Holding

A secured creditor may invoke Section 14 without first attempting possession under Section 13(4), and the right to appeal under Section 17 remains available irrespective of the method of possession; Rule 8 does not bind the magistrate or his receiver.

Summary

The Supreme Court examined whether a secured creditor under the SARFAESI Act could obtain possession of a secured asset by invoking Section 14 without first attempting possession under Section 13(4), and whether such a route would defeat the borrower's right to appeal under Section 17. It held that the creditor may directly approach the magistrate under Section 14; the remedy under Section 17 is available regardless of whether possession is taken under Section 13(4) or Section 14. The Court also ruled that Rule 8 of the Security Interest (Enforcement) Rules, 2002, which governs possession by the creditor, does not bind the magistrate when he acts under Section 14, and the receiver appointed by the magistrate is not required to follow Rule 8. Consequently, the High Court’s order was set aside and the appeals were allowed.

Issues considered

Can a secured creditor invoke Section 14 of the SARFAESI Act without first attempting possession under Section 13(4)?
Does bypassing Section 13(4) render the appeal right under Section 17 illusory?
Is compliance with Rule 8 of the Security Interest (Enforcement) Rules, 2002 mandatory before invoking Section 14?
Must the magistrate and any appointed receiver follow Rule 8 when taking possession under Section 14?
What is the scope and timing of the remedy under Section 17?

Legislation cited

Code of Criminal Procedure, 1973
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002s. 13(4), s. 14, s. 17, s. 3A
Security Interest (Enforcement) Rules, 2002s. Rule 8

Subjects

SARFAESI ActSection 13(4)Section 14Section 17possession of secured assetRule 8secured creditorborrowermagistrateappeal rightdebt recovery

Judgment

[2013] 10 S.C.R. 762

A STANDARD CHARTERED BANK
V.
V. NOBLE KUMAR & OTHERS
(Criminal Appeal No. 1218 of 2013)
AUGUST 22, 2013
B
[H.L. GOKHALE AND J. CHELAMESWAR, JJ.]

Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002:
c
ss. 13(4) and 14 - Possession of secured assets - Method
and manner of - Invocation of s. 14 - Without invoking
provisions of s. 13(4) - And without following procedure
contemplated u/r. 8 of Security Interest (Enforcement) Rules,
D 2002 - Permissibility - Held: It is not mandatory for the secured
creditor to obtain possession on its own resorting to provision
u/s. 13(4), before approaching the Magistrate uls. 14 - The
secured creditor is also not required to follow the procedure
laid down u/r. 8 of 2002 Rules before invoking provisions ul
E s. 14 - Functioning of the Magistrate is structured by the
provisions under Cr.P.C. - r.8 provides procedure to be
followed when possession of the secured asset is taken without
intervention of the Court ~ Security Interest (Enforcement)
Rules, 2002 - r. 8 - Code of Criminal Procedure, 1973.

F s. 17 - Appeal under - Scope and nature of - Held: A
borrower is always entitled to prefer an 'appeal' under s. 17
after losing possession of the property - It is immaterial
whether such possession is obtained either directly u/s. 13(4)
or through the Magistrate u/s. 14 - The remedy uls. 17 is
G essentially like filing a suit.

The questions for consideration in the present
appeals were whether the secured creditor/Bank can by
pass the provisions u/s. 13(4) of Securitisation and
H 762
STANDARD CHARTERED BANK v. V. NOBLE 763
KUMAR & ORS.
Reconstruction of Financial Assets and Enforcement of A
Security Interest Act, 2002 and invoke the provisions of
s.14; whether the resort to s. 14 by bypassing the
provisions u/s. 13(4) would make the provisions of
appeal u/s. 17 illusory, because the proceeding u/s. 14
cannot be questioned in appeal; and whether not a
following the procedures contemplated u/r. 8 of the
Security Interest (Enforcement) Rules, 2002 before
invoking provisions u/s. 14 would make the order passed
u/s. 14 liable to be set aside, being contrary to the Rules.
Allowing the appeals, the Court c
HELD: 1.1. In every case where the objections raised
by the borrower are rejected by the secured creditor, the
secured creditor is entitled to take possession of the
secured assets. Such action - having regard to the D
object and scheme of Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest
Act, 2002 - could be taken directly by the secured creditor
u/s. 13(4) of the Act. However, visualising the possibility
of resistance for such action, Parliament under section E
14 also provided for seeking the assistance of the judicial
po~er of the State for obtaining possession of the
secured asset, in those cases where the secured creditor
seeks it. [Para 23) [778-F-G, 779-A]
1.2. The scheme of sections 13 and 14 and the object F
of the enactment, do not warrant the High Court to
record the conclusion that it is only after making an
unsuccessful attempt to take possession of the secured
asset, a secured creditor can approach the Magistrate.
No doubt that a secured creditor may initially resort to the G
procedure under section 13(4) and on facing resistance,
he may still approach the Magistrate under section 14.
But, it is not mandatory for the secured creditor to make
attempt to obtain possession on his own before
approaching the Magistrate under section 14. The H
764 SUPREME COURT REPORTS [2013] 10 S.C.R.

A submission that such a construction would deprive the
borrower of a remedy under section 17 is rooted in a
misconception of the scope of section 17. (Para 29) (782-
C-E]

8 1.3. The "appeal" under section 17 is available to the
borrower against any measure taken under section 13(4).
Taking possession of the secured asset is only one of the
measures that can be taken by the secured creditor.
Depending upon the nature of the secured asset and the
C terms and conditions of the security agreement,
measures other than taking the possession of the
secured asset are possible under section 13(4).
Alienating the asset either by lease or sale etc. and
appointing a person to manage the secured asset are
some of those possible measures. On the other hand,
0
section 14 authorises the Magistrate only to take
possession of the property and forward the asset alc;mg
with the connected documents to the borrower.
Therefore, the borrower is always entitled to prefer an
E "appeal" under section 17 after the possession of the
secured asset is handed over to the secured creditor.
Section 13(4)(a) declares that the secured creditor may
take possession of the secured assets. It does not
specify whether such a possession is to be obtained
F directly by the secured creditor or by resorting to the
procedure under section 14. By whatever manner, the
secured creditor obtains possession either through the
process contemplated under section 14 or without
resorting to such a process obtaining of the possession
of a secured asset is always a measure against which a
G remedy under section 17 is available. [Para 30) [782-F;
783-A-D]
1.4. It can be noticed from the language of the
proviso to section 13(3A) and the language of section 17
H that an "appeal" under section 17 is available to the
STANDARD CHARTERED BANK v. V. NOBLE 765
KUMAR & ORS.
borrower only after losing possession of the secured A
asset. The employment of the words "aggrieved
by ....................taken by the secured creditor" in section
17(1) clearly indicates the appeal under section 17 is
available to the borrower only after losing possession of
the property. To set at naught any doubt regarding the B
interpretation of section 17, the proviso to sub-section
(3A) of section 13 makes it explicitly clear that either the
reasons indicated for rejection of the objections of the
borrower or the likely action of the secured creditor shall
not confer any right under section 17. The same principle C
is re-emphasised with the newly added explanation in
section 17(1) which came to be inserted by Act No.30 of
2004. [Paras 31 and 32] (783-E-F; 784-A-C]

