Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

Bench: D Sinha, M Bhatkar

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 4033 OF 2010

Union Bank of India ]

a body corporate constituted under the ]

Banking Companies (Acquisition & ]

Transfer of Undertakings) Act V, 1970 ]

and having its Head Office at 239, ]

Vidhan Bhavan Marg, Back Bay ]

Reclamation, Nariman Point, ]

Mumbai 400 021 and a Branch office ]

at Mumbai Samachar Marg Branch, ]

66/89, M. S. Marg, Fort, ]

Mumbai 400 023 ] ..Petitioner versus

1. The State of Maharashtra. ]

through the Office of the Government]

Pleader, Public Works Department ]

Building, Mumbai ]

2. District Collector, Raigad ]

3. M/s. Jivanlal & Sons, a partnership ]

firm, carrying on business from ]

129/131 Kazi Syed Street, ]

Mumbai 400 003 ]

4. Mr. Kamlesh Gandhi (HUF) through ]

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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

its Karta Mr. Kamlesh Gandhi ]

5. Mrs. Jayashree K. Gandhi ]

Defendant Nos. 2 and 3 being the ]

partners of Defendant No. 1 ]

M/s. Jivanlal & Sons, a partnership ]

and both residing at Flat No.801/802 ]

Neelam Apts. C.H.S. Ltd., ]

Mount Mary Road, Bandra (West) ]

Mumbai 400 050 ]

6. Mr. Kamlesh Gandhi ]

residing at Flat No. 801/802 ]

Neelam Apts. C.H.S. Ltd., ]

Mount Mary Road, Bandra (West) ]

Mumbai 400 050 ] ..Respondents Mr. Pravin Samdani Sr. Advocate with Mr. Harinder Toor and Mr. Nainesh
N. Amin i/b. N. N. Amin & Co. for Petitioner. Mr. V. S. Gokhale AGP for Respondent Nos. 1 and 2 State.
Mr. Lillan Lobo for Respondent Nos. 3 to 5.

Mr. G. S. Godbole i/b. Ms. Khushbu Prabhu for Respondent No. 6. CORAM : D. D. SINHA AND

MRS. MRIDULA BHATKAR, JJ.

Judgment Reserved on : 17.06.2010

Judgment Pronounced on : 05.07.2010

JUDGMENT : (Per : D. D. Sinha, J.)

1. Rule, returnable forthwith. Heard the petition finally on merits at the stage of admission.

2. The Petitioner is a body corporate registered under the Banking Companies (Acquisition & Transfer of
Undertakings) Act V of 1970. The Respondent no. 3 is a partnership firm of which Respondent nos. 4 and 5
are partners. Respondent nos. 4 and 5 are the guarantors to the credit facilities 3

availed by the Respondent no. 6 who has created mortgage so as to secure the debts of the Petitioner bank.
Those properties are as follows:

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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

1. Factory land and building at Survey No. 157, Hissa No. 1, 2, 3 Village Nadhal, Taluka : Khalapur, District
Raigad, Maharashtra State.

2. Factory land and building at Survey No. 158, Hissa No. 1, Village Nadhal, Taluka : Khalapur, District :
Raigad, Maharashtra State.

3. Factory land and building at Survey No. 158, Hissa No. 2-B, Village Nadhal, Taluka : Khalapur, District :
Raigad, Maharashtra State.

4. Factory land and building at Survey No. 159, Hissa No. 1, Village Nadhal, Taluka Khalapur, District :
Raigad, Maharashtra State.

All the aforesaid properties will be referred as "mortgage properties" for the sake of convenience.

3. The facts which have given rise to the filing of the instant petition are as follows:-

4. It is the case of the Petitioner that pursuant to the request of the 4

Respondent no. 3 for grant of various credit facilities, the Petitioner have from time to time granted the credit
facilities to Respondent no. 3 and last such credit facility was granted vide Sanction Advise dated 10th April
2007 and Working Capital Term Loan of Rs.10 Crores was carved out and the balance of Rs.7.97 Crores was
retained as Packing Credit limit.

