Sahebrao Marutrao Patil vs Dr. Annasaheb Chougule Urban Co-Op. Bank Ltd

Raj Mani Chauhan, J

This Appeal under Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2004 (SARFAESI Act) has been directed by the Original Applicant against the judgment and order dated 28th October, 2013 passed by Dr. R.V.S. Gautam the learned Presiding Officer (learned P.O.), Debts Recovery Tribunal (DRT), Pune, in Securitization Application (S.A.) No. 126/2013, Shri Sahebrao Marutrao Patil v. Dr. Annasaheb Chougule Urban Co-operative Bank Ltd., whereby the learned P.O. has dismissed the aforesaid S.A. filed by the appellants. The relevant facts giving rise to the present appeal may be briefly stated as under:

The appellant No. 2, Smt. Chitra Sahebrao Patil availed certain credit facilities sanctioned by respondent No. 1, Dr. Annasaheb Chougule Urban Co-operative Bank Ltd. The appellant No. 1, Shri Sahebrao Marutrao Patil and respondent No. 2, Surendra Sahebrao Patil stood guarantors to the credit facilities availed by the borrowers. The borrower created equitable mortgage of her following immovable properties in favour of respondent No. 1 on 6th July, 2006 by depositing the title deeds:

All that piece and parcel of land situated, laying and being in district and Registration District Kolhapur, sub district and Tal: Karveer, within jurisdiction of Hon. Sub-Registrar Karveer, within city limits of Kolhapur, within limits of Kolhapur Municipal Corporation, in Ward "E", in the locality known as Mahadik Vasahat, Ruikar Colony, bearing R.S. No. 386 (part), in the scheme known as Royal Retreat, Twin Bungalow No. 7, having area admeasuring 128.21 sq.mts. built up along with garden area of 46.00 sq.mts. and terrace having area admeasuring 20.62 sq.mts. and bounded as follows:

The East by: Swimming Pool

The South by: Internal Road

The West by: Internal Road

The North by: Twin House No. 8.

(hereinafter referred as the Suit property).

The borrowers and guarantors executed relevant documents relating to the availing of credit facilities, guarantee deeds and other documents.

Indisputedly the borrower failed to maintain her accounts regular. Consequently, respondent No. 1 Bank classified the account of the borrower as Non-Performing Assets (NPA) and proceeded under the SARFAESI Act to recover its dues.

The Authorised Officer on 24th November, 2012 issued demand notice under Section 13(2) of the SARFAESI Act to the borrower, appellant No. 2, Smt. Chitra Sahebrao Patil and guarantors, appellant No. 1, Shri Sahebrao Marutrao Patil and respondent No. 2, Surendra Sahebrao Patil, calling upon them to pay the outstanding dues of Rs. 43,13,392/- due as on 31st October, 2012 within 60 days from the date of receipt of the notice. The authorized officer issued two demand notices, one to the borrower and the other to guarantors. The borrower and guarantors failed to pay the outstanding dues as per the demand of the authorized officer. Consequently, the authorized officer proceeded further under Section 13(4) of the SARFAESI Act.

The Authorized Officer on 15th February, 2013 issued notice to the borrower to remain present on 22nd February, 2013 at the Suit property to hand over the possession of the same. The authorized officer on the scheduled dated i.e. 22nd February, 2013 reached at the Suit property, but he found on the Suit property as locked and none was present there. The authorized officer thereafter took over the symbolic possession of the Suit property pasting possession notice on the property and he prepared Panchanama on the spot. The authorized officer thereafter published possession-cum-sale notice on 4th March, 2013 in a newspaper, which was in Vernacular language, calling upon the tenders from willing purchasers to purchase the Suit property. The date of submission of the tenders was fixed as 6th April, 2013 from 10.00 a.m. to 3.00 p.m. The date of opening the tenders was fixed as 8th April, 2013. The reserve price of the Suit property was mentioned as Rs. 56.75 lacs on the basis of Valuation Report obtained by the authorized officer through approved valuer, Deepak A. Mithari and Associates. The intending purchasers submitted their tenders on scheduled date i.e. on 6th April, 2013 before the Authorized Officer. The tenders were opened by the authorized officer on 8th April, 2013. The price quoted by respondent No. 3, Shri Shashikant Ganpatrao Chavan was found to be the highest. Consequently, the authorized officer declared him as "successful auction purchaser".

