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CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO. 1983 OF 2023
Saraswat Co-operative Bank Ltd. .. Petitioner
Vs.
1. Purnanadu Shekharmal Jain, deceased
Through LRs. (a) Anupama P. Jain
(b) Vaibhav Purnandu Jain
(c) Ms. Aakansha Sawa
2. M/s. Ankur Drugs & Pharma Ltd.
3. The State of Maharashtra
4. The Competent Authority under
MPID Act, 1999 AND
The Deputy Collector, Malad, Mumbai .. Respondents
….
Mr. Prathamesh Kamat i/b Mr. Tushar Pabale & Mr. Kayush
Zaiwala for the petitioner
Mrs. P.P. Shinde, APP for the respondent – State
Ms. Apurva Thipsay for the respondent no.4
Mr. Anil Bhagure, Asst. O.L. present
Mr. Ashwin Pimple i/b SSB Legal & Advisory for the respondent no.1
Mr. Rahul Deshmukh, PI, EOW Unit – 08(MPID), Mumbai present
….
ORAL JUDGMENT
1. At the outset, learned Counsel for the petitioner seeks leave to amend the prayer clause. Leave granted. Amendment to be carried out forthwith during the course of the day.
2. Heard learned Counsel for the parties.
3. Rule. Rule is made returnable forthwith, with the consent of the parties and the petition is taken up for final disposal.
4. By this petition, the petitioner seeks the following substantive relief:- (a) This Hon’ble Court may be pleased to issue Writ of Certiorari or Writ in the nature of Certiorari or any other appropriate thereby quashing and setting aside the order dated 10.11.2022 passed by the Hon’ble MPID Court in M.A. No.1350 of 2018 i.e. Exhibit-1-I in MPID Case No. 22 of 2015 [C.R. No. 166 of 2013] and the Attachment Order MPI-2014/Pra.Kra.186/Pole 11 Dt. 01.04.2016 passed by the Respondent No.1 and further allow the Objection dated 23.10.2018 of the petitioner.” 2 of 10
5. Mr. Kamat, learned Counsel for the petitioner submits that the MPID Court had no jurisdiction to attach the properties in question, which were the subject matter under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, SARFAESI Act). He further submits that since the properties in question were mortgaged prior in point of time to the petitioner i.e. prior to the attachment of the properties by the learned Special Judge, Mumbai (under the MPID Act), i.e. in March 2011, the SARFAESI Act would override the provisions of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (for short, “MPID Act”).
6. Learned Counsel for the petitioner relied on the judgment of this Court in the case of (i) Invent Assets Securitisation and Reconstruction Pvt. Ltd. Vs. The State of Maharashtra (EOW), dated 29th August 2023 passed in Criminal Writ Petition (L) NO. 22056 of 2023 and; (ii) The State of Maharashtra Vs. Aryarup Tourism Club Resorts Pvt. Ltd. (In Liquidation) dated 25th 3 of 10 August, 2022 passed in Appeal No. 396 of 2017, in support of his submission that SARFAESI Act would prevail over the MPID Act, where the property in question was mortgaged prior to the invocation of the MPID Act i.e. prior to the attachment under the MPID Act.
7. Perused the papers. A few dates, which are relevant for deciding the petition are as under:- (a) The respondent no.1 had purchased suit property from M/s. Parekh Brother-n-Sons by an Agreement for Sale on 15.10.1999. (b) The respondent no.1 thereafter purchased another property from Mr. Nafisa M. Rajkotwala by an Agreement for Sale on 16.12.2004.
(c) On 21.03.2011, the petitioner was granted overdraft facility against both the properties of Rs.1.[2] crore.
(d) On 30.03.2011, the respondent no.1 furnished documents in respect of both the properties, for securing a loan of Rs.1.[2] crore. 4 of 10 (e) On 30.03.2011, the respondent no.1 mortgaged the suit properties in favour of the petitioner to secure the loan amount and deposited Title Deeds of the suit property with the petitioner. (f) On 06.03.2012, the petitioner no.1 registered the mortgage with the Central Registry (CERSAI Registration) under Section 26-E of the provisions of the SARFAESI Act. (g) On 30.09.2014 as there were multiple defaults in making the payment, the account was declared as a Non Performing Asset (NPA). (h) Pursuant thereto, a Notice dated 20.07.2015 was issued by the petitioner under Section 13(2) of the SARFAESI Act and recovery action was initiated against the respondent no.1. The respondent no.1 admittedly did not file a reply to the said notice.
