Oral Order:
1. Rule. By consent, Rule made returnable forthwith.
2. By consent, heard finally forthwith.
3. The petitioner had filed a complaint against the respondent Nos.2, 3 and 4 herein, alleging commission of various offences, including the offences punishable under section 406 IPC, 409 IPC, 420 IPC, 448 IPC, 504 IPC read with section 34 of the IPC, in the Court of Judicial Magistrate First Class at Pune. The learned Magistrate after examining the petitioner on oath, postponed the issue of process, and ordered investigation into the matter by the police, as contemplated under section 202 of the Code of Criminal Procedure (for short 'the Code'). After receipt of the report of investigation, the learned Magistrate came to the conclusion that there were not sufficient grounds for proceeding, and therefore, by an order dated 3rd October 2011, dismissed the complaint, as contemplated under section 203 of the Code. The petitioner challenged the order of dismissal of the complaint by filing an application for revision in the Court of Sessions. The learned Addl. Sessions Judge, who heard the revision application, found nothing wrong in the order passed by the Magistrate, and therefore, rejected the revision application. It is under these circumstances, that the applicant has, by the present petition under Article 227 of the Constitution of India, approached this Court, and is also invoking the inherent powers of the Court, praying that the order passed by the learned Addl. Sessions Judge in revision, be quashed and set aside, and that process be ordered to be issued with respect to the offences mentioned in the complaint 'against the respondent Bank'.
4. In this Court, the petitioner desired to be represented by his wife - Smt.Aarti Mahadik and as such, the wife of the petitioner Smt.Aarti Mahadik was permitted to address the Court by making submissions in support of the petition.
5. I have heard the petitioner's wife for and on behalf of the petitioner. I have heard Mr. R.Sathyanarayanan, learned counsel for the respondent nos.2 and 3. I have heard Mr.Deepak Thakre, learned APP for the State.
6. The case of the petitioner (hereinafter referred to as 'the complainant' for the sake of clarity and convenience), as per the complaint, was as follows :-
That, in the month of October 2003, or thereabout, the complainant and his wife approached the respondent no.3 - Housing Development Finance Corporation Ltd (HDFC Ltd) with a request to grant a term loan for their housing requirements. A term loan of Rs.8,50,000/- was disbursed to the complainant and his wife, on executing necessary security documents in favour of the HDFC Ltd. The flat for the purchase of which the loan was got sanctioned i.e. flat no.24, 6th floor Russet CHSL, Building No.D-3, Hermes Heritage, Phase II, Off Nagar Road, Yerawada, Taluka Haveli, District Pune (hereinafter referred to as 'the flat' or 'the said flat') was mortgaged, creating security interest in favour of the respondent no.3 - HDFC Ltd. That, initially the complainant paid the equated monthly instalments as agreed upon, but later, due to several personal difficulties, such as heavy loss in the business, loss of his wife's job due to ill-health etc. could not pay the same. The complainant's wife, therefore, wrote a letter to the respondent no.3 requesting them to revise the repayment schedule under a new scheme declared by the respondent no.3 as 'Easy EMI'. The respondent no.3, however, did not respond to the said communication. On 9th July 2005, the complainant again wrote a letter to the respondent no.3, but that also was not replied. According to the complainant, he is not a wilful defaulter, and that he has been repaying the loan amount as and when it was possible, and that even today, he and his wife are willing to regularize the loan account.
7. That, on 1st October 2008, the complainant found a notice dated 18th June 2008, issued by the respondent no.3, pasted on the door of the said flat. The complainant was shocked and surprised as he and/or his wife had not received any letter/notice demanding the overdue amounts towards the repayment of loan. That, the complainant was never served with the said notice dated 18th June 2008, and that they learnt about such a notice only on 1st October 2008 when it had been found pasted on the door of the said flat. It appears that the said notice purported to be one under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'SARFEASI Act'). That, on getting knowledge of the said notice, the complainant addressed a notice dated 7th October 2008 to the respondent no.3 through the complainant's advocate, and demanded a statement of accounts. However, no reply to the said notice was given by the respondent no.3. The respondent no.3 instead issued a further notice dated 15th November 2008, purportedly under section 13(4) of the SARFEASI Act. That, the said notice was also not served upon the complainant, but the complainant and his wife came to know about the same only after it had been pasted on the door of the said flat on 17th November 2008. The complainant and his wife then went to the office of the respondent no.3, but the officials of the respondent no.3 did not entertain them, and threatened that they would take possession of the said flat.