The respondent No. 3 deposited 25% and balance 75% of the sale price within the stipulated time. The authorized officer confirmed the sale and issued sale certificate in favour of respondent No. 3. The authorized officer thereafter moved an application before the District Magistrate, Kolhapur on 15th June, 2013 for taking over the physical possession of the sold property, which was allowed by the District Magistrate vide order dated 15th July, 2013. Pursuant to the aforesaid order/notice, the Circle Officer Part C. Kajja Karveer, Taluka-Karveer, District Kolhapur on 27th August, 2013 issued notice to Smt. Chitra Sahebrao Patil and Dr. Annasaheb Chougule Urban Cooperative Bank Ltd. informing that pursuant to the order dated 15th July, 2013 passed by the District Magistrate, Kolhapur, he will take over the physical possession of the sold property on 4th September, 2013 and thereafter hand over possession to the authorized officer.

Feeling aggrieved by the measures taken by the secured creditor under Section 13(2) and Section 13(4), the auction sale of the Suit property as well as the order dated 15th July, 2013 passed by the District Magistrate for handing over the possession of the Suit property to the authorized officer, the appellants filed Appeal/Securitisation Application (S.A.) No. 126/2013 under Section 17 of the SARFAESI Act in the DRT, Pune.

The appellants in the aforesaid S.A. challenged the demand notice issued by the authorized officer under Section 13(2) of the SARFAESI Act, on the ground that they were not served with any such notice. The appellants contended that they were said to have been served with the notice through RPAD, while the appellant No. 1 is suffering from paralysis, he was bed ridden, he could not sign the acknowledgement. The service of the so-called demand notice through RPAD, is totally false. The respondent No. 1 has not furnished the statement of accounts to them. The amount claimed by, respondent No. 1 has not been crystallized. The authorized officer has not given the break-up of the outstanding dues in the demand notice issued under Section 13(2) of the SARFAESI Act. Therefore, the so-called demand notice issued by the authorized officer is illegal, defective and liable to be quashed.

The appellants have further alleged that they were never served with the possession notice and that too, has been published after seven days from the date of taking over the symbolic possession of the secured assets. Therefore, the possession notice is in violation of Rule 8(2) of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred as the "Rules").

The appellants have further contended that the authorized officer had published the composite possession-cum-sale notice which is not permissible under the Rules. The possession and sale notice have to be published separately as contemplated under Rule 8(2) of the Rules. The authorized officer before publishing the sale notice, did not get the sold property valued through approved valuer, rather he had mentioned the reserve price of the sold property in the sale notice on a Valuation Report which was prepared subsequent to the sale notice. The appellants were never served with any sale notice as contemplated under Rule 8(6) of the Rules. The authorized officer did not publish the sale notice in two newspapers i.e. one in English and the other in Vernacular language. He had published the sale notice in one newspaper in Vernacular language. The authorized officer had never taken symbolic possession of the Suit property before conducting the sale.

The appellants have also challenged the legality of the equitable mortgage alleged to have been created by the appellant No. 2 in favour of respondent No. 1 Bank. The appellants have also challenged the action of respondent No. 1, on the ground that respondent No. 1 is a Co-operative Bank, which cannot proceed under the SARFAESI Act to recover its dues. The appellants in their aforesaid S.A. sought for the following reliefs:

(a) S.A. may be allowed.

(b) The intended possession by using the order under Section 14 be permanently stayed.

(c) The impugned sale, Section 13(4) and Section 13(2) notices were fraudulently obtained and order under Section 14 be quashed and set aside.

(d) During pendency, further action, like physical possession and sale auction, etc. be stayed till the final disposal of the present S.A.

