Bank of Baroda v. State of U.P. and

"1. Heard counsel for the parties.

2. Let counsel for petitioner satisfy the court as to how this petition is maintainable in view of the settled law that the borrower does not have any right to challenge the order passed under Section 14 before the High Court under Article 226 of the Constitution of India though he may have a remedy under Section 17 of the SARFAESI Act, 2002 before the Debts Recovery Tribunal.

3. Put up on 16.01.2025 as first case of the day.

4. No further time shall be granted to Shri Sharad Nandan Ojha, counsel for petitioner or the arguing counsel who is not available today.

5. We have recently pronounced two decisions ; one in Writ C No.8867 of 2024 (Bank of Baroda vs. State of U.P. and 8 others decided on 25.10.2024 where we have elucidated the scope of the proceedings under Section 14 of the SARFAESI Act 2002 relying upon Supreme Court decisions in the case of Balkrishna Rama Tarle Dead Through LRS and another vs. Phoenix ARC Private Limited and Others wherein the judgment of the Bombay High Court holding that no notice was required to be issued to the borrower or any third party in proceedings under Section 14, was upheld. We have passed another judgment in Writ C No.9723 of 2024 (PNB Housing Finance Ltd., Lucknow vs. State of U.P. and others) decided on 14.11.2024 wherein we have dealt with the aspect regarding implementation of the orders passed under Section 14."

4. It is an admitted position that the petitioner is a borrower, who has challenged the order under Section 14 of the SARFAESI Act 2002. The legal position has already been discussed in the judgment referred in the above quoted order. The petitioner cannot challenge the said order before this Court under 226 if the Constitution of India directly, though he has remedy under Section 17 of the SARFAESI Act 2002.

5. Learned counsel for the petitioner of the connected petition filed by the auction purchaser says that proceeding under Section 17 of the SARFAESI Act 2002 has not been initiated by the petitioner. There is no interim order in WRIT - C No. - 11232 of 2014 filed by the borrower.

6. This petition is not maintainable. It (WRIT - C No. - 11232 of 2014) is accordingly dismissed as not maintainable with liberty however to pursue the remedy under Section 17 of the SARFAESI Act 2002 as far as it may be permissible at this stage.

7. As far as the writ petition (WRIT - C No. - 656 of 2022) filed by the auction purchaser is concerned there is already an order under Section 14 of the SARFAESI Act 2002 passed by the District Magistrate in favour of the Bank, however, we have perused the order dated 5.11.2024 passed under Section 14 of the SARFAESI Act 2002, we find that ADM, Pratapgarh has directed the Bank to take possession of the secured asset and has written to the police to facilitate the taking over possession and has also directed SDM, Sadar and S.P., Pratapgarh to do the needful. Till date, the possession has not been handed over to the Bank in pursuance to the said order.

8. We have already discussed the legal possession as to how the proceedings under Section 14 of the SARFAESI Act 2002 are to be held especially with regard to the handing over of possession in the judgment refer in our order dated 8.1.2025 quoted hereinabove. We may specifically refer to our order 14.11.2024 rendered in Writ- C No. 9723 of 2024 wherein considering the provision of SARFAESI Act 2002 we have held as under:- "The above quoted provision evidently says that the District Magistrate or the Chief Metorpolitan Magistrate may authorize any officer subordinate to him (i) to take possession of such assets and documents relating thereto; and (ii) to forward such assets and documents to the secured creditor. This makes intention of the legislature clear, that, it is the District Magistrate or the Chief Metropolitan Magistrate (who in the State of U.P. would be the Chief Judicial Magistrate) are obliged to take possession of such assets and documents relating thereto, and to forward such assets & documents to the secured creditor. Therefore, it is not the secured creditor who after obtaining an order under Section 14 of the Act, 2002 who is supposed to run from pillar to post or to the police personnel to get the order executed, it is the obligation of the aforesaid officer. Further, for the purpose of securing compliance with the provisions of Sub-section (1) of the Act, 2002, the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. This also makes it clear that it is the statutory obligation of the District Magistrate or the Chief Metropolitan Magistrate / Chief Judicial Magistrate, to take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. In fact, a separate execution case or enforcement case need not be registered either by the District Magistrate or the Chief Judicial Magistrate, but after passing of requisite orders under Section 14 of the Act, 2002, its execution should also be ensured and after possession has actually been handed over to the secured creditor, only then the proceedings under Section 14 should be consigned and treated as concluded, not prior to it. It appears that after passing of such orders, the District Magistrates or the Chief Judicial Magistrates leave the secured creditor to the mercy of the police personnel, as if, it is the secured creditor who has to get the order enforced through the police, which is not the correct legal position. In judgment dated 25.10.2024 rendered in Writ C No. 8867 of 2024, Bank of Baroda Vs. State of U.P. and 8 others, we have already held that there is no requirement of issuing notice to the Borrower in such proceedings under Section 14. However, we must clarify that a reasonable time say of at least 15 days should be given to the occupant of the secured asset to vacate the premises so that he may shift his belongings."

