Facts of the Case

The petitioner approached the High Court of Kerala after being aggrieved by the failure of the Debts Recovery Tribunal-II, Ernakulam, to number and take up his Securitisation Application filed under Section 17 of the SARFAESI Act, 2002.

The Registry of the Tribunal took the view that the petitioner had not produced the “relevant documents including the order of Chief Judicial Magistrate Court, Kollam through which the Advocate Commissioner was appointed to take physical possession of the property in question.”

The petitioner claimed to be a bona fide tenant in the property and sought protection against eviction otherwise than through due process of law. His grievance was specifically connected with the proposed taking of physical possession of the property.

The petitioner’s case was that he was not challenging every proceeding initiated under the SARFAESI Act. His challenge was confined to the taking of physical possession. According to him, for such a challenge, the notice issued by the Advocate Commissioner appointed by the Chief Judicial Magistrate Court, Kollam, was sufficient and production of the order appointing the Advocate Commissioner was not necessary for registration of the Securitisation Application.

The petitioner also stated that a chamber appeal had been filed before the Presiding Officer of the Debts Recovery Tribunal-II, Ernakulam, but the same was not entertained.

Issues Involved

The principal issues before the High Court were:

  1. Whether a Securitisation Application under Section 17 of the SARFAESI Act could be refused registration or numbering merely because the applicant had not annexed the Chief Judicial Magistrate’s order appointing an Advocate Commissioner for taking physical possession.
  2. Whether such an order was mandatory at the registration stage where the petitioner’s challenge was confined only to the taking of physical possession.
  3. Whether every material or document that may ultimately be relevant for adjudication must necessarily be annexed to the Securitisation Application at the initial stage.
  4. Whether the Registrar of the Debts Recovery Tribunal was justified in declining to register the petitioner’s Securitisation Application on the stated documentary objection.
  5. Whether interference by the High Court was warranted against the impugned action of the Tribunal Registry.

Petitioner’s Arguments

The petitioner contended that:

  • He was a bona fide tenant and was entitled to protection from eviction without following due process of law.
  • His challenge in the Securitisation Application was limited to the taking of physical possession of the property.
  • He was not challenging all proceedings initiated by the secured creditor under the SARFAESI Act.
  • Since the dispute concerned physical possession, it was unnecessary to produce documents unrelated to the limited challenge raised by him.
  • The notice issued by the Advocate Commissioner appointed by the Chief Judicial Magistrate Court, Kollam, was sufficient for the purpose of presenting his grievance before the Tribunal.
  • The order of the Chief Judicial Magistrate appointing the Advocate Commissioner was not indispensable merely for numbering and registering the Securitisation Application.
  • Although a chamber appeal had been filed before the Presiding Officer of the Debts Recovery Tribunal-II, Ernakulam, the same had not been entertained.

Respondent Bank’s Arguments

The respondent bank contended that:

  • Ordinarily, in proceedings challenging action taken by a bank under Section 14 of the SARFAESI Act, the petition filed before the Chief Judicial Magistrate Court and the final order issued by the Chief Judicial Magistrate appointing the Advocate Commissioner are also annexed to the Securitisation Application.
  • This ordinary practice may have been the reason why the Registry of the Tribunal refused to number the petitioner’s application.
  • The petitioner had no cause of action to challenge the proceedings of the Registrar before the High Court under Article 226 of the Constitution of India.

Court Order / Findings

The High Court, after hearing the petitioner and the respondent bank, held that since the petitioner was challenging only the taking of physical possession and was not genuinely concerned with the other proceedings initiated under the SARFAESI Act, it was not necessary for him to produce the order through which the Advocate Commissioner had been appointed to take physical possession.

The Court further held that it was for the petitioner to substantiate his case by producing sufficient materials and documents before the Debts Recovery Tribunal.

Significantly, the High Court clarified that every material relevant to the dispute need not necessarily be annexed to the Securitisation Application itself. The petitioner could produce such materials as may be necessary in the manner prescribed by the Rules governing the functioning of the Tribunal.

Accordingly, the High Court:

  • Allowed the writ petition;
  • Quashed Ext.P9;
  • Directed the Registrar of the Debts Recovery Tribunal-II to register the Securitisation Application filed by the petitioner, taking into account the findings contained in the judgment; and
  • Left the merits of the dispute open for independent adjudication by the Tribunal in accordance with law.

Important Clarification

The High Court expressly clarified that it had made no observations on the merits of the substantive dispute.

Therefore, the judgment should not be understood as:

  • accepting the petitioner’s claim of bona fide tenancy on merits;
  • conclusively granting protection against eviction;
  • invalidating the SARFAESI proceedings initiated by the bank;
  • deciding the legality of the physical-possession action itself; or
  • restricting the Debts Recovery Tribunal from independently examining the dispute in accordance with law.

The ruling was confined to the procedural question concerning registration of the Securitisation Application.

The key clarification emerging from the judgment is that a Tribunal Registry should not insist that every potentially relevant material must necessarily accompany a Securitisation Application at the initial filing stage. Where the applicant challenges only the taking of physical possession, the absence of the Chief Judicial Magistrate’s order appointing the Advocate Commissioner cannot, in the circumstances considered by the Court, by itself justify refusal to register the application.

At the same time, the applicant remains responsible for substantiating the case before the Debts Recovery Tribunal by producing sufficient materials and documents in the manner permitted or prescribed by the applicable Rules.

Sections Involved

Section 17 of the SARFAESI Act, 2002

Section 17 was directly involved because the petitioner had filed a Securitisation Application before the Debts Recovery Tribunal and complained that the application had not been numbered and taken up.

Section 14 of the SARFAESI Act, 2002

Section 14 was relevant because the dispute concerned physical possession and the appointment of an Advocate Commissioner through proceedings before the Chief Judicial Magistrate Court. The respondent bank specifically referred to the ordinary practice in proceedings challenging action taken under Section 14.

Section 13(2) of the SARFAESI Act, 2002

The record of the case included Ext.P10, described as a notice dated 9 October 2021 issued to the fifth respondent under Section 13(2) of the SARFAESI Act.

Article 226 of the Constitution of India

Article 226 arose because the respondent bank argued that the petitioner had no cause of action to challenge the proceedings of the Registrar before the High Court under its writ jurisdiction.

Link to Download the Order-https://mytaxexpert.co.in/uploads/1783416646_1420compressed.pdf

 

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