(e) Without prejudice, the appellants may be permitted to privately sell the secured assets to the purchasers of their choice.

(f) The appellants may be allowed to shift the loan account to other Banks.

(g) For any other just and reasonable orders to meet the ends of justice.

The respondent Nos. 1 and 3 opposing the aforesaid S.A. filed by the appellants, have filed their written reply separately. The respondent No. 1 has denied the contention raised by the appellants in their S.A. It has contended that its authorized officer has taken over the symbolic possession of the Suit property on 22nd February, 2013. Thereafter on 4th March, 2006, he had issued sale notice, inviting tenders from the public at large for selling the Suit property fixing 8th April, 2013 for conducting the sale. The tenders were opened by the Authorized Officer on 8th April, 2013. The price quoted by respondent No. 2 was found to be the highest. Therefore, the authorized officer declared him as "successful purchaser", who deposited the entire sale price within the stipulated time. The authorized officer on 12th June, 2013, issued sale certificate in favour of respondent No. 2. Since symbolic possession of the Suit property was taken over by the authorized officer on 22nd February, 2013 therefore, the appellants could be aggrieved by the action taken by the authorized officer when he took over the symbolic possession of the Suit property on 22nd February, 2013, but the appellants filed S.A. on 28th August, 2013, which is barred by time. The appellants could challenge the measures taken by the authorized officer under Section 13(4) of the SARFAESI Act within 45 days from the date he had taken measures under Section 13(4) of the SARFAESI Act. The Authorized Officer after taking over the symbolic possession of the Suit property, issued possession-cum-sale notice.

The respondent No. 1 further contended that the authorized officer had already issued demand notice under Section 13(2) to the borrowers and guarantors on 24th November, 2012. They were served with the notice, but they despite service of demand notice, did not file any objection/representation against the demand notice. Therefore, they cannot challenge the outstanding dues as indicated in the demand notice. The borrower had executed mortgage documents of her immovable property, by depositing the title deeds. The respondent No. 1 is therefore, a secured creditor and is entitled to enforce its securities interest in accordance with the SARFAESI Act. The authorized officer had issued demand notice under Section 13(2) of the SARFAESI Act, and thereafter possession-cum-sale notice on 4th March, 2013, He had conducted the sale in accordance with the Rules provided under Rule 8 of the Rules. The measures taken by the authorized officer is in accordance with law. The S.A. filed by the appellant is misconceived which is liable to be dismissed.

The respondent No. 3 has filed separate written statement, almost on the same pattern as respondent No. 1.

The parties in support of their contentions filed affidavit and documentary evidence.

The learned P.O. after hearing the learned Counsel for the parties, found that the S.A. filed by the appellants is barred by time. The authorized officer of respondent No. 1 had taken over the symbolic possession of the Suit property on 22nd February', 2013, while the appellants have filed the present S.A. on 22nd November, 2013, i.e. after 45 days from the date of taking over the symbolic possession of the Suit property by the authorized officer. The S.A. filed by the appellants is therefore, barred by time.

The learned P.O. on the basis of evidence available on record, has held that the appellants were duly served with the demand notice issued by the authorized officer under Section 13(2) of the SARFAESI Act. The authorized officer has filed photographs, showing that he had pasted the possession notice on the Suit property on 22nd February, 2013. On the basis of evidence available on record, it is established that the borrower had created equitable mortgage of the Suit property. The authorized officer had taken measures under Sections 13(2) and 13(4) of the SARFAESI Act in accordance with the rules. The respondent No. 1 although is a Co-operative Bank, but it is entitled to proceed under the SARFAESI Act to recover its dues. In view of the above, the learned P.O. did not find any illegality in the measures taken by the authorized officer of respondent No. 1 Consequently, the learned P.O. did not find any merit in the S.A. filed by the appellants. The learned P.O. therefore, vide impugned judgment and order dated 28th October, 2013 dismissed the aforesaid S.A. filed by the appellant.