1.5. Remedy under Section 17 of the Act is essentially D
like filing a suit in a Civil Court though it was called an
Appeal. It would be open to the borrower to file an appeal
under Section 17 any time after the measures are taken
under Section 13 (4) and before the date of sale/auction
of the property. The same would apply if the secured E
creditor resorts to Section 14 and takes possession of the
property with the help of the officer appointed by the
Magistrate. [Para 39] [789-H; 790-A, C-D]

Mardia Chemials Limited vs. Union of India (2004) 4
sec 311: 2004 (3) SCR 982 - relied on. F

2.1. The High Court clearly erred in recording a
conclusion that in the absence of the rule, the strict
compliance of the provisions of section 13(4) and rule 8,
even in case of possession taken by virtue of an order G
under section 14, assumes importance. The language of
Rule 8 does not demand such a construction. On the
other hand, a Magistrate whose functioning is structured
by the Code of Criminal Procedure is required to act in
accordance with the provisions of the said code unless H
766 SUPREME COURT REPORTS [2013] 10 S.C.R.

A expressly ordained otherwise by any other law. It is not
a case that Cr.P.C. never prescribed for the procedure to
be followed by the Magistrate in a case where the
Magistrate is required to take possession of property.
[Paras 34 and 35) [785-F-H; 786-A]
B
2.2. There is also no justification for the conclusion
that the receiver appointed by the Magistrate is also
required to follow Rule 8 of the Security Interest
(Enforcement) Rules, 2002. The procedure to be followed
c by the receiver is otherwise regulated by law. Rule 8
provides for the procedure to be followed by secured
creditor taking possession of the secured asset without
the intervention of Court. Such a process was unknown
prior to the Act. So, specific provision is made under
0 Rule 8 to ensure transparency in taking such
possession. There is no conflict between different
procedures prescribed by law for taking possession of
the secured asset. The finding of the High Court,.
therefore, is unsustainable. [Para 36] [788-D-F]
E 3. Thus, there will be three methods for the secured
creditor to take possession of the secured assets:- (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 authorised
F 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 realise the amounts that are
claimed by the secured creditor. (ii) The second situation
will arise where the secured creditor meets with
G 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 and (iii) The third
situation will be one where the secured creditor
H approaches the Magistrate concerned directly under
STANDARD CHARTERED BANK v. V. NOBLE 767
KUMAR & ORS.
section 14 of the Act. In any of the three situations, after A
the possession is handed over to the secured creditor,
the subsequent specified provisions of rule 8 concerning
the preservation, valuation and sale of the secured
assets, and other subsequent rules from the Security
Interest (Enforcement) Rules, 2002, shall apply. [Paras 37 B
and 38] (788-G-H; 789-A-F]

· 4.1. In the present case, a notice under section 13(2)
was served on the respondent for which the respondent
did not choose to respond. Therefore, there was no c
occasion for the appellant to consider the objections as
there was none of the respondent against the demand
made in the said notice. Even while making application
under section 14, the appellant filed an affidavit
substantially providing for the necessary information D
contemplated under the newly introduced proviso to
section 14 (1), though there was no statutory requirement
as on the date when the application under section 14 was
made in the instant case either to give such an affidavit
or regarding the content of the affidavit. In view of the
E
contents of the affidavit, that all the basic requirements
necessary for granting the request of the appellant of ·
delivery of the possession of the secured asset are
asserted to have existed on the date of application.
[Paras 40 and 41] [790-E-H; 791-C-D]
F
4.2. In view of the scope of section 17, it would
normally have been open to the respondent to prefer an
appeal under section 17 raising objections regarding
legality of the decision of the Magistrate to deprive the
respondent of the possession of the secured asset. But G
in view of the fact that the respondent chose to challenge
the decision of the Magistrate by invoking the jurisdiction
of the High Court under Article 226 of the Constitution and
in view of the fact that the respondent does not have any
H
768 SUPREME COURT REPORTS [2013] 10 S.C.R.

A substantive objection, it is clarified that the respondent in
the instant case would not be entitled to avail the remedy
under section 17 as the respondent stalled the
proceedings for a period of almost 4 years. The
respondent did not even choose to raise any objections
B to the demand issued under section 13(2) of the Act.
However, it is always open to the respondent to seek
restoration of his property by complying with sub-section
8 of section 13 of the Act. [Para 42] [791-E-H; 792-A]

c to. Trade Well vs. Indian Bank 2007 CriLJ 2544 - referred
Case Law Reference:
2004 (3) SCR 982 referred to Para 20
D 2007 CriLJ 2544 referred to Para 25
CRIMINAL AP PELLATE JURISDICTION : Criminal Appeal
No. 1218 of 2013.

E From the Judgment & Order dated 27.07.2010 of the
High Court of Judicature at Madras in Writ Petition being W.P.
No. 4600 of 2010.
WITH
Crl. A.No. 1217 of 2013.
F
Siddharth Luthra, ASG, Sanjay Jain, Sanjeev Sagar, Ruchi
Jain, Mohd. lrshad Hanif, Ajay Vir Singh J., Sanjay Kapur, Anmol
Chadan, Shubhra Kapur for the Appellant.

P.B. Suresh, Vipin Nair, U. Banerjee (for Temple Law
G Firm), Venkita Subramonium T.R., for the Respondents.

The Judgment of the Court was delivered by

CHELAMESWAR, J. 1. Leave granted.
H
STANDARD CHARTERED BANK v. V. NOBLE 769
KUMAR & ORS. [J. CHELAMESWAR, J.]
2. Since both the appeals raise a common question of law, A
the same are being disposed of by this common judgment. For
the sake of convenience, we shall refer to the facts in Criminal
Appeal arising out of Special Leave Petition (Criminal) No.2038
of 2011.
B
3. This appeal arises out of judgment and order of the High
Court of Judicature at Madras in Writ Petition No.4600 of 2010
dated 23rd January, 2003.

