MANU/UP/3850/2019

Equivalent Citation: 2019(12)ADJ193, AIR2020All68, 2020(2) ALJ 195, 2020 (138) ALR 57, 2019 6 AWC 6113All, (2019)ILR 10All1840, 2020
146 RD839

IN THE HIGH COURT OF ALLAHABAD

Civil Misc. Writ Petition No. 9731 of 2019
Decided On: 08.08.2019
Appellants: Mahesh Industries Pvt. Ltd. and Ors.
Vs.
Respondent: Karur Vysya Bank Ltd.
Hon'ble Judges/Coram:
Yashwant Varma, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Manu Khare
For Respondents/Defendant: Maneesh Mehrotra, D.K. Pathak, Rahul Tyagi and
Shashank Pathak
Case Note:
Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 - Section 13 (2) and (4)--Security Interest
(Enforcement) Rules, 2002--Rule 8--Recovery proceedings--Petitioner Nos.
1, 4 and 5 original borrowers and 2 and 3 guarantors--Respondent-bank
called upon petitioners to repay a sum of ' 92,41,11,057.49 alongwith
interest--Petitioner defaulted--Notices issued by the bank for taking over
possession--After taking symbolic possession bank issued sale notice--
Petitioners filed appeal before the D.R.T. which was allowed--D.R.A.T. held
that on failure of debtors to liquidate the dues as claimed--Open to secured
creditor to take symbolic possession without issuing any prior or further
notice--Petitioners did not deny the receipt, publication and affixation of
the possession notices--Act of taking over of possession in terms of
statutory provisions of the Act and Rules is complete the moment the
possession notice is delivered and published in accordance therewith--No
obligation on creditor to apprise the borrower of its intent of taking
possession--Writ petition dismissed. [9], [10] and [18]
JUDGMENT
Yashwant Varma, J.
1 . Heard Sri Manu Khare, learned counsel for the petitioners and Sri D.K. Pathak,
learned Senior Advocate assisted by Sri Rahul Tyagi and Sri Shashank Pathak,
appearing for the respondent Bank.
2 . This petition impugns an order dated 30 January 2019 passed by the Debt
Recovery Tribunal, Allahabad [DRAT] on an appeal preferred by the respondent Bank
under Section 18 of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 [hereinafter referred to as the "2002 Act"].
The appeal itself was directed against an order dated 19 May 2018 passed by the

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DRT, Lucknow [DRT] allowing a Securitisation Application filed by the petitioners
here. The DRT by its order of 19 May 2018 while allowing the Securitisation
Application set aside the possession notices dated 12, 19 and 26 July 2017 issued
under Rule 8 of the Security Interest (Enforcement) Rules, 2002 [hereinafter referred
to as the "2002 Rules"] as also the demand notice of 19 April 2017 referable to
Section 13(2) of the 2002 Act.
3. The facts on which there is no dispute are as follows. The petitioner Nos. 1, 4 and
5 are the original borrowers. The petitioner Nos. 2 and 3 are the guarantors. The
respondent Bank is stated to have granted various credit facilities to the petitioners
from time to time. In order to secure the credit facilities so sanctioned and disbursed,
equitable mortgages were also created in respect of properties situate at Meerut,
Karnal, NOIDA and Gandhidham (Gujarat). The loan account of the petitioners was
classified as a non performing asset on 31 March 2017. The respondent Bank on 19
April 2017 issued a notice under Section 13(2) of the 2002 Act calling upon the
petitioners to repay a sum of Rs. 92,41,11,057.49 alongwith interest thereon at the
rate of 14.55% per annum. Since the terms of the notice under Section 13(2) were
not complied with, the Bank proceeded to issue possession notices on 12, 19 an 26
July 2017 evidencing the taking over of possession in terms of Section 13(4) of the
2002 Act. After taking symbolic possession, the respondent Bank issued a sale notice
dated 11 August 2017 but the auction sale could not materialise for want of bidders.
Aggrieved by the possession notices issued as well as the notice of sale, the
petitioners filed a Securitisation Application before the DRT on 1 September 2017. It
was this Securitisation Application which was allowed by the DRT on 19 May 2018
and formed subject-matter of challenge laid by the Bank before the DRAT. The DRAT
in terms of its impugned order of 30 January 2019 has proceeded to record that
despite the notice under Section 13(2) of the Act having been duly served, no
objections were preferred as a consequence of which the respondent Bank proceeded
to issue the possession notices. It further noted that although requisite details of
service of the notice under Section 13(2) of the Act had been duly brought on record
by the Bank before the DRT, no objection was raised by the petitioners here to the
same. The DRAT has further found that the three possession notices were duly affixed
on the premises of the secured assets and that the requirements of Rule 8 of the
2002 Rules complied with. Referring to the decision of the Supreme Court in
Standard Chartered Bank v. Noble Kumar and others, MANU/SC/0874/2013 : (2013)
9 SCC 620, the DRAT held that after issuance of the demand notice under Section
13(2) of the 2002 Act and on a failure of the debtors to liquidate the dues as claimed,
it is open to the secured creditor to take symbolic or physical possession without
issuing any prior or further notice. It essentially held that there is no legal
requirement of issuance of a notice before proceeding to take possession. While
dealing with the issue of compliance with Rule 8, it has significantly recorded that the
petitioners did not deny the receipt, publication and affixation of the possession
notices. Having recorded the conclusions as aforesaid, it proceeded to allow the
appeal of the respondent Bank and set aside the order of the DRT dated 19 May 2018.
4 . Sri Manu Khare, learned counsel appearing in support of the present petitioners
has addressed the following two contentions. His first submission was that the
respondent Bank was obliged in law to issue a notice to the petitioners indicating its
intent of taking over physical possession of the secured assets. According to Sri
Khare, the respondent Bank was obliged to place the petitioners on notice of the date
when possession of the secured assets was intended to be taken after the expiry of
the period specified in the notice issued under Section 13(2) of the 2002 Act.
According to Sri Khare this is clearly a requirement which flows from the provisions