The appellants being aggrieved by the impugned judgment and order passed by the learned P.O., has filed the present Appeal.

Heard the learned Counsel for the parties and perused the material available on record.

The learned Counsel for the appellant contended that the authorized officer of respondent No. 1 had proceeded under the SARFAESI Act for realization of the outstanding dues of respondent No. 1, but the entire measures taken by him is in contravention to the Rules. However, the learned Counsel pressed the present Appeal, mainly on five grounds.

(i) The first contention of the learned Counsel for the appellant is that the learned P.O. has held that the appeal is barred by time, on the ground that the symbolic possession of the Suit property was taken over by the authorized officer on 22nd February, 2013, which had given rise to the cause of action to the appellants to filed the present S.A. But the appellant did not file S.A. challenging the action of taking over the symbolic possession of the Suit property by the authorized officer under Section 13(4) of the SARFAESI Act within time i.e. within 45 days from the date of taking over the symbolic possession of the Suit property by the authorized officer. The appellants have filed S.A. after expiry of 45 days from the date of taking over the symbolic possession of the Suit property by the Authorized Officer which gave rise to the cause of action to the appellants to file to present S.A. The S.A. filed by the appellants is therefore, barred by limitation. The learned Counsel contended that this observation of the learned P.O. is contrary to law.

The learned Counsel contended that there are so many measures contemplated under Section 13(4) of the SARFAESI Act, which can be challenged by the borrowers and guarantors or any person aggrieved by the measures taken by the authorized officer. Any person including the borrower may be aggrieved by any of the measures taken by the authorized officer under Section 13(4) of the SARFAESI Act, he can challenge measures by S.A. under Section 17 of the SARFAESI Act. The learned Counsel further contended that in view of the law laid down by the Hon'ble Apex Court in case Indian Overseas Bank v. Ashok Saw Mills, III (2009) BC 640 (SC) : VI (2009) SLT 10 : (2009) 8 SCC 366, the appellants may also challenge the post measures taken by the authorized officer to Section 13(4 of the SARFAESI Act. The learned Counsel contended that in this case, the authorized officer on 15th June, 2013 moved an application before the District Magistrate, Kolhapur under Section 14 of the SARFAESI Act to hand over the possession of the Suit property which was allowed by the District Magistrate vide order dated 15th July, 2013. The Circle Officer vide letter dated 27th August, 2013 had informed appellant No. 2 that the possession of the Suit property will be handed over to the authorized officer on 14th September, 2013 in pursuant to the order dated 15th July, 2013 passed by the District Magistrate, Kolhapur. The order of the District Magistrate, Kolhapur followed by a letter issued by the Circle Officer has given rise to the cause of action to the appellants to file the present S.A. The S.A. filed by the appellant is within 45 days from the date of the order was passed by the District Magistrate, Kolhapur. Therefore, the S.A. filed by the appellant is well within the time. The learned Counsel in support of his arguments has placed reliance on the following cases:

(a) Kanaiyalal Lalchand Sachdeo v. State of Maharashtra, II (2011) SLT 188 : I (2011) BC 698 (SC) : Arising out of SLP (Criminal) No. 4436-4438 of 2009 decided by the Hon'ble Apex Court (unreported); and

(b) Kaushal Shah v. State of Maharashtra, W.P. (L) No. 1298/2013 decided by the Division Bench of the Hon'ble High Court, Bombay (unreported).

