate has to necessarily beguided by the consideration of doing justice, even though it is saidthat while passing order under Section 14 of the SARFAESI Act theChief Metropolitan Magistrate or District Magistrate is onlyassisting the bank or financial institution for enforcing thesecurity of the secured asset.41. While rejecting the contention that there is a dichotomybetween symbolic possession and physical possession under theSARFAESI Act, the Supreme Court has held that there is no distinctionunder the SARFAESI Act and has taken note of the fact that the thirdparty interest are created overnight in order to scuttle theenforcement of the provisions of the SARFAESI Act. It was inTranscore v. Union of India and another, 2006 (5) CTC 753, theSupreme Court has made the following observations which arereproduced here-under:"54. The word possession is a relative concept. It isnot an absolute concept. The dichotomy between symbolicand physical possession does not find place in the Act.As stated above, there is a conceptual distinctionbetween securities by which the creditor obtainsownership of or interest in the property concerned(mortgages) and securities where the creditor obtainsneither an interest in nor possession of the propertybut the property is appropriated to the satisfaction ofthe debt (charges). Basically, the NPA Act deals withthe former type of securities under which the securedcreditor, namely, the bank/FI obtains interest in theproperty concerned. It is for this reason that the NPAAct ousts the intervention of the courts/tribunals. https://hcservices.ecourts.gov.in/hcservices/

55. Keeping the above conceptual aspect in mind, we findthat Section 13(4) of the NPA Act proceeds on the basisthat the borrower, who is under a liability, has failedto discharge his liability within the period prescribedunder Section 13(2), which enables the secured creditorto take recourse to one of the measures, namely, takingpossession of the secured assets including the right totransfer by way of lease, assignment or sale forrealising the secured assets. Section 13(4-A) refers tothe word “possession” simpliciter. There is no dichotomyin sub-section (4-A) as pleaded on behalf of theborrowers. 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 noticeis required to be affixed on the property. Rule 8 dealswith sale of immovable secured assets. Appendix IVprescribes the form of possession notice. It inter aliastates that notice is given to the borrower who hasfailed to repay the amount informing him and the publicthat the bank/FI has taken possession of the propertyunder Section 13(4) read with Rule 9 of the 2002 Rules.Rule 9 relates to time of sale, issue of salecertificate and delivery of possession. Rule 9(6) statesthat on confirmation of sale, if the terms of paymentare complied with, the authorised officer shall issue asale certificate in favour of the purchaser in the formgiven in Appendix V to the 2002 Rules. Rule 9(9) statesthat the authorised officer shall deliver the propertyto the buyer free from all encumbrances known to thesecured creditor or not known to the secured creditor.(emphasis supplied) Section 14 of the NPA Act statesthat where the possession of any secured asset isrequired to be taken by the secured creditor or if anyof the secured asset is required to be sold ortransferred, the secured creditor may, for the purposeof taking possession, request in writing to the DistrictMagistrate to take possession thereof. Section 17(1) ofthe NPA Act refers to the right of appeal. Section 17(3)states that if DRT as an appellate authority afterexamining the facts and circumstances of the case comesto the conclusion that any of the measures under Section13(4) taken by the secured creditor are not inaccordance with the provisions of the Act, it may byorder declare that the recourse taken to any one or moremeasures is invalid, and consequently, restorepossession to the borrower and can also restore https://hcservices.ecourts.gov.in/hcservices/ 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 statusquo ante. Therefore, it cannot be said that ifpossession is taken before confirmation of sale, therights of the borrower to get the dispute adjudicatedupon is defeated by the authorised officer takingpossession. As stated above, the NPA Act provides forrecovery of possession by non-adjudicatory process;therefore, to say that the rights of the borrower wouldbe defeated without adjudication would be erroneous.Rule 8, undoubtedly, refers to sale of immovable securedasset. However, Rule 8(4) indicates that wherepossession is taken by the authorised officer beforeissuance of sale certificate under Rule 9, theauthorised officer shall take steps for preservation andprotection