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We have received further information that the SLP filed in the Supreme Court has been rejected in
limine and hence this judgment has become absolute
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO.4484 of 2013
Milind Kashinath Mahadik .. Petitioner
Versus
The State of Maharashtra & ors .. Respondents
Mrs. Aarti Mahadik and Mr.Milind
Mahadik, Petitioner in person present.
Mr.R. Sathyanarayanan i/b M/s.H & M
Legal Associates for respondent no.3 – Housing Development Finance Corporation
Ltd (HDFC Ltd)
Mr.Deepak Thakre, APP for the
Respondent No.1 State.
CORAM : ABHAY M. THIPSAY, J.
DATED : 11 th
DECEMBER 2014.
ORAL
ORDER :1
Rule. By consent, Rule made returnable forthwith.
2 By consent, heard finally forthwith.
3 The petitioner had filed a complaint
against the respondent nos. 2,3 and 4 herein, alleging commission of
various offences, including the offences punishable under section 406 IPC, 409
IPC, 420 IPC, 448 IPC, 504 IPC read with section 34 of the IPC,
in the Court of Judicial Magistrate First Class at Pune.
The learned Magistrate after examining the petitioner on oath, postponed the
issue of process, and ordered investigation into the matter by the police, as
contemplated under section 202 of the Code of Criminal Procedure (for short 'the
Code'). After receipt of the report of investigation, the learned
Magistrate came to the conclusion that there
were not sufficient grounds for proceeding, and therefore, by an order dated
3 rd
October 2011, dismissed the complaint, as contemplated under
section 203 of the Code. The petitioner challenged the order of dismissal of the
complaint by filing an application for revision in the
Court of Sessions. The learned Addl.
Sessions Judge, who heard the revision application, found nothing
wrong in the order passed by the Magistrate, and therefore,
rejected the revision application. It is
under these circumstances, that the applicant has, by the
present petition under Article 227 of the Constitution of India,
approached this Court, and is also invoking the inherent powers of the Court,
praying that the order passed by the learned Addl. Sessions Judge in revision,
be quashed and set aside, and that process be ordered to be issued with respect
to the offences mentioned in the complaint 'against the respondent Bank'.
4 In this Court, the petitioner desired to be represented by his
wife – Smt.Aarti Mahadik and as such, the wife of the petitioner Smt.Aarti Mahadik was permitted to address the Court by making submissions in support of
the petition.
5 I have heard the petitioner's wife for and on behalf of the
petitioner. I have heard Mr. R.Sathyanarayanan, learned counsel for the
respondent nos.2 and 3. I have heard Mr.Deepak Thakre, learned APP for the
State.
6 The case of the petitioner (hereinafter referred to as 'the
complainant' for the sake of clarity and convenience), as per the complaint, was
as follows :That, in the month of October 2003, or thereabout, the complainant
and his wife approached the respondent no.3 – Housing
Development Finance Corporation Ltd (HDFC Ltd) with a request to
grant a term loan for their housing requirements. A term loan of Rs.8,50,000/was
disbursed to the complainant and his wife, on executing necessary security
documents in favour of the HDFC Ltd. The flat for the purchase of which the loan
was got sanctioned i.e. flat no.24, 6 th
floor Russet CHSL, Building No.D3,
Hermes Heritage, Phase II, Off Nagar Road, Yerawada, Taluka Haveli, District
Pune (hereinafter referred to as 'the flat' or 'the said flat') was mortgaged,
creating security interest in favour of the respondent no.3 HDFC Ltd. That,
initially the complainant paid the equated monthly installments as agreed upon,
but later, due to several personal difficulties, such as heavy loss in the
business, loss of his wife's job due to ill health etc. could not pay the same.
The complainant's wife, therefore, wrote a letter to the respondent no.3
requesting them to revise the repayment schedule under a new scheme declared by
the respondent no.3 as 'Easy EMI'. The respondent no.3, however, did not respond
to the said communication. On 9th
July 2005, the complainant again
wrote a letter to the respondent no.3, but that also was not replied.
According to the complainant, he is not a wilful
defaulter, and that he has been repaying the loan amount as and when
it was possible, and that even today, he and his wife are willing to regularize
the loan account.