According to the complainant, threatening language suggesting that the officials of the respondent no.3 and the recovery agents are dangerous persons, and that they knew 'how to twist the law, and how to use the lawful means in unlawful way' was used by one Prithviraj Rane - a previous authorized officer of the respondent no.3. That, the high-handed action of the respondent no.2 was objected to by the complainant and his wife by writing a letter dated 18th November 2008, contending that there was not proper service of the notice under section 13(2) of the SARFEASI Act, but the respondent no.3 did not pay any heed to the said letter and maintained that the notice had been properly served through Registered Post A.D, and also by publication in newspapers. That, the complainant approached the Yerawada Police Station on 19th November 2008, and tried to lodge a report, but the police replied to the complainant that they would definitely take action next time whenever any incident would happen in future. That, on the same day, the said Mr.Prithviraj Rane, the previous authorized Officer of the respondent no.3, visited the said flat along with 15 to 20 unknown persons who were armed with big wooden sticks, and who were supposed to be the recovery agents of the respondent no.3; and threatened to cause harm to the extent of causing death or grievous hurt to the complainant and his wife, in case they did not give the possession of the said flat. Alternatively, the complainant and his wife were also told that those persons would break the door, and drive them (the complainant and his wife) out forcibly. That, there was a chaos and noise in the building (due to the incident) and thereafter, the said recovery agents went away.
On 29th December 2008, some other correspondence took place between the parties, the details of which are not very material for the present. What is material is that on 24th December 2010, the complainant and his wife visited the said flat and found that the lock that had been put by them on the said flat had been broken. The respondent no.2 had pasted a notice of possession dated 3rd September 2010 on the door of the said flat, and had put the seal of the respondent no.3 on the flat. The complainant and his wife made inquiries with the concerned police station as well as in the office of the District Magistrate when they learnt that the respondent no.2 had forcibly taken possession of the said flat without intervention of any Court or the District Magistrate. That, the accused persons had therefore, taken illegal possession of the said flat. That, household goods, articles, ornaments etc. belonging to the complainant and his wife totally valued at about Rs.22,07,000/- are lying in the said flat.
8. Making these averments and contending that offences punishable under sections 356 IPC, 403 IPC, 405 IPC, 406 IPC, 409 IPC, 415 IPC, 417 IPC, 420 IPC, 424 IPC, 442 IPC, 445 IPC, 448 IPC, 504 IPC r/w section 34 of the IPC, had been committed by the respondent nos.2, 3 and 4, the complainant had prayed that investigation as contemplated under section 156(3) of the Code be ordered in the matter.
9. As aforesaid, instead ordering investigation as prayed for, the learned Magistrate examined the complainant on oath as contemplated under section 200 of the Code thereafter ordered investigation into the matter by the police under the provisions of section 202 of the Code, and as aforesaid, after receipt of the report of investigation, dismissed the complaint by an order dated 23rd October 2011. As aforesaid, the Revision Application against the said order came to be dismissed.
10. It is contended on behalf of the petitioner that the action of the respondent no.3 and its officers is patently illegal. It is submitted that the respondent no.3 was not entitled to take possession of the said flat in this manner, and that the taking of possession of the said flat cannot be justified by referring to the provisions in the SARFEASI Act, inasmuch as the provisions of the said Act were not followed. It is submitted, inter alia, that the notice under section 13(2) of the SARFEASI Act was not at all served on the complainant, and that it was deliberately sent at the address of the said flat though, at the material time, the complainant and his wife were not residing there, to the knowledge of the concerned officers of the respondent no.3. It is also submitted that this is evident from the fact that certain other communications to the complainant and his wife were sent by the respondent no.3 on a different address. It is also submitted that the respondent no.3 was not entitled to take possession of the said flat without obtaining any order from the District Magistrate, as contemplated in section 14 of the SARFEASI Act.
