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Judgment
R.S. Kulhari, J
This appeal has been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of the Security Interest Act, 2002 (hereinafter referred to as "The SARFAESI Act") against the order dated 07.05.2019 passed by the Presiding Officer, DRT, Lucknow, whereby the securitization application (S.A. hereinafter) filed by the respondents-borrowers was allowed.
The brief facts of the matter are, that the appellant-Bank granted certain credit facilities to the respondent No. 1-a partnership firm. In order to secure the said loan, the respondents No. 2 to 4 created equitable mortgage over their properties by depositing title deeds with the Bank. As the loan was not repaid in time, the account was classified as NPA on 30.09.2016 and the demand notice dated 31.01.2017 was issued under section 13(2) of the SARFAESI Act, 2002 demanding a sum of Rs. 14,37,50,688.76. Since the borrowers did not pay any heed to the said demand, so the symbolic possessions of the properties were taken by the Bank by issuing possession notices dated 8.8.2017, 9.8.2017 and 10.08.2017 under section 13(4) of the SARFAESI Act.
It is averred that the appellant-Bank obtained an order dated 31.08.2018 passed by the A.D.M. (F & R) for taking physical possession of the secured assets. The physical possessions of four immovable secured assets, out of six properties, were taken by the Bank on different dates i.e. 29.12.2018, 01.01.2019 and 02.01.2019 and the possession of two residential houses remained with the respondents.
The respondents-borrowers filed S.A. No. 37 of 2019 praying for setting aside the demand notice, possession notices as well as the proceedings of physical possessions dated 29.12.2018, 01.01.2019 and 02.01.2019 alleging that the Bank had violated the provisions of law.
During the pendency of S.A., the sale notice dated 14.03.2019 was issued scheduling the auction for 25.04.2019. The said sale notice was also challenged by the S.A. applicants amending the securitization application, but the same could not be materialized for want of bids, hence it became infructuous.
The Tribunal below vide impugned order allowed the S.A. and set aside the possession notices dated 08.08.2017, 09.08.2017 and 10.08.2017 as well as the proceedings of the physical possessions dated 29.12.2018, 01.01.2019 and 02.01.2019 and directed the Bank to restore the possession of immovable properties, observing that the appellant-Bank has not served the notice to the borrowers/mortgagors either at the time of taking symbolic possession or at the time of taking physical possession of the secured assets. Being aggrieved by the said order, the present appeal has been filed by the appellant.
Learned counsel for the appellant submitted that the symbolic possessions of the properties were taken on 08.08.2017, 09.08.2017 and 10.08.2017, as the properties were situated at various places and just after that, the possession notices were sent to the respondents by post on 11.08.2017. Copies of the postal receipts were submitted before the learned Tribunal below and also filed at page No. 120 of memo of appeal, but the learned Tribunal below has not whispered about these postal receipts and erred in concluding that the possession notices were not served. It was also contended that even otherwise, the relief qua the symbolic possession was time barred, as the S.A. was filed on 15.01.2019 and this aspect was also not considered.
With regard to the physical possession of the properties, it was contended that the Bank had obtained the order under section 14 of the SARFAESI Act from the competent authority for taking physical possession and in furtherance thereof, the concerned officers contacted the respondents on 28.12.2018, but on the next day i.e. 29.12.2018, the respondents have submitted an affidavit on 29.12.2018 for voluntarily handover of the physical possession of four properties and in conformity of the affidavit, they had handed over the physical possession on 29.12.2018, 01.01.2019 and 02.01.2019. However, at their request, the physical possessions of two residential properties were deferred on the basis of email dated 31.12.2018 sent by the respondents. But after lapse of 11 days, the respondents had cooked the story and lodged a false complaint on 11.01.2019. Thus, there was no infirmity in taking the physical possession of the properties.