4. The first respondent is a guarantor of the borrower to C
loan transaction whereby the second respondent borrowed
money from the appellant herein. The undisputed facts are that
the first respondent created a mortgage on certain property
(Land and building comprised in Re-survey No.493/2 lying
within the sub-registration district of Saidapet hereinafter
referred to as the "secured asset") owned by him to secure the D
abovementioned loan. 1
. /

5. On 15.11.2007, a notice under section 13(2)2 of the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred E
to as "the SARFAESI Act") demanding the repayment of the
loan amount along with interest within a period of sixty days was
issued inter alia to the borrower as well as the guarantor
(respondent nos.2 and 1 herein). The said notice also advised
the respondents to comply with the demand in order to avoid F

1. Section 2 (zc) - "secured asset" means the property on which security
interest is created;
2. Section 13(2) - Where any borrower, who is under a liability to a secured G
creditor under a security agreement, makes any default in repayment of
secured debt or any instalment thereof, and his account in respect of such
debt is classified by the secured creditor as non-performing asset, then,
the secured creditor may require the borrower by notice in writing to
discharge in full his liabilities to the secured creditor within sixty days from
the date of notice failing which the secured creditor shall be entitled to
exercise all or any of the rights under sub-section (4). H
/

770 SUPREME COURT REPORTS [2013] 10 S.C.R.

A further action under the Act. The first respondent neither made
the payment nor raised any objection to the said demand.

6. Consequent upon the failure of the respondents to make
the payments the appellant herein made an application under
B section 143 of the SARFAESI Act in the Court of Chief Judicial
Magistrate, Chengalpattu requesting him to take possession
of the secured asset and to handover the same to the appellant.

7. Pursuant to the abovementioned application, the Chief
Judicial Magistrate, Chengalpattu by his proceeding dated
C 14.12.2009 appointed an Advocate commissioner to take
possession of the secured asset and to handover the same to
the appellant herein.

8. Challenging the legality of the proceedings dated
D 14.12.2009 the first respondent approached the High Court. By
the judgment under appeal, the first respondent's writ petition
came to be allowed by a Division Bench setting aside the order
impugned therein.

E 9. The High Court recorded the submissions made before
it as follows:

"3. The learned counsel appearing for the petitioner raised
two contentions, viz.:
F 3. 14. Chief Metropolitan Magistrate or District Magistrate to assist secured
creditor in taking possession of secured asset.-(1) Where the possession
of any secured asset is required to be taken by the secured creditor or if
any of the secured asset is required to be sold or transferred by the secured
creditor under the provisions of this Act, the secured creditor may, for the
purpose of taking possession or control of any such secured asset. request,
in writing, the Chief Metropolitan Magistrate or the District Magistrate within
G whose jurisdiction any such secured asset or other documents relating
thereto may be situated or found, to take possession thereof, and the Chief
Metropolitan Magistrate or, as the case may be, the District Magistrate shall,
on such request being made to him-
(a) take possession of such asset and documents relating thereto;
and
H (b) forward such assets and documents to the secured creditor;
STANDARD CHARTERED BANK v. V. NOBLE 771
KUMAR & ORS. [J. CHELAMESWAR, J.]
(i) The bank cannot bypass section 13(4) of the A
SARFAESI Act and invoke the provisions of section
14. He would submit, before ir.voking section 14,
that notice under section 13(4) is necessary,
otherwise the provisions of appeal under section 17
will become illusory, particularly when the B
proceedings under section 14 cannot be
.questioned by filing appeal before the Tribunal or
before a Court.

(ii) In the event the procedures contemplated under C
Rule 8 of the Security Interest (Enforcement) Rules,
2002, are not followed before section 14 is invoked,
the order passed by the Chief Judicial Magistrate
would be contrary to the said Rules and
consequently, the order passed under section 14
D
is liable to be set aside."

10. It is argued before the High Court as well as before
us by the respondent that a secured creditor before invoking
the authority of the Magistrate under section 14 must necessarily
make an attempt to take possession of the secured asset. Only E
when the creditor faces resistance to such an attempt the
creditor could resort to the procedure under section 14 of the
Act. According to the first respondent, section 174 of the Act

4. 17. Right to Appeal.- (1) Any person (including borrower), aggrieved by F
any of the measures referred to in sub-section (4) of section 13 taken by
the secured creditor or his authorised officer under this Chapter, may make
an application alongwith such fee, as may be prescribed to the Debts
Recovery Tribunal having jurisdiction in the matter within forty-five days
from the date on which such measure had been taken:

G
Explanation : For the removal of doubts, it is hereby declared that the
communication of the reasons to the borrower by the secured creditor for
not having accepted his representation or objection or the likely action of
the secured creditor at the stage of communication of reasons to the
borrower shall not entitle the person (including borrower) to make an
application to the Debts Recovery Tribunal under sub-section 1 of section
17. H
772 SUPREME COURT REPORTS [2013) 10 S.C.R.

A provides an "appeal" only against the measures taken by the
creditor under section 13(4)5 of the Act and no such appeal is
available against an action taken by the Judicial Magistrate
under section 14 of the Act. Therefore, permitting the creditor
to invoke section 14 without first resorting to the procedure
8 under section 13(4) would deprive the owner of the_ secured
asset an opportunity to prefer an "appeal" to have his
grievances adjudicated. It is further argued that Rule 8 of the
Security Interest (Enforcement) Rules, 2002 (hereinafter referred
to as "the Rules") contemplates a procedure to be followed
c which includes a certain mode of publicity of taking possession
to be made, and therefore, even a Magistrate exercising power
under section 14 of the Act is also required to follow the

5. 13(4) In case the borrower fails to discharge his liability in full within the
period specified in sub-section (2), the secured creditor may take recourse
D to one or more of the following measures to recover his secured debt,
namely:--
(a) take possession of the secured assets of the borrower including the right
to transfer by way of lease, assignment or sale for realising the secured
asset;
E (b) take over the management of the business of the borrower including the
right to transfer by way of lease, assignment or sale for realising the secured
asset:

Provided that the right to transfer by way of lease, assignment or sale
shall be exercised only where the substantial part of the business of the
borrower is held as security for the debt:
F
Provided further that where the management of whole of the business
or part of the business is severable, the secured creditor shall take over
the management of such business of the borrower which is relatable to
the security for the debt.

G (c) appoint any person (hereafter referred to as the manager), to manage the
secured assets the possession of which has been taken over by the
secured creditor;
(d) require at any time by notice in writing, any person who has acquired any
of the secured assets from the borrower and from whom any money is
due or may become due to the borrower, to pay the secured creditor, so
H much of the money as is sufficient to pay the secured debt.
STANDARD CHARTERED BANK v. V. NOBLE 773
KUMAR & ORS. [J. CHELAMESWAR, J.]
procedure contemplated under Rule 8 though the Rule does not A
expressly say so. Failure to comply with the requirement of Rule
8 in the instant case vitiated the order of the Magistrate.