of secured assets till they are sold orotherwise disposed of. Under Section 13(8), if the duesof the secured creditor together with all costs, chargesand expenses incurred by him are tendered to thecreditor before the date fixed for sale or transfer, theasset shall not be sold or transferred. The 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 ofRule 8(4). Thus, Rule 8 deals with the stage anterior tothe issuance of sale certificate and delivery ofpossession under Rule 9. Till the time of issuance ofsale certificate, the authorised officer is like a CourtReceiver under Order 40 Rule 1 CPC. The Court Receivercan take symbolic possession and in appropriate caseswhere the Court Receiver finds that a third-partyinterest is likely to be created overnight, he can takeactual possession even prior to the decree. Theauthorised officer under Rule 8 has greater powers thaneven a Court Receiver as security interest in theproperty is already created in favour of the banks/FIs.That interest needs to be protected. Therefore, Rule 8provides that till issuance of the sale certificateunder Rule 9, the authorised officer shall take suchsteps as he deems fit to preserve the secured asset. Itis well settled that third-party interests are createdovernight and in very many cases those third partiestake up the defence of being a bona fide purchaser forvalue without notice. It is these types of disputeswhich are sought to be avoided by Rule 8 read with Rule https://hcservices.ecourts.gov.in/hcservices/ 9 of the 2002 Rules. In the circumstances, the drawingof dichotomy between symbolic and actual possession doesnot find place in the scheme of the NPA Act read withthe 2002 Rules."42. On analyzing the judgment of the Supreme Court in Transcorecase, supra, a Division Bench of the Bombay High Court in Trade Wellv. Indian Bank, 2007 Cri LJ 2544 has given a gist of the saidjudgment of the Supreme Court as follows:"64. Following is the gist of the relevant portion ofthe Supreme Court judgment.(a) The DRT Act did not provide for assignment of debtsto securitisation companies. The secured assets couldnot be liquidated in time. The NPA Act was enacted toreduce mounting non-performing assets by empoweringbanks to liquidate the assets and secured interest.(b) The NPA Act deals with crystallized liabilities.(c) The NPA Act proceeds on the basis that the asset iscreated in favour of bank which could be assigned to theassets management company which steps into the shoes ofthe secured creditors.(d) Section 13(2) proceeds on the basis that theborrower is under a liability and his account in thebooks of account of the bank is classified as sub-standard or doubtful or loss. The NPA Act comes intoforce only if these two conditions are satisfied.(e) Since Section 13(2) deals with liquidation ofliability on the basis that the account of the borrowerhas become non-performing, there is no scope of anydispute regarding liability.(f) The NPA Act does not deal with disputes between thesecured creditors and the borrowers but it deals withthe rights of the secured creditors inter se.(g) Section 13(1) and Section 13(2) of the NPA Actproceed on the basis that the security interest in thebank and financial institution needs to be enforcedexpeditiously without the intervention of the Court and https://hcservices.ecourts.gov.in/hcservices/ that enforcement could take place by non- adjudicatoryprocess. The NPA Act provides for recovery of possessionby non-adjudicatory process.(h) The NPA Act removes all fetters on the right of thesecured creditor.(i) Under Section 17(2), the DRT is required to considerwhether any of the measures referred to in Section 13(4)are in accordance with the provisions of the NPA Act andthe Rules made thereunder.(j) If while examining the application under Section 17,the DRT comes to the conclusion that any of the measurestaken under Section 13(4) are not in accordance with NPAAct, it shall direct the secured creditor to restore thepossession to the borrower or restore management to theborrower.(k) If the DRT declares that the recourse taken underSection 13(4) is in accordance with the provisions ofthe NPA Act then notwithstanding anything contained inany other law for the time being in force, the securedcreditor shall be entitled to take recourse to anyone ormore of the measures as specified under Section 13(4) torecover his secured debt.(l) Section 17(4) shows that the secured creditor isfree to take recourse to any one of the measures underSection 13(4) notwithstanding anything contained in anyother law for the time being in force, e.g. for the sakeof argument if in a given case, the measures undertakenby the secured creditor under Section 13(4) come inconflict with the State land revenue law, thennotwithstanding such conflict, the provision of Section13(4) shall override the local law.