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made in Section 13(4) of the 2002 Act read with Rule 8 of the 2002 Rules. This
submission rests solely upon a decision rendered by a Division Bench of the
Karnataka High Court in KR Krishnegowda and another v. Chief Manager/Authorised
Officer, Kotak Mahindra Bank, MANU/KA/0689/2012 : 2012 AIR (Kar.) 116. Sri Khare
has pressed in aid the following observations as appearing in paragraphs 13 and 14
of the report.:
"13. On a conspectus reading of sub-section (4) of section and section with
Rule 8, the question that would arise is, as to the stage at which notice under
Rule 8 would have to be issued, as the contention of counsel for the
respondent is that the notice regarding possession would be issued after an
order under section is passed and possession is taken and before sale. When
once there is non-compliance of the demand made under sub-section (2) of
section, steps could be initiated under sub-section (4) by taking possession
of the secured asset. The question is, as to whether the borrower ought to
know as to when exactly possession of the secured asset would be taken,
when once the demand under sub-section (2) of section is not complied with
by the borrower. Having regard to sub-section (13) read with sub-section (2)
of section would imply that the receipt of notice under sub-section (2) results
in a virtual attachment of the secured asset. If the demand made in sub-
section (2) of section is not complied with and the representation as well as
the objections filed by the borrower are also not accepted and communicated
to the borrower, then in that case, steps could be initiated under sub-section
(4) of section. Having regard to the fact that sub-section (6) of section
enables a secured creditor to transfer the secured asset after taking
possession would imply that the possession of the secured asset vests with
the secured creditor prior to any such transfer. The procedure for taking
possession or control of the secured asset by the secured creditor is
envisaged in section after the date mentioned in the possession notice at
which stage, it is not necessary to actually inform or indicate to the
borrower, the taking of possession by the secured creditor. Section in fact
does not prescribe an opportunity of hearing the borrower before an order is
passed with regard to taking of possession. But we have held that if
possession has to be taken by the secured creditor, then in that event, the
borrower must-be informed or intimated about the taking of possession, more
precisely, the actual date on which possession would be taken over from the
borrower by the secured creditor which would have to be indicated to the
former. It is in this regard, that in so far as immovable property, is
concerned, sub-rules (1) and (2) of Rule 8 prescribe notices or intimation to
the borrower in two ways : (i) by delivery of possession notice; and (ii) by
newspaper publication, clearly indicating the date on which possession of the
secured asset would be taken by the secured creditor. If on the date
indicated in the possession notice, the secured creditor is unable to take
possession of the secured asset, then in that case, recourse may be had to
Section 14 of the Act, at which stage a further, notice to the borrower is not
envisaged, under the said section.
1 4 . Therefore, what emerges is the mandatory requirement under the Act
read with the Rules, that in order to enable the borrower to know the date on
which possession would be taken by the secured creditor, sub-rules (1) and
(2) of Rule 8 would have to be complied with by issuance of notices indicating
the date on which possession would be taken There is another purpose for
issuing the notice prior to taking possession and that is, to enable the

