# Rich Field Industries Pvt. Ltd v. State Bank Of India & Ors

- **Citation:** (2016) 8 ILRA 465
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-08-31
- **Bench:** Tarun Agarwala, Vipin Sinha
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/rich-field-industries-pvt-ltd-v-state-bank-of-india-ors-44332
- **Pages:** 13

## Headnote

SARFAESI Act, 2002 - Section 14 - Additional District Magistrate - District Magistrate - secured creditor
- taking possession of secured asset - lease deed - unregistered document - notice under Section 13(2)
- Section 13(13) - transfer by way of lease - non-performing asset - borrower - fraud with the Bank -
Article 226 Constitution of India - equitable jurisdiction - discretionary relief - writ petition dismissed

It has been a considered legal position that the power exercised under Section 14 of the SARFAESI Act by the
Collector/District Magistrate is only an administrative power and thus authorizing any authority to exercise
these powers does not amount to the delegation of the power and, in view of the Full Bench judgment of the
Supreme Court and the Division Bench judgment of Allahabad High Court, referred to above, this Court finds
no illegality in the order that has been passed under Section 14 of the SARFAESI Act by the Additional District
Magistrate.(Para 6)

Held:(Paras 15-16,24-27)
1.It is apparent from the record that respondent no.2, who happens to be the borrower has very complacently
executed a lease deed after the receipt of the notice under Section 13(2) of the SARFAESI Act with the sole
intention of playing fraud with the Bank. His dishonest intention is writ large on the face of the record.
Respondent no. 2 after setting up the petitioner in the forefront has very calmly chosen to stay away from the
litigation and is cooling his heals sitting at home. It is apparent from the fact that the benefit of the lease
deed cannot be extended to the petitioner in view of the fact that firstly it is an unregistered document and
secondly it was executed after the service of notice under Section 13 (2) of the SARFAESI Act and this Court
feels that no person can be permitted to reap the harvest of his own wrongdoing. Further, the petitioner
admits that the lease is an unregistered document.

2.It has also been submitted that upon default in payment of financial assistance, the account of borrower has
been notified as 'non-performing asset' by State Bank of India on 28.1.2014 and by Punjab National Bank on
31.12.2013 and thus it is apparent that respondent no.2 was well aware that the account has been notified as
'non-performing asset'. There is apparently a huge liability against respondent no.2 and it was under these
466 INDIAN LAW REPORTS ALLAHABAD SERIES

circumstances and in order to hoodwink the Bank, a frivolous lease deed was executed surreptitiously by
respondent no. 2 in favour of the petitioner.

3.Reference may also be had to a recent judgment of Division Bench of Allahabad High Court rendered in
Surendra Kumar Maheshwari v. State of U.P. and others; 2006(2) ADJ 182 wherein the Court while dealing
with the similar situation has held that the grant of relief in writ jurisdiction is discretionary and a Court can
decline the relief where the person seeks to secure a dishonest advantage or perpetuate unjust gain.

4.In the present case, lease deed has been executed after the receipt of notice under Section 13(2) of the
SARFAESI Act and thus it cannot be said that the lease is valid or that the possession of the petitioner is a
lawful possession.

5.In view of the aforesaid facts and circumstances, this Court finds that the petitioner is not entitled to grant
of any indulgence of this Court in exercise of its equitable jurisdiction under Article 226 of the Constitution.

6.The writ petition fails and is accordingly dismissed.

Case Law discussed:
1.Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited and others, (2014) 6
SCC 1 - para 4
2.Hari Chand Aggarwal v. Batala Engineering Co. Ltd., Civil Appeal No. 681 of 1966 - para 5
3.Virendra Kumar Agarwal v. M. L. Kulshreshtha and others, Civil Misc. Writ No.3721 of 1973- para 5
4.M/s T. R. Jewellery and another v. M/s State Bank of India and another, AIR 2016 Hyderabad 125 - para 7
5.Transcore v. Union

## Text

8 All. Rich Field Industries Pvt. Ltd. Vs State Bank Of India & Ors.
465
(2016) 08 ILRA 465
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 31.08.2016

BEFORE

THE HON'BLE TARUN AGARWALA, J.
THE HON'BLE VIPIN SINHA, J.

