(In the matter of an application under Articles 226 and 227 v. The Collector and District

29.06.2022 _________________________________________________________________ Jaswant Singh, J.

This common order shall dispose of both the aforementioned writ petitions as they involve similar facts and identical questions of law.

The Writ Petitions numbered W.P.(C) No.27775 of 2021 and W.P.(C) No.26500 of 2021 are taken up together as they involve a common question and prayer i.e. an opportunity must have been provided by the DM/Collector while taking possession of // 3 // the mortgaged property under Section 14 of the SARFAESI Act, 2002 (Hereinafter, "Act, 2002"). W.P.(C) No.26500 of 2021

The relevant facts of the Writ Petition numbered W.P.(C) No.26500 of 2021 is set out in brief hereunder. The Petitioner No.1 i.e. M/s. Maa Kalika Bhandar availed a cash credit loan of Rs. 22.50 crores from the Opposite Party No. 5/ Punjab National Bank on 25.06.2016. The said loan was availed by mortgaging an immovable property under the ownership of Petitioner No. 3 i.e. Jay Kumar Jajodia. Due to financial indiscipline, the said loan account was declared NPA on

31.01.2018. A demand notice under Section 13 (2) of the SARFAESI Act, 2002 was issued on 13.02.2018 recalling outstanding liability of Rs.22,14,25,096.45/-(Twenty Two Crores Fourteen Lacs Twenty Five Thousand Ninety Six Fourty Five Paise) and symbolic possession of the property was taken vide a notice dated 17.04.2018 under Section 13 (4) of the Act,

2002. Further, the property was auctioned on 12.03.2019 wherein the Opposite Party No.4/Auction purchaser i.e. MGM Minerals Pvt. Ltd. was declared as the highest bidder and // 4 // consequently, sale certificate has been issued in its favour owing to complete deposit of the whole bidding amount. Consequently, a challenge was laid to the said auction vide S.A No.41 of 2019 in the DRT by the petitioner, which has been admitted. Further, the 2nd Additional Civil Judge (Senior Division), Bhubaneswar and the Civil Judge (Senior Division), Bhubaneswar have passed an interim order to maintain status- quo over the disputed property. The dispute arose when the Opposite Party No. 1/ DM/Collector in Bank Misc. Case No.78 of 2018 passed an order dated 19.08.2021 on the application filed by the Opposite Party/Bank instructing the Police to help in acquiring the physical possession of the mortgaged property. W.P.(C) No.27775 of 2021

The brief facts of W.P. (C) No.27775 of 2021 are that the petitioner No.1 i.e. M/s. Dwarikamayee Bhandar availed a Cash Credit Facility of Rs.470 lakhs from the Opposite Party No.5/Punjab National Bank on 25.08.2015 which was further enhanced to Rs.950 lakhs on 10.09.2016 by mortgaging various immovable properties standing in the name of the Petitioner No.2 i.e. Pawan Kumar Jajodia. The petitioner No.2 stood as a // 5 // guarantor. Moreover, the petitioner No.2 is also the partner in the petitioner No.1 i.e. M/s. Dwarikamayee Bhandar. Due to financial indiscipline, the said loan account was declared NPA on 31.01.2018. A demand notice under Section 13(2) of the Act, 2002 was issued to the petitioner on 03.02.2018 recalling outstanding liability of Rs.9,23,56,545.85/- (Nine Crores Twenty Three Lacs Fifty Six Thousands Five Hundred Fourty Five Eighty Five Paise). Further, the symbolic possession of the property was taken over on 17.04.2018. It is also pertinent to note that the auction with respect to two of the immovable properties has been successful and the auction purchasers have deposited the entire amount within the stipulated period. The Civil Judge (Senior Division), Bhubaneswar vide C.S. No.518 of 2019 passed an order dated 25.04.2019 to maintain status-quo over the disputed property. In the meantime, opposite party No.5/ Punjab National Bank approached opposite party No. 1 - DM by filing an application U/s 14 of the 2002, on 13.06.2018 vide Bank Misc. Case No.77 of 2018 seeking to take physical possession the property in possession. The bank, preferred W.P.(C) No.1404 of 2019 before this Court, seeking disposal of // 6 // its application filed U/s 14 before the District Magistrate, on an

early date. The said petition, was disposed off on 21.01.2019 by this Court directing District Magistrate to pass appropriate orders on the aforesaid application, after granting opportunity of hearing to the parties. Arguments

It is the claim of the Petitioners in both the cases that no opportunity of personal hearing was afforded to them by the Opposite Party No.1/Collector-cum-District Magistrate, Khordha before passing order(s) dated 19.08.2021 under Section 14 of the Act, 2002 and thereby violating the principles of natural justice. It is further contended that the District Magistrate, Khordha failed to appreciate that the property in question could not be treated to be a secured asset, on account of the same having been attached by the Income Tax Department prior to the mortgage in favour of the bank on 28.06.2016, whereas, the said property had already been attached by the Income Tax department in proceedings initiated under Income Tax Act on

31.12.2015. Consequently, the mortgage transaction is void in terms of the Section 281 of the Income Tax Act, 1961. // 7 //

Per Contra, Opposite Party /Punjab National Bank (PNB) in both the cases have contended that pursuant to the judgment of Bajaj Finance Ltd. v. M/s Ali Agency & others1 W.P.(C).No.11425/2019, decided on 10.01.2022, Petitioners have an alternative remedy to approach the DRT under section 17 of the Act, 2002 and thereby this writ petitions are not maintainable.

Learned counsel for Opposite Party/ Punjab National Bank (PNB) raises a preliminary objection regarding maintainability on the ground that the impugned order(s) dated 19.08.2021 has been passed by the District Magistrate, Khordha in exercise of its powers under Section 14 of the Act, 2002 and the same amounts to an action under Section 13(4) and hence in view of the judgment of Hon’ble Supreme Court in Kanhaiya Lalchand Sachdev V/s State of Maharashtra 2and United Bank of India Vs. Satyawati Tondon3 the remedy available to the petitioners is to approach Debts Recovery Tribunal (DRT) under Section 17 of the Act, 2002 and hence present petition is not maintainable. He further places