11. The abovementioned submissions found favour with
the High Court. B

12. The learned counsel appearing for the appellant
argued before us that the Act provided for two alternative
procedures for taking possession of the secured assets under
sections 13(4) and 14 respectively. While section 13(4)
authorises the creditor himself to take possession of the C
secured assets without the aid of the State's coercive power,
section 14 enables the secured creditor to seek the assistance
of the State's coercive power for securing the possession of
the secured assets. It is submitted that it is always open to the
secured creditor to choose one of the abovementioned two D
procedures in a given case to obtain possession of the secured
asset depending upon his own assessment of the situation
regarding the possibility of resistance (by the debtor or
guarantor as the case may be) for taking possession of the
secured assets. It is also submitted that the fact that an "appeal" E
under section 17 is available against the measures taken under
section 13(4) and such an "appeal" is not available against the
measures taken by the Magistrate under section 14 does not
necessarily mean that the procedure under section 14 cannot
be resorted to without first exhausting the measures F
contemplated under section 13(4). Lastly, it is submitted on
behalf of the appellant that the High Court completely erred in
recording a conclusion:

"3. In the event the secured creditor bypassing the G
provision of section 13(4) and the rule 8 and files an
application under section 14, a situation may arise that the
advocate commissioner may straight away take
possession without there being compliance of any of the
provisions of section 13(4) or rule 8. When both the H
774 SUPREME COURT REPORTS [2013] 10 S.C.R.

A provisions are read together, we could only come to the
conclusion that the legislature had not intended to create
such a situation. The objection of section 14 is only to be
invoked in case the secured creditor faces obstruction and
not as a routine, bypassing the provisions of section 13(4).
B
13. On the other hand, the learned counsel appearing for
the first respondent reiterated the submissions made by him
before the High Court.

14. To decide the correctness of the judgment under
C appeal, it is essential that we examine the purpose and the
scheme of the Act. One of the professed purposes sought to
be achieved by the enactment as evidenced by the Objects and
Reasons appended to the Bill is as follows:-

D " .... Further, unlike international banks, the banks and
financial institutions in India do not have power to take
possession of securities and sell them. Our existing
legal framework relating to commercial transactions has
not kept pace with the changing commercial practices and
E financial sector reforms. This has resulted in slow place
of recovery of defaulting loans and mounting levels of
non-performing assets of banks and financial institutions."

15. In order to achieve the said purpose, sections 13, 14
and 15 are enacted. Only sections 13 and 14 are relevant for
F the present appeal. Section 13(1)6 enables the secured creditor
to enforce a security interest which such creditor has in a
secured asset without intervention of the Court or Tribunal. The
expression "security interest" is defined under section 2 (zf) as
follows:-
G

6. Section 13(1) Notwithstanding anything contained in section 69 or section
69A of the Transfer of Property Act, 1882 (4 of 1882). any security interest
created in favour of any secured creditor may be enforced, without the
intervention of court or tribunal, by such creditor in accordance with the
H provisions of this Act.
STANDARD CHARTERED BANK v. V. NOBLE 775
KUMAR & ORS. [J. CHELAMESWAR, J.]
"security interest" means right, title and interest of any kind A
whatsoever upon property, created in favour of any secured
creditor and includes any mortgage, charge, hypothecation,
assignment other than those specified in section 31;

16. Sub-section (2) authorises the secured creditor to
B
exercise any of the rights under sub-section (4). Sub-section
(2) reads as follows:-

(2) Where any borrower, who is under a liability to a
secured creditor under a security agreement, makes any
default in repayment of secured debt or any instalment C
thereof, and his account in respect of such debt is
classified by the secured creditor as non-performing asset,
then, the secured creditor may require the borrower by
notice in writing to discharge in full his liabilities to the
secured creditor within sixty days from the date of notice D
failing which the secured creditor shall be entitled to
exercise all or any of the rights under subsection (4).

18. It can be seen from the said sub-section that for the
secured creditor to take possession of the secured assets, the E
following conditions must be satisfied: (i) That there must be a
security agreement7 which creates the liability of the borrower
to make repayment to the secured creditor of the secured debt,
(ii) The secured creditor is required to demand the borrower
by notice in writing to discharge the full liability within a period
F
of 60 days from the date of the notice.

19. Sub-section (3)8 stipulate that such notice shall give the

7. Section 2(zb) "security agreement" means an agreement, instrument or
any other document or arrangement under which security interest is G
created in favour of the secured creditor including the creation of mortgage
by deposit of title deeds with the secured creditor;
8. Sub-Section (3) The notice referred to in sub-section (2) shall give details
of the amount payable by. the borrower and the secured assets intended
to be enforced by the secured creditor in the event of non-payment of
secured debts by the borrower. H
776 SUPREME COURT REPORTS [2013] 10 S.C.R.

A details of (i) the amount payable by the borrower (ii) the interest
in the secured asset intended to be enforced by the secured
creditor. Sub-section (4) 9 provides for various measures which
can be resorted to by the secured creditor in order to recover
his debt. Such measures are (1) taking possession of the
B secured asset or (2) taking over the management of the
business of the borrower. 10 The secured creditor is also given
the right either to make a further assignment of his interest or
lease out the secured assets or sell the same in orde,r to realise

c 9. within
Section 13(4) - In case the borrower fails to discharge his liability in full
the period specified in sub-section (2), the secured creditor may
take recourse to one or more of the following measures to recover his
secured debt, namely:--
(a} take possession of the secured assets of the borrower including the
right to transfer by way of lease, assignment or sale for realising the
secured asset;
D
(b) take over the management of the business of the borrower including
the right to transfer by way of lease, assignment or sale for realising the
secured asset:
PROVIDED that the right to transfer by way of lease, assignment or sale
shall be exercised only where the substantial part of the business of the
borrower is held as security for the debt:
E
PROVIDED FURTHER that where the management of whole of the
business or part of the business is severable, the secured creditor shall
take over the management of such business of the borrower which is
relatable to the security for the debt.
(c) appoint any person (hereafter referred to as the manager}, to manage
the secured assets the possession of which has been taken over by the
F secured creditor;
(d) require at any time by notice in writing, any person who has acquired
any of the secured assets from the borrower and from whom any money
is due or may become due to the borrower, to pay the secured creditor,
so much of the money as is sufficient to pay the secured debt.
G 10. Section 2(1) - "borrower'' means any person who has been granted financial
assistance by any bank or financial institution or who has given any
guarantee or created any mortgage or pledge as security for the financial
assistance granted by any bank or financial institution and includes a
person who becomes borrQwer of a securitisation company or
reconstruction company consequent upon acquisition by it of any rights
or interest of any bank or financial institution in relation to such financial
H assistance;
STANDARD CHARTERED BANK v. V. NOBLE 777
KUMAR & ORS. [J. CHELAMESWAR, J.]
his debt. Such right of the secured creditor is hedged with A
limitations/safeguards designed to protect interest of the
borrower so that the secured creditor may not abuse his rights
i.e. except to take a possession of the property and alienate
the same only to the extent necessary to realise the actual
amount due to him. Details of which may not be necessary for B
the purpose of this case. We are only concerned in this case
with the method and manner in which possession of the secured
assets could be obtained and the conditions precedents that
are required to be satisfied for taking possession of the
secured assets. C

