Ors vs Sri
Dinesh Kumar Agarwal on 23 April, 2013
Kolkata High Court (Appellete Side)
Kolkata High Court (Appellete Side)
Ors vs Sri Dinesh Kumar Agarwal on 23 April,
2013 Author: Ashim Kumar Banerjee Form No. J.(2)
IN THE
HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction Appellate Side Present:
The
Hon'ble Justice Ashim Kumar Banerjee And
The
Hon'ble Justice Dr. Mrinal Kanti Chaudhuri
M.A.T. No.
389 of 2013
With
CAN 3023
of 2013 ANDHRA BANK & ORS.
Vs.
SRI DINESH
KUMAR AGARWAL & ORS.
For the
Appellants : Mr. Sovon Siddhanta, Advocate Mr. Dinendra Nath Chatterjee,
Advocate For the Respondents : Mr. Srijib Chakraborty, Advocate Mr. Sirsanya
Bandopadhyay, Advocate For the State : Mr. Bhabes Ganguly, Advocate Mr. Somnath
Banerjee, Advocate Heard on : April 8, 2013. Judgment on : April 23, 2013.
ASHIM
KUMAR BANERJEE.J:
FACTS :
On February 6,
1996 Agarwals formed a company by the name of M/s Chetani Exim Pvt. Ltd., the
couple Dinesh Kumar Agarwal and Sunita Agarwal became its Directors. Chetani
applied for financial support from Andhra Bank. The Bank sanctioned credit
facility to the extent of Rs.40 lacs as working capital vide letter dated
February 1, 2007. Dinesh and Sunita executed personal guarantee to the extent
of Rs.10 lacs and Rs.8 lacs respectively. Agarwals did not adhere to the
repayment schedule. The Bank declared the account as non-performing. On October
7, 2009, the Bank served a notice under Section 13(2) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act
(hereinafter referred to as 'SARFAESI' Act. inter alia demanding a sum of
Rs.46,97,257.02. The respondent replied to the said notice on
November 28, 2009 by
contending; the said notice was illegal and as such liable to be quashed. In
paragraph 7 (II) of the said letter the learned advocate appearing for Agarwals
would contend, "before taking such qusi step under the Act of 2002 the
bank ought to have allowed and/or called upon my client to pay balance unpaid
amount under compromise settlement which settlement is still in operation and
vogue". The Bank replied by letter dated December 9, 2009, the Agarwals
never turned up to the branch for any discussion. Chetani replied by letter
dated December 24, 2009 asking for time, date and venue for discussing
settlement. Nothing happened. The authority waited for about three years and
ultimately took physical possession of the flat being the only tangible asset belonging
to Agarwals. On November 6, 2012 challenging the action of the Bank for taking
possession of the flat in question Agawrals and Chetani filed a writ petition
before the learned Single Judge on December 13, 2012. The learned Single Judge
allowed the writ petition vide judgment and order dated February 1, 2013
quashing the action taken by the bank under Section 13(4) coupled with liberty
to proceed afresh. Being aggrieved, Bank preferred the instant appeal that we
heard on April 8, 2013.
ANALYSIS OF THE JUDGMENT AND ORDER OF THE LEARNED SINGLE
JUDGE :
Learned Judge did not
consider the merits of the case. His Lordship considered the provisions of law
and ultimately came to the conclusion, the action on the part of the Bank was
illegal. Pertinent to note, the Bank approached the Chief Judicial Magistrate,
Barasat, 24-Parganas with an application under Section 14 of the SARFAESI Act
and obtained an order on September 16, 2011 to take actual physical possession
of the immovable properties/secured assets. According to the learned Judge,
Section 14 would not empower a Chief Judicial Magistrate to pass such order as
the power was vested upon the Chief Metropolitan Magistrate in Metropolis and
the District Magistrate in the rest part of the State. Barasat is not a
Metropolis nor is Baguihati where the flat is situated. Hence, the Chief
Judicial Magistrate did not have any authority under Section 14. The Bank
should have approached the District Magistrate, 24-Parganas (North) for
appropriate order. His Lordship differed with the view expressed by the Kerala
High Court in the case of Solaris Systems (P) Ltd. Vs. Oriental Bank of
Commerce reported in 2006 Volume-II D.R.T.C page-408 Kerala and relied on the
decision of the Bombay High Court in the case of Indusind Bank Ltd. Vs. State
of Maharashtra reported in All India Reporter 2008 NOC-2474 (Bombay). His
Lordship also considered the Apex Court decision in the case of M/s. Transcore
Vs. Union of India & Anr. reported in All India Reporter 2007 Supreme Court
page-712 and in the case of United Bank of India Vs. Satyawati Tondon &
Ors. reported in (2010) Volume-VIII Supreme Court Cases page-110. His Lordship
lastly relied on the Apex Court decision in the case of Whirlpool Corporation
Vs. Registrar of Trade Marks, Mumbai reported in 1998 Volume-VIII Supreme Court
Cases page-1. We are told in a case of the like nature His Lordship in W.P. No.