5. Respondent No.3 and the mortgagors / guarantors have executed necessary documents for securing the
debts of the Respondent no. 3. It is submitted that pursuant to the restructuring of the credit facilities, the
Respondent no. 6 in his personal capacity as a owner of the immovable properties has on 29th March 2007
confirmed that he had deposited the title deeds of the mortgaged properties hereto with the Petitioner on 23rd
December, 2003 and 31st January, 2005 to secure the repayment of credit facilities aggregating to Rs.36.80
Crores together with interest and requested the Petitioner to continue to retain the said title deeds as a security
for repayment of the revised credit facilities aggregating to Rs.30.82 Crores. It is submitted that the
Respondent no. 6 and his wife Respondent no. 5 have guaranteed the payment of the dues of the Respondent
no. 3 in consideration of sanction of restructured credit facilities to the Respondent no. 3 by executing the
Letter of Guarantee dated 3rd April 2007 for an amount of Rs. 30.82 Crores.

6. The learned counsel for the Petitioner has submitted that Respondent no. 3 has defaulted in repayment of
dues of the Petitioner bank and the Petitioner bank having classified the account of such debt as Non
Performing Asset (NPA) on 31st May 2007, has issued notice dated 26th June 2007 under Section 13(2) of the
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
(referred to as "SARFAESI Act" for the sake of brevity) calling upon the Respondent no. 3 and Respondent
no. 6 mortgagors / guarantors to pay to the Petitioner within 60 days from the date of notice a sum of Rs.
28,05,26,044.66 paise together with interest. Respondent no. 3 and the mortgagors / guarantors have been
served by personal service and they have acknowledged the service of the notice.

7. It is the case of the Petitioner that on failure on the part of the Respondent nos. 3 and 6 to comply with the
requisitions as contained in the notice dated 26th June 2007 were called upon to deliver the possession of the
secured assets. Respondent no. 3 vide letter dated 11th September 2007 has not disputed the claim of the
Petitioner, however, requested for time for repayment of dues. As the Respondent nos. 3 and 6 failed to
discharge their liability under the SARFAESI notice, Petitioner by their notice dated 4th January, 2008
addressed to the Respondent no.3 called upon the Respondent no. 3 to hand over and deliver possession of the
secured assets on 16th 6
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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

January 2008.

8. Pursuant to the said notice, symbolic possession of the secured assets was taken by the Petitioner and
necessary possession notice was published in the newspapers. The Petitioner at latter point of time filed
application under Section 14 of the SARFAESI Act before the District Collector / Magistrate bearing
Application No. 39 of 2008. The District Collector / Magistrate by his order dated 17th July 2008 allowed the
application and provided necessary assistance to the Petitioner bank in taking possession of the secured assets.

9. The learned counsel for the Petitioner has submitted that the Respondent nos. 3 to 6 filed Securitization
Application No. 8 of 2009 under Section 17 of the SARFAESI Act interalia challenging the action initiated by
the Petitioner under Section 14 of the SARFAESI Act. Apart from the other grounds raised in the said
application, the Respondent nos. 3 to 6 also raised a specific ground that no action under the SARFAESI Act
can be initiated against two of the properties, viz. Survey No. 158, Hissa No. 2-B and Survey No. 159, Hissa
No. 1 situate at Village Nadhal, Taluka Khalapur, District Raigad as the same were agricultural lands. The
Petitioner opposed the said application by filing their reply. After hearing the parties and considering the
pleadings, the Presiding Officer MDRT-1 vide order dated 7

15th December, 2009 was pleased to dismiss the Securitization Application No. 8 of 2009.

10. The learned counsel for the Petitioner further submitted that the Respondent nos. 3 to 6 on 15th January
2010 filed Appeal bearing (Lodging) No. 47 of 2010 under Section 18 of the SARFAESI Act challenging the
order dated 15th December 2009 passed in Securitization Application No. 8 of 2009.