(m) This position stands clarified by Section 35 of theNPA Act which states that the provisions of the NPA Actshall override all other laws which are inconsistentwith the NPA Act. Section 35 gives an overriding effectto the NPA Act over all other laws, if they are inconsistent with it. https://hcservices.ecourts.gov.in/hcservices/ (n) The dichotomy between symbolic and physicalpossession does not find place in the NPA Act.(o) Rule 8 of the said Rules deals with the sale ofimmovable secured assets. Rule 8 deals with the stageanterior to the issuance of sale certificate anddelivery of possession under Rule 9. Rule 9 relates totime of sale, issue of sale certificate and delivery ofpossession. Till the time of issuance of salecertificate, the authorised officer is like a courtreceiver under Order XL, Rule 1 of the CPC. The courtreceiver can take symbolic possession and in appropriatecases, he can take actual possession even prior to thedecree. The authorised officer's powers are greater assecurity interest is already created in the bank. Hence,under Rule 8, he can take steps to preserve the securedasset till issuance of the sale certificate under Rule9. Rule 9(6) states that on confirmation of sale, if theterms of payment are complied with, the authorisedofficer shall issue a sale certificate in favour of thepurchaser. Rule 9(9) states that the authorised officershall deliver the property to the buyer free from allencumbrances known to the secured creditor or not knownto the secured creditor. This scheme of the NPA Acttherefore does not disclose any dichotomy betweensymbolic possession and physical possession.(p) Since scheme of Section 13(4) read with Section 17(3) shows that if the borrower is dispossessed not inaccordance with the provisions of the NPA Act, the DRTis entitled to restore status quo ante, it cannot besaid that if possession is taken before confirmation ofsale, the rights of the borrower to get the disputeadjudicated upon is defeated by the authorised officertaking possession.(q) The disputes which are sought to be avoided by Rule8 read with Rule 9 of the said Rules are those wherethird party interests are created overnight and in verymany cases those third parties take up the defence ofbeing a bonafide purchaser for value without notice."In fact, in the said judgment, the Bombay High Court while holdingthat the process under Section 14 of the SARFAESI Act is a non https://hcservices.ecourts.gov.in/hcservices/ adjudicatory process, has held that the remedy under Section 17 ofthe SARFAESI Act before the Debts Recovery Tribunal is available tothe third parties also.43. While holding that the secured creditor to enforce his rightunder Section 13(4) of the SARFAESI Act, in particular Section 13(4)(a) of the SARFAESI Act, may take recourse to Section 14 of theSARFAESI Act, it was held in the latest judgment of the Supreme Courtin Kanaiyalal Lalchand Sachdev v. State of Maharashtra, (2011) 2 SCC782 that it is after resorting to Section 13(4) of the SARFAESI Act,the assistance under Section 14 of the SARFAESI Act arises andagainst any measure taken under Section 14 of the SARFAESI Act, anyperson can approach the Debts Recovery Tribunal under Section 17(1)of the SARFAESI Act. It is useful to extract the followingparagraphs of the said judgment:"18. Section 14 of the Act provides that the securedcreditor can file an application before the ChiefMetropolitan Magistrate or the District Magistrate,within whose jurisdiction, the secured asset or otherdocuments relating thereto are found for takingpossession thereof. If any such request is made, theChief Metropolitan Magistrate or the DistrictMagistrate, as the case may be, is obliged to takepossession of such asset or document and forward thesame to the secured creditor. (See United Bank of Indiav. Satyawati Tondon, (2010) 8 SCC 110.) Therefore, itfollows that a secured creditor may, in order to enforcehis rights under Section 13(4), in particular Section 13(4)(a), may take recourse to Section 14 of the Act.....22. We are in respectful agreement with the aboveenunciation of law on the point. It is manifest that anaction under Section 14 of the Act constitutes an actiontaken after the stage of Section 13(4), and therefore,the same would fall within the ambit of Section 17(1) ofthe Act. Thus, the Act itself contemplates anefficacious remedy for the borrower or any personaffected by an action under Section 13(4) of the Act, byproviding for an appeal before the DRT."44. In view of the judgments of the Supreme Court commencing fromMardia Chemicals case to Kanaiyalal Lalchand Sachdev case, supra,wherein the Supreme Court has analyzed threadbare the variousprovisions of the SARFAESI Act, we are unable to accept thecontention of Mr.R.Singgaravelan, learned counsel appearing for thepetitioner in W.P.No.950 of 2012 for a declaration that Section 14 ofthe SARFAESI Act is null and void, except issuing certain guidelinesas stated above. https://hcservices.ecourts.gov.in/hcservices/