Writ C No.- 26826 Of 2016

Rich Field Industries Pvt. Ltd. ...Petitioner
Versus
State Bank Of India & Ors. ...Respondents

Counsel for the Petitioner:
Siddharth Khare, Sr. Advocate

Counsel for the Respondents:
C.S.C., Satish Chaturvedi.

SARFAESI Act, 2002 - Section 14 - Additional District Magistrate - District Magistrate - secured creditor
- taking possession of secured asset - lease deed - unregistered document - notice under Section 13(2)
- Section 13(13) - transfer by way of lease - non-performing asset - borrower - fraud with the Bank -
Article 226 Constitution of India - equitable jurisdiction - discretionary relief - writ petition dismissed

It has been a considered legal position that the power exercised under Section 14 of the SARFAESI Act by the
Collector/District Magistrate is only an administrative power and thus authorizing any authority to exercise
these powers does not amount to the delegation of the power and, in view of the Full Bench judgment of the
Supreme Court and the Division Bench judgment of Allahabad High Court, referred to above, this Court finds
no illegality in the order that has been passed under Section 14 of the SARFAESI Act by the Additional District
Magistrate.(Para 6)

Held:(Paras 15-16,24-27)
1.It is apparent from the record that respondent no.2, who happens to be the borrower has very complacently
executed a lease deed after the receipt of the notice under Section 13(2) of the SARFAESI Act with the sole
intention of playing fraud with the Bank. His dishonest intention is writ large on the face of the record.
Respondent no. 2 after setting up the petitioner in the forefront has very calmly chosen to stay away from the
litigation and is cooling his heals sitting at home. It is apparent from the fact that the benefit of the lease
deed cannot be extended to the petitioner in view of the fact that firstly it is an unregistered document and
secondly it was executed after the service of notice under Section 13 (2) of the SARFAESI Act and this Court
feels that no person can be permitted to reap the harvest of his own wrongdoing. Further, the petitioner
admits that the lease is an unregistered document.

2.It has also been submitted that upon default in payment of financial assistance, the account of borrower has
been notified as 'non-performing asset' by State Bank of India on 28.1.2014 and by Punjab National Bank on
31.12.2013 and thus it is apparent that respondent no.2 was well aware that the account has been notified as
'non-performing asset'. There is apparently a huge liability against respondent no.2 and it was under these
466 INDIAN LAW REPORTS ALLAHABAD SERIES

circumstances and in order to hoodwink the Bank, a frivolous lease deed was executed surreptitiously by
respondent no. 2 in favour of the petitioner.

3.Reference may also be had to a recent judgment of Division Bench of Allahabad High Court rendered in
Surendra Kumar Maheshwari v. State of U.P. and others; 2006(2) ADJ 182 wherein the Court while dealing
with the similar situation has held that the grant of relief in writ jurisdiction is discretionary and a Court can
decline the relief where the person seeks to secure a dishonest advantage or perpetuate unjust gain.

4.In the present case, lease deed has been executed after the receipt of notice under Section 13(2) of the
SARFAESI Act and thus it cannot be said that the lease is valid or that the possession of the petitioner is a
lawful possession.

5.In view of the aforesaid facts and circumstances, this Court finds that the petitioner is not entitled to grant
of any indulgence of this Court in exercise of its equitable jurisdiction under Article 226 of the Constitution.

6.The writ petition fails and is accordingly dismissed.

Case Law discussed:
1.Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited and others, (2014) 6
SCC 1 - para 4
2.Hari Chand Aggarwal v. Batala Engineering Co. Ltd., Civil Appeal No. 681 of 1966 - para 5
3.Virendra Kumar Agarwal v. M. L. Kulshreshtha and others, Civil Misc. Writ No.3721 of 1973- para 5
4.M/s T. R. Jewellery and another v. M/s State Bank of India and another, AIR 2016 Hyderabad 125 - para 7
5.Transcore v. Union of India (UOI) and another - para 7
6.Union Bank of India v. State of Maharashtra - para 7
7.International Asset Reconstruction Company Private Limited v. Union of India - para 7
8.Mansa Synthetic Pvt. Ltd. and others v. Union of India and another - para 7
9.Irshad Husain v. District Magistrate Moradabad and others, 2009 (3) ADJ 81 - para 8
10.Sk. Akbr Ali v. State of West Bengal and others, AIR 2012 Calcutta 90 - para 9
11.Andhra Pradesh State Financial Corporation v. M/s GAR Re-Rolling Mills and another, AIR 1994 SC 2151 -
para 18
12.M.P. Mittal v. State of Haryana and others, AIR 1984 SC 1888 - para 19
13.State of Maharashtra v. Prabhu, (1994) 2 SCC 481 - para 20
14.Chandra Singh v. State of Rajasthan and another, AIR 2003 SC 2889 - para 21
15.ONGC Ltd. v. Sendhabhai Vastram Patel and others, (2005) 6 SCC 454 - para 22
16.S.D.S. Shipping (P) Ltd. v. Jay Container Services Co. (P) Ltd., (2003) 9 SCC 439 - para 22
17.Surendra Kumar Maheshwari v. State of U.P. and others, 2006 (2) ADJ 182 - para 24