(i) On 01.04.2016, the respondent no.3 issued a
Notification under Section 4(1) r/w Sections 5, 8 and 12 of the MPID Act and as such, attached the secured assets. (j) On 01.03.2017, the petitioner preferred an application under Section 14 of the SARFAESI Act, for 5 of 10 taking physical possession of the property in question, pursuant to which, the learned Chief Metropolitan Magistrate, Mumbai passed an order under Section 14. (k) Pursuant thereto, the petitioner took physical possession of the properties on 09.05.2017 and published a “Possession Notice” as mandated under the provisions of the Security Interest Rules 2002.
(l) Thereafter, the petitioner published a Notice of Sale of the properties on 01.07.2017.
(m) On 10.08.2017, the Deputy Collector and the
Competent Authority issued a letter under the MPID Act and attached the suit properties, which were mortgaged by the respondent no.1 with the petitioner. It is pertinent to note that when a letter was issued by the Deputy Collector and Competent Authority, the petitioner had already taken action under Section 14 of the SARFAESI Act and as such, the property no longer vested with the respondent no.1.
8. Thereafter, the petitioner filed a Miscellaneous Application before the MPID Court on 20.06.2014 and sought 6 of 10 lifting of the attachment on the said two properties. The said application was rejected by the Learned Special Judge, MPID Court on 07.01.2017. The said Court while rejecting the petitioner’s application observed that if the properties i.e. subject matter of the application are liquidated, then the sale proceeds be kept in FDR.
9. By this present petition, the question that arise for consideration is, whether in the facts, the two properties which were mortgaged prior in point of time i.e. in 2011, could be attached under the MPID Act and whether the provisions of SARFAESI Act supersede the provisions of the MPID Act. Both the said questions have been answered by a Division Bench of this Court in the aforesaid judgments i.e. Invent Assets Securitisation and Reconstruction Pvt. Ltd. (supra) and Aryarup Tourism Club Resorts Pvt. Ltd. (supra). Admittedly, this Court in Invent Assets Securitisation and Reconstruction Pvt. Ltd. (supra), in para 8 and 9, has observed as under:-
8. We have heard the learned Counsel for the parties and we have also perused the papers and proceedings in 7 of 10 the above Writ Petition. It is not in dispute that the attached property mentioned above was originally mortgaged with Central Bank of India and now with the Petitioner [by virtue of a deed of assignment dated 26th November, 2015]. This mortgage was created long before any attachment was levied by the Special Court under the MPID Act. In fact, action under the SARFAESI Act, 2002 has also been initiated in relation to the attached property and an order under Section 14 of the SARFAESI Act, 2002 is also passed. The order passed under Section 14 is not being implemented only because of this attachment.
9. Considering that admittedly a security interest in the attached property is created in favour of the Petitioner and which is attached by the Special Court, MPID, we are of the view that rather than relegating the Petitioner to the Hon’ble Bombay Session’s Court for a decision on its Miscellaneous Application, it would be prudent to entertain this Writ Petition and raise the attachment levied on the said attached property. We say this because admittedly and undisputedly, the Petitioner is a secured creditor, and the said property is its secured asset. Under the provisions of the SARFAESI Act, 2002, the secured creditor not only gets priority under Section 26-E thereof but should also be allowed to take the SARFAESI proceedings [initiated by it] to its logical conclusion. To put it differently, the attachment under the MPID Act would subservient to the mortgage created in favour of the Petitioner. Hence, the proceedings initiated by the Petitioner to secure its dues by taking measures under the provisions of the SARFAESI Act, 2002 cannot be allowed to be thwarted by virtue of this attachment.” 8 of 10
10. Admittedly, in the present case, the suit properties in question were mortgaged on 30.03.2011 i.e. almost 5 years prior to the attachment of the suit properties i.e. on 10.08.2017, by the Competent Authority under the MPID Act. The fact, that the mortgage properties were also registered with the Central Registry under Section 26-E of the SARFAESI Act on 06.03.2012 is also not disputed.
11. Admittedly, the petitioner is a secured creditor of the two properties in question and as such the said properties are its secured assets. Under the provisions of the SARFAESI Act, the secured creditor would get priority under Section 26-E. The judgment of this Court in Invent Assets Securitisation and Reconstruction Pvt. Ltd. (supra) would squarely apply to the facts of the present case and as such, the impugned order passed by the learned Special Judge under the MPID Act cannot be sustained and as such, would have to be quashed and set aside.
12. Accordingly, the petition is allowed in terms of prayer clause (a) as reproduced hereinabove, only qua the petitioner’s secured assets i.e. Unit Nos. C-304 and C-306, 3rd Floor, “C” 9 of 10 Wing, Crystal Plaza, Andheri Link Road, Andheri (W), Mumbai – 400 005.
13. Rule is made absolute in the aforesaid terms. Writ Petition is disposed of accordingly.
14. All concerned to act on the authenticated copy of this order. (PRITHVIRAJ K. CHAVAN, J.) (REVATI MOHITE DERE, J.)