7 That, on 1 st
October 2008, the complainant found
a notice dated 18th
June 2008, issued by the respondent no.3,
pasted on the door of the said flat. The complainant was shocked and surprised as he and/or his wife had not received any
letter/notice demanding the overdue amounts towards the repayment of loan. That, the complainant was never served with the said notice
dated 18th
June 2008, and that they learnt about such
a notice only on 1st
October 2008 when it had been found pasted
on the door of the said flat. It appears that the said notice purported to be one under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'SARFAESI Act'). That, on getting knowledge of the
said notice, the complainant addressed a notice dated 7th
October 2008 to the respondent no.3 through the complainant's advocate, and demanded a statement of accounts. However, no reply to the said notice was given by the respondent no.3. The respondent no.3 instead issued a further notice dated 15th
November 2008, purportedly under section 13(4) of the SARFAESI Act. That, the said notice was also not served upon the complainant, but the complainant and his wife came to know about the same only after it had been pasted on the door of the said flat on 17th
November 2008. The complainant and his wife then went to the office of
the respondent no.3, but the officials of the respondent no.3 did
not entertain them, and threatened that they would take possession
of the said flat. According to the complainant, threatening
language suggesting that the officials of the respondent no.3 and the recovery agents are dangerous persons, and that they knew 'how to twist the law, and how to use the lawful means in unlawful
way' was used by one Prithviraj Rane – a previous authorized officer
of the respondent no.3. That, the highhanded action of the respondent no.2 was objected to by the complainant and his wife by writing a letter dated 18th
November 2008, contending that there was not proper service of the notice under section 13(2)
of the SARFAESI Act, but the respondent no.3 did not pay any heed to the said letter and maintained that the notice had been
properly served through Registered Post A.D, and also by publication in newspapers. That, the complainant approached the Yerawada Police Station on 19th
November 2008, and tried to lodge a
report, but the police replied to the complainant that they would definitely take action next time whenever any incident would happen in future. That, on the same day, the said Mr.Prithviraj Rane, the previous authorized Officer of the respondent no.3, visited the said flat along with 15 to 20 unknown persons who were armed with big wooden sticks, and who were supposed to be the recovery agents of the respondent no.3; and threatened to cause harm to the extent of causing death or grievous hurt to
the complainant and his wife, in case they did not give the
possession of the said flat. Alternatively, the complainant and his wife
were also told that those persons would break the door, and drive
them (the complainant and his wife) out forcibly. That, there was a chaos and noise in the building (due to the incident) and thereafter, the said recovery agents went away. On 29th
December 2008, some other correspondence took place between the parties, the details of which are not very material for the present. What
is material is that on 24th
December 2010, the complainant and
his wife visited the said flat and found that the lock that had been
put by them on the said flat had been broken. The respondent no.2 had pasted a notice of possession dated 3rd
September 2010 on the door of the said flat, and had put the seal of the respondent
no.3 on the flat. The complainant and his wife made inquiries with
the concerned police station as well as in the office of the
District Magistrate when they learnt that the respondent no.2 had
forcibly taken possession of the said flat without intervention of any
Court or the District Magistrate. That, the accused persons had therefore, taken illegal possession of the said flat. That,
household goods, articles, ornaments etc. belonging to the complainant and his wife totally valued at about Rs.22,07,000/are lying in the said flat.
8 Making these averments and contending that offences punishable under sections 356 IPC, 403 IPC, 405 IPC, 406 IPC, 409 IPC, 415 IPC, 417 IPC, 420 IPC, 424 IPC, 442 IPC, 445 IPC, 448 IPC, 504 IPC r/w section 34 of the IPC, had been committed by the respondent nos.2, 3 and 4, the complainant had prayed
that investigation as contemplated under section 156(3) of the Code
be ordered in the matter.
9 As aforesaid, instead ordering investigation as prayed for, the learned Magistrate examined the complainant on oath as contemplated under section 200 of the Code thereafter ordered investigation into the matter by the police under the provisions
of section 202 of the Code, and as aforesaid, after receipt of the report of investigation, dismissed the complaint by an order
dated 23 rd
October 2011. As aforesaid, the Revision
Application against the said order came to be dismissed.
10 It is contended on behalf of the petitioner that the action of the respondent no.3 and its officers is patently
illegal. It is submitted that the respondent no.3 was not entitled to take possession of the said flat in this manner, and that the taking
of possession of the said flat cannot be justified by referring to
the provisions in the SARFAESI Act, inasmuch as the provisions of
the said Act were not followed. It is submitted,
inter alia,
that the notice under section 13(2) of the SARFAESI Act was not at all served on the complainant, and that it was deliberately sent at
the address of the said flat though, at the material time, the complainant and his wife were not residing there,
to the knowledge of the concerned officers of the respondent no.3.