(Delivered by Hon'ble Tarun Agarwala, J.
&
Hon'ble Vipin Sinha, J)

1. Heard Sri Ashok Khare, the learned Senior Advocate assisted by Sri Prateek Chandra,
the learned counsel for the petitioner and Sri Satish Chaturvedi, the learned counsel appearing for
the respondent bank.

2. The present writ petition has been filed by the petitioner with the claim that the
petitioner is neither a borrower nor a guarantor and in fact is a lessee in pursuance of a valid lease
8 All. Rich Field Industries Pvt. Ltd. Vs State Bank Of India & Ors.
467
deed executed by the borrower - respondent no.2. The relief sought by the petitioner in the present
writ petition is to the effect that the impugned order dated 1.1.2016 be quashed as it has been
passed by the Additional District Magistrate purportedly in exercise of power under Section 14 of
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (hereinafter referred to as 'SARFAESI Act'). The petitioner has also made the following
prayer in the writ petition:

"II. Issue a writ, order or direction in the nature of Mandamus directing the
Respondent No.1 to refrain from interfering with the possession of the property of the petitioner;

III. Issue a writ, order or direction in the nature of Certiorari or any other order
or direction declaring the e-auction notice issued by the Respondent No.1 that was published in the
newspaper on 16.1.2016 as null and void and restraining the Respondent No.1 from proceeding
with the auction sale or taking any action.

IV. ...

V. ..."
3. Sri Ashok Khare, the learned Senior Counsel appearing for the petitioner has raised three
basic contention while attacking the impugned order dated 1.1.2016 (Annexure No.1 to the writ
petition); (a) that the order passed under Section 14 of the Act could not have been passed by the
Additional District Magistrate as he is not the competent authority as the same being Collector /
District Magistrate and in this regard reliance has been placed upon Section 14 of the Act, relevant
portion of which reads as under:

"14. Chief Metropolitan Magistrate or District Magistrate to assist secured
creditor in taking possession of secured asset.--

(1) Where the possession of any secured assets 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 assets, request, in writing, the Chief Metropolitan
Magistrate or the District Magistrate within 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

(b) forward such asset and documents to the secured creditor:

Provided that any application by the secured creditor shall be accompanied by an
affidavit duly affirmed by the authorised officer of the secured creditor, declaring that--
468 INDIAN LAW REPORTS ALLAHABAD SERIES

(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 ig 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 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 the
account of the borrower has been 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
served on the borrower;

(vii) the objection or representation in reply to the notice received from the
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-section (4) of section 13 read with section 14 of the
principal Act;

(ix) that the provisions of this Act and the rules made thereunder had been
complied with:

Provided further that 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 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.

(1-A) The District Magistrate or the Chief Metropolitan Magistrate may authorise
any officer subordinate to him,--
8 All. Rich Field Industries Pvt. Ltd. Vs State Bank Of India & Ors.
469
(i) to take possession of such assets and documents relating thereto; 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 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.""

(b) that the Additional District Magistrate has not at all referred to the contention /
objection raised by the petitioner in its objection filed in response to the application of the Bank
under Section 14 of the SARFAESI Act;

and (c) that the petitioner is a lessee under a validly executed lease deed.