5968 (w) of 2013 Banani Kar & Anr. Vs. Union of India and Ors, quashed an
attempt of the secured creditor on the strength of an order passed by the Chief
Judicial Magistrate, 24-Parganas (South) vide judgment and order dated March 8,
2013.
CONTENTIONS :
Mr. Sovon Siddhanta, learned counsel appearing with Mr.
Dinendra Nath Chatterjee, learned counsel advanced the argument on behalf of
the Bank. Mr. Siddhanta would bank upon the Kerala High Court decision and
contend, once the Chief Metropolitan Magistrate was permitted to exercise power
under Section 14 there would be no reason why the Chief Judicial Magistrate in
respect of other cities and/or towns would not be empowered to exercise such
judicial power which their counterpart would avail sitting in Metropolis. Mr.
Siddhanta drew our attention to the decision of the learned Single Judge in
case of Solaris Systems (P) Ltd. (supra). He would also rely upon a Madras High
Court decision in the case of Dhanlakshmi Bank Ltd. Vs. Kovai Foods and
Beverages & Ors. reported in 2007 Volume-III Banking Cases page-612. The
learned Single Judge of the Madras High Court considered Section 14 and observed
as follows:
"On perusal of the
impugned order it appears that the learned Chief Judicial Magistrate is under
misconception. Since the term "Chief Judicial Magistrate" is missing
in the Act, instead "District Magistrate" is mentioned, erroneously
returned the application. Power has been conferred on the District Head in
metropolitan areas as well as in the non-metropolitan areas to initiate
proceedings in this regard. Section 17(1) of the Cr.P.C. reads as follows :
"The High Court shall,
in relation to every metropolitan area within its local jurisdiction, appoint a
Metropolitan Magistrate to be the Chief Metropolitan magistrate for such
metropolitan area." Section 12(1) of the Cr.P.C. reads as follows :
"In every district (not being a metropolitan area), the High Court shall
appoint a Judicial Magistrate of the First Class to be the Chief Judicial
Magistrate."
Section 3(1)(d) of the
Cr.P.C. reads as follows : "any reference to the Chief Judicial Magistrate
shall, in relation to a metropolitan area, be construed as a reference to the
Chief Metropolitan Magistrate exercising jurisdiction in that area." The
power conferred with the Chief Metropolitan Magistrate is equal to the Chief
Judicial Magistrate in the District level. The learned District Magistrate will
be seen only as Chief Judicial Magistrate. The return of the application of the
petitioner is erroneous." His Lordship relied on Section 17(1) of the
Criminal Procedure Code that would provide, the High Court in relation to every
Metropolis would appoint a Metropolitan Magistrate to be the Chief Metropolitan
Magistrate and under Section 12(1) a Judicial Magistrate to be the Chief
Judicial Magistrate. Under Section 3(1)(d), any reference to the Chief Judicial
Magistrate shall, in relation to a metropolitan area would be construed as a
reference to Chief Metropolitan Magistrate. On a combined reading of the said
provisions, His Lordship observed, the District Magistrate as mentioned in
Section 14 would be seen only as Chief Judicial Magistrate.
Per contra, Mr. Srijib
Chakraborty, learned counsel would contend, Section 14 was clear on the issue
except in a Metropolis the power was conferred on a District Magistrate and not
any other person. Hence, the Bank was not entitled to enforce the order of the
Chief Judicial Magistrate.
OUR VIEW :
We have considered the rival contentions. We have carefully
perused the judgment and order of the learned Single Judge and the precedents
cited at the Bar and relied upon by the learned Single Judge. In our considered
view, the learned Single Judge was not only correct but also accurate to
interpret the provision of law. If we read Section 14, it would clearly mean,
the legislature did not intend to bring the Court of law at the stage of
Section 13 or 14. Hence, it entrusted the Chief Executive of the District to
exercise the power under Section 14. Only exception was made in case of
Metropolis that was entrusted to the Chief Metropolitan Magistrate. We do not
support the logic of the Madras High Court or the Kerala High Court to the
extent, District Magistrate should be seen as Chief Judicial Magistrate. The
learned Single Judge of the Madras High Court considered the relevant
provisions of the Criminal Procedure Code where the Chief Metropolitan
Magistrate was authorized to use the power that was vested on the Chief
Judicial Magistrate. It was not otherway round. Had it been only Chief
Metropolitan Magistrate, we would have supported the logic. Once the District
Magistrate was clearly mentioned in Section 14, the intent was clear and
unambiguous. We cannot interpret otherwise. We fully agree, in a case of
Metropolis, the Chief Metropolitan Magistrate having the expertise to examine
the provisions of law, would judiciously exercise such power whereas in case of
other cities or towns the District Magistrate being an Executive without having
the legal expertise would not be so competent like Chief Metropolitan
Magistrate. It is for the legislature to amend the law if they intend to do so.
