Case Note & Summary
The dispute arose from a writ petition filed by M/s. Shailesh Traders and five other petitioners against Union Bank of India regarding the rejection of their request for documents related to a loan classified as a Non-Performing Asset (N.P.A.). The petitioners had taken a loan of Rs. 250 lakhs from the bank, with the other petitioners acting as guarantors. Despite timely repayments, the bank classified the loan as N.P.A. and issued notices under the SARFAESI Act for possession of secured properties. The petitioners challenged the bank's actions, arguing that the bank failed to comply with legal requirements and that their loan account was improperly classified. The Chief Judicial Magistrate rejected their application for document disclosure, leading to the writ petition. The court analyzed the provisions of the SARFAESI Act, particularly Section 14, and referenced previous judgments to conclude that the Chief Judicial Magistrate was not required to notify the borrowers or third parties in such proceedings. The court found that the petitioners had been served the necessary notice under Section 13(2) and had not contested it, thus dismissing the writ petition and upholding the lower court's decision.
Headnote
A) Banking Law - SARFAESI Act - Notice Requirement - Chief Judicial Magistrate not required to give notice to borrower - SARFAESI Act, 2002, Section 14 - The court held that the Chief Judicial Magistrate is not mandated to provide notice to the borrower or third parties when acting under Section 14, focusing solely on jurisdiction and prior notice under Section 13(2) being served. (Paras 13-29).
Issue of Consideration
Whether the Chief Judicial Magistrate's order declining the petitioners' request for documents under the SARFAESI Act was justified.
Final Decision
The High Court dismissed the writ petition, affirming the Chief Judicial Magistrate's order and ruling that the petitioners had not established grounds for relief. The court held that the Chief Judicial Magistrate was not required to notify the borrowers or third parties under Section 14 of the SARFAESI Act and that the petitioners had been duly served notice under Section 13(2).
Law Points
- SARFAESI Act
- Non-Performing Assets
- Securitization Application
- Chief Judicial Magistrate
- Affidavit Requirements
Case Details
2024 LawText (BOM) (12) 130
Criminal Writ Petition No. 1685 of 2023
Mr. N.P. Patil, Jamalpurkar, Mr. Atul A. Mishra
M/s. Shailesh Traders, Harishchandra Nivrutti Ghar, Sumanbai Mohan Makane, Mohan Rangrao Makane, Kavitabai Balu Darode, Gopal S/o Harishchandra Ghar
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Nature of Litigation
Writ petition challenging the order of the Chief Judicial Magistrate regarding document disclosure under the SARFAESI Act.
Remedy Sought
Petitioners sought directions for the supply of copies of application, affidavit, and notice under Section 13(2) of the SARFAESI Act.
Filing Reason
The petitioners contended that the bank failed to comply with legal requirements in the proceedings under the SARFAESI Act.
Previous Decisions
The Chief Judicial Magistrate had previously rejected the petitioners' application for document disclosure.
Issues
Whether the Chief Judicial Magistrate's order declining the petitioners' request for documents was justified.
Whether the bank complied with the provisions of the SARFAESI Act in its actions against the petitioners.
Submissions/Arguments
Petitioners argued that the bank failed to provide necessary documents and did not comply with legal requirements.
Respondent bank contended that all necessary notices were served and that the Chief Judicial Magistrate's order was in accordance with the law.
Ratio Decidendi
The Chief Judicial Magistrate's role under Section 14 of the SARFAESI Act is ministerial, requiring no notice to borrowers or third parties, focusing solely on jurisdiction and prior notice compliance.
Judgment Excerpts
The Chief Judicial Magistrate acting under Section 14 of SARFAESI Act is not required to give notice either to borrower or third party.
The powers exercisable by CMM/DM under Section 14 of the SARFAESI Act are ministerial step and Section 14 does not involve any adjudicatory process.
The Petitioners have not denied about service of notice dated 14.09.2022 issued by the Respondent/Bank under Section 13(2) of the SARFAESI Act.
Procedural History
The petitioners filed a writ petition against the order of the Chief Judicial Magistrate rejecting their application for document disclosure under the SARFAESI Act. The Chief Judicial Magistrate had previously ruled on the bank's application for possession of secured assets.
Acts & Sections
- Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: Section 13(2), Section 14