11. The Petitioner on 29th January 2010 issued the sale notice under Section 13(4) of the SARFAESI Act for
sale of the secured assets on 4th March, 2010. The Respondent Nos. 3 to 6 filed Writ Petition (Lodging) No.
485 of 2010 in this Court seeking necessary direction to the DRAT to urgently hear the appeal on merits and
for stay of the proposed auction which was fixed by the Petitioner on 4th March 2010. The said writ petition
was dismissed as the Respondent nos. 3 to 6 had already preferred an appeal before the DRAT vide Order
dated 5th March 2010.

12. It is the case of the Petitioner that having failed to obtain any order either from DRAT Mumbai in appeal
filed under Section 18 of the SARFAESI Act or in Writ Petition (L) No. 485 of 2010, Respondent Nos. 3 to 6
surreptitiously and without any notice to the Petitioner, filed Appeal 8

bearing No. Desk/LNA/105/2010 on 3rd March 2010 interalia challenging the order dated 17th July 2008
passed by the District Collector / Magistrate under Section 14 of the SARFAESI Act. Respondent Nos. 3 to 6
prayed for interim relief to stay the scheduled sale of the mortgaged properties / secured assets, which was on
4th March 2010. It is contended that the Additional Commissioner, Konkan Division, Mumbai vide order
dated 3rd March 2010 granted stay in terms of prayer clause (b) i.e. sale scheduled on 4th March 2010 was
stayed till the next date of hearing which was on 15 th March 2010. The Additional Commissioner, Konkan
Division, Mumbai disposed of the said Appeal filed by the Respondent nos. 3 to 6 vide order dated 1st April,
2010.

13. The learned counsel for the Petitioner has submitted that in view of the disposal of the appeal, the interim
order passed therein came to an end and therefore the Petitioner issued auction notice dated 8th April, 2010
scheduling the auction on 20th April 2010. On 20th April, 2010 the Petitioner had received two bids, one from
Sargam Enterprises for Rs.8,11,00,000.00 for land and building and Rs.1,00,00,000.00 for plant and
machinery; and the other from Mehek Overseas Pvt. Ltd. for Rs.15,55,00,000.00 for land and building and
Rs.1,00,00,000.00 for plant and machinery.

14. It is further submitted that on 19th April 2010, just before the 9

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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

commencement of public auction at 3 p.m., the Petitioner was served with the copy of the order dated 19th
April 2010 passed by the District Collector / Magistrate, Alibagh, purportedly passed on an application filed
by Respondents No. 3 to 6 on 17th April 2010, without notice to the Petitioner, interalia directing the
Petitioner to cancel the public auction, remove the aforesaid properties from the purview of action under
SARFAESI Act and further directed the Petitioner to hand over the possession of the two lands, viz. Survey
No. 158, Hissa No. 2-B and Survey No. 159, Hissa No. 1. Being aggrieved by the order dated 19th April 2010
passed by the District Magistrate, the Petitioner has filed the present petition and questioned the propriety and
validity of the said order. The counsel for the Petitioner has contended that the learned District Magistrate
failed to appreciate that the powers under Section 14 of the SARFAESI Act were very limited and ministerial
in nature and that the Respondent no. 2 had no power to adjudicate any claim or counter claim raised in the
application under Section 14 of the SARFAESI Act and therefore the impugned order is without jurisdiction
and is contrary to the provisions of SARFAESI Act and therefore cannot be sustained in law.

15. Learned counsel for the Petitioner further contended that Respondent no. 2 has no power to review and/or
recall its own order dated 17th July 2008 passed in Case No. 39 of 2008 under Section 14 of the SARFAESI
Act. 10

Similarly the impugned order is contrary to principles of natural justice as no notice or opportunity was given
to the Petitioner to put their case or reply to the contentions of Respondent nos. 3 to 6. It is contended that it
was obligatory on the part of the Respondent no. 2 to hear the Petitioner before passing the impugned order.

