Sri. V. Srinivasa Rao vs State Bank of India

K.N. Keshavanarayana, J.—The proceedings before the jurisdictional Magistrate initiated by the respondent-Bank as per the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ''SARFAESI Act''), is sought to be quashed by presenting this petition. The petitioner borrowed loan from the Respondent-Bank and certain properties were offered as security for repayment of the loan. On the ground that the petitioner has failed to repay the installments due, the respondent-Bank issued notice as contemplated u/s 13(2) of the SARFAESI Act declaring the petitioner as defaulter. Thereafter, to realize the amount, the Respondent-Bank tried to take possession of the secured properties and since there were some protest by the petitioner, the Bank filed petition before the III Additional CMM, Bangalore, seeking an order of assistance from the Magistrate for taking possession of the secured properties.

After hearing the learned counsel for the Respondent-Bank, the learned Magistrate by the impugned order dated 10.12.2012, directed the jurisdictional police to give necessary assistance to the Respondent-Bank, while taking possession of the schedule properties. The said order is questioned in this petition on the ground that, no notice of the proceedings has been issued to the petitioner.

The question as to whether the notice of such proceeding is necessary to the borrower was referred to Division Bench. The Division Bench in the case of Mrs. Sunanda Kumari and L.R. Raghunath Vs. Standard Chartered Bank Previously known as ANZ Grindlays Bank, has held that, in the absence of any provision in the Act or the Rules framed thereunder requiring such notice, the Magistrate is not required to issue any notice to the borrower before passing an order u/s 14. The Division Bench has further noticed that the notice u/s 13(2) of the Act would satisfy the principles of natural justice and no further notice by the Magistrate is required before passing an order u/s 14 of the Act. In the light of the aforesaid decision, the order of the learned Magistrate cannot be found fault with. The contention of the counsel for the petitioner that, the notice of the proceeding is necessary, has no substance. In this view of the matter, there are no justifiable grounds to entertain this petition. Accordingly, the petition is rejected.