45. Accordingly, W.P.No.950 of 2012 stands dismissed and Section14 of the SARFAESI Act is held valid. However, while exercising thepower by way of measure to assist the bank or financial institutionto secure the secured assets, the Chief Metropolitan Magistrate orDistrict Magistrate shall follow the following guidelines:(i)that even after giving notice under Section 13(4) ofthe SARFAESI Act, the secured creditor requiresassistance from the Chief Metropolitan Magistrate orDistrict Magistrate under Section 14 of the SARFAESIAct;(ii)that while classifying the due as non performingasset, the bank or financial institution has followedthe procedure contemplated under the SARFAESI Act;(iii)that a notice under Section 13(2) of the SARFAESIAct was, in fact, given to the borrower in accordancewith the Rules, including paper publication, affixture,etc., by giving him sixty days time as contemplatedtherein and such notice has been received by theborrower and it contains the details of the amountpayable by the borrower, etc.;(iv)that in case any representation has been made by theborrower under Section 13(3-A) of the SARFAESI Act, thesecured creditor – bank or financial institution hasreplied within one week;(v)that a notice of possession under Section 13(4) ofthe SARFAESI Act has been given;(vi)that in cases where the borrower or guarantor is notin possession of the secured asset, whether the bank orfinancial institution has scrupulously followed Rule 8(1) of the Security Interest (Enforcement) Rules, 2002in affixing the possession notice and if necessary,direct the bank or financial institution to informabout the affixture of possession notice under Rule 8(1) of the Security Interest (Enforcement) Rules, 2002to the tenant in occupation and also in that eventdirect the bank or financial institution to give suchtenant sufficient time to file appeal under Section 17of the SARFAESI Act to the Debts Recovery Tribunal; and(vii)thereafter pass appropriate orders, which shallcontain laconically the above said considerations toevince that there has been an application of mind bythe authority. https://hcservices.ecourts.gov.in/hcservices/ W.P.Nos.30223 and 30184 of 2011,104 and 105 of 201246. Now coming to the individual cases wherein the orders of theChief Judicial Magistrates are challenged, it is true that as againstthe measure taken under Section 14 of the SARFAESI Act any personaffected can approach the Debts Recovery Tribunal under Section 17 ofthe SARFAESI Act, which states "any person (including the borrower)",as it seen in Section 17(1) of the SARFAESI Act, which is as follows:"Section 17. Right to appeal.- (1) Any person (including borrower), aggrieved by any ofthe measures referred to in sub-section (4) of section13 taken by the secured creditor or his authorisedofficer under this Chapter, may make an applicationalong with such fee, as may be prescribed to the DebtsRecovery Tribunal having jurisdiction in the matterwithin forty-five days from the date on which suchmeasure had been taken: PROVIDED that different fees may be prescribedfor making the application by the borrower andthe person other than the borrower. Explanation: For the removal of doubts, it is herebydeclared that the communication of the reasons to theborrower by the secured creditor for not having acceptedhis representation or objection or the likely action ofthe secured creditor at the stage ofcommunication of reasons to the borrower shallnot entitle the person (including borrower) to makean application to the Debts Recovery Tribunal under thissub-section." 47. It is relevant to point out that under Section 14(3) of theSARFAESI Act, an order of the Chief Metropolitan Magistrate orDistrict Magistrate as a measure under Sections 14(1) and 14(2) ofthe SARFAESI Act has become final and cannot be questioned in anycourt of law or before any authority. Of course, it is because ofthat provision the Supreme Court has clarified that an appeal lies tothe Debts Recovery Tribunal against the order passed under Section 14of the SARFAESI Act. But at the same time, when the ChiefMetropolitan Magistrate or District Magistrate while considering suchrequest from the secured creditor, failed to follow the provisions ofthe SARFAESI Act and exercised his discretion in an improper manner,or in cases where the Chief Metropolitan Magistrate or DistrictMagistrate