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 borrower to discharge the liability to the secured creditor. Also a 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 can pay the secured
creditor, so much of the money as is sufficient to pay the secured debt as per
clause (d) of sub-section (4) of Section 13 read with sub-section (5) thereof.
We have also borne in mind the fact that on an application being filed under
Section 14 of the Act before the Magistrate, there is no provision for issuance
of notice to the borrower before an order to take possession is issued. We
are, therefore, of the considered view that before initiating action under sub-
section (4) of Section 13 of the Act, the issuance of notice as per sub-rules
(1) and (2) of Rule 8 has to be complied with indicating the date on which
possession of the property would be taken from the borrower by the secured
creditor. If on the said date possession of the secured asset cannot be taken
or it is not surrendered by the borrower, then the secured creditor can take
recourse to Section 14 of the Act and take possession of the secured
immovable I property, of course, we hasten to add that the notices issued
under sub-rules (1) and (2) of Rule 8 cannot be assailed per se as the
purpose of issuance of such notices is only to indicate the date of taking
possession."
(emphasis supplied)
5. The second submission which was canvassed for the consideration of the Court by
Sri Khare related to the validity of the possession notices issued by the respondent
Bank. In this respect, it was contended that the notices under Rule 8 were published
in the Business Standard and Economic Times which were not leading newspapers
having sufficient circulation in the locality concerned. Sri Khare argued that the two
newspapers were generally read by a specific class of readers and were not liable to
be recognised as newspapers having sufficient circulation in the locality. Sri Khare
also drew the attention of the Court to the averments made in a supplementary-
affidavit to assert that the papers did not enjoy wide circulation. It was further
contended that the respondent Bank had failed to prove that the possession notices
had been duly affixed on the premises of the secured assets thus violating the
mandatory provisions of Rule 8(1) and (2) of the 2002 Rules.
6 . Countering the submissions, Sri Pathak, leaned Senior counsel appearing for the
respondent Bank, has submitted that as is evident from the recordal of facts by the
DRAT, the petitioners did not dispute that the notice under Section 13(2) of the 2002
Act despite being duly served was not responded to. Sri Pathak has sought to
highlight the fact that despite the Bank having brought on record evidence of due
service of the notice under Section 13(2) of the Act as well as those under Rule 8,
these aspects were neither denied nor the averments made in that respect
controverted by the petitioners. Sri Pathak has further submitted that the DRT
committed a gross illegality in setting aside the notice under Section 13 (2) of the
2002 Act dated 19 April 2017 when that did not even form subject-matter of
challenge in the Securitisation Application preferred by the petitioners. Sri Pathak has
further highlighted and underlined the fact that the petitioners had conceded the due
service of the possession notices and consequently it was not permissible for them to
contend before this Court that the provisions of Rule 8 had not been complied with.
7. Turning to the contentions as urged on behalf of the petitioners of a prior notice
being issued before the taking of possession, Sri Pathak submitted that the decision
in Krishnegowda pales into insignificance in light of the subsequent judgments

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rendered by the Supreme Court in Nobel Kumar and Hindon Forge Private Limited and
another v. State of UP, MANU/SC/1250/2018 : (2019) 2 SCC 198. Sri Pathak
contends that once the statutory period prescribed under Section 13(2) comes to an
end or when the Bank has decided and rejected the objections, if any, preferred by
the debtor which ever be later, it is open to the secured creditor to take possession of
the secured assets complying with the provisions made in Rule 8. Sri Pathak submits
that neither Section 13(4) of the 2002 Act nor Rule 8 of the 2002 Rules contemplates
or envisages a prior notice being given apprising the debtors of the proposed date of
taking of possession. Sri Pathak has consequently urged that the order of the DRAT is
liable to be upheld and the instant writ petition dismissed. It is these rival
submissions which consequently fall for determination.
8. The principal and underlying theme of the contention addressed by the petitioners
with respect to a prior notice appears to be a perceived requirement in law of a notice
being issued after the expiry of 60 days of the Section 13(2) notice and the taking
over of possession under Section 13(4). As noticed above, the petitioners have
sought to canvass that before the taking of possession under Section 13(4), the
secured creditor is obliged to apprise the debtor of its intent and the date of taking
over possession. This submission rests entirely on the decision of the Karnataka High
Court rendered in Krishnegowda. In Krishnegowda, their Lordships took the view that
the debtor must be informed and intimated of the intent of taking over possession.
This prior notice was considered as a requirement flowing from a construction of Rule
8 on the' basis of which their Lordships held that the borrowers would be enabled to
discharge the liability of the secured creditor. It was in that backdrop that
Krishnegowda held that before initiating action under Section 13(4), the issuance of a
notice under Rule 8 had to be complied with by indicating the date on which
possession of the properties would be taken from the borrower by the secured
creditor. This Court, with due respect, finds itself unable to sustain or follow the line
of reasoning as adopted for the following reasons.
9. In terms of Section 13(2) of the 2002 Act, the secured creditor is required to place
the borrower on notice of his liability to discharge the outstanding in an account
which has been classified as a non performing asset. In case the borrower fails to
comply with that demand within 60 days from the date of the notice, the secured
creditor becomes legally entitled to exercise all or any of the rights enumerated in
sub-section (4) of Section 13. The taking of possession of the secured assets
including the right transfer it by way of lease, assignment or sale is one of the
measures specified in sub-section (4). The Legislature by virtue of Amending Act 1 of
2013 had inserted Sub-section (3A) enjoining the secured creditor to consider and
decide any representation or objection that the borrower may chooses to make in
respect of the notice issued under Section 13(2). This legislative amendment was
principally introduced in light of the decision rendered by the Supreme Court in
Mardia Chemicals Ltd. v. Union of India, MANU/SC/0323/2004 : (2004) 4 SCC 311. If
one bears in mind the various stages of the proceedings under Section 13 of the Act,
it is manifest that the action of enforcement of a security interest created in favour of
the creditor commences with the notice issued under Section 13(2). The statute
constructs a window of 60 days within which a borrower is entitled to respond to the
notice and show-cause why he is not liable to pay the amounts as claimed by the
secured creditor. By virtue of the provisions made in sub-section (3A), the
representation or objection that may be chosen to be made has to necessarily be
decided by the secured creditor and a decision thereon communicated within a period
of 15 days from the receipt of such representation or objection. The secured creditor
is statutorily empowered to take recourse to one or more of the measures specified in

