The Federal Bank Limited v. State of Kerala and Others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU** **TUESDAY, THE 7TH DAY OF AUGUST 2018 / 16TH SRAVANA, 1940** **WP(C).No. 18787 of 2018 --------------------------** ## **PETITIONER(S)** ## **THE FEDERAL BANK LIMITED** **MUNDUR BRANCH, THRISSUR DISTRICT REPRESENTED BY ITS AUTHORIZED OFFICER, SAJAN PHILIP MATHEW, AGED 42 YEARS, ASSISTANT VICE PRESIDENT THE FEDERAL BANK LIMITED, LCRD ERNAKULAM DIVISION (ERSTWHILE ASSET RECOVERY BRANCH, MARINE, ERNAKULAM-682 031.** **BY ADVS.SRI.MOHAN JACOB GEORGE** **SMT.P.V.PARVATHY (P-41)** **SMT.REENA THOMAS SRI.T.K.NAVAS** **SMT.NIGI GEORGE** ## **RESPONDENT(S):** ## **1. STATE OF KERALA** **REPRESENTED BY ITS CHIEF SECRETARY, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001.** ## **2. JAYANTHAN** **AGED 46 YEARS, S/O.KUMARAN, KARNAMKOT HOUSE,** **P.O.MUNDOOR, THRISSUR-680 541.** ## **3. KARTHIKA BALAN** - **W/O.BALAN, VANDERIYATTIL HOUSE, MUNDOOR P.O., THRISSUR-680 541.** ## **4. DIJESH.V.B** **S/O.BALAN, VANDERIYATTIL HOUSE, MUNDOOR P.O., THRISSUR-680 541.** ## **5. DINESH** - **S/O.BALAN, VANDERIYATTIL HOUSE, MUNDOOR P.O., THRISSUR-680 541.** ## **6. DIVYA** - **D/O.BALAN, VANDERIYATTIL HOUSE, MUNDOOR P.O., THRISSUR-680 541.** **WP(C).No. 18787 of 2018** ## **--------------------------** ## **7. STATION HOUSE OFFICER,** **MEDICAL COLLEGE POLICE STATION, THRISSUR - 680 596** **R2 BY ADV. SRI.DINESH MATHEW J.MURICKEN** **R BY SRI. MATHEW GEORGE VADAKKEL, GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07-08-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No. 18787 of 2018 (W)** ## **APPENDIX** **PETITIONER(S)' EXHIBITS: -----------------------EXT.P1 COPY OF SECTION 13(2) NOTICE DATED 02.11.2016 EXT.P1(A) COPY OF POSSESSION NOTICE DATED 28.3.2017 EXT.P2 COPY OF SECTION 14 APPLICATION FILED AS CMP NO.3098/2017 EXT.P3 COPY OF THE ORDER DATED 21.6.2017 IN CRL.MP NO.3098/2017 PASSED BY THE CJM, THRISSUR EXT.P4 COPY OF ADVOCATE COMMISSIONER'S NOTICE DATED 10.07.2017 EXT.P5 COPY OF THE PETITION FILED AS CMP NO.4928/2017 EXT.P6 COPY OF THE OBJECTION SUBMITTED BY THE BANK TO EXT.P5 EXT.P7 COPY OF ORDER DATED 09.03.2018 PASSED BY THE CJM, THRISSUR.** ## **RESPONDENT(S) EXHIBITS : NIL** **----------------------** ## **//TRUE COPY//** **P.A.TO JUDGE** **sd** **CR** ## **DAMA SESHADRI NAIDU, J.** ================================= **W.P.(C). No. 18787 of 2018** ================================= **Dated this the 7[th] day of August, 2018** ## **JUDGMENT** The petitioner bank lent money to the respondents 3 to 6. On their default, the bank began recovery proceedings. When it invoked Section 14 of the SARFAESI Act and wanted to take possession of the property, the 2[nd] respondent objected before the Chief Judicial Magistrate's Court. He raised a plea that he is the tenant and he ought to have been put on notice. Therefore, the Chief Judicial Magistrate's Court issued the Ext.P7 proceedings, asking the bank to put the tenant on notice. Assailing the Ext.P7, the bank filed this Writ Petition. 2. The petitioner's counsel has strenuously contended that because of the amended Section 17(4)(A) of the SARFAESI Act, the Chief Judicial Magistrate's Court has no jurisdiction to entertain any objection by a third party, including a tenant. He, therefore, asserts that the Ext.P7 order cannot be sustained. 3. The 2[nd] respondent's counsel, on the other hand, submits W.P.