simply as an administrative authority without applicationof mind merely on the request of the secured creditor passes an orderappointing an Advocate Commissioner to take possession with the helpof police without considering anything about the fulfillment of the https://hcservices.ecourts.gov.in/hcservices/ requirements under the SARFAESI Act, it cannot be said that thisCourt cannot entertain a writ petition under Article 226 of theConstitution of India, especially when gross injustice is sought tobe done by such measure taken by the Chief Metropolitan Magistrate orDistrict Magistrate under Section 14 of the SARFAESI Act. This isbecause it can be construed that under Section 17 of the SARFAESIAct, the Debts Recovery Tribunal even while considering the appeal ofany person other than the borrower has to only examine as to whethernotice under Section 13(2) of the SARFAESI Act has been given,followed by the possession notice under Section 13(4) of the Act. Byreferring to Section 17 of the Act, which is as follows:"Section 17. Right to appeal (1) Any person (including borrower), aggrieved by any ofthe measures referred to in sub-section (4) of section13 taken by the secured creditor or his authorisedofficer under this Chapter, may make an applicationalongwith such fee, as may be prescribed to the DebtsRecovery Tribunal having jurisdiction in the matterwithin forty-five days from the date on which suchmeasure had been taken: PROVIDED that different fees may be prescribedfor making the application by the borrower andthe person other than the borrower. Explanation: For the removal of doubts, it is herebydeclared that the communication of the reasons to theborrower by the secured creditor for not having acceptedhis representation or objection or the likely action ofthe secured creditor at the stage ofcommunication of reasons to the borrower shallnot entitle the person (including borrower) to makean application to the Debts Recovery Tribunal under thissub-section. (2) The Debts Recovery Tribunal shall consider whetherany of the measures referred to in sub-section (4) ofsection 13 taken by the secured creditor for enforcementof security are in accordance with the provisions ofthis Act and the rules made thereunder. (3) If, the Debts Recovery Tribunal, afterexamining the facts and circumstances of the caseand evidence produced by the parties, comes to theconclusion that any of the measures referred to in sub-section (4) of section 13, taken by the securedcreditor are not in accordance with theprovisions of this Act and the rules madethereunder, and require restoration of the https://hcservices.ecourts.gov.in/hcservices/ management of the business to the borrower orrestoration of possession of the secured assetsto the borrower, it may by order, declare therecourse to any one or more measures referred to insub-section (4) of section 13 taken by the securedcreditors as invalid and restore the possession of thesecured assets to the borrower or restore the managementof the business to the borrower, as the case may be, andpass such order as it may consider appropriate andnecessary in relation to any of the recourse taken bythe secured creditor under sub-section (4) of section13. (4) If, the Debts Recovery Tribunal declares therecourse taken by a secured creditor under sub-section(4) of section 13, is in accordance with theprovisions of this Act and the rules madethereunder, then, notwithstanding anything containedin any other law for the time being in force,the secured creditor shall be entitled to takerecourse to one or more of the measuresspecified under sub-section (4) of section 13 torecover his secured debt. (5) Any application made under sub-section (1) shall bedealt with by the Debts Recovery Tribunal asexpeditiously as possible and disposed of within sixtydays from the date of such application: PROVIDED that the Debts Recovery Tribunal may,from time to time, extend the said period forreasons to be recorded in writing, so, however,that the total period of pendency of theapplication with the Debts Recovery Tribunal, shallnot exceed four months from the date of making of suchapplication made under sub-section (1). (6) If the application is not disposed of by the DebtsRecovery Tribunal within the period of four months asspecified in sub-section (5), any part to theapplication may make an application, in such formas may be prescribed, to the Appellate Tribunalfor directing the Debts Recovery Tribunal forexpeditious disposal of the application pendingbefore the Debts Recovery Tribunal and the AppellateTribunal may, on such application, make an order forexpeditious disposal of the pending application by theDebts Recovery Tribunal. (7) Save as otherwise provided in this Act, the