(ii) The second contention of the learned Counsel for the appellants is that the appellant No. 1 is a paralysis patient since long and he was confined to his bed. Therefore, he was unable to sign any document. The learned Counsel contended that the demand notice issued by the authorized officer under Section 13(2) of the SARFAESI Act has been served to the borrower through RPAD. The Bank has filed acknowledgment, bearing signature of appellant No. 1. But on account of paralysis, appellant No. 1, was unable to sign any document. The learned Counsel contented that the appellant in support of this contention has filed copy of medical certificate dated 10th July, 2013 issued by Dr. Girish V. Patil of Shri Sai Cardiac Centre, Kolhapur, wherein it is specifically mentioned that the Appellant is unable to sign any document. The learned Counsel contended that the appellants have specifically denied that they were ever served with any notice under Section 13(2) of the SARFAESI Act. Therefore, the burden of proof of service of the demand notice laid on respondent No. 1, who failed to discharge its burden. The learned P.O. has held that the demand notice was served to the appellant, but he has not dealt with the contentions raised by the appellant, keeping in view of the medical certificate issued by Dr. Girish V. Patil. The learned P.O. was expected to record a clear finding, as to whether the demand notice issued by the authorized officer under Section 13(2) was reserved to the appellant or not on the basis of documentary evidence, as well as keeping in view of the contentions of the appellant No. 1. But the learned P.O. did not deal with this issue in the right perspective. The finding of the learned P.O. that the appellants were served with the demand notice issued by the Authorized Officer under Section 13(2) of the SARFAESI Act is therefore, perverse and liable to be quashed.

(iii) The third contention of the learned Counsel for the appellants is that the symbolic possession of the Suit property is said to have been taken over by the authorized officer on 22nd February, 2013. The learned Counsel contended that as provided under Rule 8(2), it was mandatory on the part of the authorized officer to publish possession notice within seven days from the date of taking over the possession of the Suit property in two newspapers, one in English and the other in Vernacular language, having sufficient circulation in the locality. In this case, the evidence available on record shows that the possession-cum-sale notice was published by the authorized officer on 4th March, 2013 only in one newspaper which was in Vernacular language. The authorized officer has not filed any newspaper cutting, showing that the notice was published in other newspaper too. In this case, the notice was published by the authorized officer after seven days from the date of taking over the symbolic possession of the Suit property and that too in one newspaper. In this way, the authorized officer has violated the provisions under Rule 8(2) of the Rules, which is mandatory.

(iv) The fourth contention of the learned Counsel is that the authorized officer had published possession-cum-sale notice, while both the notices could be clubbed together. The possession and sale notices are contemplated to be published separately as provided under Rule 8 of the Rules. The possession-cum-sale notice of the Suit property published by the authorized officer is therefore, illegal.

(v) The fifth contention of the learned Counsel for the appellants is that the sale notice was published in the newspaper on 4th March, 2013, filing the reserve price of the Suit property as Rs. 56.75 lacs, while the Valuation Report filed by respondent No. 1 shows that the valuation report was submitted by the Valuer on 5th March, 2013. Therefore, fixing of the reserve price prior to receipt of the valuation report reflects that the authorized officer colluding with the auction purchaser had fixed the reserve price on lower side in an imaginary manner. Therefore, the sale notice is defective and liable to be quashed.

The learned Counsel in view of the aforesaid contention, contended that all these points have not been properly dealt with by the learned P.O. Therefore, the impugned order passed by the learned P.O. is bad in the eyes of law and liable to be quashed and the matter requires to be remanded back to the learned P.O. for deciding the matter afresh, after affording an opportunity to the parties to be heard and after dealing with contentions raised by the parties in the light of evidence available on record.

Per contra, the learned Counsel for the respondent contended that the authorized officer has taken over the symbolic possession of the Suit property on 22nd February, 2013 which had given rise to the cause of action to the appellant to file the present S.A. The appellant could file the S.A. under Section 17 of the SARFAESI Act within 45 days from the date of accrual of the cause of action. But the appellants have filed the present S.A. on 28th August, 2013 which is hopelessly barred by time. The learned Counsel contended that the appellants have filed the present S.A. after the District Magistrate, Kolhapur had passed an order under Section 14 of the SARFAESI Act for taking over possession of the Suit property. As provided under Section 14 of the Act, the order passed by the Collector is not subject to the challenge under Section 17 of the SARFAESI Act. The learned P.O. has therefore; rightly held that the S.A. filed by the Appellant is barred by time.

