Last Updated on August 31, 2020 by Satish Mishra
This post is a case digest on writ petition against the orders of DRT in Punjab and Haryana High Court wherein petitioners have challenged the order dated 22.06.2018 passed by the Debt Recovery Tribunal-III, Chandigarh by which the Securitization Application filed by the petitioners was dismissed as not maintainable on the ground that the petitioners have not lost their physical possession over the mortgaged property. Now the same was challenged before Punjab Haryana High Court.
Also Read- Can Banks attach Agricultural Land DRT Chandigarh Bench?
M/S National Electronics … vs Authorized Officer Punjab
16 November, 2019
THE HIGH COURT OF PUNJAB AND HARYANA
CWP-18067-2018 (O&M)Date of Decision: 16.11.2019Petitioners- M/s National Electronics Corporation and anotherRespondent- Authorized Officer, Punjab National Bank Two judgments have been referred: 1. M/S Hindon Forge Pvt. Ltd. vs The State Of Uttar Pradesh Thr.2. Shanta Arora vs Debts Recovery Appellate Also Read- Whether DRT or High Court Chandigarh for Payment Default (NPA) M/S Hindon Forge Pvt. Ltd. Vs The State of Uttar Pradesh Thr Ø Whether an application under section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 at the instance of a borrower, is maintainable even before physical or actual possession of secured assets is taken by banks/financial institutions in exercise of their powers under section 13(4) of the Act read with rule 8 of the Security Interest (Enforcement) Rules, 2002.Ø Taking measure under Section 13(4)(a) would mean taking actual (physical) possession, and if we do not read it in the said provision to say so, the right and power of the secured creditor to transfer the assets by way of lease, assignment or sale for realizing the secured assets, as provided for therein, would render redundant.Ø Unless physical possession is taken, the measure, contemplated under Section 13(4), cannot be stated to have been taken.Ø The absolute owner, who is under no personal incapacity can grant lease for any term he pleases. However, the limited owner like a tenant for life can grant lease but it would not endure beyond his death.Ø Under S. 52 if a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof, it will be a licence. The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the permissive for a particular purpose.Ø The ultimate object of taking possession of the secured asset or management of the business of the borrower would not be achieved unless the secured creditor is in a position to further exercise his right to transfer the same, inter alia, by way of lease or sale, which could be possible only if physical (actual) possession has been taken over and not constructive or symbolic possession.Ø A secured creditor remains a secured creditor when only constructive or symbolic possession is given, as the entire interest in the property not having been passed on to the secured creditor in the first place, the secured creditor in turn could not pass on the entire interest in the property to the auction purchaser. Also Read- CONDONATION OF DELAY PETITION IN DRT CHANDIGARH Shanta Arora vs Debts Recovery Appellate º Securitization Application No.643 of 2017 filed by the petitioner was dismissed on the ground that the secured creditor has not taken physical possession on the basis of symbolic possession in terms of the provisions of Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.º The impugned order passed by the Tribunal on 03.08.2018 does not survive. Therefore, the writ petition is hereby allowed and orders dated 03.08.2018 is set aside and the matter is remanded back to the Debts Recovery Tribunal- III, Chandigarh to decide the same in accordance with law.
Also Read- DRT Chandigarh Procedure
Orders in the present Petition:
- The petition filed under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (for short ‘SARFAESI Act, 2002′) would be 1 of 2 CWP-18067-2018 (O&M) -2-maintainable before the Debt Recovery Tribunal despite the fact that the physical possession is not lost.
- The impugned order dated 22.06.2018 passed by the Debt Recovery Tribunal-III, Chandigarh is hereby set aside and the matter is remanded back to it to decide the same on merits.
- With the disposal of this petition, all the interim orders passed by this Court have come to an end but petitioners are at liberty to raise the issue of stay in the proceedings before the DRT after the remand of this matter.
- Parties are directed to appear before the DRT on 04.12.2019
Also Read- Securitization Application DRT to Redeliver Possession Back
For case specific advice, please contact best/top/expert DRT Chandigarh Lawyers Advocate in Punjab Haryana, Jammu & Kashmir, Himachal Pradesh, Haryana etc.
This post is written by Rashika Garg. More on 99888-17966.