https://hcservices.ecourts.gov.in/hcservices/ Debts Recovery Tribunal shall, as far as may be,dispose of the application in accordance with theprovisions of the Recovery of Debts Due to Banksand Financial Institutions Act, 1993 and the rules madethereunder.",one can certainly come to a conclusion that the power of the DebtsRecovery Tribunal under Section 17 of the SARFAESI Act even though itenables any person affected by an order under Section 13(4) orconsequently under Section 14 of the SARFAESI Act to approach it, isrestricted to the confirmation to the provisions of the SARFAESI Actalone.48. Ergo, in cases where a bona fide tenant is sought to beevicted either by the steps taken under Section 13(4) of the SARFAESIAct by the secured creditor or by the order of assistance passed bythe Chief Metropolitan Magistrate or District Magistrate underSection 14 of the SARFAESI Act at the instance of the securedcreditor, it is highly doubtful as to whether the Debts RecoveryTribunal can go into the question as to whether the third partytenant is a bona fide tenant or not, since the Debts RecoveryTribunal is not expected to follow the elaborate procedure of a CivilCourt and is expected to proceed on summary basis taking intoconsideration the object of the SARFAESI Act. Therefore, in suchcases, in order to render substantial justice, we are of the viewthat there is no bar for this Court to entertain a writ petitionunder Article 226 of the Constitution of India. But insofar as itrelates to the borrower or guarantor, as against the steps taken bythe secured creditor under Sections 13(4) and 14 of the SARFAESI Act,Section 17 of the SARFAESI Act provides an effective alternativeremedy and in such cases, it is not possible for this Court toentertain a writ petition.49. While construing about the right of a bona fide tenant inoccupation under a borrower and taking note of the fact that suchtenant has got a statutory protection under the Tamil Nadu Buildings(Lease and Rent Control) Act, 1960 and also in other cases underSection 106 of the Transfer of Property Act, 1882, in the light ofthe summary powers provided to the secured creditor under theSARFAESI Act, a Division Bench of this Court in Indian Bank v. NipponEnterprises South and others, 2011 (2) CTC 474, after analyzing theconstitutional provisions regarding the source of power under boththe Acts and finding that the SARFAESI Act has been enacted by theParliament by virtue of the power under List I of Schedule VII, whilethe Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 wasenacted by the State Legislature under Entry 6 of List III(Concurrent List) of Schedule VII, and that the tenant can be evictedonly on specific grounds enumerated under Section 10 of the TamilNadu Buildings (Lease and Rent Control) Act, 1960 and alsoconsidering the judgment of the Supreme Court in Central Bank of https://hcservices.ecourts.gov.in/hcservices/ India v. State of Kerala, 2009 (6) CTC 656, wherein the Supreme Courthas considered as to whether there is any repugnancy between KeralaSales Tax Act, 1962 and Bombay Sales Tax Act, 1959 on the one handand the SARFAESI Act on the other hand, held that the SARFAESI Actand Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 areacting in different fields and the intention of the Tamil NaduBuildings (Lease and Rent Control) Act, 1960 is to protect thepossession of the bona fide tenants and, therefore, while there is norepugnancy between the two Acts, it was held that the bank cannottake physical possession from a bona fide tenant by invoking theprovisions of Sections 13(4) and 14 of the SARFAESI Act in thefollowing paragraph:"38. In the above case, the Supreme Court found thatsince there was no specific provision creating firstcharge in respect of the amount due to the bank in theSARFAESI Act, such provision contained in the Stateenactment creating first charge in respect of the duesto the Government shall not indicate any conflict orinconsistency or overlapping between the same. In thecase on hand, as we have already stated, there is nospecific provision in the SARFAESI Act in respect oftaking possession from the hands of the tenant. But theright of the tenant to continue to be in possession isprotected by the TN Rent Control Act. The SARFAESI Actis an Act for the expeditious recovery of dues to thebanks, financial institutions and secured creditors,whereas the purpose of the State legislation i.e., theTN Rent Control Act is to protect the possession of thetenants. Thus, they are traceable to two differententries in their respective fields and there is neitherany conflict nor repugnancy or overlapping. In such viewof the matter, there is no difficulty in holding thatthe bank cannot take physical