20. Section 13, as originally enacted, did not contain any
provision for consideration of objections (if any) the borrower
may have to the demand made under sub-section (2). However,
this Court in Mardia Chemia/s Limited v. Union of India [(2004) D
4 SCC 311], where the constitutionality of the Act fell for the
consideration of this Court, noticed that section 13(2) is a very
stringent provision and opined:-

"77. It is also true that till the stage of making of the
demand and notice under Section 13(2) of the Act, no E
hearing can be claimed for by the borrower. But looking
to the stringent nature of measures to be taken without
intervention of court with a bar to approach the court or any
other forum at that stage, it becomes only reasonable that
the secured creditor must bear in mind the say of the F
borrower before such a process of recovery is initiated so
as to demonstrate that the reply of the borrower to the
notice under Section 13(2) of the Act has been considered
applying mind to it. The reasons, howsoever brief they may
be, for not accepting the objections, if raised in the reply, G
must be communicated to the borrower. True, presumption
is in favour of validity of an enactment and a legislation
may not be declared unconstitutional lightly more so, in the
matters relating to fiscal and economic policies resorted
to in the public interest, but while resorting to such H
778 SUPREME COURT REPORTS [2013] 10 S.C.R.

A legislation it would be necessary to see that the persons
aggrieved get a fair deal at the hands of those who have
been vested with the powers to enforce drastic steps to
make recovery."

21. Consequent upon the said decision, Parliament
8
introduced sub-section 3A 11 by Act 30 of 2004, which now
provides for consideration of the objections, if any raised by
the borrower. By definition under section 2(f) of the Act a
borrower includes the guarantor of the debt.

C 22. Section 3A further provides that if the secured creditor
reaches a conclusion that the objections raised by the borrower
are not acceptable or tenable, the creditor shall communicate
the reasons for non-acceptance of the objections within a period
of 15 days. The proviso to the said sub-section declares that
D the rejection of the objections does not confer any right on the
borrower to resort to the proceedings, contemplated either
under section 17 or 17A. We may indicate here both sections
17 and 17A afford an opportunity to the borrower to approach
the Debts Recovery Tribunal or (in the cases of Jammu &
E Kashmir) the concerned District Court against any measure
taken under section 13(4).
23. In every case where the objections raised by the
borrower are rejected by the secured creditor, the secured
F creditor is entitled to take possession of the secured assets.
In our opinion, such action - having regard to the object and
scheme of the Act - could be taken directly by the secured
creditor. However, visualising the possibility of resistance for
such action, Parliament under section 14 also provided for

G 11. Section 3A - (3A) If, on receipt of the notice under sub-section (2), the
borrower makes any representation or raises any objection, the secured
creditor shall consider such representation or objection and if the secured
creditor comes to the conclusion that such representation or objection is
not acceptable or tenable, he shall communicate within one week of receipt
of such representation or objection the reasons for non-acceptance of the
H representation or objection to the borrower:
STANDARD CHARTERED BANK v. V. NOBLE 779
KUMAR & ORS. [J. CHELAMESWAR, J.]
seeking the assistance of the judicial power of the State for A
obtaining possession of the secured asset, in those cases
where the secured creditor seeks it.
24. Under the scheme of section 14, a secured creditor
who desires to seek the assistance of the State's coercive
8
power for obtaining possession of the secured asset is. required
to make a request in writing to the Chief Metropplitan
Magistrate or District Magistrate within whose jurisdiction,
secured asset is located praying that the secured asset and
other documents relating thereto may be taken possession C
thereof. The language of section 14 originally enacted
purportedly obliged the Magistrate receiving a request under
section 14 to take possession of the secured asset and
documents, if any, related thereto in terms of the request
received by him without any further scrutiny of the matter. D
25. However, the Bombay High Court in the case of Trade
Well v. Indian Bank [2007 CriLJ 2544] opined;
"2 ... CMM/DM acting under Section 14 of the NPA Act is
not required to give notice either to the borrower or to the E
3rd party.
3. He has to only verify from the bank or financial institution
whether notice under Section 13(2) of the NPA Act is given
or not and whether the secured assets fall within his
jurisdiction. There is no adjudication of any kind at this F
stage.
4. It is only if the above conditions are not fulfilled that
the CMM/DM can refuse to pass an order under Section
14 of the NPA act by recording that the above conditions G
are not fulfilled. If these two conditions are fulfilled, he
cannot refuse to pass an order under Section 14."
The said judgment was followed by the Madras High Court
in the case of Indian Overseas Bank v. Mis. Sri Aravindh
Steels Ltd. [AIR 2009 Mad. 10]. Subsequently, Parliament H
780 SUPREME COURT REPORTS [2013] 10 S.C.R.