16. It is contended that the Petitioner in his notice issued under Section 13(2) of the SARFAESI Act has given
the description of all the immovable properties which were mortgaged to secure the dues of the Petitioner
bank. It is contended that the District Magistrate under Section 14 of the SARFAESI Act needs only to verify
from the bank or financial institution whether notice under Section 13(2) of SARFAESI Act is given or not
and whether the secured assets fall within his jurisdiction. There is no adjudication of any kind permissible in
law by the District Magistrate. It is contended that while passing the impugned order, District Magistrate
travelled beyond the jurisdiction vested in him under Section 14 of the SARFAESI Act and therefore the
impugned order is without jurisdiction and therefore cannot be sustained in law. In order to substantiate this
contention, reliance is placed on the decision of this Court in the case of Trade Well & Anr. vs. Indian Bank &
Anr. Reported in 2007(1) Bom. C.R. (Cri.)783, a decision of the Kerala High Court in case of Smt.
Ayishumma & Ors. vs. T. Hassan & Ors. Reported in AIR 2010 Kerala 11

13, and a decision of the Gujarat High Court in the case of Bank of India v. Pankaj Dilipbhai Hemnani & Ors.
reported in AIR 2007 Gujarat 201.

17. The learned counsel for Respondent nos. 3 to 6 supported the impugned order passed by the District
Magistrate. It is contended that in view of the provisions of Section 31(i) of the SARFAESI Act, the
provisions of this Act shall not apply to any security interest created in agricultural land. It is contended that
since the land bearing Survey No. 158, Hissa No.2- B and Survey no. 159, Hissa No. 1 in Village Nadhal,
Taluka Khalapur, District : Raigad, Maharashtra State are the agricultural land, hence provisions of Section
31(i) of the SARFAESI Act are not applicable to these lands and therefore the impugned order of the District
Magistrate is just and proper and is sustainable in law.

18. The learned counsels for the Respondent Nos. 3 to 6 further submitted that it was obligatory on the
Petitioner bank to consider before approaching the District Magistrate for an order under Section 14 of the
SARFAESI Act whether Section 31 of the SARFAESI Act excludes application of Sections 13 and 14
thereof. However, in the instant case the Petitioner bank filed application No. 39 of 2008, failed to disclose
this aspect in the said application which was under Section 14 of the SARFAESI Act and were allowed by the
District Magistrate vide Order dated 17th July 12

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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

2008. It is contended that the power exercised by the District Magistrate under Section 14 is of the ministerial
nature. The District Magistrate was entitled to modify, revoke and alter the same in view of Section 21 of The
General Clauses Act.

19. The learned counsels for the Respondent nos. 3 to 6 further contended that the application of the
provisions of the SARFAESI Act do not apply to any security interest created in agricultural land. The
District Magistrate had no power, jurisdiction or authority to allow the application bearing No. 39 of 2008
filed by the Petitioner under Section 14 of the SARFAESI Act. Since the power exercised by the District
Magistrate was ministerial in nature and was without jurisdiction, the District Magistrate was entitled to
revoke / modify the said order considering the scheme of Section 31(i) of the SARFAESI Act by passing the
impugned order, which is just and proper and is sustainable in law.

20. We have considered the contentions canvassed by the respective counsels for the parties and perused the
impugned order passed by the Respondent no. 2. At the outset, we must express that the scope, ambit and
purport of Section 14(i) of the SARFAESI Act has already been decided by this Court and other High Courts,
and therefore it will be appropriate to consider those decisions on the subject.

13

21. The Division Bench of this Court in the case of Trade Well & Anr. (cited supra) in paragraph 90 has
observed thus : "90. Following conclusions emerge from the above discussion :

1. The bank or financial institution shall, before making an application under section 14 of the

NPA Act, verify and confirm that notice under

section 13(2) of the NPA Act is given and that the secured asset falls within the jurisdiction of CMM/DM
before whom application under section 14 is made. The bank and financial

institution shall also consider before approaching CMM/DM for an order under section 14 of the NPA Act,
whether section 31 of the NPA Act excludes the application of sections 13 and 14

thereof to the case on hand.