4. Thus, the petitioner cannot be evicted except in accordance with law from the premises
in dispute. The learned senior counsel has relied upon a judgment of the Supreme Court rendered in
Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited and
others; 2014 (6) SCC 1 to contend that it was incumbent upon the authority prescribed under
Section 14 of the SARFAESI Act to adjudicate upon the status of the petitioner as a lessee under a
validly executed lease deed. The relevant extracts are quoted herein below:

"As per the mandate of Section 107 TPA if the lessee of the mortgagor claims that
it is entitled to possession of a secured asset for any term exceeding one year from the date of the
lease made in his favour by the lessor. Where he does not produce proof of execution of a
registered instrument in his favour and instead relied on an unregistered instrument or oral
agreement accompanied by delivery of possession, the CMM or the DM, as the case may be will
have to come to the conclusion that he is not entitled to the possession of the secured asset for more
than a year from the date of the instrument or from the date of delivery of possession in his favour
by the landlord.

... If the lessee surrenders possession, the lease, even if valid, gets determined in
accordance with clause (f) of Section 111 of the Transfer of Property Act, but if he resists the
attempt of the secured creditor to take possession, the authorised officer cannot evict the lessee by
force but has to file an application before the Chief Metropolitan Magistrate or the District
Magistrate under Section 14 of the SARFAESI Act and state in the affidavit accompanying the
application, the name and address of the person claiming to be the lessee. When such an
application is filed, the Chief Metropolitan Magistrate or the District Magistrate will have to give a
notice and give an opportunity of hearing to the person claiming to be the lessee as well as to the
secured creditor consistent with the principles of natural justice and then take a decision.
470 INDIAN LAW REPORTS ALLAHABAD SERIES

We may now consider the contention of the respondents that some of the appellants
have not produced any document to prove that they are bona fide lessees of the secured assets. We
find that in the cases before us, the appellants have relied on the written instruments or rent
receipts issued by the landlord to the tenant. Section 107 of the Transfer of Property Act provides
that a lease of immoveable property from year to year, or for any term exceeding one year or
reserving a yearly rent, can be made ''only by a registered instrument' and all other leases of
immoveable property may be made either by a registered instrument or by oral agreement
accompanied by delivery of possession. Hence, if any of the appellants claim that they are entitled
to possession of a secured asset for any term exceeding one year from the date of the lease made in
his favour, he has to produce proof of execution of a registered instrument in his favour by the
lessor. Where he does not produce proof of execution of a registered instrument in his favour and
instead relies on an unregistered instrument or oral agreement accompanied by delivery of
possession, the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, will
have to come to the conclusion that he is not entitled to the possession of the secured asset for more
than an year from the date of the instrument or from the date of delivery of possession in his favour
by the landlord. "

5. The learned Senior Counsel further relied upon a judgment of the Apex Court rendered
in the case of Hari Chand Aggarwal v. Batala Engineering Co. Ltd. (Civil Appeal No. 681 of
1966 decided on 24.9.1968) and also upon a judgment of Allahabad High Court rendered in
Virendra Kumar Agarwal v. M. L. Kulshreshtha and others ( Civil Misc. Writ No. 3721 of
1973 decided on 19.7.1973) in support of his contention that the Additional District Magistrate
could not have exercised the power of District Magistrate in exercise of power under Section 14 of
the SARFAESI Act. However, as far as the case of Hari Chand (Supra) is concerned, the same is
with regard to the power under the Code of Criminal Procedure. In the said case it has been
observed that the District Magistrate and the Additional District Magistrate are two different and
distinct authorities and even though the latter may be empowered under Sub-section (2) to exercise
all or any of the powers of a District Magistrate but by no stretch of reasoning can an Additional
District Magistrate be called the District Magistrate which are the words employed in Sub-section
(1) of Section 10. As far as second case Virendra Kumar (Supra) is concerned, the same is with
regard to the power of the Central Government to delegate the power to the District Magistrate and,
thus, it is contended that District Magistrate could not have sub delegated the power. A perusal of
the said two judgment shows that the facts and circumstances of the aforesaid cases do not apply to
the facts and circumstances of the present case.

6. It has been a considered legal position that the power exercised under Section 14 of the
SARFAESI Act by the Collector/District Magistrate is only an administrative power and thus
authorizing any authority to exercise these powers does not amount to the delegation of the power
and, in view of the Full Bench judgment of the Supreme Court and the Division Bench judgment of
Allahabad High Court, referred to above, this Court finds no illegality in the order that has been
passed under Section 14 of the SARFAESI Act by the Additional District Magistrate.
8 All. Rich Field Industries Pvt. Ltd. Vs State Bank Of India & Ors.
471
7. Sri Satish Chaturwedi, the learned counsel for the respondent bank has placed strong
reliance upon a Full Bench judgment of Hyderabad High Court rendered in M/s T. R. Jewellery
and another v. M/s State Bank of India and another; AIR 2016 HYDERABAD 125 to contend
in support of his contention that the term District Magistrate will include the Additional District
Magistrate or Additional Collector. The relevant extract of the said judgment is quoted herein
below:

"27. Relying upon the word order used in the proviso to Section 14, it has been
urged, that the Chief Metropolitan Magistrate is exercising judicial function while assisting the
secured creditor and the same cannot be entrusted to Chief Judicial Magistrate in nonmetropolitan area when the Legislature never contemplated the same. It has been further urged
that if really the intention of the Legislature was to give such power to Chief Judicial Magistrate, it
would have referred to it atleast in the amendment brought to Section 14 in the year 2013. It is true
that Section 14 of the Act refers only to Chief Metropolitan Magistrate and District Magistrate.
But, if really the proceedings before the Chief Metropolitan Magistrate are judicial in nature, the
Legislature would not have allowed the District Magistrate or the Chief Metropolitan Magistrate
to authorize any Officer subordinate to them to take possession of such assets and documents
relating there to and forward such assets and documents to the secured creditor. At this stage, an
argument was sought to be advanced, stating that delegation as referred to in Section 14(1A) is
only with regard to execution of the order by an Officer subordinate to Chief Metropolitan
Magistrate or District Magistrate and not passing of the order. The same cannot be accepted. It is
to be noted that Section 14(1)(a)(b) which deal with assistance by Chief Metropolitan Magistrate
and District Magistrate also refers to taking possession of such assets and documents and
forwarding them to the secured creditor.

28. Dealing with the word possession in Sections 13, 17 and the Rules made under
SARFAESI Act, the Apex Court in Transcore v. Union of India (UOI) and another, held as under :

68. The word possession is a relative concept. It is not an absolute concept. The
dichotomy between symbolic and physical possession does not find place in the Act. As stated
above, there is a conceptual distinction between securities by which the creditor obtains ownership
of or interest in the property concerned (mortgages) and securities where the creditor obtains
neither an interest in nor possession of the property but the property is appropriated to the
satisfaction of the debt (charges). Basically, the NPA Act deals with the former type of securities
under which the secured creditor, namely, the bank/FI obtains interest in the property concerned. It
is for this reason that the NPA Act ousts the intervention of the courts/tribunals.

29. In Union Bank of India v. The State of Maharashtra through the Office of the
Government Pleader, Public Works Department and others , the Bombay High Court held that
Section 14 of the SARFAESI Act is procedural in nature and that the procedure stipulated therein
enables the secured creditor to take the assistance of Chief Metropolitan Magistrate or District
Magistrate in taking possession of the secured assets. It was also held that Section 14 only
empowers the authorities to assist the secured creditor in taking possession of the secured assets as
472 INDIAN LAW REPORTS ALLAHABAD SERIES

per the procedure contemplated under Section 14, but does not clothe the District Magistrate with
the power to adjudicate in respect of any dispute pertaining to any secured asset. Further, it has
been held that proviso to Section 14 of the Act does not vest District Magistrate with the
jurisdiction to adjudicate and decide any dispute regarding the secured assets. Similar view was
taken by a Division Bench of Bombay High Court in International Asset Reconstruction Company
Private Limited through its Authorized Representative of the Constituted Attorney Shri Tushar
B.Patel v. Union of India (UOI), through the District Magistrate and others. In Mansa Synthetic
Pvt. Ltd. and others v. Union of India and another , a Division Bench of the Gujarat High Court
held that the District Magistrate or Chief Metropolitan Magistrate is bound to assist secured
creditor in taking possession of secured asset and is not empowered to decide question of legality
or propriety of any action taken by the secured creditor under Section 14 of the Act."

8. He further placed reliance upon Division Bench judgment of this Court rendered in
Irshad Husain v. District Magistrate Moradabad and others; 2009 (3) ADJ 81 wherein the
Division Bench has taken a specific view and has held herein as under:

"According to us, when the above Act is subjective in nature, the Act below is the
procedural in nature. Upon going through Section 14-A of the U.P. Land Revenue Act, 1901 we
find that the Additional Collector has the similar power as of Collector, thereby the Collector
includes the Additional Collector. Section 14-A of such Act is also quoted hereunder:

"14-A. Appointment, powers and duties of Additional Collectors.--(1) The State
Government may appoint an Additional Collector in a district or in two or more districts combined.

