Meenu Agarwal vs District Magistrate, Pauri Garhwal And Others

Sudhanshu Dhulia, J

The petitioner claims to be owner of a property. The property, according to the petitioner, was mortgaged by Sri Vinay Singh Bisht its earlier owner with the District Cooperative Bank Ltd., Garhwal (Kotdwar) as security for the loan he had taken. The petitioner had no knowledge of the same, he states. Thereafter, since the loan could not be repaid, the assets of the borrower Vinay Singh Bisht were declared as Non Performing Assets.

Regarding the securitization proceedings, the borrower had also filed a writ petition before this Court, which was disposed of by this Court with the direction to deposit the loan amount in easy installments. This Court has been informed that he failed to deposit the entire amount. Subsequently the District Cooperative Bank Ltd., Garhwal (Kotdwar), which is a secured creditor as defined under Section 2(zd) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (from hereinafter referred to as the Act), initiated proceedings under the Act and as of now not only the possession of the property in question has been taken over by the orders of the District Magistrate but this Court has been informed that the property has also been auctioned. However, no further action has been taken as there is an interim order dated 21.02.2019 of this Court whereby it has been directed that the auction proceedings shall not be finalized.

The case of the petitioner before this Court is that the property on which the possession was taken by the bank by moving an application under Section 14 of the Act before the District Magistrate is actually under the sole ownership and possession of the petitioner. She has the title deed of the land with her and she has purchased the land from the borrower. Admittedly this was after the aforesaid loan was taken by the borrower.

The main contention of the petitioner before this Court is that the District Magistrate has not applied its mind before proceeding with the matter. The District Magistrate ought to have seen the documents, which were placed before him such as the title deed, which has not been examined properly.

All the same, the satisfaction of the District Magistrate under Section 14 of the Act is for limited purposes. It has only to examine the factual correctness of the assertions made by the secured creditor and he is not supposed to go into the legal niceties of the transaction, as held by the Hon'ble Apex Court in the case of Standard Chartered Bank v. V. Noble Kumar and others reported in (2013) 9 SCC 620, where the Hon'ble Apex Court in para 25 has held as under:

"25. The satisfaction of the Magistrate contemplated under the second proviso to Section 14(1) necessarily requires the Magistrate to examine the factual correctness of the assertions made in such an affidavit but not the legal niceties of the transaction. It is only after recording of his satisfaction the Magistrate can pass appropriate orders regarding taking of possession of the secured asset."

In any case, the petitioner is primarily aggrieved by the proceeding initiated by the bank under Section 13 and later under Section 14 of the Act. She has a remedy to file an appeal before the Debts Recovery Tribunal under Section 17 of the Act, inasmuch as an appeal can be filed not only by the borrower but by "any person".

At this stage, it may also be necessary to note that under sub-section (4)(d) of Section 13, a person who has acquired any of the secured assets from the borrower and when the borrower owes money to the secured creditor, he can pay the amount to the secured creditor which shall be adjusted as discharge of debt. However, since it involves appreciation of disputed questions, which is beyond the jurisdiction of the District Magistrate, the correct appreciation of facts can only be done by the Debts Recovery Tribunal.

Writ petition is therefore dismissed on ground of alternative remedy. Interim order dated 21.02.2019 stands vacated. The petitioner shall be at liberty to move an appeal under Section 17 of the Act for redressal of her grievances.

However, as the prima facie case of the petitioner is that the land of which she is the owner was never mortgaged to the bank as a secured asset, therefore in the interest of justice, in order to enable the petitioner to approach the Debts Recovery Tribunal, it is directed that for a period of one month the respondent bank shall not take any coercive measure against the petitioner.