2. CMM/DM acting under section 14 of the NPA Act is not required to give notice either to the

borrower or to the 3rd party.

3. He has to only verify from the bank or financial institution whether notice under section 13(2) of the NPA
Act is given or not and whether the

secured assets fall within his jurisdiction. There is no adjudication of any kind at that stage.

4. It is only if the above conditions are not fulfilled that the CMM/DM can refuse to pass an order

under section 14 of the NPA Act by recording that 14

the above conditions are not fulfilled. If these two conditions are fulfilled, he cannot refuse to pass an order
under section 14.

5. Remedy provided under section 17 of the NPA Act is available to the borrower as well as the third party.

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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

6. Remedy provided under section 17 is an

efficacious alternative remedy available to the

third party as well as to the borrower where all grievances can be raised.

7. In view of the fact that efficacious alternative remedy is available to the borrower as well as to the third
party, ordinarily, writ petition under Articles 226 and 227 of the Constitution of India should not be
entertained.

8. In exceptional cases of gravest injustice, a writ petition could be entertained by this court.

9. Great care and caution must be exercised while entertaining a writ petition because in a given case it may
result in frustrating the object of the NPA Act.

10.Even if a writ petition is entertained, as far as possible, the parties should be relegated to the remedy
provided under section 17 of the NPA Act

before the DRT by passing an interim order which will protect the secured assets. Adjudication and final order
should be left to the DRT as far as

possible."

15

22. The above referred observations clearly show that before exercising power under Section 14 of the
SARFAESI Act, the District Magistrate has to only verify from the bank or financial institution whether
notice under Section 13 of the SARFAESI Act is given or not and whether the secured assets fall within his
jurisdiction. There is no power vested in the District Magistrate to adjudicate upon any issue of any kind
pertaining to secured assets.

23 Similarly, in case of Bank of India (cited supra), the learned Judge in paragraph 8 has observed thus:

"8. Hence, the authority who is called upon to act under S. 14 of the Securitisation Act can only assist, nay, is
bound to assist the secured creditor in taking possession of the secured asset. Any dispute between the parties
regarding the secured asset raised before the authority cannot be gone into by authority, the authority has to
relegate aggrieved person to seek statutory remedy under the Securitisation Act after taking possession and
handing over to the secured creditor. The authority cannot be permitted to read anything beyond this is S. 14
of the Securitisation Act."

It is evident that Section 14 of the SARFAESI Act is an enabling section which empowers Magistrate only to
assist secured creditor in taking possession of the secured assets and therefore the power vested in the 16

District Magistrate is limited and specific. Plain reading of Section 14 of the SARFAESI Act demonstrates
that it does not clothe the District Magistrate with power to undertake any adjudication in respect of any
dispute between the parties regarding the secured assets. Hence, any dispute raised regarding the secured
assets of any kind, cannot be gone into by the District Magistrate while exercising power under Section 14
and the aggrieved person is required to approach the competent forum for redressal of his grievance in respect
of the secured assets.

24. Similarly, in the case of Smt. Ayishumma & ors. (cited supra) the learned Single Judge of Kerala High
Court in paragraph 7 has observed thus:
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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

"7. In the instant case, there is no case for the Petitioner that the property in question is not a secured asset.
The only contention is that though it is a secured asset, it is 'an agricultural land' and hence is excluded from
the purview of the SARFAESI Act, as provided under Section 31(i) of the Act. This is a matter which is to be
looked into by the appropriate forum under the Act and not by the

Magistrate, who is only vested with limited jurisdiction, to provide necessary assistance to take over the
physical possession of the property, if it is a secured asset. This Court finds support in this regard, from the
decisions rendered by this Court, as reported in Singhu v. State of Kerala (2008 (2) KLT 736) : (AIR 2008
Ker 65) and 17

Muhammed Asharaf v. Union of India (2008 (3) KLT 1) : AIR 2009 Ker. 14)."