(2) An Additional Collector shall hold his office during the pleasure of State
Government.

(3) An Additional Collector shall exercise such powers and discharge such duties
of a Collector in such cases or classes of cases as the Collector concerned may direct.

(4) This Act and every other law for the time being applicable to a Collector shall
apply to every Additional Collector, when exercising any powers or discharging any duties under
sub-section (3), as if he were the Collector of the district."

9. Reference may also be made to a judgment of the Calcutta High Court rendered in Sk.
Akbr Ali v. State of West Bengal and others; AIR 2012 CALCUTTA 90, wherein it has been
categorically held that there is no dispute that an Additional District Magistrate even if the State
Government duly confers on him all or any of the powers of the District Magistrate does not
become a District Magistrate. He still remains an Additional District Magistrate holding a position
below the District Magistrate. This, however, does not lead to the conclusion that if a power of the
District Magistrate on being duly conferred on him is exercised by an Additional District
Magistrate, it will not be a valid exercise of power. Once the power is duly conferred on an
Additional District Magistrate, such Additional District Magistrate is competent to decide an
8 All. Rich Field Industries Pvt. Ltd. Vs State Bank Of India & Ors.
473
application under Section 14 of the SARFAESI Act. It is not necessary that the power has to be
exercised by the District Magistrate.

10. Learned counsel for the respondent bank has also placed reliance upon Section 14(1-A)
of the SARFAESI Act.

11. It has further been contended by the learned counsel for respondent bank that as far as
question of lease deed is concerned, it may be appreciated that the Bank had issued a notice under
Section 13(2) of the SARFAESI Act on 17.5.2014 for recovery of the amount due against the
borrower, namely, respondent no.2 - M/s Zync Global Pvt. Ltd. which was to the tune of
Rs.67,00,26,840/- including the accrued interest up to 1.10.2013 and that as per the
notice/application under Section 14 of the SARFAESI Act apart from the liability of the State Bank
of India running to Rs.67,00,26,840/- there is further liability of Punjab National Bank running to
Rs.75,48,38,788.78/-. The contention of the respondent bank is that respondent no.2 knowing fully
well that there is huge liability against him, in order to derail the entire recovery proceeding had
executed an unregistered lease deed in favour of the petitioner on 9.9.2014 for a period of three
years. The further contention of the respondent bank is that it is an admitted position on record that
the lease deed was executed after the notice under Section 13(2) of the SARFAESI Act has been
given.

12. Further reliance has been placed by the counsel for respondent bank upon a specific
clause contained in the notice issued under Section 13(2) of the SARFAESI Act, which reads as
under:

"You are also put on notice that in terms of sub-section 13 of section 13 you shall
not transfer by sale, lease or otherwise the said secured assets detailed in Schedule "C" of this
notice without obtaining written consent of the Bank."

13. The learned counsel for the respondent bank has also drawn attention of the Court to
section 13(13) of the SARFAESI Act, which reads as under:

"13. Enforcement of security interest. - (1) ...

(2) ...

(3) ...

(4) ...

(5) ...

(6) ...
474 INDIAN LAW REPORTS ALLAHABAD SERIES

(7) ...

(8) ...

(9) ...

(10) ...

(11) ...

(12) ...

(13) No borrower shall, after receipt of notice referred to in sub-section (2),
transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any
of his secured assets referred to in the notice, without prior written consent of the secured
creditor."

14. Relying upon the aforesaid contentions, learned counsel for the respondent bank
submitted that the petitioner cannot be granted any indulgence whatsoever in exercise of equitable
jurisdiction of this Court under Article 226 of the Constitution.

15. It is apparent from the record that respondent no.2, who happens to be the borrower has
very complacently executed a lease deed after the receipt of the notice under Section 13(2) of the
SARFAESI Act with the sole intention of playing fraud with the Bank. His dishonest intention is
writ large on the face of the record. Respondent no. 2 after setting up the petitioner in the forefront
has very calmly chosen to stay away from the litigation and is cooling his heals sitting at home. It is
apparent from the fact that the benefit of the lease deed cannot be extended to the petitioner in view
of the fact that firstly it is an unregistered document and secondly it was executed after the service
of notice under Section 13 (2) of the SARFAESI Act and this Court feels that no person can be
permitted to reap the harvest of his own wrongdoing. Further, the petitioner admits that the lease is
an unregistered document.