possession from the tenantprotected under Tamil Nadu Rent Control Act by invokingthe provisions of Sections 13(4) and 14 of the SARFAESIAct, in the event the tenant is in bona fide occupation.The point is answered accordingly."It is in the above backdrop, we take up the individual cases.W.P.No.30223 of 201150. In this writ petition, the petitioner is a borrower from thesecond respondent/bank in respect of a housing loan to the extent of` 8,82,000/- and a cash credit loan to the extent of ` 20 Lakhs. Thebank has issued a notice under Section 13(2) of the SARFAESI Actclaiming an outstanding of ` 21,58,531.40 under cash credit loan and` 7,28,644.42 under housing loan and thereafter issued a notice underSection 13(4) of the SARFAESI Act as per Rule 8(1) of the SecurityInterest (Enforcement) Rules, 2002 on 5.4.2011 claiming a total https://hcservices.ecourts.gov.in/hcservices/ amount of ` 28,97,725.91 and on the bank approaching the ChiefJudicial Magistrate, Salem under Section 14 of the SARFAESI Act, theChief Judicial Magistrate after recording the evidence of the Managerof the Bank, who has produced in his evidence notice issued underSection 13(2) of the SARFAESI Act, apart from the possession noticeissued under Section 13(4) of the SARFAESI Act, as it is affixed andpublished in two newspapers, has passed an order after perusing therecords and sworn statement of the authorised officer directing theInspector of Police to render necessary assistance to the securedcreditor in respect of the secured property. The order passed by theChief Judicial Magistrate, Salem is as follows:"The Authorized Officer Mr.N.Krishnan, of the petitionerhas filed this petition under section 14 of theSecuritisation and Reconstruction of Financial Assetsand Enforcement of Security Interest Act, 2002 fortaking possession of assets mentioned in the Descriptionof Property. Perused the records. Sworn statement ofthe Authorized Officer of the petitioner recorded.After gleaning the entire materials made available withthe court and upon hearing the petitioner, the court isfully satisfied with a need to render necessaryassistance to the secured creditor in taking over thesecured assets. All the legal formalities have alreadybeen complied with scrupulously and accordingly thiscourt is inclined to confer the relief sought for by thepetitioner under section 14 of the SARFAESI Act 2002.Thus, the Inspector of Police, Soora Mangalam, P.S., isrequired to render all necessary assistance to thesecured creditor (petitioner) in taking over possessionof the secured assets described in the description ofproperty."51. Inasmuch as the petitioner is a borrower and there is nothingto conclude that the Chief Judicial Magistrate has not applied hismind and inasmuch the petitioner has got an effective alternativeremedy of filing an appeal under Section 17 of the SARFAESI Act,W.P.No.30223 of 2011 stands dismissed with liberty to the petitionerto approach the Debts Recovery Tribunal under Section 17 of theSARFAESI Act, making it clear that if such appeal is filed within aperiod of four weeks from the date of receipt of a copy of thisorder, the Debts Recovery Tribunal shall receive the said appeal anddecide the same on merits and in accordance with law, independent ofany observation made above.W.P.No.30184 of 2011 https://hcservices.ecourts.gov.in/hcservices/

52. In this writ petition, the petitioner claims to be a tenantunder the second respondent, who stood as a guarantor in respect ofthe borrowal made by third parties creating a mortgage in respect ofhis property. Even though the petitioner is a tenant, he has notstated in the affidavit filed in support of the writ petition as tothe period of his tenancy, except producing an unregistered rentalagreement dated 7.8.2008. However, it appears, as it is seen in theapplication filed by the first respondent/bank under Section 14(1) ofthe SARFAESI Act before the Chief Judicial Magistrate, Erode, thatthe second respondent has created a mortgage in the year 2009.53. In such circumstances, this Court cannot decide the bona fidenature of the petitioner as a tenant under the second respondent and,therefore, giving liberty to the petitioner to approach the DebtsRecovery Tribunal under Section 17 of the SARFAESI Act or to approachthe appropriate forum in any other manner known to law, the writpetition stands dismissed. It is made clear that if the petitionerresorts to such legal recourse within four weeks from the date ofreceipt of a copy of this order, the authority concerned shall decidethe issue on merits and in accordance with law. Till such time, ifphysical possession of the property was not taken over from thepetitioner, status-quo shall be maintained. It is further made