It is therefore evident that even if contention is canvassed before the District Magistrate in view of Section
31(i) of the SARFAESI Act that the secured asset is an agricultural land and therefore provisions of this Act
are not applicable in respect of the said lands, same cannot be considered by the District Magistrate for want
of jurisdiction to adjudicate in this regard. The aggrieved person will have to approach the appropriate forum
for the said purpose. The power vested in the District Magistrate under Section 14 is only to assist secured
creditor in taking possession of the secured assets only.

25. The view expressed by the learned Single Judges is consistent with the law declared by the Division
Bench of this Court in the case of Trade Well & Anr. We concur with the view expressed by the learned
Single Judges

26. The SARFEASI Act was enacted to regulate securitisation and reconstruction of financial assets and
enforcement of security interest and for matters connected thereto. The SARFEASI Act enables the banks and
financial institutions to realise long term assets, manage problem of liquidity, asset liability mis-match and
improve recovery by exercising 18

powers to take possession of securities, sell them and reduce non- performing assets by adopting measures for
recovery or reconstruction. Under Section 13(4) if the borrower fails to discharge his liability in full within the
period specified in sub section (2) of Section 13 of the SARFEASI Act, the secured creditor is entitled to take
recourse to one or more of the measures stipulated in sub section (4) of Section 13 to recover his secured debt.

27. Section 14 enables the secured creditor to take the assistance of the Chief Metropolitan Magistrate or
District Magistrate in taking possession of the secured assets. The power of the CMM or DM under Section
14 as per the scheme of the said Section can only be invoked by the secured creditor in taking possession of
the secured assets. The intention of the legislature is to enable the banks and the financial institutions to
realise their long term assets, improve recovery process of taking possession of the securities. As per scheme
of Section 14 of the SARFEASI Act, only secured creditor can invoke the power of the CMM or DM vested
under this Section. Sub Section 3 of Section 14 gives finality to the act done by CMM or DM under this
Section.

28. In the instant case the following facts are not in dispute: 19

i. The Petitioner granted last credit facility to Respondent no. 3 (borrower) the Respondent nos. 4 to 6
(partners) on 10th April, 2007. ii. On 26th June 2007 notice under Section 13(2) of the SARFAESI Act was
issued by the Petitioner, calling upon the Respondent no. 3 and Respondent no. 6 (mortgagors / guarantors) to
pay to the Petitioner within 60 days from the date of notice all outstanding dues with interest.

iii. The Petitioner vide letter dated 4th September 2007 addressed to the Respondent nos. 3 and 6 and called
upon them to deliver the possession of the secured assets. Respondent no. 3 vide letter dated 11th September
2007 did not dispute the liability of payment of dues as claimed by the Petitioner, however, requested the
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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

Petitioner for time to make payment.

iv. As Respondent nos. 3 and 6 failed to discharge their liability, the Petitioner issued notice dated 4th January
2008 to Respondent no. 3 and called upon it to hand over possession on 16th January 2008. Petitioner taken
symbolic possession on 16th January 2008. v. On 17th January 2008 the Petitioner filed an application
bearing No. 39 of 2008 under Section 14 of the SARFEASI Act before the District Magistrate. The District
Magistrate vide Order dated 17th July 2008 directed Talathi to assist the Petitioner to take possession of the
20

secured assets.

vi. The District Magistrate at the behest of the concerned Respondents, reviewed / reconsidered his order
dated 17th July 2008 in view of the provisions of Section 31(i) and directed the Petitioner to cancel the public
auction which was scheduled on 20th April 2010 and to hand over the possession of the lands, viz. Survey No.
158, Hissa No. 2-B and Survey No. 159, Hissa No. 1 to the Respondent no. 3. It is this order which is
impugned in the present petition.