11. According to Mr.Sathyanarayan, the learned counsel for the respondent nos.2 and 3, the complaint filed by the complainant has been properly dismissed as these respondents had not committed any offence. It is submitted that the possession of the said flat has been taken by the respondent no.3 in accordance with the provisions of SARFEASI Act, and that the act of taking possession in accordance with the provisions of the said Act cannot amount to any offence. It is submitted that the complainant is a wilful defaulter, and had lodged a false complaint against the respondent nos.2 and 3. It is submitted that the respondent no.3 was entitled to take possession of the flat, which was a secured interest/asset, without obtaining any order from the District Magistrate as contemplated under section 14 of the Act. It is submitted that the respondent no.3 had an option in that regard, and that though section 14 of the SARFEASI Act makes a provision for approaching the District Magistrate for the purpose of taking possession of a secured asset, it is not that the possession of the secured asset cannot be taken by the secured creditor without an order, or assistance, from the District Magistrate.
12. I have carefully considered the matter. I have been taken through the relevant provisions in the SARFEASI Act,and the Security Interest (Enforcement Rules 2002) (for short 'the Rules').
13. In the view that I am taking, it is not necessary to go deeper into the matter for deciding the likelihood or unlikelihood of the respective pleas on the disputed facts, being true or false. It is because the real question is whether on the facts alleged in the complaint, and the material that was before the Magistrate, a case for ordering investigation into the matter as contemplated under section 156(3) of the Code, had been made out or not. There is also another reason for avoiding a detailed discussion as to the compliance or otherwise with the requirements of the provisions of the SARFEASI Act and the Rules, as these issues are said to be pending before the Debt Recovery Appellate Tribunal.
14. It is not in dispute that the possession of the said flat was taken by breaking open the lock that had been put thereon by the complainant. It is also not in dispute that this was done without any order from the District Magistrate under Section 14 of the SARFEASI Act. What is claimed is that the respondent no.3 were entitled to do so, in view of the provisions of the SARFEASAI Act. The question is whether the SARFEASI Act permits a secured creditor to take possession of the flat which is a secured asset/interest by use of force and/or by breaking open a lock put thereon. Such a situation i.e. taking possession of the flat (which is a secured interest/asset) by the secured creditor by breaking open the lock put thereon, is not specifically contemplated or dealt with under the provisions of the said Act, or the relevant rules. On general principles, however, it would be difficult to accept the correctness of the claim that a secured creditor would be entitled to do so under the provisions of the SARFEASI Act and the relevant rules.
15. Undoubtedly, section 14 of the SARFEASI Act cannot be held to be mandatory - in the sense that it cannot be held that the possession of a secured interest cannot, at all, be taken without obtaining assistance from the District Magistrate, as contemplated under section 14 of the SARFEASI Act. Still, when the question would be of use of force, it would be necessary for the secured creditor to obtain assistance from the District Magistrate for taking possession of the secured asset. If breaking open the lock put on a flat, and taking forcible possession of such flat by a secured creditor is held to be permissible, on the ground that the SARFEASI Act empowers a secured creditor to do so without the intervention of the District Magistrate, then it would be extremely dangerous. The problems arising from holding such a course to be legal will be more serious in cases where such flat is a residential one, containing articles of movable property in it. The provisions of the SARFEASI Act and/or the Rules though speak of entitlement of a secured creditor to take possession of the secured asset without the intervention of Court, or the Chief Metropolitan Magistrate or District Magistrate (as the case may be), are silent as to what should be done with respect to the movable property, as may be contained in the secured asset which is a residential flat. Thus, it would be difficult - and dangerous too - to accept the proposition that a secured creditor would be entitled to take possession of a residential flat (which is a secured asset) by breaking open the lock put thereon, on his own and without seeking the assistance of the Chief Metropolitan Magistrate, or the District Magistrate (as the case may be), as contemplated under section 14 of the SARFEASI Act.
16. In this regard, the complainant has placed reliance on certain observations made by this Court in Clarity Gold Pvt.Ltd and Anr. Vs. State Bank of India and ors., AIR 2011 Bom 42. It would be proper to reproduce the observations made by the learned Single Judge in paragraph no.19 of the judgment in the said case.