It is also submitted that this is evident from the fact that certain other communications to the complainant and his wife were sent by the respondent no.3 on a different address. It is also submitted
that the respondent no.3 was not entitled to take possession of the
said flat without obtaining any order from the District Magistrate,
as contemplated in section 14 of the SARFAESI Act. 11 According to Mr.Sathyanarayan, the learned counsel for the respondent nos.2 and 3, the complaint filed by the complainant has been properly dismissed as these respondents had not committed any offence. It is submitted that the possession
of the said flat has been taken by the respondent no.3 in
accordance with the provisions of SARFAESI Act, and that the act of taking possession in accordance with the provisions of the said Act
cannot amount to any offence. It is submitted that the complainant is a wilful defaulter, and had lodged a false complaint against the respondent nos.2 and 3. It is submitted that the respondent no.3 was entitled to take possession of the flat, which was a secured interest/asset, without obtaining any order from the District Magistrate as contemplated under section 14 of the Act. It is submitted that the respondent no.3 had an option in that regard, and that though section 14 of the SARFAESI Act makes a provision for approaching the District Magistrate for the purpose of
taking possession of a secured asset, it is not that the possession of
the secured asset cannot be taken by the secured creditor without an order, or assistance, from the District Magistrate.
12 I have carefully considered the matter. I have been taken through the relevant provisions in the SARFAESI Act, and the Security Interest (Enforcement Rules 2002)(for short 'the Rules').
13 In the view that I am taking, it is not necessary to go deeper into the matter for deciding the likelihood or
unlikelihood of the respective pleas on the disputed facts, being true or
false. It is because the real question is whether on the facts alleged in
the complaint, and the material that was before the Magistrate, a
case for ordering investigation into the matter as contemplated under section 156(3) of the Code, had been made out or not. There is also another reason for avoiding a detailed discussion as to the compliance or otherwise with the requirements of the provisions
of the SARFAESI Act and the Rules, as these issues are said to be pending before the Debt Recovery Appellate Tribunal.
14 It is not in dispute that the possession of the said flat was taken by breaking open the lock that had been put thereon by the complainant. It is also not in dispute that this was done without any order from the District Magistrate under Section 14
of the SARFAESI Act. What is claimed is that the respondent no.3 were entitled to do so, in view of the provisions of the
SARFAESI Act. The question is whether the SARFAESI Act permits a secured creditor to take possession of the flat which is a secured asset/interest by use of force and/or by breaking open a lock
put thereon. Such a situation i.e. taking possession of the flat
(which is a secured interest/asset) by the secured creditor
by breaking open the lock put thereon,
is not specifically contemplated or dealt with under the provisions of the said Act, or the relevant
rules. On general principles, however, it would be difficult to accept the correctness of the claim that a secured creditor would be
entitled to do so under the provisions of the SARFAESI Act and the relevant rules.
15 Undoubtedly, section 14 of the SARFAESI Act cannot be held to be mandatory – in the sense that it cannot be held
that the possession of a secured interest cannot, at all, be taken
without obtaining assistance from the District Magistrate, as
contemplated under section 14 of the SARFAESI Act. Still, when the question would be of use of force, it would be necessary for the secured creditor to obtain assistance from the District Magistrate for
taking possession of the secured asset. If breaking open the lock put
on a flat, and taking forcible possession of such flat by a secured creditor is held to be permissible, on the ground that the SARFAESI Act empowers a secured creditor to do so without the intervention of the District Magistrate, then it would be
extremely dangerous. The problems arising from holding such a course to be legal will be more serious in cases where such flat is a
residential one, containing articles of movable property in it. The
provisions of the SARFAESI Act and/or the Rules though speak of entitlement of a secured creditor to take possession of the secured asset without the intervention of Court, or the Chief Metropolitan Magistrate or District Magistrate (as the case may be), are
silent as to what should be done with respect to the movable property, as may be contained in the secured asset which is a residential
flat. Thus, it would be difficult – and dangerous too – to accept the proposition that a secured creditor would be entitled to take possession of a residential flat (which is a secured asset) by breaking open the lock put thereon, on his own and without seeking the assistance of the Chief Metropolitan Magistrate, or
the District Magistrate (as the case may be), as contemplated under section 14 of the SARFAESI Act.