29. It is not in dispute that the Petitioner has given description of the immovable properties mortgaged so as to
secure the debts of the Petitioner bank, in the notice under Section 13(2) of the SARFEASI Act which
includes Survey No. 158 and Survey No. 159. It is also not in dispute that the secured assets fall within the
jurisdiction of the District Magistrate who had passed the Order dated 17th July 2008. Considering these vital
undisputed facts as well as in view of the legal position emerges from the above referred decisions on the
subjects and in view of the scheme of the provisions of Section 14 of the SARFAESI Act, the District
Magistrate, in our considered view, had no jurisdiction, power or authority to reconsider the issue which was
finally concluded by the Order dated 17th July 2008, at the behest of the concerned respondents and
adjudicate as to whether the land, viz. Survey No. 158 and Survey No. 159 was the agricultural land or 21

otherwise and whether in view of the provisions of Section 31(i) of the SARFAESI Act, the provisions of the
said Act shall not apply to these survey numbers. The jurisdiction exercised by the Magistrate under Section
14 of the SARFAESI Act being limited only to assist the secured creditor in taking possession of the secured
assets, had no jurisdiction or authority to adjudicate and decide the issue about the status of the lands and
exclude them from the purview of the SARFAESI Act as provided under Section 31(i) of the SARFEASI Act
since DM has no jurisdiction to entertain any dispute relating to secured assets. The impugned order therefore
is wholly without jurisdiction.

30. It is pertinent to note that the Respondent nos. 3 to 6 filed Securitisation Application No. 8 of 2009 under
Section 17 of the SARFEASI Act challenging the action initiated by the Petitioner under Section 14 of the
SARFEASI Act on the ground that no action under the SARFEASI Act can be initiated against two of the
properties, viz. Survey No. 158 and Survey No. 159 in view of the provisions of Section 31(i) of the
SARFEASI Act. However, the Presiding Officer DRT-1 by an order dated 15th December 2009 has dismissed
the Securitisation Application No. 8 of 2009 filed by the Respondent nos. 3 to 6. Respondent nos. 3 to 6 filed
Appeal no. 47 of 2010 under Section 18 of the SARFEASI Act challenging the order dated 15th December
2009 passed by the DRT. In view of the 22

above referred facts, it is evident that the proper adjudicatory authority, i.e. DRT after considering the issue
raised by the Respondent nos. 3 to 6 concluded that the property, viz. Survey No. 158 and Survey No. 159 are
not the agricultural lands and therefore provisions of Section 31(i) of the SARFEASI Act were not attracted
and dismissed the Securitisation Application filed by the Respondent nos. 3 to 6.

31. The contention canvassed by the learned counsels for Respondent Nos. 3 to 6 that the order passed by the
CMM or DM under Section 14 of the SARFEASI Act and though there is no provision in the said Act for
review of the said order, the Respondents Nos. 3 to 6 invoked the provisions of Section 21 of the General
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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

Clauses Act, 1897 for reconsideration of the earlier order passed by the District Magistrate and it is also
permissible for the CMM and DM to amend, vary or rescind his own order, in our view, is incorrect for the
following reasons.

32. In order to appreciate the said contention, it is necessary to consider the scope and ambit of the power
provided under Section 21 of the Act of 1897 in the context of provisions of Section 14 of the SARFEASI
Act. Section 14 of the SARFEASI Act is procedural in nature and the procedure stipulated therein enabled the
secured creditor to take assistance of the CMM or DM in taking possession of the secured assets. Section 14
merely 23