So long it is not done, we are unable to support the view of the Madras High
Court or the Kerala High Court. We fully support the learned Single Judge on
the proposition of law.
We should have ended here,
however, our conscience would prick looking at the facts. Writ Court is a Court
of equity. Court of appeal being an extension of the original jurisdiction
cannot be oblivion and cannot shut their eyes that would result in a gross
injustice, rather it would be a premium to dishonesty. On examination of the
facts we would find, the couple formed a company and obtained credit facilities
to the extent of Rs.40 lacs. Possibly, they did not repay any sum, at least not
specifically claimed in their reply to the Bank. Even if it was paid it would
be pittance considering the amount of the dues. Working capital loan was
granted to the extent of Rs.40 lacs for trading. The company had no tangible
asset at all. The couple had only the flat that could be taken possession of.
Plant and machinery was shown as Rs.4 lacs. We fail to appreciate, how plant
and machinery would be relevant for trading of plastic granules. Bank officials
must be involved in the fraud. The loan was sanctioned on January 31, 2007. It
was to be repaid by January 30, 2009. The amount of Rs.40 lacs became Rs.46
lacs within two years. The reply to the notice under Section 13(2) did not make
any specific proposal to repay. The reply to the Bank would show, the borrower
never approached the Bank for repayment. In course of hearing, we asked Mr.
Chakraborty as to what amount the borrower would pay to show their bona fide.
We adjourned the matter on April 5, 2013. Mr. Chakraborty was prompt enough to
inform us on the next day, he was not in a position to pay anything. It is
true, the Bank dispossessed the couple. It is also true, Bank waited for long
three years even after service of notice under Section 13(2). During these
three years period not a single penny was repaid. If we consider Section 13 and
14 together, we would find, there had been subjective compliance. The Bank
issued notice under Section 13(2) demanding payment. The Bank was entitled to
take possession under Section 13(4) that they took. Section 14 was an enabling
provision for obtaining necessary administrative help that would not take away
the substantive power of the Bank under Section 13(4). Section 13(4) would
empower the Bank to take possession in case of default in making payment of the
outstanding so demanded under Section 13(2). The Bank was not obliged to
approach any authority under Section 14 for taking possession. Section 14 would
empower the Bank to approach the appropriate authority under the said provision
making a request to take possession on their behalf if they so like. It was
rather making a request to an authority to take possession on their behalf.
From the documents it appears,
the Bank officer being the Assistant General Manager, Andhra Bank took
possession on behalf of the Bank and not the District Magistrate or the Chief
Judicial Magistrate or the police authority, hence, such possession was under
Section 13(4) not under Section 14. If we look to the order dated September 16,
2011 passed by the Chief Judicial Magistrate, we would find the
Officer-In-Charge, Baguihati, was directed to take possession under Section
14(2) however, the possession notice was signed by the Assistant General
Manager and not Officer-In-Charge, hence, the order of the Chief Judicial
Magistrate was not acted upon at all. If the police force gave necessary police
assistance to the Bank Manager that would be for protection of the officer from
any untoward incident or to prevent breach of peace. The possession so taken by
the Bank in our view, was under Section 13(4) and not under Section 14. Hence,
although we fully agree with the finding of the learned Judge on the
proposition of law, we beg to differ with His Lordship on the ultimate
decision. His Lordship held, the approach of the Bank under Section 14 was
contrary to law. We find, the ultimate approach was not under Section 14 but
under Section 13(4), hence, His Lordship's direction to restore possession
cannot be sustained and as such is set aside.
Appeal succeeds and is allowed. The writ
petition is dismissed. There would be however no order as to costs. Urgent
certified copy of this judgment, if applied for, be given to the parties on
their usual undertaking.
Dr. Mrinal Kanti Chaudhuri, J:
I agree.
[ASHIM KUMAR BANERJEE,J.]
[DR. MRINAL KANTI CHAUDHURI,J.]
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