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1/28/11

Can the Bank forcibly evict the borrower/guarantor without obtaining an order under section 14 of SARFAESI Act, 2002?

Bombay High Court in M/s.Clarity Gold Pvt.Ltd. & Another Vs. State Bank of India & Others CDJ 2011 BHC 085:

“19. The Tribunal came to the conclusion that the Bank had taken forcible possession of the property without seeking recourse to an order of the Chief Metropolitan Magistrate under Section 14. Now, under Section 14, where the possession of any secured asset is required to be taken by the secured creditor, the secured creditor may make request in writing to the Chief Metropolitan Magistrate or the District Magistrate concerned to take possession. Thereupon, the Chief Metropolitan Magistrate or the District Magistrate is empowered to take possession of the asset and documents relating thereto and to forward them to the secured creditor. Under subsection (2) the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use or cause to be used such force as may in his opinion be necessary. Section 14 of the Act is an enabling provision under which the secured creditor is empowered to seek recourse to the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate for the purpose of taking possession. Though Section 14 is an enabling provision, it will be wholly impermissible for a secured creditor, despite the provisions of Section 14, to take the law into his own hands and to forcibly evict a borrower from the secured asset. Our legal system is governed by the rule of law. If the borrower hands over possession voluntarily to the secured creditor in pursuance of a notice under Section 13(4), it would be open to the secured creditor to take possession. But, if possession is not voluntarily handed over, the secured creditor cannot take the law into his own hands and secure vacant possession by taking recourse to the police machinery. In such an event, the only remedy that is available is to seek an appropriate order from the Chief Metropolitan Magistrate, or as the case may be, the District Magistrate. Parliament has specifically authorised in subsection (2) those authorities to take or cause to be taken such steps and use or caused to be used such force as may be necessary. Authorisation of the use of force for taking possession is therefore a matter which lies in the jurisdiction and power of the authorities prescribed by Section 14. No secured creditor can by seeking assistance of police machinery unilaterally carry out the eviction of the borrower and take over forcible possession of the secured asset.”

4 comments:

  1. மதிப்புக்கும் அன்புக்குரிய ஐயா தங்களது கம்பெனி பற்றிய விஷயங்கள் எழுதிய பிளாகையும் , கடன் வசூல் தீர்வாயங்கள் பற்றிய விஷயங்களையும் தொடர்ந்து படித்து வருகிறேன். இன்னும் முடிக்கவில்லை படித்துக்கொண்டேதான் இருக்கிறேன்.அவ்வளவு தகவல்கள் கொட்டிகிடக்கிறது.நான் உங்களுக்கு எத்தனை முறை நன்றி சொன்னாலும் போதாது. எப்படி அடுத்தவரிடம் இதயெல்லாம் கேட்பது என்று சங்கட பட்ட விஷயங்களையும் சேர்த்து எழுதுவது சந்தோஷமாக இருக்கிறது.மிக்க நன்றி மிக்க நன்றி.Since i am more comfortable to wish you in my own mother tongue i am doing so.I have saved your pages ...slowly i ahve to gooooooo thro it. Thank you again for your service.Hats Off for your selfless service.This way of Sharing knowledge is going to give you more wealth, health, luck and Peace.- Advocate Latha.

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  2. The above decesion has been overturned by Honarble Debt RECOVERY APPELATE TRIBUNAL, mUMBAI, also DRAT judgement has been upheld by Honarble Bombay High Court. The Property of clarity gold is still in Lega Physical possesion of the bank.

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