Licensed to Adv.

Ajmal A Karunagappally 2016 ICO 1770 Page 1 of 3

2016 ICO 1770

06-06-2016
High Court of Kerala

W.P.(C) No. 39130 of 2015

Justice A M Shaffique

Federal Bank Limited ( Represented by, Mohan Jacob George (Adv.) & P V Parvathi (Adv.) & Reena
Thomas (Adv.) & T K Navas (Adv.) )

Vs.

Thahira ( Represented by, Abu Mathew (Adv.) & Aju Mathew (Adv.) & Abhilash Mathoor (Adv.) & Lilly K T
(GP) )

Equivalent Citations : 2017 (1) KLT 1038

Mentioned in Citations : 2022 ICO 611

Headnotes :-

A. Securitization and Reconstruction of Finacial Assests andEnforcement of Security Interest Act,

2002 – Section 14 - It is always open forthe Magistrate to take note of the factual circumstances
involved in the matterand to pass appropriate orders to ensure that the statutory right of thepetitioner
Bank is protected. (Para 6)

JUDGMENT

A.M. Shaffique, J.

1. Petitioner has approached this Court challenging Ext. P14, an order passed by the Chief Judicial
Magistrate, Thalassery, dismissing an application under S. 14 of the SARFAESI Act, 2002. The petitioner
also seeks for a direction to implement Ext. P5 by directing the respondent 3 and 4 to remove respondents 1
and 2 from the secured asset of the Bank and hand over vacant possession of the same to the petitioner. The
facts involved in the Writ Petition would disclose that the petitioner Bank had taken proceedings against
respondents 1 and 2 under the SARFAESI Act, when they committed default in payment of the dues.
According to the Bank, symbolic possession of the secured asset was taken by affixture of notice, as evident
from Ext. P2 dated 14.12.2009.

2. Though respondents 1 and 2 approached this Court challenging the sale notice published by the petitioner,
this Court granted installment facility to respondents 1 and 2 to repay the loan amount in installments since
respondents 1 and 2 committed default. Pursuant to the same, the petitioner approached the Chief Judicial
Magistrate, Thalassery under S. 14(1) of SARFAESI Act and as per order dated 31.10.2013, an Advocate
Commissioner was appointed to take possession of the secured assets and submit a report. Ext. P5 is the said
order. According to the petitioner, pursuant to Ext. P5, possession was taken by the Advocate Commissioner
and it was handed over to the petitioner Bank. Bank also had posted a security guard in the aforesaid
property. Ext. P6 is the report of the Advocate Commissioner dated 13.5.2013 and an inventory was taken

Generated on 2024-04-22 © 2024 Kerala Law Journal indiancases.com

 Licensed to Adv. Ajmal A Karunagappally 2016 ICO 1770 Page 2 of 3

and panchanama was prepared and the matter was closed by the Chief Judicial Magistrate as per order dated
13.5.2014. According to the Bank, physical possession was taken on 23.4.2014.

3. It is submitted that on the very same day, the security guard engaged by the Bank reported that the locks
and seal were broken and a complaint was filed before the police. Thereafter, respondents 1 and 2 filed W.P.
(C) No. 9377 of 2014 and an interim stay was obtained for three months. Ext. P10 is the order. Pursuant to
the stay order, respondents 1 and 2 forcefully entered into the property, threatening the security personnel
and showing the stay order obtained from the Court and trespassed into the building and occupied the same.
Though a complaint has been given to the police, no action has been taken in the matter. On 20.6.2014, W.P.
(C) No. 9377 of 2014 had been dismissed. Thereafter, the Bank filed an application before the Chief Judicial
Magistrate for re-opening the petition and to issue directions to the Superintendent of Police for extending
necessary police protection. But the same was dismissed by Ext. P14. It is at this stage that the petitioner has
approached this Court.

4. The learned counsel appearing for respondents 1 and 2 submits that the Chief Judicial Magistrate was
justified in rejecting the application filed for re-opening the matter under S. 14(1) of SARFAESI Act. It is
submitted that respondents 1 and 2 remained in possession of the property and if at all the petitioner wants to
dispossess respondents 1 and 2, the remedy is to approach the Civil Court and cannot have a second right to
invoke S. 14(1) of the SARFAESI Act.

