Whether Magistrate must heard borrower before Allowing Possession Of Assets U/S 14 of SARFAESI Act?

The SARFAESI Act is intended to facilitate quick recovery of secured debts without extending any opportunity of hearing to a borrower and without judicial/quasi-judicial intervention till such time possession of the secured asset is taken by the secured creditor after serving the requisite notices and responding to the objection/representation that may be lodged/preferred by the borrower under section 13(3A). 

8. Pertinently, section 14 of the SARFAESI Act was amended twice, once in 2013 and then again in 2016. If it were the intention of the legislature to extend opportunity of hearing to a borrower before the District Magistrate/Chief Metropolitan Magistrate, as the case may be, it was free to do so. Advisedly, the legislature did not do so, for, it would have militated against the scheme of the SARFAESI Act and more particularly section 13 thereof. It is implicit in the scheme of the SARFAESI Act that natural justice, only to a limited extent, is available and not beyond what is expressly provided. There seems to be little merit in the argument advanced by Mr. Nedumpara and we hold that the language of section 14 is too clear and unambiguous, and does not admit of any requirement of complying with natural justice by putting the borrower on notice while an application thereunder is under consideration.

 IN THE HIGH COURT OF BOMBAY

Writ Petition (L) No. 8418 of 2022

Decided On: 23.03.2022

 C.A. Manisha Mehta and Ors. Vs. The Board of Directors and Ors.

Hon'ble Judges/Coram:

Dipankar Datta, C.J. and M.S. Karnik, J.

Citation:-MANU/MH/1377/2022

Print Page

Supreme Court : Borrower of vehicle can not claim compensation from owner or insurer of vehicle U/S 163A of MV Act

 An identical question came to be considered by this Court in

the case of Ningamma (supra). In that case, the deceased was

driving a motorcycle which was borrowed from its real owner and

met with an accident by dashing against a bullock cart i.e. without

involving any other vehicle. The claim petition was filed under

Section 163A of the Act by the legal representatives of the deceased

against the real owner of the motorcycle which was being driven by

the deceased. To that, this Court has observed and held that since

the deceased has stepped into the shoes of the owner of the vehicle,

Section 163A of the Act cannot apply wherein the owner of the

vehicle himself is involved. Consequently, it was held that the legal

representatives of the deceased could not have claimed the

compensation under Section 163A of the Act. Therefore, as such, in

the present case, the claimants could have even claimed the

compensation and/or filed the claim petition under Section 163A of

the Act against the driver, owner and insurance company of the

offending vehicle i.e. motorcycle bearing registration No. RJ 29 2M

9223, being a third party with respect to the offending vehicle.

However, no claim under Section 163A was filed against the driver,

owner and/or insurance company of the motorcycle bearing

registration No. RJ 29 2M 9223. It is an admitted position that

the claim under Section 163A of the Act was only against the owner

and the insurance company of the motorcycle bearing registration

No. RJ 02 SA 7811 which was borrowed by the deceased from the

opponentowner

Bhagwan Sahay. Therefore, applying the law laid

down by this Court in the case of Ningamma (supra), and as the

deceased has stepped into the shoes of the owner of the vehicle

bearing registration No. RJ 02 SA 7811, as rightly held by the High

Court, the claim petition under Section 163A of the Act against the

owner and insurance company of the vehicle bearing registration

No. RJ 02 SA 7811 shall not be maintainable.

5.5 It is true that, in a claim under Section 163A of the Act, there

is no need for the claimants to plead or establish the negligence

and/or that the death in respect of which the claim petition is

sought to be established was due to wrongful act, neglect or default

of the owner of the vehicle concerned. It is also true that the claim

petition under Section 163A of the Act is based on the principle of

no fault liability. However, at the same time, the deceased has to be

a third party and cannot maintain a claim under Section 163A of

the Act against the owner/insurer of the vehicle which is borrowed

by him as he will be in the shoes of the owner and he cannot

maintain a claim under Section 163A of the Act against the owner

and insurer of the vehicle bearing registration No. RJ 02 SA 7811.