It was also canvassed that since the possession was taken with the consent of the respondents, therefore, no notice for taking physical possession was required to be served, as laid down by the Hon'ble Supreme Court in Standard Chartered Bank Vs. V. Noble Kumar, 2013 (9) SCC 620. The Tribunal below has wrongly relied upon the judgment passed by the Hon'ble Karnataka High Court in K.R. Krishnegowda and another Vs. Chief Manager/Authorized Officer, Kotak Mahindra Bank, which is not applicable in the present case.
On the contrary, the learned Senior Advocate appearing on behalf of the respondents contended that the Bank has not served the possession notice as per procedure laid down under Rules 3(1) and 3(3) of the Security Interest (Enforcement) Rules, 2002 (in short "the Rules, 2002"), as the Bank has not submitted any acknowledgement receipt. Thus, the compliance of Rule 8(1) of the Rules, 2002 was not made by the Bank. The next contention was that the respondents were forced to sign the blank affidavit, which was filled-in by the authorized officer later on. Thus, the respondents had not handed over the possession voluntarily and for that purpose, they have also filed a complaint on 11.01.2019. Since no consent was given by the borrowers, therefore, the Bank was required to serve the notice before taking physical possession of the properties. No such notice was served, so the Tribunal below has rightly set aside the proceedings of the physical possession of the properties.
The learned Sr. Counsel has also emphasized that as per Rule 4(2-A) of the Rules, 2002, the Bank was required to intimate the respondents by the notice enclosing the Panchnama immediately after possession, but the same was sent on 02.02.2019 after delay of more than one month. Thus, the compliance of this provision has also not been made by the Bank, which vitiates the proceedings of the Bank.
I have given my thoughtful consideration to the rival contentions of the learned counsels for the parties and perused the record.
There is no dispute on the point that six immovable properties belonging to the respondents were equitably mortgaged with the Bank and out of which, the physical possessions of four properties were taken by the Bank. The symbolic possessions were taken on 08.08.2017, 09.08.2017 and 10.08.2017, which is evident from the photocopies of the possession notices placed at page No. 47 to 54 of the memo of appeal. Since the properties were situated at different places, hence the symbolic possessions were taken on three consecutive days. The possession notices were sent to the respondents by registered post on 11.08.2017. The copies of postal receipts are placed at page No. 120 of the memo of appeal. The Tribunal below has conveniently observed that the possession notices were not served, but has not considered the postal receipts filed by the Bank before the DRT and has set aside the possession notice only on this ground, but the conclusion of the Tribunal below cannot be said to be justified.
The Authorized Officer may take possession of the property by delivering the possession notice to the owner and if it is not possible to deliver the notice simultaneously at the time of taking of possession, the possession notice may be sent by post immediately or at the earliest, as held by this Tribunal and affirmed by the Hon'ble Madhya Pradesh High Court in Central Bank of India Vs. M/s. Jain Mineral Water (W.P. No. 1991/2019 decided on 18.02.2019). In the instant case, the symbolic possessions of all the properties belonging to the borrowers were concluded on 10.08.2017 and the possession notices were dispatched by registered post on 11.08.2017, so there was no delay or lapse in sending the possession notices to the borrowers.
Although, it is true that the Bank has not filed any acknowledgement receipts of service, but it is not disputed that the notices were not sent on the recorded address nor it is the case of the borrowers that they have not received such notices nor they have rebutted by any cogent evidence that the notices so sent were not delivered or returned back undelivered to the appellant-Bank. Thus, the presumption under the General Clauses Act may be drawn that the notices sent by the registered post were delivered to the borrowers. The Tribunal below has not considered the evidence furnished by the Bank in right perspective and has erred in concluding that the notice was not given to the borrowers at the time of taking symbolic possession of the properties.
The borrowers have not raised any objection with regard to affixation of the possession notice, therefore, the compliance of Rule 8(1) of the Rules, 2002 has been duly made with by the Bank.