The learned Counsel further contended that as regards the service of demand notice under Section 13(2) of the SARFAESI Act to the borrowers and guarantors is concerned, the authorized officer had sent demand notice to the borrowers and guarantors through RPAD. The postman had returned the acknowledgement, showing "personal service" to the borrowers and guarantors. The appellant No. 1 might have been suffering from paralysis, but the medical certificate does not specifically indicate that at the relevant time, the Appellant was unable to sign any document. The learned P.O. has dealt with this issue and has clearly observed that the notice under Section 13(2) of the SARFAESI Act was served to the borrowers and guarantors. Therefore, the above submission of the learned Counsel for the appellant has got no force.

The learned Counsel further contended that as regards the publication of possession notice is concerned, although the possession notice was published in the newspaper in Vernacular language after seven days from the date of taking over of the possession of the Suit property, but it was mere irregularity and not illegality. Unless the appellants prove that they had suffered any irreparable injury, such irregularity will not vitiate the sale conducted by the authorized officer.

The learned Counsel further contended, that although as contemplated under Rule 8, the possession and sale notice has to be served to the borrowers and guarantors and published separately but if the composite possession-cum-sale notice is published, it will be mere irregularity and not illegality which will not vitiate the sale conducted by the authorized officer in pursuant to such possession-cum-sale notice.

I have given active consideration to the rival submissions advanced by the learned Counsel for the parties.

From a perusal of the impugned judgment and order passed by the learned P.O., it appears that the learned P.O. has observed that the authorized officer of respondent No. 1 had taken over symbolic possession of the Suit property on 22nd February, 2013 which had given rise to the cause of action to the appellants to file the present S.A. The appellants as provided under Section 17 of the SARFAESI Act, could file S.A. within 45 days from the date, the authorized officer had taken over symbolic possession the Suit property. But the appellant has filed S.A. on 22nd November 2013 which is barred by time.

From a perusal of the copy of the S.A. filed by the appellant, it appears that the appellant has challenged the demand notice issued by the authorized officer under Section 13(2) of the SARFAESI Act and the measures taken by him under Section 13(4) of the SARFAESI Act. He has also contended that the authorized officer of respondent No. 1 has fraudulently obtained the order dated 15th July, 2012 from the District Magistrate, Kolhapur under Section 14 of the SARFAESI Act. From a perusal of the order dated 15th July, 2013 passed by the District Magistrate Kolhapur, it appears that he had allowed the application, filed by the authorized officer under Section 14 of the SARFAESI Act and directed Taluka-Karveer, District Kolhapur to take over the actual possession of the Suit property.

From a perusal of letter dated 271h August, 2013 sent by the Circle Officer, Taluka-Karveer, District Kolhapur to the borrower, Smt. Chitra Sahebrao Patil, it appears that he had informed her that in pursuant to the order dated 15th July, 2013 passed by the District Magistrate, Kolhapur, he will take over the physical possession of the Suit property on 4th September, 2013. The appellant thereafter on 28th August, 2013 filed S.A. It is well settled principle of law that the measures under Section 13(4) of the SARFAESI Act, contemplates series of measures. The appellants can challenge any of the measures taken by the authorized officer under Section 13(4) of the SARFAESI Act by which he feels aggrieved.

The Hon'ble Apex Court in case Indian Overseas Bank v. Ashok Saw Mills (supra) has held that even the measures subsequent to Section 13(4) of the SARFAESI Act can be also challenged by a person, who is aggrieved by such measures.

In case of Kanaiyalal Lalchand Sachdeo v. State of Maharashtra (supra), the Hon'ble Apex Court referring to its so many earlier judgments had held that the action under Section 14 of the SARFAESI Act, constitutes an action taken after the stage of Section 13(4) of the SARFAESI Act and therefore, the same would fall within the ambit of Section 17(1) of the Act. The Act itself contemplates an efficacious remedy for the borrower or any person affected by the action under Section 13(4) of the SARFAESI Act, by providing for an Appeal before the DRT. The relevant observation of the Hon'ble Court finds place in Para 20 of the Judgment, which reads as under:

It is manifest that an action under Section 14 of the Act constitutes an action taken after the stage of Section 13(4) and, therefore, the same would fall within the ambit of Section 17(1) of the Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person affected by an action under Section 13(4) of the Act, by providing for an Appeal before the DRT.