A inserted a proviso to section 14(1)12 and also sub-section 1A13
by Act 1 of 2013.
12. 14(1) ........ x x x x
Provided that any application by the secured creditor shall be
accompanied by an affidavit duly affirmed by the authorised officer of the
B secure9 creditor, declaring that-
(i) the aggregate amount of financial assistance granted and the total claim
of the Bank as on the date of filing the application;
(ii) the borrower has created security interest over various properties and
that the Bank or Financial Institution is holding a valid and subsisting
security interest over such properties and the claim of the Bank or
C Financial Institution is within the limitation period;
(iii) the borrower has created security interest over various properties giving
the details of properties referred to in sub-clause (ii) above;
(iv) the borrower has committed default in repayment of the financial
assistance granted aggregating the specified amount;
(v) consequent upon such default in repayment of the financial assistance
D the account of the borrower has be.en classified as a non-performing
asset;
(vi) Affirming that the period of sixty days notice as required by the provisions
of sub-section (2) of section 13, demanding payment of the defaulted
financial assistance has been l;erved on the borrower;
(vii) The objection or representation in reply to the notice received from the
E borrower has been considered by the secured creditor and reasons for
non-acceptance of such objection or representation had been
communicated to the borrower;
(viii) The borrower has not made any repayment of the financial assistance
in spite of the above notice and the Authorised Officer is, therefore, entitled
to take possession of the secured assets under the provisions of sub-
F section (4) of section 13 red with section 14 of the principal Act;
Ox) That the provisions of this Act and the rules made thereunder had been
complied with:
Provided further on receipt of the affidavit from the Authorised Officer, the
District Magistrate or the Chief Metropolitan Magistrate, as the case may
be, shall after satisfying the contents of the affidavit pass suitable orders
G for the purpose of taking possession of the secured assets:
Provided also that the requirement of filing affidavit stated in the first
proviso shall not apply to proceeding pending before any District
Magistrate or the Chief Metropolitan Magistrate, as the case may be, on
the date of commencement of this Act.
13. 14 (1A). The District Magistrate or the Chief Metropolitan magistrate may
H authorise any officer subordinate to him.-
STANDARD CHARTERED BANK v. V. NOBLE 781
KUMAR & ORS. [J. CHELAMESWAR, J.]
26. We must make it clear that these provisions were not A
in existence on the date of the order impugned in the instant
proceedings. These amendments are made to provide
safeguards to the interest of borrower. These provisions
stipulate that a secured creditor who is seeking the intervention
of the Magistrate under section 14 is required to file an affidavit B
furnishing the information contemplated under various sub-
clauses (i) to (ix) of the proviso and obligates the Magistrate
to pass suitable orders regarding taking of the possession of
the secured assets only after being satisfied with the contents
of the affidavits. C

27. An analysis of the 9 sub-clauses of the proviso which
deal with the information that is required to be furnished in the
affidavit filed by the secured creditor indicates in substance that
(i) there was a loan transaction under which a borrower is liable D
to repay the loan amount with interest, (ii) there is a security
interest created in a secured asset belonging to the borrower,
(iii) that the borrower committed default in the repayment, (iv)
that a notice contemplated under section 13(2) was in fact
issued, (v) in spite of such a notice, the borrower did not make E
the repayment, (vi) the objections of the borrower had in fact
been considered and rejected, (vii) the reasons for such
rejection had been communicated to the borrower etc.

28. The satisfaction of the Magistrate contemplated under F
the second proviso to section 14(1) necessarily requires the

(i) to take possession of such assets and documents relating thereof; and
(ii) to forward such assets and documents to the secured creditor.
(2) For the purpose of securing compliance with the provisions of sub-
section (1 ), the Chief Metropolitan Magistrate or the District Magistrate may G
take or cause to be taken such steps and use, or cause to be used, such
force, as may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the District Magistrate
any officer authorised by the Chief Metropolitan Magistrate or District
Magistrate done in pursuance of this section shall be called in question in
any court or before any authority. H
782 SUPREME COURT REPORTS [2013] 10 S.C.R.

A Magistrate to examine the factual correctness of the assertions
made in such an affidavit but not the legal niceties of the
transaction. It is only after recording of his satisfaction the
Magistrate can pass appropriate orders regarding taking of
possession of the secured asset.
B
29. It is in the above-mentioned background of the legal
frame of sections 13 and 14, we are required to examine the
correctness of the conclusions recorded by the High Court.
Having regard to the scheme of sections 13 and 14 and the
c object of the enactment, we do not see any warrant to record
the conclusion that it is only after making an unsuccessful
attempt to take possession of the secured asset, a secured
creditor can approach the Magistrate. No doubt that a secured
creditor may initially resort to the procedure under section 13(4)
o and on facing resistance, he may still approach the Magistrate
under section 14. But, it is not mandatory for the secured
creditor to make attempt to obtain possession on his own
before approaching the Magistrate under section 14. The
submission that such a construction would deprive the borrower
E of a remedy under section 17 is rooted in a misconception of
the scope of section 17.

30. The "appeal" under section 1714 is available to the
borrower against any measure taken under section 13(4).
Taking possession of the secured asset is only one of the
F measures that can be taken by the secured creditor. Depending
upon the nature of the secured asset and the terms and
conditions of the security agreement, measures other than

14. 17. Right to Appeal.- (1) Any person (including borrower}, aggrieved by
G any of the measures referred to in sub-section (4) of section 13 taken by
the secured creditor or his authorised officer under this Chapter, may make
an application alongwith such fee, as may be prescribed to the Debts
Recovery Tribunal having jurisdiction in the matter within forty-five days
from the date on which such measure had been taken:
Provided that different fees may be prescribed for making the application
H by the borrower and the person other than the borrower.
STANDARD CHARTERED BANK v. V. NOBLE 783
KUMAR & ORS. [J. CHELAMESWAR, J.]
taking the possession of the secured asset are possible under A
section 13(4). Alienating the asset either by lease or sale etc.
and appointing a person to manage the secured asset are
some of those possible measures. On the other hand, section
14 authorises the Magistrate only to take possession of the
property and forward the asset along with the connected B
documents to the borrower. Therefore, the borrower is always
entitled to prefer an "appeal" 15 under section 17 after the
possession of the secured asset is handed over to the secured
creditor. Section 13(4)(a) declares that the secured creditor
may take possession of the secured assets. It does not specify c
whether such a possession is to be obtained directly by the
secured creditor or by resorting to the procedure under section
14. We are of the opinion that by whatever mannerthe secured
creditor obtains possession either through the process
contemplated under section 14 or without resorting to such a D
process obtaining of the possession of a secured asset is
always a measure against which a remedy under section 17
is available.

31. It can be noticed from the language of the proviso to
E
section 13(3A) and the language of section 17 that an "appeal"
under section 17 is available to the borrower only after losing
possession of the secured asset. The employment of the words
"aggrieved by ................... .taken by the secured creditor" in
section 17(1) clearly indicates the appeal under section 17 is
F
15. Mardia Chemials Limited v. Union of India [(2004) 4 SCC 311], The
expression appeal as originally existed in Section 17 is substituted by the
word representation in view of the judgment of this Court in Mardia
Chemicals Case.
We may like to observe that proceedings under Section 17 of the Act, in G
fact, are not appellate proceedings. It seems to be a misnomer. In fact it
is the initial action which is brought before a forum as prescribed under
the Act, raising grievance against the action or measures taken by one of
the parties to the contract. It is the stage of initial proceeding like filing a
suit in civil court. As a matter of fact proceedings under Section 17 of the
Act are in lieu of a civil suit which remedy is ordinarily available but for the
bar under Section 34 of the Act in the present case. H
784 SUPREME COURT REPORTS [2013] 10 S.C.R.