With regard to the compliance of Rule 8(2) of the Rules, 2002, no infirmity has been pointed out by the Tribunal below. However, there is evidence on record that the Bank has published the possession notices in two newspapers namely "Business Standard" in English language and "Amar Ujala" in Hindi language (placed at page No. 75 and 76 of the memo of appeal). Thus, the Bank has also complied with the provisions of Rule 8(2) of the Rules, 2002 and no infirmity was caused in taking the symbolic possession of the properties.
The contention that the Bank was required to serve the notice before taking physical possession is also not tenable. It is the case of Bank that the possessions of the properties were voluntarily handed over by the borrowers. In support of this contention, an affidavit dated 29.12.2018 signed by the borrowers has also been placed on record. The respondents have not denied their signatures on the affidavit, but are alleging that their signatures were obtained on blank stamp paper. However, the possibility cannot be ruled out that this averment of the borrowers was a concocted story. Had there been no consent of the borrowers, they would have resisted at the time of taking of physical possession, which was taken not only on one day, but on three different days. Further, no FIR was lodged immediately during those days raising any objection towards the physical possession. Apart from this, the respondents have sent an email dated 31.12.2018 to the Managing Director of the Bank, in which they have never stated that the signatures were taken on any "blank paper". Their thrust was to settle the matter through OTS and prayed for grant of 15 days further time to settle the dues. The story of signature on blank paper was narrated for the first time, when the complaint was lodged on 11.01.2019, which was filed with the delay of more than 10 days and no reason has been mentioned for such inordinate delay, so any improved version may be mentioned after lapse of such time to create a defence. The factum of voluntary handover is also fortified by the averment of the bank that the Bank has deferred the possession of two residential properties, as the borrowers had agreed to voluntarily handover the possession of four properties in question. Thus, it cannot be said that the Bank has obtained any forceful possession and instead the possession was taken with the consent of the borrowers. Even otherwise, if the Bank had apprehended any resistance of the borrowers, it might have resorted to the order dated 31.08.2018 of the D.M. for taking physical possession, but since the possession was handed over voluntarily, therefore, there was no necessity to act on behalf of the order of the D.M.
As stated above, the physical possession was taken with the consent, so there was no necessity to serve any notice to the parties before taking physical possession. The Tribunal below has not considered the law as laid down by the Hon'ble Supreme Court in Standard Chartered Bank Vs. V. Noble Kumar (Supra) that if no resistance is caused after compliance of Rules 8(1) and (2) of the Rules, 2002, the possession may be taken by the secured creditor (para 36(1) of the judgment). This judgment was passed after the judgment of the Hon'ble Karnataka High Court in K.R. Krishnegowda and another Vs. Chief Manager/Authorized Officer, Kotak Mahindra Bank (Supra). Therefore, the law laid down in V. Noble Kumar case is applicable for all the purposes of taking possession of the properties.
With regard to the contention that the copy of inventory was sent after about one month, suffice it to say that firstly, the possession was taken with the consent of the borrowers, so the Bank was not required to send the copy of inventory, which was necessary, if the possession was taken in compliance of the order of the D.M. as laid down by the Hon'ble Supreme Court in V. Noble Kumar case (Para 36(H)). Secondly, the Rule 4(2-A) of the Rules, 2002 prescribes for sending the notice with copy of inventory to the borrowers, but no specific time frame has been provided under this Rule. So, even if, it is dispatched after some time, it cannot be said that any prejudice was caused to the borrowers. Thirdly, the delay so caused in sending the copy of inventory may be a mere irregularity, but cannot be treated an illegality nor it is so grave, which causes any prejudice to the borrowers or goes to the root of the matter of taking physical possession.
In view of the aforesaid, the Tribunal below has not considered the factual and legal aspects in right perspective, therefore, the impugned order is liable to be set aside.
Accordingly, the appeal is allowed and the impugned order dated 07.05.2019 is quashed and set aside. The Bank is free to proceed further in accordance with law. No order as costs.
A copy of this judgment be supplied to the parties as well as to the DRT concerned.