In case Kaushal Shah v. State of Maharashtra (supra), the Hon'ble Bombay High Court, relying on the aforesaid judgment rendered by the Hon'ble Apex Court held that the action under Section 14 of the Act, constitutes an action taken under Section 13(4) of the SARFAESI Act. The relevant observation of the Hon'ble High Court finds place in Para 10 which reads as under:

Section 17 entitles a person aggrieved by any of the measures referred to in Section 13(4) taken by a secured creditor to file an application. The words "measures referred to in Sub-section (4) of Section 13" pertain to any steps taken by the secured creditor. In other words, the ambit of Section 17 is not restricted to cases where orders are passed pursuant to the measures taken under Section 13(4) and/or where such orders are implemented. The Supreme Court, in Para. 39 of the judgment in Indian Overseas Bank v. Ashok Saw Mills (quoted in Para 21 of the judgment of the Supreme Court set out above) held that the "action taken by a secured creditor in terms of Section 13(3) is open to scrutiny". The Supreme Court further held that the filing of an application under Section 14 constitutes an action or measure taken under Section 13(4). The Supreme Court did not hold that the words "measures taken" refer to cases where orders are passed pursuant to the measures taken. Nor has the Supreme Court held that a secured creditor can be said to have taken measures under Section 13(4) only when it has had the order under Section 14 implemented or enforced. This is clear from the last sentence of Para 18 of the judgment of the Supreme Court, where it is held that a secured creditor may, in order to enforce its rights under Section 13(4), take recourse to Section 14 of the Act. The doubt, if any, is removed by the second sentence in Para 22 of the judgment of the Supreme Court where it is held that an action under Section 14 constitutes an action after the stage of Section 13(4) and, therefore, the same would fail within the ambit of Section 17(1). The Supreme Court has not held that only an order passed in an application under Section 14 can be the subject-matter of an application under Section 17. The making of the application itself is sufficient.

In view of the law laid down as above by the Hon'ble Apex Court as well as the Hon'ble High Court, Bombay, it is well settled that the order of dispossession of the person, in pursuant to the order passed by the CMM or District Magistrate under Section 14 of the SARFAESI Act found in possession of the secured asset, constitutes an action under the SARFAESI Act which falls within the ambit of Section 17 of the Act. The Appellant after receiving the letter dated 27th August, 2013 sent by the Circle Officer, has filed S.A. under Section 17 of the Act before the DRT, Pune, which in view of the law laid down by the Hon'ble Apex Court as well as the Hon'ble Bombay High Court in the above cited cases is well within time.

From perusal of the impugned judgment, it appears that the learned Counsel for the petitioner, either could not bring the above cited case laws to the notice of the learned P.O. or if the same were brought to the notice of the learned P.O., he failed to go through the above cited case laws. The findings of the learned P.O. that the S.A. is barred by time, appears erroneous in the eyes of law.

The appellants in their S.A. have specifically contended that they were not served with the demand notice alleged to have been issued by the authorized officer under Section 13(2) of the SARFAESI Act. The respondent in its reply has stated that the demand notices were sent to the borrower and guarantors through RPAD. The acknowledgement bears the signatures of the appellants and respondent No. 2. The appellant No. 1 has contended that he was suffering from paralysis and confined to bed. He was unable to sign any document. The medical certificate shows that he is unable to sign any document. The appellant No. 1 has filed photographs showing that he was badly suffering from paralysis and unable to move easily and to discharge his routine activities. The medical certificate filed by the appellant shows that he is unable to sign, while the acknowledgement bears his signature, the learned P.O. has not dealt with the contentions raised by the appellant in the light of documentary evidence filed by them, while the learned P.O. was expected to deal with their contentions in the light of documentary evidence filed by them.