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Sub-section (4) only thereafter. The provisions of sub-section (4) come into play and
the secured creditor is empowered to enforce the measures specified therein only
when a debtor fails to discharge his liability in full or where the representation or
objection made has come to be rejected. It is therefore evident that upon the expiry
of 60 days from the date of the notice under Section 13(2) and once the objections, if
any, preferred under sub-section (3A) have been rejected, the statute in
unambiguous terms empowers the secured creditor to take possession.
10. The taking of possession is governed by the provisions made in Rule 8 of the
2002 Rules. Rule 8(1) prescribes that the authorised officer shall take possession by
delivery of a possession notice prepared in accordance with the format prescribed in
Appendix IV. The possession notice prescribed in Appendix IV carries the recital of
the fact that despite the expiry of 60 days of the notice under Section 13(2), the
borrower has failed to repay the amount. It also records the consequential fact of the
authorised officer having taken possession of the secured assets in exercise of
powers conferred under Section 13(4). On a conjoint reading of Section 13 and Rule
8, it is therefore, manifest and abundantly clear that no notice is envisaged in law to
intervene the Section 13(2) notice and the possession notice issued under Rule 8(1).
This is evident from a plain construct of the scheme of the 2002 Act when it
empowers the creditor to enforce a measure specified in sub-section (4) upon a
failure of the borrower to discharge the liability. The borrower, it becomes relevant to
note, is already made aware by the statute of the measures which are likely to be
enforced in case he fails to discharge the liability within 60 days of the notice under
Section 13(2) or where the objections, if any, preferred against that notice come to
be rejected and a decision thereon communicated to him. On a plain reading of the
provisions of the 2002 Act, therefore, this Court finds no requirement or obligation
on the creditor to intimate the borrower of the proposed date of taking of possession.
The Division Bench in Krishnegowda appears to have found the imperative of a prior
notice being issued in order to provide an opportunity to the borrower to discharge
the liability of the secured creditor. However, in the considered view of this Court,
the view so taken clearly misses the point that the Section 13(2) notice has already
apprised the borrower of the obligation to discharge the liability as claimed by the
secured creditor. It is only consequent to a failure on his part to discharge the
liability or where his objections are considered and rejected that the provisions of
Section 13 (4) are attracted. The statute, neither on its plain language nor in its
intendment, contemplates a further notice intervening those issued under sub-
sections (2) and (4) of Section 13. Regard must also be had to the fact that the
notice under Rule 8 itself is the repository and evidence of possession having been
taken.
11. In Noble Kumar, the Supreme Court was called upon to consider the validity of a
decision rendered by the Madras High Court which had held that the guarantor must
make an attempt to take possession of the asset under Section 13(4) before invoking
the provisions of Section 14 of the 2002 Act. Dealing with the correctness of that
view the Supreme Court made the following pertinent observations:
"26. 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 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