16. It has also been submitted that upon default in payment of financial assistance, the
account of borrower has been notified as 'non-performing asset' by State Bank of India on
28.1.2014 and by Punjab National Bank on 31.12.2013 and thus it is apparent that respondent no.2
was well aware that the account has been notified as 'non-performing asset'. There is apparently a
huge liability against respondent no.2 and it was under these circumstances and in order to
hoodwink the Bank, a frivolous lease deed was executed surreptitiously by respondent no. 2 in
favour of the petitioner.

17. Sri Chaturvedi has placed reliance upon the reply filed by the Bank to the application of
objector i.e. the petitioner wherein the objection taken by the petitioner has been duly considered
and replied to, a copy of the said reply has been annexed as annexure CA-3 to the counter affidavit.
8 All. Rich Field Industries Pvt. Ltd. Vs State Bank Of India & Ors.
475
The said reply has been considered by the Additional District Magistrate while passing the order
under Section 14 of the SARFAESI Act.

18. Keeping in view the conduct of the borrower a reference may be made to the judgment
of the Apex Court rendered in Andhra Pradesh State Financial Corporation v. M/s GAR ReRolling Mills and another; AIR 1994 SC 2151, where the Supreme Court observed:-

"A court of equity, when exercising its equitable jurisdiction under Article 226 of
the Constitution must so act as to prevent perpetration of a legal fraud and the courts are obliged
to do justice by promotion of good faith, as far as it lies within their power. Equity is always known
to defend the law from clefty evasions and new subtelities invented to evade law."

19. In the case of M.P. Mittal Vs. State of Haryana & Ors. AIR 1984 SC, 1888, the
Hon'ble Supreme Court held as follows:-

"The appeal arises out of a writ petition, and it is well settled that when a
petitioner invokes the jurisdiction of the High Court under Article 226 of the Constitution, it is
open to the High Court to consider whether, in the exercise of its undoubted discretionary
jurisdiction, it should decline relief to such petitioner if the grant of relief would defeat the interests
of justice. The Court always has power to refuse relief where the petitioner seeks to invoke its writ
jurisdiction in order to secure a dishonest advantage or perpetuate an unjust gain. This is a case
where the High Court was fully justified in refusing relief."

20. The Hon'ble Supreme Court in State of Maharastra Vs. Prabhu (1994) 2 SCC 481
considered the equity jurisdiction of the High Court under Article 226 of the Constitution and
pointed out as follows:-

"Even assuming that the construction placed by the High Court and vehemently
defended by the learned counsel for respondent is correct should the High Court have interfered
with the order of Government in exercise of its equity jurisdiction................. Where the
Government or any authority passes an order which is contrary to rules or law it becomes
amenable to correction by the courts in exercise of writ jurisdiction. But one of the principles
inherent in it is that the exercise of power should be for the sake of justice. One of the yardstick for
it is if the quashing of the order results in greater harm to the society then the court may restrain
from exercising the power...........Therefore, even if the order of the Government was vitiated either
because it omitted to issue a proper show-cause notice or it could not have proceeded against the
respondent for his past activities the High Court should have refused to interfere in exercise of its
equity jurisdiction as the facts of the case did not warrant interference.......... It is the responsibility
of the High Court as custodian of the Constitution to maintain the social balance by interfering
where necessary for sake of justice and refusing to interfere where it is against the social interest
and public good."
476 INDIAN LAW REPORTS ALLAHABAD SERIES

21. The same position was reiterated by the Hon'ble Supreme Court in the case of
Chandra Singh Vs. State of Rajasthan & Anr. AIR 2003 SC 2889 in which it was observed as
follows:-

"Issuance of a writ of Certiorari is a discretionary remedy (Champalal Binani v.
CIT, West Bengal, AIR 1970 SC 645). The High Court and consequently this Court while
exercising its extra ordinary jurisdiction under Articles 226 or 32 of the Constitution of India may
not strike down an illegal order although it would be lawful to do so. In a given case, the High
Court or this Court may refuse to extend the benefit of a discretionary relief to the applicant."