"Section 14 of the Act is an enabling provision under which the secured creditor is empowered to seek recourse to the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate for the purpose of taking possession. Though Section 14 is an enabling provision, it will be wholly impermissible for a secured creditor, despite the provisions of Section 14, to take the law into his own hands and to forcibly evict a borrower from the secured asset. Our legal system is governed by the rule of law. If the borrower hands over possession voluntarily to the secured creditor in pursuance of a notice under Section 13(4), it would be open to the secured creditor to take possession. But, if possession is not voluntarily handed over, the secured creditor cannot take the law into his own hands and secure vacant possession by taking recourse to the police machinery. In such an event, the only remedy that is available is to seek an appropriate order from the Chief Metropolitan Magistrate, or as the case may be, the District Magistrate. Parliament has specifically authorized in sub-section (2) those authorities to take or cause to be taken such steps and use or caused to be used such force as may be necessary. Authorization of the use of force for taking possession is therefore, a matter which lies in the jurisdiction and power of the authorities prescribed by Section 14. No secured creditor can, by seeking assistance of police machinery unilaterally carry out the eviction of the borrower and take over forcible possession of the secured asset". (Emphasis supplied)
In this case, even the assistance of the police machinery has not been taken by the respondent no.3 though force was used for taking possession of the said flat.
17. Mr.Sathyanarayan, the learned counsel for respondent nos.2 and 3 has placed reliance on a decision of the Supreme Court of India in the case of Standard Chartered Bank Vs. V. Noble Kumar and others, (2013) 9 Supreme Court Cases 620, in support of his contention that the action of the respondent no.3 in taking possession of the said flat is perfectly lawful and that therefore, there was no question of proceeding against the respondent nos.2 and 3 on the allegation that they have committed offences.
18. I have gone through the said judgment. It is not possible to hold that this judgment supports the contention advanced on behalf of the respondents. On the other hand, as pointed out on behalf of the petitioner, observations in the very judgment indicate that where force is required to be used, it would not be open for a secured creditor to take possession of the secured asset without taking recourse to the provisions of section 14 of the SARFEASI Act. It would be appropriate to reproduce the relevant observations.
"Thus, there will be three methods for the secured creditor to take possession of the secured assets:
36.1. (i) The first method would be where the secured creditor gives the requisite notice under Rule 8(1) and where he does not meet with any resistance. In that case, the authorised officer will proceed to take steps as stipulated under Rule 8(2) onwards to take possession and thereafter for sale of the secured assets to realise the amounts that are claimed by the secured creditor.
36.2. (ii) The second situation will arise where the secured creditor meets with resistance from the borrower after the notice under Rule 8(1) is given. In that case he will take recourse to the mechanism provided under section 14 of the Act viz.making application to the Magistrate. The Magistrate will scrutinize the application as provided in Section 14, and then if satisfied, appoint an officer subordinate to him as provided under section 14(1A) to take possession of the assets and documents. For the purpose the Magistrate may authorise the officer concerned to use such force as may be necessary. After the possession is taken the assets and documents will be forwarded to the secured creditor.
36.3. (iii) The third situation will be one where the secured creditor approaches the Magistrate concerned directly under section 14 of the Act. The Magistrate will thereafter scrutinise the application as provided in Section 14, and then if satisfied, authorise a subordinate officer to take possession of the assets and documents and forward them to the secured creditor as under clause 36.2(ii) above." (Emphasis supplied)
These observations leave no manner of doubt that when the question of use of force for overcoming the resistance offered by the borrower, for taking possession of the secured asset would arise, recourse must be taken to the provisions of section 14 of the SARFEASI Act.
19. The things can be further complicated where the secured asset which is a residential flat is containing movable property, and the possession of such a secured asset is taken along with the movable property contained therein, by a secured creditor on his own - and without involving the State machinery in the process of taking possession by use of force. In the instant case, the lock put on the premises was broken open at the instance of the respondent no.2. Possession of the flat was taken in the absence of the complainant or his representative. It is not in dispute that several household articles including refrigerator, washing machine, business files, computer, books etc. as also gold and silver ornaments belonging to the complainant and his wife were in the said flat. What has happened to the articles has not been verified or checked by anyone, and it is only the word of the respondents that the movable property contained in the said flat, is still lying there. It is obvious that the respondent no.3 which is a body corporate is taking such a stand on the basis of the information received by it from the persons who were actually involved in the process of taking physical possession of the secured asset. The complications that can arise in taking possession in this manner are too obvious. For instance, if the complainant was to notice - or even falsely claim for that matter - that some of the household belongings are missing, a case of theft would have to be registered. The possibility of thefts taking place in such cases cannot be totally excluded, but what is more significant is that the possibility of the persons involved in the process of taking the possession being falsely accused of theft, mischief etc, undoubtedly exists. Taking possession in this manner is, therefore, not quite in the interest of the secured creditor also. Thus, in any case, it would be advisable to involve the state machinery in the process of obtaining possession of such a secured asset even from the point of view of the secured creditor, when the process has been undertaken bonafide.