16 In this regard, the complainant has placed reliance on certain observations made by this Court in
Clarity
Gold Pvt.Ltd and Anr Vs. State Bank of India & ors, AIR
2011 Bom 42. It would be proper to reproduce the observations made by the learned Single Judge in paragraph no.19
of the judgment in the said case.
“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 authorized 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. Authorization 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”. ( Emphasis
supplied)
In this case, even the assistance of the police machinery has
not been taken by the respondent no.3 though force was used for taking possession of the said flat.
17 Mr.Sathyanarayan, the learned counsel for respondent nos.2 and 3 has placed reliance on a decision of the Supreme Court of India in the case of
Standard Chartered Bank Vs. V. Noble Kumar and others, (2013) 9 Supreme Court Cases 620,
in support of his contention that the action of the respondent
no.3 in taking possession of the said flat is perfectly lawful and
that therefore, there was no question of proceeding against the respondent nos.2 and 3 on the allegation that they have committed offences.
18 I have gone through the said judgment. It is not possible to hold that this judgment supports the contention advanced on behalf of the respondents. On the other hand, as pointed out on behalf of the petitioner, observations in the
very judgment indicate that
where force is required to be used, it
would not be open for a secured creditor to take possession of the
secured asset without taking recourse to the provisions of section 14 of
the SARFAESI Act.
It would be appropriate to reproduce the relevant observations.
“Thus, there will be three methods for the secured creditor to take possession of the secured assets:
36.1. (i) The first method would be where the secured creditor gives the requisite notice under Rule 8(1) and where he does not meet with any resistance. In that case, the
authorized officer will proceed to take steps as stipulated under Rule 8(2) onwards to take possession and thereafter for sale of the secured assets to
realize the amounts that are claimed by the secured creditor.
36.2. (ii) The second situation will arise where the secured creditor meets with resistance from the borrower after the notice under Rule 8(1) is given. In that case he will take recourse to the mechanism provided under section 14 of the Act viz. making application to the Magistrate. The Magistrate will scrutinize the application as provided in Section 14, and then if satisfied, appoint an officer subordinate to him as provided under section 14(1A) to take possession of the assets and documents. For the purpose the Magistrate may
authorize the officer concerned to use such force as may be necessary. After the possession is taken the assets and documents will be forwarded to the secured creditor.
36.3. (iii) The third situation will be one where the secured creditor approaches the Magistrate concerned directly under section 14 of the Act. The Magistrate will thereafter
scrutinize the application as provided in Section
14, and then if satisfied, authorize a subordinate officer to take possession of the assets and documents and forward them to the secured creditor as under clause 36.2(ii) above.
(Emphasis supplied)
These observations leave no manner of
doubt that when the question of use of force for overcoming the resistance
offered by the borrower, for taking possession of the secured asset would arise,
recourse must be taken to the provisions of section 14 of the SARFEASI Act.
19 The things can be further
complicated where the secured asset which is a residential flat is containing
movable property, and the possession of such a secured asset is taken along with
the movable property contained therein, by a secured creditor on his own – and
without involving the State machinery in the process of taking possession by use
of force. In the instant case, the lock put on the premises was broken open at the instance of the respondent no.2. Possession of the flat was taken in the absence of the complainant or his representative. It is not in dispute that several household articles including refrigerator, washing machine, business files, computer, books etc. as also
gold and silver ornaments belonging to the complainant and his wife were in the said flat. What has happened to the articles has not been verified or checked by anyone, and it is only the word of
the respondents that the movable property contained in the said
flat, is still lying there. It is obvious that the respondent no.3
which is a body corporate is taking such a stand on the basis of the information received by it from the persons who were actually involved in the process of taking physical possession of the
secured asset. The complications that can arise in taking possession in this manner are too obvious. For instance, if the complainant
was to notice – or even falsely claim for that matter – that some of
the household belongings are missing, a case of theft would have to
be registered. The possibility of thefts taking place in such cases cannot be totally excluded, but what is more significant is that
the possibility of the persons involved in the process of taking the possession being falsely accused of theft, mischief etc,
undoubtedly exists. Taking possession in this manner is, therefore, not
quite in the interest of the secured creditor also. Thus, in any case, it would be advisable to involve the state machinery in the process
of obtaining possession of such a secured asset even from the point
of view of the secured creditor, when the process has been undertaken bonafide.
