SARFAESI – Refusal of District Magistrate to execute order for possession of secured assets only on the objection of Third Party – Illegal
SARFAESI – Refusal of District Magistrate to take possession of secured assets only on the objection of Third Party – Illegal
Judgment dated 30.8.2023 of the High Court of Bombay
Writ Petition No.3351 of 2023 – Kotak Mahindra Bank Ltd Vs. The State of Maharashtra and others
The borrowers and the Directors of M/s. Millenium Motors Pvt Ltd had taken credit facilities from Citi Financial Consumer Finance India Limited. However, the account became non-performing asset.
By the assignment deed dated 9.4.2013, the Finance Company assigned all its right, title and interest in the debts to the petitioners and also the right to enforcement.
By the notice dated 31.3.2013, the petitioner initiated recovery proceedings under SARFAESI. By the notice dated 16.10.2014, under Section 13(4) the petitioner took symbolic possession of the secured assets.
In 2015, the petitioner came to know that one Mr.Khanvilkar filed Special Civil Suit No.676 of 2010 against the borrowers for cancellation of assignment deed and in that suit decree dated 17.5.2005 was passed. The petitioner was not, however, party to the said suit.
The petitioner filed Special CS No.1436 of 2015 challenging the said decree. In the said suit, temporary injunction order dated 25.11.2015 was passed.
By the Securitization Application No.978 of 2020, the petitioner prayed for possession of the secured assets.
By the order dated 12.1.2021, the Respondent no.1 District Magistrate, Pune, allowed the application and directed the respondent nos.2 and 3 to take possession of the secured assets.
On 18.3.2021, one Mr.Jayraj Khanvilkar (third party) had objected to handing over possession of the secured assets. However, the third party did not file proceedings under Section 17.
After exchange of correspondence, lastly by the letter dated 17.11.2022 the respondent no.1 informed the petitioner that the possession cannot be taken until orders in Spl CS No.1436 of 2015 are passed.
HELD that once the order under Section 14 for possession of the borrower was passed, the same cannot be allowed to be intermeddled with by any person. The possession of the secured assets cannot be held up and the Tahsildar should take immediate steps to hand over possession. The approach of the respondents in stalling the recovery proceedings was illegal.