22. In ONGC Ltd. Vs. Sendhabhai Vastram Patel & Ors,. reported in (2005) 6 SCC
454, the Supreme Court held as follows:-

"It is now well settled that the High Court and the Supreme Court while exercising
their equity jurisdiction under Articles 226 and 32 of the Constitution as also Article 136 thereof
may not exercise the same in appropriate cases. While exercising such jurisdiction, the superior
courts in India may not strike down even a wrong order only because it would be lawful to do so. A
discretionary relief may be refused to be extended to the appellant in a given case although the
Court may find the same to be justified in law. [See S.D.S. Shipping (P) Ltd. V. Jay Container
Services Co. (P) Ltd. (2003) 9 SCC 439]."

23. Respondent no. 2 who owes approximately a sum of Rs. Rs.67,00,26,840/- to SBI and a
sum of Rs. 75,48,38,788.78/- to PNB and with the sole intention of playing fraud with the Bank has
executed a lease deed surreptitiously and that too after the receipt of the notice and in complete
violation of Section 13(13) of the SARFAESI Act as well as the condition mentioned in the notice
under Section 13(2) of the SARFAESI Act itself.

24. Reference may also be had to a recent judgment of Division Bench of Allahabad High
Court rendered in Surendra Kumar Maheshwari v. State of U.P. and others; 2006(2) ADJ 182
wherein the Court while dealing with the similar situation has held that the grant of relief in writ
jurisdiction is discretionary and a Court can decline the relief where the person seeks to secure a
dishonest advantage or perpetuate unjust gain.

25. In the present case, lease deed has been executed after the receipt of notice under
Section 13(2) of the SARFAESI Act and thus it cannot be said that the lease is valid or that the
possession of the petitioner is a lawful possession.

26. In view of the aforesaid facts and circumstances, this Court finds that the petitioner is
not entitled to grant of any indulgence of this Court in exercise of its equitable jurisdiction under
Article 226 of the Constitution.

27. The writ petition fails and is accordingly dismissed.
-----------
8 All. Ram Niyadi Rai Vs State Of U.P. & Anr.
477
(2016) 8 ILRA 477
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 30.08.2016

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE KAUSHAL JAYENDRA THAKER, J.

Writ A No.- 14108 Of 2004

Ram Niyadi Rai ...Petitioner
Versus
State Of U.P. & Anr. ...Respondents

Counsel for the Petitioner:
G.K. Singh, V.K. Singh

Counsel for the Respondents:
C.S.C., M.A.Qadeer

Civil Services Regulations - Article 351-A - disciplinary enquiry after retirement - reduction of pension
- forfeiture of gratuity - departmental enquiry - oral enquiry - opportunity to cross-examine witnesses -
principles of natural justice - quasi-judicial proceeding - major punishment - enquiry not conducted in
accordance with procedure - punishment order set aside.

The writ petition is directed against the order dated 19.02.2004 passed by respondent-1 imposing punishment
of reduction of pension by fifty per cent and forfeiture of entire gratuity.(Para 2)

Petitioner was working as Accounts Officer in the Office of Basic Shiksha Adhikari and retired on 31.01.1998.
Before his retirement, a charge-sheet was issued to him on 17.01.1997 which was replied by him and
thereafter Enquiry Officer submitted enquiry report which has culminated in the impugned order of
punishment.(Para 3)

Counsel for petitioner submitted that enquiry has been continued after retirement of petitioner under Article
351-A of Civil Services Regulations (hereinafter referred to as "CSR"), which provides that procedure for
enquiry would be same as is applicable in the case of major penalty but in the present case, no date, time or
place for oral enquiry was ever fixed and after receiving reply from petitioner, Enquiry Officer submitted
enquiry report and thereafter punishment order has been passed. In this regard, specific averment has been
made in para 20 of writ petition.(Para 4)

In the present case, charge-sheet was issued to petitioner which is undated but it is said in para 13 of writ
petition that the same was served on 17.01.1997. This is admitted in para 7 of counter affidavit. Petitioner
submitted reply on 28.01.1997 as said in para 15 of writ petition and that is also not denied in para 9 of
counter affidavit. A letter sent by Enquiry Officer dated 07.08.1997 required petitioner to make available
copies of certain letters which was also replied by petitioner on 07.08.1997. Thereafter case of petitioner is
that no date, place or time was fixed for oral enquiry and no oral enquiry was conducted at all. Enquiry Officer
submitted report, copy whereof has been filed as Annexure-8 to writ petition, but it is also undated. In the