20 I have carefully gone through the
order passed by the learned Magistrate dismissing the complaint filed by the
complainant. I find that the complaint came to be dismissed only on the ground
that the complainant was a defaulter, and that
therefore, the possession of the secured asset was rightly taken by the
respondent no.3.
The learned Magistrate did not discuss as to 'whether the respondent no.3 and
its Officers were entitled under the provisions of SARFEASI Act, and the Rules
to break open the lock put on the premises, and take forcible possession of the
said flat in the absence of the complainant'. The Magistrate did not consider
the legal effects of taking possession in such manner, and thereby keeping the
complainant out of the possession of his own belongings kept in the said flat.
The Magistrate did not consider whether breaking of lock would amount to an
offence or not. The Magistrate did not consider whether or not it was necessary
to ascertain whether the movable property of the complainant was
damaged/removed; and if so, whether it would amount to any offence. More
importantly, the Magistrate completely ignored the averments made in the
complaint to the effect that the persons of the respondent no.3 had gone to the
said flat, and had threatened the complainant and his wife though the
complainant had specifically stated that record of the said incident was
available in a CD. The Magistrate did not consider whether on a
prima facie
view of the matter, such threats were found to have
been given, whether the same would amount to an offence or not.
21 The order passed by the Court of
Sessions in Revision is also perfunctory. It does not consider
whether on a reading of the complaint, a case for ordering investigation into the matter was made out. The learned Addl. Sessions Judge has concluded that there was no illegality in the acts attributed to the
respondent no.3 and its officials only on the basis of the finding of the
Debt Recovery Tribunal which was not permissible. The learned Addl. Sessions Judge ought to have come to his own findings in that regard, and that too independently.
22 In the course of arguments, I have asked the learned counsel for the respondent nos.2 and 3 as to what they propose
to do with respect to the movable property belonging to the complainant which is still lying in the said flat. It was
submitted that a notice to remove the same has been given to the complainant by publishing the same in newspapers. However, there was no dispute with respect to the fact that while the movable property is lying there, the flat in question cannot be properly sold.
23 This was a matter where the complainant had approached the Magistrate with a claim that the respondent nos.2 and 3 had taken forcible possession of his flat without
following the provisions of the SARFAESI Act. His contention was that sending notice on the address of the said flat was a malafide
act on the part of the respondent nos.2 and 3, as they were aware
that at the material time, the complainant and his wife were not residing there. The complainant's case was also that the respondent nos.2 and 3 were not entitled to break open the lock put on the premises, take forcible possession thereof along with the movable property contained therein.
24 The provisions laid down under the
SARFEASI Act are drastic. The provisions permit a secured creditor to take
possession of a secured asset without the intervention of the Court. These
provisions are drastic, and therefore, the procedural aspects thereof, must be
scrupulously followed. Neither the learned Magistrate nor the learned Addl.
Sessions Judge realized the seriousness of the issue viz: whether a secured
creditor could take forcible possession of a secured asset which is a
residential flat, by breaking open the lock put on the premises, and that too,
in the absence of the borrower or his representative. None of them considered
whether any offences had been committed by any persons in the process of taking
the possession of the said flat. Simply because the possession is claimed to
have been taken in accordance with the provisions of the SARFAESI Act, it would
not follow automatically that no offences had been committed in the process.
25 Though I hold that the impugned orders are not proper and/or legal, it is not easy to decide, on the facts
alleged and on the material that was before the Magistrate, as to
what offences, if any, have been committed, and by whom.
It is because taking possession, simplicitor, even if in a wrongful manner,
would not, by itself,
amount to an offence. It would all depend on the
mensrea on the
part of the person or persons that accompanied the act of taking possession. Whether any offences have been committed in the process of taking the possession of the said
flat, and if so, by whom, can be properly decided only after investigation is carried out.
26 This was a case where commission of offences – including cognizable offences – was alleged, and investigation under section 156(3) of the Code was needed to ascertain whether any, and if so, what offences have been committed – and by whom? Since the prayer of the complainant was that investigation into the matter as contemplated under section 156(3) of the Code be ordered, the Magistrate ought to have allowed it. There were certainly grounds for ordering such investigation.
27 Petition is partly allowed.
28 The impugned orders are set aside.
29 The learned Magistrate is directed
to order investigation, as contemplated under section 156(3) of the Code of
Criminal Procedure, in the complaint filed by the petitioner.
30 Rule is made absolute in the above terms.
(ABHAY M.THIPSAY, J)
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