The appellants have challenged the sale, on the ground that the appellants before issuing sale notice, did not obtain the valuation of the Suit property from the approved valuer. From perusal of possession-cum-sale notice dated 4th March, 2013 published in the newspaper on 6th March, 2013, it appears that the reserve price of the Suit property was fixed as Rs. 56.75 lacs, while the valuation report is dated 5th March, 2013. It is, therefore, clear that when the sale notice was issued, the authorized officer had not obtained valuation report, rather he obtain valuation report on 5th March, 2013. From perusal of impugned judgment, it appears that the learned P.O. has not considered this aspect in the light of documentary evidence available on record.

The appellants have challenged the possession-cum-sale notice on the ground that as contemplated under Rule 8(2) of the Rules, the possession notice has to be published within seven days from the date of taking over the possession of the secured asset i.e. within seven days from 22nd February, 2013, But in this case, the possession notice was published in the newspapers on 6th March, 2013, which is beyond seven days from the date of taking over the possession of the secured assets which in contravention of Rule 8(2) of the Rules. Moreover, the authorized officer published the possession-cum-sale notice only in one newspaper, which was in Vernacular language. He did not publish the possession notice in the other newspaper which is also in contravention of Rule 8(2) of the Rules.

At the stage, it will be relevant to go through the provisions under Rule 8(1) and (2) of the Security Interest (Enforcement) Rules, 2002, which read as under:

Sale of immovable secured assets:

(1) Where the secured asset is an immovable property, the authorized officer shall take or cause to be taken possession, by delivering a possession notice prepared as nearly as possible in Appendix IV to these rules, to the borrower and by affixing the possession notice on the outer door or at such conspicuous place of the property.

(2) The possession notice as referred to in Sub-rule (1) shall also be published, as soon as possible, but in any case not later than seven days from the date of taking possession, in two leading newspapers, one in vernacular language having sufficient circulation in that locality, by the authorized officer.

From perusal of Rule 8(2) of the Rules as quoted above, it appears that the possession notice as referred in Sub-rule (1), shall be published as soon as possible, but in any case not later than seven days from the date of taking over the possession in two leading newspapers, one in Vernacular language, having sufficient circulation in the locality.

From perusal of the possessions notice, it is clear that the possession notice has been published after seven days from the date of taking over the possession of the Suit property and that too only in one newspaper which is in contravention of the Rule 8(2) of the Rules. It is well-settled principle of law, where a particular act is required to be done in a particular manner as provided under the Act or the rules framed thereunder, such act has to be done in that manner. If such act is not done in the manner as provided under the Act or under the Rules, the same will be illegal.

From perusal of the documentary evidence available on record, it appears that the authorized officer has not followed Rule 8(2) of the Rules in letters and spirit. The learned P.O. has dealt with all the issues in a casual manner. Therefore, the finding of the learned P.O. suffers from non/proper application of mind to the evidence available on record as well as relevant rules as referred above.

The appellants have also challenged the legality of the possession-cum-sale notice, on the ground that there could not be a composite of possession-cum-sale notice, rather the possession and sale notices were required to be-published separately. The learned P.O. has also not dealt with this issue.

In view of the discussions above, I find that the learned P.O. has not dealt with the above points as observed above, while passing the impugned judgment and order. Therefore, the impugned judgment and order passed by the learned P.O. is bad in the eyes of law and liable to be quashed and the appeal deserves to be allowed. The matter requires to be remanded back to the learned P.O. to decide the S.A. filed by the Appellant afresh in the light of the observation made above.

ORDER

The Appeal, therefore, is allowed and the impugned judgment and order dated 28th December, 2013 passed by the learned P.O. in S.A. No. 126/2013 is set aside.

The matter is remanded back to the learned P.O. to decide the S.A. afresh in the light of the observations made above, after affording an opportunity to the parties to be heard.

The parties will appear before the learned P.O., DRT, Pune, on 6th January, 2014 for hearing. It is provided that the parties will maintain status quo with regard to the Suit property till pending S.A.