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 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 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.
27. 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 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, Section 14 authorises
the Magistrate only to take possession of the property and forward the asset
alongwith the connected 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 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 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 remedy
under Section 17 is available."
12. Dealing with the provisions comprised in Rule 8, it held as follows:
"35. Therefore, there is 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 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
SARFAESI Act. So, specific provision is made under Rule 8 to ensure
transparency in taking such possession. We do not see any conflict between
different procedures prescribed by law for taking possession of the secured
asset. The finding of the High Court in our view is unsustainable.
3 6 . Thus, there will be three methods for the secured creditor to take
possession of the secured assets:
36.1 (i) The first method would be where the secured creditor gives
the requisite notice under Rule 8(1) and where he does not meet
with any resistance. In that case, the authorised 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.
36.2 (ii) The second situation will arise where the secured creditor
meets with resistance from the borrower after the notice under Rule

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 8(1) is given. In that case he will take recourse to the mechanism
provided under Section 14 of the Act viz. making application to the
Magistrate. The Magistrate will scrutinize the application as provided
in Section 14, and then if satisfied, appoint an officer subordinate to
him as provided under Section 14 (1)(A) to 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.
36.3 (iii) The third situation will be one where the secured creditor
approaches the Magistrate concerned directly under Section 14 of the
Act. The Magistrate will thereafter scrutinize the application as
provided in Section 14, and then if satisfied, authorise a subordinate
officer to take possession of the assets and documents and forwards
them to the secured creditor as under Clause (ii) above.
36.4. In any of the three situations, after 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."
13. As is evident from the construction of Rule 8 as expounded by the Supreme Court
in Noble Kumar, the provisions of that Rule itself embody the procedure to be
followed by a secured creditor seeking to take possession without the intervention of
the Court. It is therefore evident that a possession notice effected in accordance with
the provisions of Rules 8(1) and (2) is sufficient evidence in itself of possession
having been taken by the creditor. The act of taking over of possession in terms of
the statutory provisions made in the 2002 Act and the 2002 Rules is complete the
moment the possession notice is delivered and published in accordance therewith. It
is therefore, clear that no obligation, statutory or otherwise, stands placed upon the
creditor to apprise the borrower of its intent of taking possession. As this Court reads
Section 13 and Rule 8, it finds no scope for introducing the concept of a notice
evidencing an intent of taking possession or apprising the borrower of the proposed
date of taking over of possession.
14. Regard must also be had to the fact that possession under the 2002 Act can be
both constructive as well as actual. A Full Bench of this Court in NCML Industries Ltd.
v. Debt Recovery Tribunal, MANU/UP/0754/2018 : 2018(3) ADJ 102 (LB)(FB), had
taken the view that possession under the provisions of the 2002 Act has to
necessarily be recognised as actual physical possession. The correctness of that
decision fell for consideration before the Supreme Court in Hindon Forge. Dealing
with the issues raised, the Supreme Court held as under:
"25. When we come to Section 13(4)(a), what is clear is that the mode of
taking possession of the secured assets of the borrower is specified by Rule
8. Under Section 38 of the Act, the Central Government may make Rules to
carry out the provisions of the Act. One such Rule is Rule 8. Rule 8(1) makes
it clear that "the authorised officer shall take or cause to be taken
possession". The expression "cause to be taken" only means that the
authorised officer need not himself take possession, but may, for example,
appoint an agent to do so. What is important is that such taking of

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 possession is effected Under Sub-rule (1) of Rule 8 by delivering a
possession notice prepared in accordance with Appendix IV of the 2002
Rules, and by affixing such notice on the outer door or other conspicuous
place of the property concerned. Under Sub-rule (2), such notice shall also
be published within 7 days from the date of such taking of possession in two
leading newspapers, one in the vernacular language having sufficient
circulation in the locality. This is for the reason that when we come to
Appendix IV, the borrower in particular, and the public in general is
cautioned by the said possession notice not to deal with the property as
possession of the said property has been taken. This is for the reason that,
from this stage on, the secured asset is liable to be sold to realise the debt
owed, and title in the asset divested from the borrower and complete title
given to the purchaser, as is mentioned in Section 13(6) of the Act. There is,
thus, a radical change in the borrower dealing with the secured asset from
this stage. At the stage of a Section 13(2) notice, Section 13(13) interdicts
the borrower from transferring the secured asset (otherwise than in the
ordinary course of his business) without prior written consent of the secured
creditor. But once a possession notice is given Under Rule 8(1) and 8(2) by
the secured creditor to the borrower, the borrower cannot deal with the
secured asset at all as all further steps to realise the same are to be taken by
the secured creditor under the 2002 Rules.
2 6 . Section 19, which is strongly relied upon by Shri Ranjit Kumar, also
makes it clear that compensation is receivable Under Section 19 only when
possession of secured assets is not in accordance with the provision of this
Act and Rules made thereunder. The scheme of Section 13(4) read with Rule
8(1) therefore makes it clear that the delivery of a possession notice together
with affixation on the property and publication is one mode of taking
"possession " Under Section 13(4) This being the case, it is clear that Section
13(6) kicks in as soon as this is done as the expression used in Section
13(6) is "after taking possession " Also, it is clear that Rule 8(5) to 8(8) also
kick in as soon as "possession " is taken Under Rule 8(1) and 8(2). The
statutory scheme, therefore, in the present case is that once possession is
taken Under Rule 8(1) and 8(2) read with Section 13(4)(a), Section 17 gets
attracted, as this is one of the measures referred to in Section 13 that has
been taken by the secured creditor under Chapter III."
15. As is evident from the extracts of the decision in Hindon Forge reproduced herein
above, the delivery of a possession notice together with Its affixation on the property
and its publication was recognised as one of the modes of taking of possession under
Section 13(4) Dealing further with the nature of possession contemplated under the
Act, their Lordships held as under
"32. Another argument that was raised by learned senior Counsel for the
Respondents is that the taking of possession under Section 13(4) (a) must
mean actual physical possession or otherwise, no transfer by way of lease
can be made as possession of the secured asset would continue to be with
the borrower when only symbolic possession is taken This argument also
must be rejected for the reason that what is referred to in Section 13 (4) (a)
is the right to transfer by way of lease for realising the secured asset One
way of realising the secured asset is when physical possession is taken over
and a lease of the same is made to a third party When possession is taken
under Rule 8(1) and 8(2), the asset can be realised by way of assignment or

