Case Note & Summary
The petitioner, Amit Mohan Bhatia, claiming to be a tenant of a property secured by Maratha Sahkari Bank Ltd., filed an intervention application before the Chief Metropolitan Magistrate, Mumbai, seeking to prevent his eviction. The Bank had initiated recovery proceedings under the Maharashtra Co-operative Societies Rules, 1961, and the Magistrate had allowed the Bank's application for possession. The petitioner challenged this order, and the High Court initially remanded the matter for fresh consideration. However, upon rehearing, the Magistrate again rejected the petitioner's tenancy claim, holding that the issue of tenancy must be decided by the Debt Recovery Tribunal (DRT). The petitioner then filed the present writ petition under Article 227 of the Constitution. The High Court, relying on the Supreme Court's decision in Vishal N. Kalsaria v. Bank of India, held that the Magistrate's role under Section 14 of the SARFAESI Act is limited to assisting the secured creditor in taking possession and cannot extend to adjudicating tenancy disputes. Such disputes must be raised before the DRT under Section 17 of the SARFAESI Act. The Court dismissed the petition, upholding the Magistrate's order and directing the petitioner to approach the DRT for relief.
Headnote
A) SARFAESI Act - Section 14 - Magistrate's Role - Limited to Facilitating Possession - The Chief Metropolitan Magistrate, while acting under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, is only required to assist the secured creditor in taking possession of the secured assets. The Magistrate cannot adjudicate disputes regarding tenancy or other claims, which must be raised before the Debt Recovery Tribunal under Section 17 of the SARFAESI Act. (Paras 6-10)
B) Tenancy - Dispute Resolution - Jurisdiction of DRT - Any claim of tenancy in respect of secured assets must be adjudicated by the Debt Recovery Tribunal under Section 17 of the SARFAESI Act, 2002, and not by the Magistrate under Section 14. The Magistrate's role is ministerial, not adjudicatory. (Paras 6-10)
C) Maharashtra Co-operative Societies Rules, 1961 - Rule 107(11)(vi)(a) - Recovery of Dues - The Special Recovery Officer appointed under the Maharashtra Co-operative Societies Rules, 1961, is entitled to take possession of the secured assets in accordance with the SARFAESI Act, 2002, and the Magistrate must assist in such possession without adjudicating tenancy claims. (Paras 4, 10)
Issue of Consideration
Whether the Chief Metropolitan Magistrate, while acting under Section 14 of the SARFAESI Act, 2002, can adjudicate the claim of tenancy raised by an intervenor, or whether such dispute must be decided by the Debt Recovery Tribunal.
Final Decision
The High Court dismissed the writ petition, upholding the Magistrate's order dated 9th February 2018. The Court held that the Magistrate correctly declined to adjudicate the tenancy claim and allowed the Bank to take possession. The petitioner was directed to approach the Debt Recovery Tribunal for relief.
Law Points
- SARFAESI Act
- 2002
- Section 14
- Maharashtra Co-operative Societies Rules
- 1961
- Rule 107(11)(vi)(a)
- Tenancy
- Debt Recovery Tribunal
- Jurisdiction
- Intervenor
- Possession
Case Details
2018 LawText (BOM) (02) 48
Writ Petition No.2299 of 2018
Dr. Shalini Phansalkar-Joshi
Mr. Vishal Kanade, Mr. Girish Thakur for Petitioner; Mr. Mahesh N. Devlekar for Respondent No.1; Mr. A.A. Alaspurkar, A.G.P. for Respondent No.5-State
Maratha Sahkari Bank Ltd. & Ors.
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Nature of Litigation
Writ petition under Article 227 of the Constitution challenging the order of the Chief Metropolitan Magistrate rejecting the petitioner's intervention application claiming tenancy and allowing the bank to take possession of secured assets.
Remedy Sought
The petitioner sought to set aside the Magistrate's order dated 9th February 2018 and to prevent his eviction from the property.
Filing Reason
The petitioner claimed to be a tenant of the secured property and contended that he could not be dispossessed without due process of law.
Previous Decisions
The Magistrate initially rejected the petitioner's application on 29th December 2017, which was set aside by the High Court in Writ Petition No.212 of 2018 on 23rd January 2018, remanding the matter for fresh hearing. After rehearing, the Magistrate again rejected the application on 9th February 2018.
Issues
Whether the Chief Metropolitan Magistrate, while acting under Section 14 of the SARFAESI Act, can adjudicate the claim of tenancy raised by an intervenor.
Whether the tenancy dispute must be decided by the Debt Recovery Tribunal under Section 17 of the SARFAESI Act.
Submissions/Arguments
Petitioner argued that he is a bonafide tenant under an Agreement of Tenancy dated 30th March 2000 and cannot be evicted without following due procedure, relying on Vishal N. Kalsaria v. Bank of India.
Respondent-Bank contended that the Magistrate's role under Section 14 is limited to assisting possession and that tenancy disputes must be adjudicated by the DRT.
Ratio Decidendi
The Chief Metropolitan Magistrate, while acting under Section 14 of the SARFAESI Act, 2002, has a limited ministerial role to assist the secured creditor in taking possession of secured assets. The Magistrate cannot adjudicate disputes regarding tenancy or other claims, which must be raised before the Debt Recovery Tribunal under Section 17 of the SARFAESI Act.
Judgment Excerpts
The Trial Court has, however, holding that the issue of tenancy has to be decided by the Debt Recovery Tribunal and he is not required to look into it, vide order dated 29th December 2017, rejected the said application and allowed the Application of Respondent No.1-Bank filed under Rule 107(11)(vi)(a) of the Maharashtra Co-operative Societies Rules, 1961.
The Magistrate, while acting under Section 14 of the SARFAESI Act, is only required to assist the secured creditor in taking possession of the secured assets. He cannot adjudicate the dispute of tenancy.
Procedural History
The petitioner filed an intervention application before the Chief Metropolitan Magistrate, which was rejected on 29th December 2017. The petitioner challenged this in Writ Petition No.212 of 2018, which was allowed on 23rd January 2018, remanding the matter for fresh hearing. After rehearing, the Magistrate again rejected the application on 9th February 2018. The petitioner then filed the present writ petition.
Acts & Sections
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: Section 14, Section 17
- Maharashtra Co-operative Societies Rules, 1961: Rule 107(11)(vi)(a)
- Constitution of India: Article 227