5. The learned counsel for the petitioner however submits that the possession had already been taken in
terms of Ext. P5, which is evident from the Advocate Commissioner's report Ext. P6. Subsequently, if they
trespassed into the property, the police authorities are bound to ensure that the rule of law is maintained and
respondents 1 and 2 are evicted from the said premises. Petitioner submits that when the complaint was
given in terms of Ext. P11, no action had been taken by the police.

6. Having heard the learned counsel on either side and having perused the records, I am of the view that this
is a typical case by which the rule of law has been completely negated by the action of respondents 1 and 2.
When a statutory right had been given to the petitioner Bank to take possession of the premises and if
necessary, with the assistance by the Chief Judicial Magistrate in terms of S. 14 of the Act, when possession
is taken through the said process, possession has to remain with the Bank itself, unless there is any change in
circumstances by which the Bank permits respondents 1 and 2 to retain possession or possession is given
back. No such eventuality had happened in the case. This is a clear case that respondents 1 and 2 had
trespassed into the property, which is taken possession by invoking a legally accepted method. In the said
circumstances, when the matter has been brought to the notice of the Chief Judicial Magistrate, the
Magistrate ought to have taken further steps pursuant to S. 14 itself. Such an inaction has led to situation of
travesty of justice. If such illegalities are permitted to continue, it will amount to giving a premium to high
handedness. This Court therefore has to ensure that such violations are rectified, and rule of law prevails.
Therefore, I am of the view that the learned Chief Judicial Magistrate failed to exercise jurisdiction in the
matter. The finding of the Chief Judicial Magistrate that the possession of the secured asset was already
handed over to the petitioner and thereafter, it is for the Bank to protect its possession, I do not think, was
justifiable in the facts of the present case. The assistance of the Court is taken for the purpose of restoring
possession and thereafter, if a borrower trespassed into the property, it cannot be said that the power of the
Magistrate is denuded in any form. S. 14 of the Act reads as under:

"14. Chief Metorpolitan Magistrate or District Magistrate to assist secured creditor in taking
possession of secured asset.-(1) Where the possession of any secured asset is required to be
taken by the secured creditor or if any of the secured asset is required to be sold or
transferred by the secured creditor under the provisions of this Act, the secured creditor
may, for the purpose of taking possession or control of any such secured asset, request, in
writing, the Chief Metropolitan Magistrate or the District Magistrate within whose
jurisdiction any such secured asset or other documents relating thereto may be situated or
Generated on 2024-04-22 © 2024 Kerala Law Journal indiancases.com
 Licensed to Adv. Ajmal A Karunagappally 2016 ICO 1770 Page 3 of 3

found, to take possession thereof, and the Chief Metorpolitan Magistrate or, as the case may
be, the District Magistrate shall, on such request being made to him-

(a) take possession of such asset and documents relating thereto; xxx

[(1A) The District or the Chief Metropolitan Magistrate may authorise any officer
subordinate to him,-

(i) to take possession of such assets and documents relating thereto; and

(ii) to forward such assets and documents to the secured creditor.]

(2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief
Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps
and use, or cause to be used, such force, as may, in his opinion, be necessary.

(3) No act of the Chief Metropolitan Magistrate or the District Magistrate (any officer
authorised by the Chief Metropolitan Magistrate or District Magistrate) done in pursuance
of this section shall be called in question in any Court or before any authority."

Going by the same statutory provision, there is no impediment for the Chief Judicial Magistrate to exercise
the power, especially in the light of S. 14(2). Therefore, Ext. P14 to that extent, it is unsustainable. It is
always open for the Magistrate to take note of the factual circumstances involved in the matter and to pass
appropriate orders to ensure that the statutory right of the petitioner Bank is protected.

Coming to the facts of the case, I am of the view that though the Magistrate had not exercised powers, it
shall always open for this Court to ensure that the illegality committed by respondents 1 and 2 are rectified. I
am satisfied that the possession was taken by the Bank, especially, in the light of Exts. P5 and P6. In the said
circumstances, respondents 1 and 2 have no right or power to trespass over the property. Accordingly, there
will be a direction to respondents 3 and 4 to forcefully remove respondents 1 and 2 or any other person from
the building aforesaid and ensure that the possession is restored to the petitioner Bank. This shall be done
within a period 15 days from the date of receipt of a copy of this judgment.

--- End ---

Generated on 2024-04-22 © 2024 Kerala Law Journal indiancases.com