Case Law Details
CA. Manisha Mehta Vs The Board of Directors of Represented by its Managing Director of ICICI Bank and ors. (Bombay High Court)
The main prayer of the petitioners is for a declaration that natural justice should be read into section 14 of the SARFAESI Act.
The SARFAESI Act is intended to facilitate quick recovery of secured debts without extending any opportunity of hearing to a borrower and without judicial/quasi-judicial intervention till such time possession of the secured asset is taken by the secured creditor after serving the requisite notices and responding to the objection/representation that may be lodged/preferred by the borrower under section 13(3A). That Mardia Chemicals (supra) and Transcore (supra) are pre-section 14 amendment decisions, make no difference. There is no fundamental change in the object and purposes of the SARFAESI Act even after the amendments. Since the need for a borrower to draw legal assistance arises only after a demand notice under sub-section (2) is issued, it has been experienced in very many cases that sub-section (1) of section 13, which is the harbinger of misfortune of recalcitrant borrowers, is completely overlooked by those representing them. It permits enforcement of security interest without the intervention of a court/tribunal but in accordance with the statutory provisions. The present case is not too different. Decision by a quasi-judicial authority (see section 17) upon compliance with natural justice stands deferred till such time possession, either symbolic or physical, is taken. The SARFAESI Act does not remotely suggest compliance with natural justice at the stage when section 13(4) or 14 operates. Paragraph 36 of V. Noble Kumar (supra) explains that there are 3 (three) methods for taking possession of a secured asset. In view thereof, section 14 cannot stand independent of section 13(4). If a borrower has no right of hearing when the secured creditor takes possession under section 13(4), a fortiori, no hearing can be demanded by a borrower when he succeeds in resisting possession being gained over by the authorized officer of the secured creditor or does not on his own surrender possession, and thus compels such officer to work out the remedy by seeking assistance of the District Magistrate/Chief Metropolitan Magistrate, as the case may be, under section 14. Only a post-possession right to approach the tribunal is conferred on a borrower in terms of section 17, nothing more and nothing less.
Pertinently, section 14 of the SARFAESI Act was amended twice, once in 2013 and then again in 2016. If it were the intention of the legislature to extend opportunity of hearing to a borrower before the District Magistrate/Chief Metropolitan Magistrate, as the case may be, it was free to do so. Advisedly, the legislature did not do so, for, it would have militated against the scheme of the SARFAESI Act and more particularly section 13 thereof. It is implicit in the scheme of the SARFAESI Act that natural justice, only to a limited extent, is available and not beyond what is expressly provided. There seems to be little merit in the argument advanced by Mr. Nedumpara and we hold that the language of section 14 is too clear and unambiguous, and does not admit of any requirement of complying with natural justice by putting the borrower on notice while an application thereunder is under consideration.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
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