20. I have carefully gone through the order passed by the learned Magistrate dismissing the complaint filed by the complainant. I find that the complaint came to be dismissed only on the ground that the complainant was a defaulter, and that therefore, the possession of the secured asset was rightly taken by the respondent no.3. The learned Magistrate did not discuss as to 'whether the respondent no.3 and its Officers were entitled under the provisions of SARFEASI Act, and the Rules to break open the lock put on the premises, and take forcible possession of the said flat in the absence of the complainant'. The Magistrate did not consider the legal effects of taking possession in such manner, and thereby keeping the complainant out of the possession of his own belongings kept in the said flat. The Magistrate did not consider whether breaking of lock would amount to an offence or not. The Magistrate did not consider whether or not it was necessary to ascertain whether the movable property of the complainant was damaged/removed; and if so, whether it would amount to any offence. More importantly, the Magistrate completely ignored the averments made in the complaint to the effect that the persons of the respondent no.3 had gone to the said flat, and had threatened the complainant and his wife though the complainant had specifically stated that record of the said incident was available in a CD. The Magistrate did not consider whether on a prima facie view of the matter, such threats were found to have been given, whether the same would amount to an offence or not.
21. The order passed by the Court of Sessions in Revision is also perfunctory. It does not consider whether on a reading of the complaint, a case for ordering investigation into the matter was made out. The learned Addl. Sessions Judge has concluded that there was no illegality in the acts attributed to the respondent no.3 and its officials only on the basis of the finding of the Debt Recovery Tribunal which was not permissible. The learned Addl. Sessions Judge ought to have come to his own findings in that regard, and that too independently.
22. In the course of arguments, I have asked the learned counsel for the respondent nos.2 and 3 as to what they propose to do with respect to the movable property belonging to the complainant which is still lying in the said flat. It was submitted that a notice to remove the same has been given to the complainant by publishing the same in newspapers. However, there was no dispute with respect to the fact that while the movable property is lying there, the flat in question cannot be properly sold.
23. This was a matter where the complainant had approached the Magistrate with a claim that the respondent nos.2 and 3 had taken forcible possession of his flat without following the provisions of the SARFEASI Act. His contention was that sending notice on the address of the said flat was a malafide act on the part of the respondent nos.2 and 3, as they were aware that at the material time, the complainant and his wife were not residing there. The complainant's case was also that the respondent nos.2 and 3 were not entitled to break open the lock put on the premises, take forcible possession thereof along with the movable property contained therein.
24. The provisions laid down under the SARFEASI Act are drastic. The provisions permit a secured creditor to take possession of a secured asset without the intervention of the Court. These provisions are drastic, and therefore, the procedural aspects thereof, must be scrupulously followed. Neither the learned Magistrate nor the learned Addl. Sessions Judge realized the seriousness of the issue viz:- whether a secured creditor could take forcible possession of a secured asset which is a residential flat, by breaking open the lock put on the premises, - and that too, in the absence of the borrower or his representative. None of them considered whether any offences had been committed by any persons in the process of taking the possession of the said flat. Simply because the possession is claimed to have been taken in accordance with the provisions of the SARFEASI Act, it would not follow automatically that no offences had been committed in the process.
25. Though I hold that the impugned orders are not proper and/or legal, it is not easy to decide, on the facts alleged and on the material that was before the Magistrate, as to what offences, if any, have been committed, and by whom. It is because taking possession, simplicitor, even if in a wrongful manner, would not, by itself, amount to an offence. It would all depend on the mens rea on the part of the person or persons that accompanied the act of taking possession. Whether any offences have been committed in the process of taking the possession of the said flat, and if so, by whom, can be properly decided only after investigation is carried out.
26. This was a case where commission of offences -including cognizable offences - was alleged, and investigation under section 156(3) of the Code was needed to ascertain whether any, and if so, what offences have been committed - and by whom? Since the prayer of the complainant was that investigation into the matter as contemplated under section 156(3) of the Code be ordered, the Magistrate ought to have allowed it. There were certainly grounds for ordering such investigation.
27. Petition is partly allowed.
28. The impugned orders are set aside.
29. The learned Magistrate is directed to order investigation, as contemplated under section 156(3) of the Code of Criminal Procedure, in the complaint filed by the petitioner.
30. Rule is made absolute in the above terms.