9. It is the obligation of the District Magistrate or the C.J.M, as the case may be, to take physical possession and then hand it over to the Bank and the requirement of subsection 14 is not satisfied by merely passing an order under the said provision with a direction to the Bank to take over the possession or the concerned authorities to facilitate the same. The officer passing the order Section 14 has to ensure that the physical possession is taken and then given to the Bank and only after the physical possession of the secured assets is actually handed over to the Bank the proceedings under Section 14 of the SARFAESI Act 2002 are to be consigned.

10. In this case, ADM, Pratapgarh has not followed procedure as envisaged under Section 14. Nevertheless, we grant him opportunity to rectify the error by ensuring handing over of physical possession of secured assets to the Bank expeditiously say within three weeks. The Bank shall thereafter handover the possession to the petitioner. This order is passed subject to the caveat i.e. if there is any legal impediment in this regard then the same shall be informed to the Bank and the petitioner in writing within the said period otherwise this order shall be complied strictly.

11. Sri Shailesh Tiwari, learned Standing Counsel shall communicate our order along with the two judgments referred hereinabove to the concerned officers at Pratapgarh for compliance.

12. As regards relief nos. 2 and 3 are concerned, it is open for the petitioner to raise separate claims against the persons after obtaining possession of the secured assets or if any legal impediment is pointed out to him as discussed as mentioned hereinabove thereafter.

13. The writ petition (WRIT - C No. - 656 of 2022) is disposed of with the aforesaid directions. Order Date :- 16.1.2025 Anuj Singh [Brij Raj Singh, J.] [Rajan Roy, J.] ANUJ PRATAP SINGH High Court of Judicature at Allahabad, Lucknow Bench

"1. Heard counsel for the parties.

2. Let counsel for petitioner satisfy the court as to how this petition is maintainable in view of the settled law that the borrower does not have any right to challenge the order passed under Section 14 before the High Court under Article 226 of the Constitution of India though he may have a remedy under Section 17 of the SARFAESI Act, 2002 before the Debts Recovery Tribunal.

3. Put up on 16.01.2025 as first case of the day.

4. No further time shall be granted to Shri Sharad Nandan Ojha, counsel for petitioner or the arguing counsel who is not available today.

5. We have recently pronounced two decisions ; one in Writ C No.8867 of 2024 (Bank of Baroda vs. State of U.P. and 8 others decided on 25.10.2024 where we have elucidated the scope of the proceedings under Section 14 of the SARFAESI Act 2002 relying upon Supreme Court decisions in the case of Balkrishna Rama Tarle Dead Through LRS and another vs. Phoenix ARC Private Limited and Others wherein the judgment of the Bombay High Court holding that no notice was required to be issued to the borrower or any third party in proceedings under Section 14, was upheld. We have passed another judgment in Writ C No.9723 of 2024 (PNB Housing Finance Ltd., Lucknow vs. State of U.P. and others) decided on 14.11.2024 wherein we have dealt with the aspect regarding implementation of the orders passed under Section 14."

4. It is an admitted position that the petitioner is a borrower, who has challenged the order under Section 14 of the SARFAESI Act 2002. The legal position has already been discussed in the judgment referred in the above quoted order. The petitioner cannot challenge the said order before this Court under 226 if the Constitution of India directly, though he has remedy under Section 17 of the SARFAESI Act 2002.

5. Learned counsel for the petitioner of the connected petition filed by the auction purchaser says that proceeding under Section 17 of the SARFAESI Act 2002 has not been initiated by the petitioner. There is no interim order in WRIT - C No. - 11232 of 2014 filed by the borrower.

6. This petition is not maintainable. It (WRIT - C No. - 11232 of 2014) is accordingly dismissed as not maintainable with liberty however to pursue the remedy under Section 17 of the SARFAESI Act 2002 as far as it may be permissible at this stage.