A available to the borrower only after losing possession of the
property. To set at naught any doubt regarding the interpretation
of section 17, the proviso 16 to sub-section (3A) of section 13
makes it explicitly clear that either the reasons indicated for
rejection of the objections of the borrower or the likely action
B of the secured creditor shall not confer any right under section
17.

32. The same principle is re-emphasised with the newly
added explanation in section 17(1) which came to be inserted
c by Act No.30 of 2004:

"Explanation : For the removal of doubts, it is hereby
declared that the communication of the reasons to the
borrower by the secured creditor for not having accepted
his representation or objection or the likely action of the
D secured creditor at the stage of communication of reasons
to the borrower shall not entitle the person (including
borrower) to make an application to the Debts Recovery
Tribunal under sub-section 1 of section 17."

E 33. The High Court opined that Rule 817 of the Security
Interest (Enforcement) Rules, 2002 provides for certain (i)
procedure to be followed by the secured creditor taking

16. Provided that the reasons so communicated or the likely action of the
secured creditor at the stage of communication of reasons shall not confer
F any right upon the borrower to prefer an application to the Debts Recovery
Tribunal under Section 17 or the Court of District Judge under Section 17A.
17. Rule 8. Sale of immovable secured assets.-(1) Where the secured asset
is an immovable property, the authorised officer shall take or cause to be
taken possession, by delivering a possession notice prepared as nearly
as possible in Appendix IV to these rules, to the borrower and by affixing
G the possession notice on the outer door or at such conspicuous place of
the property.
(2) The possession notice as referred to in sub-rule (1) shall also be
published, as soon as possible but in any case not later than seven days
from the date of taking possession, in two leading newspapers, one in
vernacular language having sufficient circulation in that locality, by the
H authorised officer.
STANDARD CHARTERED BANK v. V. NOBLE 785
KUMAR & ORS. [J. CHELAMESWAR, J.]

· possession of the secured asset. The High Court opined that A
even in a case where procedure contemplated under section
14 is resorted to for obtaining possession of the secured
assets, compliance with Rule 8 is mandatory. Such a
requirement according to the High Court arises because in view
of the High Court: B

"The object of Section 14 is only to be invoked in case the
secured creditor faces obstruction and not as a routine
bypassing the provisions of Section 13(4)."

Under Rule 8, the secured creditor is required to deliver to the C
borrower a notice prepared as nearly as possible in Appendix
IV to the Rules and by affixing such notice to the property.
Further sub-rule (2) which came to be substituted in 2007 in
original provides that the notice contemplated under sub-rule
(1) is required to be published in two leading newspapers D
having sufficient circulation in the locality of which at least one
should be in vernacular language. Prior to 2007 the requirement
of publication in vernacular newspaper was not there.

34. The High Court recognized that the language of Rule E
8 does not expressly warrant the compliance with the procedure
contemplated therein when section 14 is resorted to for
obtaining possession of the secured asset:

"In the absence of the rule, the strict compliance of the
provisions of section 13(4) and rule 8, even in case of F
possession taken by virtue of an order under section 14,
assumes importance."

35. We are of the opinion that the High Court clearly erred
in recording such a conclusion. The language of Rule 8 does G
not demand such a construction. On the other hand, a
Magistrate whose functioning is structured by the Code of
Criminal Procedure is required to act in accordance witt) the
provisions of the said code unless expressly ordained
otherwise by any other law. It is not a case that Cr.P.C. never H
786 SUPREME COURT REPORTS [2013] 10 S.C.R.

A prescribed for the procedure to be followed by the Magistrate
in a case where the Magistrate is required to take possession
of property. For example, under section 83 18 of the Code, a
18. 83.·Attachment of property of person absconding.- (1) The Court issuing a
proclamation under section 82 may, for reasons to be recorded in writing,
B at any time after the issue of the proclamation, order the attachment of any
' property, movable or immovable, or both, belonging to the proclaimed
person:
Provided that where at the time of the issue of the proclamation the Court
is satisfied, by affidavit or otherwise that the person in relation to whom
the proclamation is to be issued, -
c {a) is about to dispose of the whole or any part of his property, or
{b) is about to remove the whole or any part of his property from the local
jurisdiction of the Court,
it may order the attachment simultaneously with the issue of the
proclamation.

D
(2) Such order shall authorize the attachment of any property belonging to such
person within the district in which it is made; and it shall authorize the
attachment of any property. belonging to such person without such district
when endorsed by the District Magistrate within whose district such property
is situate.

E
(3) If the property ordered to be attached is a debt or other movable property,
the attachment under this section shall be made-
{a) by seizure; or
{b) by the appointment of a receiver; or
{c) by an order in writing prohibiting the delivery of such property to the
F proclaimed person or to any one on his beha!f; on
(d) by all or any two of such methods, as the Court thinks fit.
(4) If the property ordered 10 be attached is immovable, the attachment under
this section shall, in the case of land paying revenue to the State
Government, be made through the Collector of the district in which the land
is situate, and in all other cases-
G (a) by taking possession; or
(b) by the appointment of a receiver; or
{c) by an order in writing prohibiting the payment of rent on delivery of property
to
the proclaimed person or to any one on his behalf; or
H (d) by all or any two of such methods, as the Court thinks fit.
STANDARD CHARTERED BANK v. V. NOBLE 787
KUMAR & ORS. [J. CHELAMESWAR, J.]
criminal Court is authorized to attach the movable or immovable A
property or both belonging to a proclaimed offender. Sub-
sections (3) and (4) to section 83 specifically provide that once
an order of attachment under sub-section (1) is made by the
criminal Court, the property which is the subject matter of such
attachment shall either be seized or taken possession of as the B
case may be depending upon the fact whether the property is
movable or immovable. Both the sub-sections contemplate the
appointment of receiver. It is declared under sub-section (6)
that the powers, duties and liabilities of a receiver appointed
under section 83 are the same as those of a receiver appointed c
under the Code of Civil Procedure, 1908. Order XL of the Code
of Civil Procedure deals with the appointment of the receiver.
Rule 1 authorizes the Court to appoint a receiver:

"1. Appointment of Receivers.-(1) Where it appears to D
the Court to be just and convenient, the Court may by
order-

(a) appoint a receiver of any property, whether before
or after decree; ·
E
(b) remove any person from the possession or custody
of the property;

(c) commit the same to the possession, custody or
management of the receiver, and
F
(d) confer upon the receiver all such powers, as to
bringing and defending suits and for the realisation,
management, protection, preservation and

(5) If the property ordered to be attached consists of live-stock or is of a G
perishable nature, the Court may, if it thinks it expedient, order immediate
sale thereof, and in such case the proceeds of the sale shall abide the
order of the Court.
(6) The powers, duties and liabilities of a receiver appointed under this
section shall be the same as those of a receiver appointed under the Code
of Civil Procedure, 1908(5 of 1908). H
788 SUPREME COURT REPORTS [2013] 10 S.C.R.

