Full Judgment
The writ petition is filed challenging the notice dated 29.06.2011 issued to the petitioner by the first respondent/Bank for sale of the movables listed therein, by invoking the powers under the Securitisation and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'SARFAESI Act'). Admittedly, the movable goods are belonging to the petitioner, who is a tenant in the property, belonging to the second respondent.
2. It is also not in dispute that the above said movables mentioned in the impugned notification are not the subject matter of security for the borrowal from the bank and the petitioner has not stood as a guarantor in respect of the amount stated to have been borrowed from the bank by one Samsen Papli, from whom the second respondent has purchased the property for repayment under the SARFAESI Act.
3. The petitioner, after giving notice under section 13(4) of the Act has approached the Chief Judicial Magistrate, Erode under section 14 of the Act and there are certain orders passed by the Chief Judicial Magistrate for possession. Since the petitioner/tenant has locked the premises by keeping the movables inside the house, there was further direction given by the Chief Judicial Magistrate appointing an Advocate Commissioner to brake open and take possession of the movables. Based on the said order passed by the Chief Judicial Magistrate, Erode, the house resided by the petitioner was brake opened and the goods were taken to the custody of the first respondent/Bank. It is, at that stage, invoking the powers under SARFAESI Act, the first respondent/Bank has issued the impugned notification brining the movables for sale. The present writ petition is filed challenging the said notification.
4. The impugned challenges is on the ground that when the movables, which are the subject matter of the impugned notification, are not the subject matter of security for the payment of loan obtained from the first respondent by the second respondent and when the petitioner has never stood as a guarantor for the payment of the amount availed by Samsen Papli from the first respondent/Bank, there is absolutely no jurisdiction on the part of the bank to invoke the SARFAESI Act against the petitioner. It is seen that notice under section 13(2) was not given to the petitioner but it was given to the second respondent. When the movable properties, which are the subject matter stated in the impugned notification does not belong to the second respondent, there is no question of bringing such movables for sale. The very act of the first respondent/Bank in approaching the Chief Judicial Magistrate, Erode under section 14 of the Act to take the movables belonging to the petitioner is alienation to the principles enunciated under the SARFAESI Act.
5. The first respondent/Bank in the counter affidavit has specifically admitted that they are not proceeding to sell the movable properties under the provisions of the SARFAESI Act and they are prepared to withdraw the notification unconditionally. Further, in the counter affidavit, the first respondent/Bank has chosen to state very strangely that the bank is willing to handover the movables back to the petitioner provided the charges incurred by the bank being paid to them. The relevant portion is extracted below:-
“10. I have been advised not to proceed with the sale of the movables under the provision of SARFAESI Act and I hereby withdraw the said notice unconditionally, but however I am willing to handover the movables back to the petitioner provided the charges incurred by us towards the safe keeping of the said articles are paid to the bank.”
6. It is also seen in the counter affidavit that the following charges are claimed by the first respondent/Bank against the petitioner as a matter of reimbursement, which are as follows: (i) Charges towards Security Guard : Rs.1,09,200/-
(ii)Paper Publication Charges : Rs. 2,050/-
(iii) Paper Publication chargs : Rs. 6,050/-
(iv) Building rent (Rs.3000 x 6 months) : Rs. 18,000/-
(v) Insurance Premium amount : Rs. 803/-
(vii) Legal charges and lawyer fees : Rs. 2,500/- -----------------
Total : Rs.1,38,803/-
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7. The learned counsel for the first respondent/Bank would vehemently contend that eventhough the movable goods never stood as a security for the repayment of the loan borrowed by Samsen Papli, from whom the second respondent has purchased the property, the petitioner being the tenant under the second respondent, having come to know about the steps taken by the Bank under section 14 of the Act, has chosen to lock the premises unlawfully and that has only made the Bank to approach the Chief Judicial Magistrate for brake open and it was only a matter of necessity and therefore, when possession was taken, it was only preserved and for preserving the goods, the expenses were incurred. According to the learned counsel for the first respondent/Bank, the charges claimed above has to be reimbursed to the first respondent/Bank.
8. Even though the contention of the learned counsel for the first respondent/Bank is attractive and she has taken strenuous steps to pursue this court to accept her plea, we are unable to accept the same for the simple reason that the goods which are taken by the first respondent/Bank are not the subject matter of the security. In such circumstances, in all fairness, the first respondent/Bank should not have taken any steps under the SARFAESI Act to take the goods belonging to the petitioner, who is a third party. The petitioner is neither a guarantor for the repayment of the loan stated to have been received by the said Samsen Papli, from the first respondent/Bank nor the movable goods belonging to the petitioner were given as a security for repayment. In such circumstances, taking possession through court of law does not mean that the SARFAESI Act enables the first respondent/Bank to take possession lawfully. Therefore, the question of indemnifying the Bank for having kept the same on behalf of the petitioner does not arise.
9. According to us, the first respondent/Bank has no right to recover even if the amount stated to have been spent sought to be indemnified as per sections 13(7) and 13(10) of the SARFAESI Act which reads as follows: “Section 13(7) : Where any action has been taken against a borrower under the provisions of sub-section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests. Section 13(10) : Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal having jurisdiction or a competent court, as the case may be, for recovery of the balance amount from the borrower.”
10. It is not the case of the petitioner that the petitioner voluntarily given possession of these goods to the bank so as to enable the bank to keep it and the bank has taken steps without even giving notice to the petitioner, who is not liable to pay any amount in respect of the borrowal made by the said Samsen Papli,. In view of the above, we are unable to accept the contention raised by the first respondent/Bank.
11. Accordingly, the writ petition stands allowed and the impugned notification dated 29.6.2011 stands set aside. As per the undertaking given by the first respondent/Bank in their counter affidavit paragraph No.10 (extracted above), the first respondent/bank shall handover all the goods to the petitioner immediately, in any event, within a period of two weeks from the date of receipt of a copy of this order. No costs. Consequently, connected miscellaneous petition is closed.