7. As far as the writ petition (WRIT - C No. - 656 of 2022) filed by the auction purchaser is concerned there is already an order under Section 14 of the SARFAESI Act 2002 passed by the District Magistrate in favour of the Bank, however, we have perused the order dated 5.11.2024 passed under Section 14 of the SARFAESI Act 2002, we find that ADM, Pratapgarh has directed the Bank to take possession of the secured asset and has written to the police to facilitate the taking over possession and has also directed SDM, Sadar and S.P., Pratapgarh to do the needful. Till date, the possession has not been handed over to the Bank in pursuance to the said order.

8. We have already discussed the legal possession as to how the proceedings under Section 14 of the SARFAESI Act 2002 are to be held especially with regard to the handing over of possession in the judgment refer in our order dated 8.1.2025 quoted hereinabove. We may specifically refer to our order 14.11.2024 rendered in Writ- C No. 9723 of 2024 wherein considering the provision of SARFAESI Act 2002 we have held as under:- "The above quoted provision evidently says that the District Magistrate or the Chief Metorpolitan Magistrate may authorize any officer subordinate to him (i) to take possession of such assets and documents relating thereto; and (ii) to forward such assets and documents to the secured creditor. This makes intention of the legislature clear, that, it is the District Magistrate or the Chief Metropolitan Magistrate (who in the State of U.P. would be the Chief Judicial Magistrate) are obliged to take possession of such assets and documents relating thereto, and to forward such assets & documents to the secured creditor. Therefore, it is not the secured creditor who after obtaining an order under Section 14 of the Act, 2002 who is supposed to run from pillar to post or to the police personnel to get the order executed, it is the obligation of the aforesaid officer. Further, for the purpose of securing compliance with the provisions of Sub-section (1) of the Act, 2002, the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. This also makes it clear that it is the statutory obligation of the District Magistrate or the Chief Metropolitan Magistrate / Chief Judicial Magistrate, to take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. In fact, a separate execution case or enforcement case need not be registered either by the District Magistrate or the Chief Judicial Magistrate, but after passing of requisite orders under Section 14 of the Act, 2002, its execution should also be ensured and after possession has actually been handed over to the secured creditor, only then the proceedings under Section 14 should be consigned and treated as concluded, not prior to it. It appears that after passing of such orders, the District Magistrates or the Chief Judicial Magistrates leave the secured creditor to the mercy of the police personnel, as if, it is the secured creditor who has to get the order enforced through the police, which is not the correct legal position. In judgment dated 25.10.2024 rendered in Writ C No. 8867 of 2024, Bank of Baroda Vs. State of U.P. and 8 others, we have already held that there is no requirement of issuing notice to the Borrower in such proceedings under Section 14. However, we must clarify that a reasonable time say of at least 15 days should be given to the occupant of the secured asset to vacate the premises so that he may shift his belongings."

9. It is the obligation of the District Magistrate or the C.J.M, as the case may be, to take physical possession and then hand it over to the Bank and the requirement of subsection 14 is not satisfied by merely passing an order under the said provision with a direction to the Bank to take over the possession or the concerned authorities to facilitate the same. The officer passing the order Section 14 has to ensure that the physical possession is taken and then given to the Bank and only after the physical possession of the secured assets is actually handed over to the Bank the proceedings under Section 14 of the SARFAESI Act 2002 are to be consigned.

10. In this case, ADM, Pratapgarh has not followed procedure as envisaged under Section 14. Nevertheless, we grant him opportunity to rectify the error by ensuring handing over of physical possession of secured assets to the Bank expeditiously say within three weeks. The Bank shall thereafter handover the possession to the petitioner. This order is passed subject to the caveat i.e. if there is any legal impediment in this regard then the same shall be informed to the Bank and the petitioner in writing within the said period otherwise this order shall be complied strictly.

11. Sri Shailesh Tiwari, learned Standing Counsel shall communicate our order along with the two judgments referred hereinabove to the concerned officers at Pratapgarh for compliance.

12. As regards relief nos. 2 and 3 are concerned, it is open for the petitioner to raise separate claims against the persons after obtaining possession of the secured assets or if any legal impediment is pointed out to him as discussed as mentioned hereinabove thereafter.

13. The writ petition (WRIT - C No. - 656 of 2022) is disposed of with the aforesaid directions. Order Date :- 16.1.2025 Anuj Singh [Brij Raj Singh, J.] [Rajan Roy, J.] ANUJ PRATAP SINGH High Court of Judicature at Allahabad, Lucknow Bench