A improvement of the property, the collection of the
rents and profits thereof, the application and
disposal of such rents and profits, and the execution
of documents as the owner himself has, or such of
those powers as the Court thinks fit.
8
(2) Nothing in this rule shall authorise the Court to remove
from the possession or custody of property any person
whom any party to the suit has not a present right so to
remove."

C It can also be noticed from Rule (1) that the power of the Civil
Court to appoint a receiver could be exercised either before
or after passing of the decree.

36. Therefore, there is no justification for the conclusion that
0 the receiver appointed by the Magistrate is also required to
follow Rule 8 of the Security Interest (Enforcement) Rules, 2002.
The procedure to be followed by the receiver is otherwise
regulated by law. Rule 8 provides for the procedure to be
followed by secured creditor taking possession of the secured
E asset without the intervention of Court. Such a process was
unknown prior to the SARFAESI Act. So, specific provision is
made under Rule 8 to ensure transparency in taking such
poss~ssion. We do not see any conflict between different
procedures prescribed by law for taking possession of the
F secured asset. The finding of the High Court in our view is
unsustainable:.

37. Thus, there will be three methods for the secured
creditor to take possession of the secured assets:-

G (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
authorised officer will proceed to take steps as stipulated
under rule 8(2) onwards to take possession and thereafter
H
STANDARD CHARTERED BANK v. V. NOBLE 789
KUMAR & ORS. [J. CHELAMESWAR, J.]
for sale of the secured assets to realise the amounts that A
are claimed by the secured creditor.

(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 B
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 (1)(A) to C
take possession of the assets and documents. For that
purpose the Magistrate may authorise 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.
D
(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, authorise a subordinate officer to take E
possession of the assets and documents and forwards
them to the secured creditor as under clause (ii) above.

38. In any of the three situations, after the possession is
handed over to the secured creditor, the subsequent specified
F
provisions of rule 8 concerning the preservation, valuation and
sale of the secured assets,, and other subsequent rules from
the Security Interest (Enforcement) rules, 2002, shall apply.

39. In this connection, it is material to refer to the judgment
in Mardia Chemicals (supra) wherein the Court was concerned G
with the legality and validity of the SARFAESI Act. The Court
held the Act to be valid except Section 17(2) thereof as it then
stood. In paragraphs 59, 62 and 76 of the judgment the Court
in terms held that in remedy under Section 17 of the Act was
essentially like filing a suit in a Civil Court though it was called H
790 SUPREME COURT REPORTS [2013] 10 S.C.R.

A an Appeal. It is also relevant to note that in the ultimate
conclusions in paragraph 80 of the judgment this Court held in
sub-para 2 thereof as follows:-

"2. As already discussed earlier, on measures having been
8 taken under sub-section (4) of Section 13 and before the
date of sale/auction of the property it would be open for
the borrower to file an appeal (petition) under Section 17
of the Act before the Debts Recovery Tribunal."

The grievance of the respondent that it will be left with no
C remedy is, therefore, misplaced. As held by a bench of three
Judges in Mardia Chemicals (supra), it would be open to the
borrower to file an appeal under Section 17 any time after the
measures are taken under Section 13 (4) and before the date
of sale/auction of the property. The same would apply if the
D secured creditor resorts to Section 14 and takes possession
of the property with the help of the officer appointed by the
Magistrate.

40. Coming to the facts of this case, a notice under section
E 13(2) was in fact served on the respondent for which the
respondent did not choose to respond. Therefore, there was
no occasion for the appellant to consider the objections as
there was none of the respondent against the demand made
in the said notice. It is brought to our notice that even while
F making application under section 14 the appellant filed an
affidavit substantially providing for the necessary information
contemplated under the newly introduced proviso to section 14
(1). We have already noticed that there was no statutory
requirement as on the date when the application under section
G 14 was made in the instant case either to give such an affidavit
or regarding the content of the affidavit. Nonetheless the
appellant chose to give such an affidavit. A copy of which is
placed before us. We have perused the affidavit and it
substantially complies with the conditions stipulated in the newly
H
STANDARD CHARTERED BANK v. V. NOBLE 791
KUMAR & ORS. [J. CHELAMESWAR, J.]
introduced proviso. May be the appellant did it by way of A
abundant caution to avoid any litigation.

41. However, the respondent submitted before us that
there is nothing in the impugned order of the Magistrate which
indicates that the Magistrate applied his mind to such an B
affidavit and satisfied that it is necessary to deliver possession
of the secured asset to the appellant. No doubt that there is no
material on record to show that the Magistrate applied his mind
to the facts stated in the affidavit filed by the appellant. On the
date of the impugned order the law did not oblige the C
Magistrate to undertake any such exercise. Apart from that we
are satisfied on examination of the content of the affidavit that
all the basic requirements necessary for granting the request
of the appellant of delivery of the possession of the secured
asset are asserted to have existed on the date of application.
D
Therefore, we do not see any illegality in the impugned order.
The appeal is allowed. The order of the High Court is set aside.

42. In view of our conclusion on the scope of section 17
recorded earlier it would normally have been open to the
respondent to prefer an appeal under section 17 raising E
objections regarding legality of the decision of the Magistrate
to deprive the respondent of the possession of the secured
asset. But in view of the fact that the respondent chose to
challenge the decision of the magistrate by invoking the
jurisdiction of the High Court under Article 226 of the F
Constitution and in view of the fact that the respondent does
not have any substantive objection as can be discerned from
the record, we make it clear that the respondent in the instant
case would not be entitled to avail the remedy under section
17 as the respondent stalled the proceedings for a period of G
almost 4 years. It is worthwhile remembering that the respondent
did not even choose to raise any objections to the demand
issued under section 13(2} of the Act. However, we make it
clear that it is always open to the respondent to seek restoration
H
792 SUPREME COURT REPORTS [2013] 10 S.C.R.

A of his property by complying with sun-section 8 of section 13
of the Act.

Criminal Appeal arising out of SLP (Crl) No. 6560 of 2011

43. The first respondent in this appeal is the borrower in
B a transaction to which V. Noble Kumar, the first respondent in
Criminal Appeal arising out of SLP(Crl) No. 2038 of 2011 was
the surety. The issue in the appeal is identical. Therefore, for
the reasons stated above, this appeal is also allowed.

C K.K.T. Appeals allowed.