In the present case, the parties are governed by the contract of

insurance and under the contract of insurance the liability of the

insurance company would be qua third party only. In the present

case, as observed hereinabove, the deceased cannot be said to be a

third party with respect to the insured vehicle bearing registration

No. RJ 02 SA 7811. There cannot be any dispute that the liability

of the insurance company would be as per the terms and conditions

of the contract of insurance. As held by this Court in the case of

Dhanraj (supra), an insurance policy covers the liability incurred

by the insured in respect of death of or bodily injury to any person

(including an owner of the goods or his authorized representative)

carried in the vehicle or damage to any property of a third party

caused by or arising out of the use of the vehicle. In the said

decision, it is further held by this Court that Section 147 does not

require an insurance company to assume risk for death or bodily

injury to the owner of the vehicle.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9393 OF 2019

Ramkhiladi  Vs The United India Insurance Company 

Dated:January 7, 2020.

M. R. Shah, J.

Citation: (2020) 2 SCC 550

Print Page

Whether borrowers proposed to be classified as wilful defaulters have right to be represented by an Advocate before GRC?

We are therefore of the opinion that the GRC satisfies the tests prescribed to qualify as a Tribunal.

(MM) Once the GRC is held to be a Tribunal within the meaning of Section 30 of the Advocates Act, the advocates would have a right to practice before it and axiomatically the borrower before such GRC will have a right to engage and avail the services of an advocate.

(NN) A Division Bench of the High Court of Punjab and Haryana in Paramjit Kumar Saroya Vs. Union of India MNU/PH/0765/2014, in the context of the provision in the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 debarring representation through an advocate before the Tribunals constituted under the said Act, held that after the coming in to force ofSection 30 of the Advocates Act, there cannot be an absolute bar to the assistance by legal practitioner to before a Tribunal.

(OO) A Full Bench of the High Court of Punjab and Haryana in Smt. Jaswant Kaur Vs. The State of Haryana AIR 1977 P&H 221 held Section 20A of the Haryana Ceiling of Land Holdings Act, 1972 prohibiting advocates from appearing before the authorities constituted under the said Act to be bad in the light of Section 30 of the Advocates Act, without of course noticing Section 30 of the Act to be not in force.

(PP) In Lingappa Pochanna Appelwar Vs. State of Maharashtra (1985) 1 SCC 479 the challenge to the vires of Section 9A of the Maharashtra Restoration of Lands to Schedule Tribes Act, 1974 prohibiting advocates from appearing in proceedings under the Act on the ground of restricting the right to practice the provision was negatived only on the ground of Section 30 of the Advocates Act having not been brought into force and though it was observed such a right is no doubt conferred thereby.It thus follows that the restriction placed by the GRC of the appellant banks to appearance on behalf of borrowers of advocates before it, not by any law but otherwise, cannot be sustained and has to be held to be bad.

 We are also of the view that the entire opposition of the GRC of the appellant banks to appearance of is based on an illogical presumption of the same delaying the proceedings before it. We do not find any basis for such apprehension. There is no basis for the Bank / FIs to form an opinion that while the defaulting borrower and / or his representatives would not delay the proceedings, an advocate appearing for them would. Moreover the members of GRC can always control and guide the proceedings before it and as per the exigencies limit the time of hearing.

 We therefore conclude that the GRC of the appellant banks erred in denying representation through the advocates to the respondent. We further hold that the borrowers or the Banks/FIs who are proposed to be classified/ declared as wilful defaulters and are given an opportunity of hearing before the GRC are entitled to be represented therein through advocates. We however hasten to clarify that the GRC would be fully empowered to control including as to the duration and guide the hearing and if finds dilatory and vexatious tactics being adopted, to take suitable consequential actions.

Delhi High Court

Punjab National Bank & Ors vs Kingfisher Airlines Limited & Ors on 17 December, 2015

Author: Rajiv Sahai Endlaw

Print Page