clearthat after the said period of four weeks if the petitioner is unableto get any legal protection from the competent authority, it shall beopen to the bank to proceed in accordance with law.W.P.No.104 of 201254. The petitioners in this writ petition are claiming to be thetenants under the second respondent, who is stated to have borrowedfrom the first respondent/bank by way of cash credit facility anamount of ` 8.50 Crores and by way of term loan facility an amount of` 3,35,95,000/- on 13.10.2009. A claim was made to the extent of `11,78,74,402/- on 15.12.2010 and possession notice under Section 13(4) of the SARFAESI Act was served on 22.2.2011. Under Section 14of the SARFAESI Act, at the instance of the first respondent/bank,the Chief Judicial Magistrate, Erode has passed a considered order byperusing the detailed affidavit filed by the bank.55. On the side of the petitioners, three unregistered rentalagreements dated 22.5.2009, 1.6.2009 and 6.7.2009 have been filed.Inasmuch as the said unregistered rental agreements are datedimmediately before the date of borrowal, this Court cannot decidewhile exercising the power under Article 226 of the Constitution ofIndia, about the bona fide nature of the petitioners/tenants and, https://hcservices.ecourts.gov.in/hcservices/ therefore, giving liberty to the petitioners to approach the DebtsRecovery Tribunal under Section 17 of the SARFAESI Act or to approachthe appropriate forum in any other manner known to law, the writpetition stands dismissed. It is made clear that if the petitionersresort to such legal recourse within four weeks from the date ofreceipt of a copy of this order, the authority concerned shall decidethe issue on merits and in accordance with law. Till such time ifphysical possession of the properties was not taken over from thepetitioners, status-quo shall be maintained. It is further madeclear that after the said period of four weeks if the petitioners areunable to get any legal protection from the competent authority, itshall be open to the bank to proceed in accordance with law.W.P.No.105 of 201256. The petitioners claim to be the tenants under the secondrespondent, who is the guarantor in respect of the availing of loanby the second respondent in W.P.No.104 of 2012, as stated above, andthe learned Chief Judicial Magistrate, Erode has passed the orderafter considering the documents and perusing the detailed affidavitfiled by the first respondent/ bank. 57. In this case also, the unregistered rental agreements30.1.2009, 31.3.2009, 3.12.2009 and 19.11.2007 are all datedimmediately before the date of borrowal, and therefore, this Courtwhile exercising the power under Article 226 of the Constitution ofIndia, cannot decide about the bona fide nature of thepetitioners/tenants and, therefore, giving liberty to the petitionersto approach the Debts Recovery Tribunal under Section 17 of theSARFAESI Act or to approach the appropriate forum in any other mannerknown to law, the writ petition stands dismissed. It is made clearthat if the petitioners resort to such legal recourse within fourweeks from the date of receipt of a copy of this order, the authorityconcerned shall decide the issue on merits and in accordance withlaw. Till such time if physical possession of the properties wasnot taken over from the petitioners, status-quo shall be maintained.It is further made clear that after the said period of four weeks ifthe petitioners are unable to get any legal protection from thecompetent authority, it shall be open to the bank to proceed inaccordance with law.In the result, all the writ petitions are dismissed with theabove observations. No costs. Consequently, M.P.No.1 of 2012 inW.P.No.950 of 2012, M.P.No.1 of 2011 in W.P.No.30223 of 2011,M.P.Nos.1 and 2 of 2011 in W.P.No.30184 of 2011, M.P.Nos.1 and 2 of https://hcservices.ecourts.gov.in/hcservices/ 2012 in W.P.No.104 of 2012 and M.P.Nos.1 and 2 of 2012 in W.P.No.105of 2012 are closed.sd/- Assistant Registrar /True Copy/ Sub Assistant RegistrarsasiTo:1. The Secretary to Government Finance Department, Union of India New Delhi.2. The Chief Judicial Magistrate Salem – 7.3. The Branch Manager, The State Bank of India, Sri Rangapalayam Branch, Salem-74. The Assistant General Manager State Bank of India Stressed Assets Recovery Branch (SARB) Santhi Plaza, I Floor, 1/5 Brindavan Road, Fair Lands Salem – 45. The Authorised Officer, Bank of Baroda Nambiyur Branch, Coimbatore - Gobi Road, Near Bus Stand, Nambiyur - 638 4582 CC to Mr.R.Singaaravelan, Advocate, SR.25907 and 25908 2 CCs to M/s.Ramalingam and Associates SR.25497 3 CC to Mr.S.Pandurangan, Advocate, SR.25806 to 25808W.P.Nos.950 of 2012,30223 and 30184 of 2011,and 104 and 105 of 2012KU(CO)SRA(04/05/2012)