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 sale, as has been held by us hereinabove This being the case, it is clear that
the right to transfer could be by way of lease, assignment or sale, depending
upon which mode of transfer the seem ed creditor chooses for realising the
secured asset Also, the right to transfer by way of assignment or sale can
only be exercised in accordance with Rules 8 and 9 of the 2002 Rules which
require various pre-conditions to be met before sale or assignment can be
effected Equally, transfer by way of lease can be done in future in cases
where actual physical possession is taken of the secured asset after
possession is taken under Rule 8(1) and 8(2) at a future point in time If no
such actual physical possession is taken the right to transfer by way of
assignment or sale for realising the secured asset continues This argument
must also therefore be rejected '
It was further observed:
"35. We now come to some of the decisions of this Court. In Transcore v.
Union of India and another, MANU/SC/5319/2006 : (2008) 1 SCC 125, this
Court formulated the question which arose before it as follows:
"1. A short question of public importance arises for determination,
namely, whether withdrawal of OA in terms of the first proviso to
Section 19(1) of the DRT Act, 1993 (inserted by amending Act 30 of
2004) is a condition precedent to taking recourse to the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 ("the NPA Act", for
short)."
To this, the answer given is in paragraph 69, which is as follows:
"69. For the above reasons, we hold that withdrawal of the OA
pending before DRT under the DRT Act is not a precondition for
taking recourse to the NPA Act. It is for the bank/FI to exercise its
discretion as to cases in which it may apply for leave and in cases
where they may not apply for leave to withdraw. We do not wish to
spell out those circumstances because the said first proviso to
Section 19(1) is an enabling provision, which provision may deal
with myriad circumstances which we do not wish to spell out
herein."
Thereafter, the Court went on to discuss whether recourse to take possession
of secured assets of the borrower in terms of Section 13(4) of the Act would
comprehend the power to take actual possession of immovable property. In
the discussion on this point in paragraph 71 of the judgment, learned
Counsel on behalf of the borrowers made an extreme submission which was
that the borrower who is in possession of immovable property cannot be
physically dispossessed at the time of issuing the notice under Section 13(4)
of the Act so as to defeat adjudication of his claim by the Debts Recovery
Tribunal Under Section 17 of the Act and that therefore, physical possession
can only be taken after the sale is confirmed in terms of Rule 9(9) of the
2002 Rules. This submission was rejected by stating that the word
"possession " is a relative concept and that the dichotomy between symbolic
and physical possession does not find place under the Act. Having said this,
the Court went on to examine the 2002 Rules and held:

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 "74. ... Thus, Rule 8 deals with the stage anterior to the issuance of
sale certificate and delivery of possession Under Rule 9. Till the time
of issuance of sale certificate, the authorised officer is like a Court
Receiver Under Order 40 Rule 1 Code of Civil Procedure. The Court
Receiver can take symbolic possession and in appropriate cases
where the Court Receiver finds that a third-party interest is likely to
be created overnight, he can take actual possession even prior to the
decree. The authorised officer Under Rule 8 has greater powers than
even a Court Receiver as security interest in the property is already
created in favour of the banks/FIs. That interest needs to be
protected. Therefore, Rule 8 provides that till issuance of the sale
certificate Under Rule 9, the authorised officer shall take such steps
as he deems fit to preserve the secured asset. It is well-settled that
third-party interests are created overnight and in very many cases
those third parties take up the defence of being a bona fide
purchaser for value without notice. It is these types of disputes
which are sought to be avoided by Rule 8 read with Rule 9 of the
2002 Rules. In the circumstances, the drawing of dichotomy between
symbolic and actual possession does not find place in the scheme of
the NPA Act read with the 2002 Rules."
If the whole of paragraph 74 is read together with the extracted passage, it
becomes clear that what is referred to in the extracted passage is the
procedure provided by Rule 8(3). It is clear that the authorised officer's
powers, once possession is taken under Rule 8(3), include taking of steps for
preservation and protection of the secured assets which is referred to in the
extracted portion. Thus, the final conclusion by the Bench, though general in
nature, is really referable to possession that is taken under Rule 8(3) of the
2002 Rules. Whether possession taken under Rule 8(1) and 8(2) is called
symbolic possession or statutory possession, the fact remains that Rule 8(1)
and Rule 8(2) specifically provide for a particular mode of possession taken
under Section 13(4) (a) of the Act. This cannot be wished away by an
observation made by this Court in a completely different context in order to
repel an extreme argument. This Court was only of the opinion that the
extreme argument made, as reflected in paragraph 71 of the judgment,
would have to be rejected. This judgment therefore does not deal with the
problem before us: namely, whether a Section 17(1) application is
maintainable once possession has been taken in the manner specified Under
Rule 8(1) of the 2002 Rules.
3 7 . In Canara Bank v. M. Amarender Reddy and another,
MANU/SC/0271/2017 : (2017) 4 SCC 735, this Court after referring to
Mathew Varghese v. M. Amritha Kumar and others, MANU/SC/0114/2014 :
(2014) 5 SCC 610, which held that the 30-day period mentioned Under Rule
8(6) is mandatory, then held:
"14. The secured creditor, after it decides to proceed with the sale of
secured asset consequent to taking over possession (symbolic or
physical as the case may be), is no doubt required to give a notice of
30 days for sale of the immovable asset as per Sub-rule (6) of Rule
8. However, there is nothing in the Rules, either express or implied,
to take the view that a public notice Under Sub-rule (6) of Rule 8
must be issued only after the expiry of 30 days from issuance of

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 individual notice by the authorised officer to the borrower about the
intention to sell the immovable secured asset. In other words, it is
permissible to simultaneously issue notice to the borrower about the
intention to sell the secured assets and also to issue a public notice
for sale of such secured asset by inviting tenders from the public or
by holding public auction. The only restriction is to give thirty days'
time gap between such notice and the date of sale of the immovable
secured asset."
Though there was no focused argument on the controversy before us, this
Court did recognise that possession may be taken over Under Rule 8 either
symbolically or physically, making it clear that two separate modes for taking
possession are provided for Under Rule 8.
3 8 . Similarly, in ITC Limited v. Blue Coast Hotels Ltd. and others,
MANU/SC/0263/2018 : AIR 2018 SC 3063, this Court held:
"43. As noticed earlier, the creditor took over symbolic possession of
the property on 20.6.2013. Thereupon, it transferred the property to
the sole bidder ITC and issued a sale certificate for Rs.
515,44,01,000/- on 25.2.2015. On the same day, i.e., 25.2.2015,
the creditor applied for taking physical possession of the secured
assets Under Section 14 of the Act.
4 4 . According to the debtor, since Section 14 provides that an
application for taking possession may be made by a secured creditor,
and the creditor having ceased to be a secured creditor after the
confirmation of sale in favour of the auction purchaser, was not
entitled to maintain the application. Consequently, therefore, the
order of the District Magistrate directing delivery of possession is a
void order. This submission found favour with the High Court that
held that the creditor having transferred the secured assets to the
auction purchaser ceased to be a secured creditor and could not
apply for possession. The High Court held that the Act does not
contemplate taking over of symbolic possession and therefore the
creditor could not have transferred the secured assets to the auction
purchaser. In any case, since ITC Ltd. was the purchaser of such
property, it could only take recourse to the ordinary law for
recovering physical possession.
45. We find nothing in the provisions of the Act that renders taking
over of symbolic - possession illegal. This is a well-known device in
law. In fact, this Court has, although in a different context, held in
M. V.S. Manikayala Rao v. M. Narasimhaswami MANU/SC/0363/1965
: AIR 1966 SC 470] that the delivery of symbolic possession
amounted to an interruption of adverse possession of a party and the
period of limitation for the application of Article of the Limitation Act
would start from such date of the delivery."
16. Their Lordships then proceeded to notice the amendments introduced in Rule 8
by way of a Notification dated 17 October 2018 to hold that the legislative
amendments clarified that possession can be both constructive or physical. The view
taken by the Full Bench of this Court in NCML Industries was consequently set aside.