(C). No. 18787 of 2018 -2- that this Court and the Supreme Court have consistently held that the _non obstante_ clause of the SARFAESI Act cannot be used to demolish the statutory protections available to people. According to him, a tenant can be evicted only through due process and the Transfer of Property Act no exception for the banks. To support his contentions, he relied on _Vishal N. Kalsaria v. Bank of India and others[1] , Harshad Govardhan Sondagar and Others v. Internl. Assets Reconstm. Co. Ltd. and Others[2] and Kelukuty P.M. And_ . _Others v. Young Men's Christian Association and Another_[3] 4. The 2[nd] respondent's counsel has also submitted that the Ext.P7 cannot be termed an 'impugned order'. According to him, — a it only required the bank to put the tenant on notice requirement of natural justice. 5. Heard the learned counsel for the petitioner and the learned counsel for the respondents. 6. Indeed, this Court and the Supreme Court have consistently held that despite the non-obstante clause in the > 1 AIR 2016 SC 530 > 2 2014(6) SCC 1 > 3 2016(1) KHC 853 -3- W.P.(C). No. 18787 of 2018 SARFAESI Act, the statutory protections for a tenant still remains. And the unmistakable judicial dictum is that the tenant ought to be evicted only through due process. 7. Given the consistent judicial view, the Parliament brought in an amendment to Section 17 and inserted sub-section 4(A). Any person claiming tenancy or leasehold rights over a secured asset can approach the Debt Recovery Tribunal. In other words, the tenant or lessee will get statutory protection if the tenancy (a) existed before the Bank issued statutory notice for repayment and still subsists, (b) conforms to Section 65A of the Transfer of Property Act, and (c) violates no terms of the mortgage. The Provision, to the extent relevant, reads: _“17(1) xxxxxxxxx (2) xxxxxxxxx (3) xxxxxxxxx 4(A)Where-_ _(i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether_ -4- W.P.(C). No. 18787 of 2018 _lease or tenancy,-_ _(a) has expired or stood determined; or_ _(b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or_ _(c) is contrary to terms of mortgage; or_ _(d) is created after the issuance of notice of default and demand by the Bank under sub-section (2) of section 13 of the Act; and_ _(ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a)or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause (i), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act._ _(5) xxxxxxxxxx_ _(6) xxxxxxxxxx_ _(7) xxxxxxxxxx”_ 8. Undoubted is the protection a tenant enjoys, but doubted is the method the tenant, here, has chosen. Rather than approach the DRT, he asserted his right before the Chief Judicial Magistrate, who may not be discharging judicial functions under Section 14 of the SARFAESI Act. 9. Even otherwise, the precedent's binding nature unquestioned, still I must say a precedent cannot be equated -5- W.P.(C). No. 18787 of 2018 with a statutory provision. 10. As the statutory mandate of Section 17(4)(A) is clear, the 2[nd] respondent's remedy lies before the DRT. So the judicial dicta available before Section 17(4)(A) added cannot aid the tenant to agitate the issue before the CJM's Court. He may have to go before the DRT. 11. Under these circumstances, I hold that the Chief Judicial Magistrate's Court can entertain no plea of a tenant because the jurisdiction of the Chief Judicial Magistrate's Court under Section 14 is limited. So it is open for the 2[nd] respondent to approach the DRT and press his cause. With these observations, I allow the Writ Petition. No order on costs. **Sd/DAMA SESHADRI NAIDU JUDGE** sd