empowers the CMM or DM to assist the secured creditor in taking possession of the secured assets as per the
procedure provided under Section 14 of the SARFEASI Act it does not clothe the District Magistrate with the
power to adjudicate in respect of any dispute pertaining to secured assets. Section 14(1) of the SARFEASI Act
provides the contingency in which the secured creditor can request in writing the CMM or DM within whose
jurisdiction the secured assets falls to grant assistance for taking over possession of the secured assets. Sub
section (2) of Section 14 provides the procedure which CMM or DM may undertake for the purpose of
securing compliance with the provisions of sub section (1). Sub section (3) of Section 14 provides finality to
the act of the CMM or DM done under Section 14 with the rider that the said act shall not be called in
question in any court or before any authority. It is therefore evident that the intention of the legislature is to
give finality to the act done by CMM or DM by exercising power under Section 14. The Magistrate having
been exercised the said power under Section 14 virtually becomes functus officio in relation to the concerned
issue. The order passed or act done by the Magistrate under Section 14 is given finality by the statute. The
general power provided under Section 21 of the General Clauses Act is to add to, amend, vary or rescind any
order etc. is clearly inapplicable in view of the specific scheme of the provisions of Section 14 of the
SARFEASI Act. Since the statute expressly provides finality to the act done by the Magistrate as per the
Scheme of 24

Section 14 of the Act, therefore the said act of District Magistrate's stands excluded from the purview of
Section 21 of the General Clauses Act. It is well settled that Section 21 embodies only a rule to construction
and the nature and the extent of its application must be governed by the relevant statute which confers the
power to issue such order. In the instant case once the Magistrate has exercised power within the limit
circumscribed by Section 14, the said act of the Magistrate stands excluded from the purview of Section 21 of
the General Clauses Act. Provision of Section 14 of the Act does not vest District Magistrate with the
jurisdiction to adjudicate and decide any dispute regarding the secured assets, vesting the said jurisdiction in
him by applying the provisions of Section 21 of the General Clauses Act would amount to re-writing the
provisions of Section 14, which is impermissible in law, since court can merely interpret the provisions of the
statute, it cannot re-write, recast or redesign the Section of the statute. In view of this legal position the
contention canvassed by the learned counsels for Respondent nos. 3 to 6 in this regard is devoid of substance.

33. Before we part with the judgment, we want to express that in the instant case the Respondent nos. 3 to 6
after admitting the claim of the Petitioner bank in the year 2007 itself succeeded in preventing the auction of
the secured assets though the possession thereof was taken by the Petitioner bank on 17th July, 2008. The
Respondent nos. 3 to 6 knowing 25

fully well that the Additional Commissioner, Konkan Division, Mumbai did not have any jurisdiction, filed
appeal before him and challenged the order dated 17th July 2008 passed by the District Magistrate under
Section 14 of the SARFEASI Act and the Additional Commissioner was also pleased to grant exparte order.
The Additional Commissioner though at latter point of time vide order dated 1st April 2010 disposed of the
said appeal. The auction of the secured assets was scheduled on 4th March 2010, however in view of the
interim order passed by the Additional Commissioner, Konkan Division, on 3rd March 2010 the Petitioner
had to defer the auction proceedings. Similarly after the appeal filed by the Respondent nos. 3 to 6 was
disposed of by the Additional Commissioner, Konkan Division on 1st April 2010, the Petitioner once again
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 Union Bank Of India vs The State Of Maharashtra on 5 July, 2010

scheduled the auction of the secured assets on 20th April 2010. However, the Respondent nos. 3 to 6
approached the District Magistrate who had no jurisdiction had passed the impugned order dated 19th April,
2010 and directed the Petitioner to hand over the possession of the land viz. Survey Nos. 158 and 159 and
therefore the auction of the secured assets which was scheduled on 20th April 2010 could not take place. The
conduct of the Respondent nos. 3 to 6 on the back-drop of the above referred facts clearly demonstrates that
though they have admitted the liability, dues of the bank, however, were successful in preventing the auction
of the secured assets on one reason or the other, which has virtually resulted in frustrating the objectives of the
SARFEASI Act. 26

34. For the reasons stated herein above, impugned order dated 19th April 2010 passed by the District
Magistrate, Raigad, Alibaug in Case No. 39 of 2008 is being without jurisdiction and illegal, hence is
unsustainable in law. Same is quashed and set aside.

35. Rule made absolute in the above terms. No order as to costs. (D. D. SINHA, J.)

(MRS. MRIDULA BHATKAR,J.)

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