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It must be borne in mind that the concept of symbolic or constructive possession was
recognised as being an existing facet and legally accepted device to disrupt the
possession of the debtor. This was so recognised in the earlier decisions rendered by
the Supreme Court and noticed in Hindon Forge. The view of the Full Bench of this
Court in NCML Industries of the 2002 Act envisaging only actual physical possession
was overruled. The concept of symbolic possession would consequently be liable to
be recognised as being an integral component of the 2002 Act existing independently
of the clarificatory amendments introduced in 2018. It therefore follows that once the
possession under Section 13(4) can be both symbolic or actual, the need of a prior
notice as canvassed on behalf of the petitioners here is clearly untenable. It may only
be additionally noted that the view taken in Krishnegowda has neither been affirmed
nor the procedure enunciated therein recognised in either Noble Kumar or Hindon
Forge. The Court consequently finds itself unable to sustain the line of submission
addressed on behalf of the petitioners on this issue. The contention stands rejected.
17. The Court then turns to the correctness of the contention addressed with respect
to the possession notices issued under Rule 8. At the very outset, it must be
underlined that the DRAT in its impugned order has categorically recorded that the
petitioners did not deny the receipt, publication and affixation of the possession
notices. It has specifically dealt with the mode and manner of publication and
affixation in paragraph 10 of its order assailed in this petition. The recitals as
appearing in paragraph 10 of the impugned order have not been questioned by the
petitioners either in the writ petition or by learned counsel appearing on their behalf
in his oral submissions. It was also not denied before this Court that the materials
brought on record by the respondent Bank before the Debt Recovery Tribunal as well
as the DRAT evidencing a compliance with the provisions of Rule 8 were not
controverted or denied by the petitioners. Sri Khare, while candidly admitting the
receipt of notices under Rule 8, sought to explain the concession made before the
DRAT stating that notwithstanding the same, the petitioners were entitled to assail
the notices on the ground of being non compliant with the provisions made in that
Rule.
18. Insofar as the question of affixation of the possession notices is concerned Sri
Khare drew the attention of the Court to the averments made in paragraph 32 of the
writ petition. In that paragraph, the petitioners assert that affixation has not been
proved as only a few photographs were annexed. According to the petitioners, it was
incumbent upon the respondent Bank to further disclose the details of the persons
appearing in the photographs as well as to place on the record their individual
statement with regard to service. Suffice it to note that the respondent Bank had duly
brought on record the possession notices which were affixed on the premises of the
secured assets These notices have been enclosed by the petitioners themselves
alongwith the writ petition However, and at the cost of repetition, it becomes
necessary to observe that although all these details were brought on record before
the DRT as well as the DRAT, the petitioners neither controverted nor questioned the
same. The Court deems it apposite to also note that although in the Securitisation
Application, it was alleged that the notices had not been served upon the petitioners,
before the DRAT the receipt and affixation of the possession notices was conceded
Once the petitioners chose not to deny the receipt and affixation of these notices,
there was no obligation on the Bank to further prove and establish a fact on which
there was no dispute In view thereof, and once the receipt, publication and affixation
of the possession notices was admitted or to put it differently not denied by the
petitioners, there mm no obligation on the respondent Bank to prove affixation by
way of further visual or documentary evidence.

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19. The submission with respect to the possession notices being published in the
Business Standard and Economic Times is also noticed only to be rejected Suffice it
to note that in the supplementary-affidavit, it is asserted that the English version of
the Business Standard has a circulation of 7954 and its Hindi version of 2858. Similar
allegations have been made with regard to its edition in circulation in Noida, Meerut
and Gujarat This information is derived by the deponent of that affidavit" as per
information available on the website" There is no disclosure off the details of the
website from which these figures have been derived Insofar as the averments made
in paragraphs 5 and 6 are concerned although certain figures have been disclosed,
fine source from which these figures were collated are not even mentioned The
assertions made in paragraphs 4, 5 and 6 of this affidavit have been sworn on
personal knowledge and as per the deponent "on the basis of information available
on website, having link of the Business Standard as stated in paragraph 7 of that
affidavit. It is thus evident that the assertions made in this affidavit are devoid of
material particulars and remain unsubstantiated. The Court consequently finds itself
unable to either countenance or accept the submissions addressed in this regard.
20. On an overall conspectus of the aforesaid facts, this Court is of the considered
view that the instant writ petition lacks merit and that the challenge to the impugned
order must necessarily fail.
21. The writ petition is consequently dismissed.
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