FACTS
In this case, Axis Bank sanctioned a credit facility of Rs. 16.68 crore to Sundev Appliances Ltd. (Respondent no. 3). The loan was secured by creating an equitable mortgage over land at Survey No. 32, Hissa No.2, Vasai, Thane, Maharashtra. The borrower failed to repay, and the land was declared a Non-Performing Asset (NPA) on 28th October 2017. The Bank invoked Section 13 (4) of the SARFAESI Act, 2002, to enforce its security and gain possession of the mortgaged property. The court of the District Magistrate in the Securitisation Application permitted the petitioner to obtain physical possession of the subject property.
After this, Respondent No. 2 filed a civil suit before the Civil Judge and claimed ownership of land under an Agreement to Sell (27th July 2016). It sought a permanent injunction restraining Axis Bank from dealing with the property and a declaration that attachment of the property was illegal. In addition to this, Respondent No. 2 filed a representation before the National Commission for Scheduled Tribes (NCST) under Sections 3(1)(f) and (g) of the SC/ST (Prevention of Atrocities) Act, 1989, alleging atrocities by Axis Bank. The NCST issued a summons requiring the personal appearance of the MD and CEO of Axis Bank to appear.
Axis Bank challenged the actions of the NCST because it lacks jurisdiction and violates due process.
ISSUE
Whether the NCST had jurisdiction to summon the MD and CEO of Axis Bank and to restrain the bank from enforcing its security rights under the SARFAESI Act due to a complaint under the SC/ST (Prevention of Atrocities) Act.
LEGAL PROVISIONS
Sections 3(1)(f) and (g) of the SC/ST (Prevention of Atrocities) Act deal with the offence of wrongful occupation and dispossession of land belonging to a member of SC/ST.
Section 13 of the SARFAESI Act, 2002, deals with the right to enforce secured interest and obtain possession.
ARGUMENTS
PETITIONER (AXIS BANK)
The Petitioner argued that NCST lacked jurisdiction to issue a summons since the dispute is commercial in nature and deals with the enforcement of mortgage rights under SARFAESI. The SC/ST (Prevention of Atrocities) Act will not apply as the bank is a secured creditor and not a private person dispossessing tribal land. The personal summons to the MD and CEO was not necessary and arbitrary. [State of U.P. v. Jasvir Singh, (2011) 4 SCC 288]. Respondent No. 2 has no locus as he is not an owner, and he does not have any possession of the subject property. They have also suppressed material facts.
RESPONDENT
The Respondent argued that the property belonged to a tribal person (Respondent No.2) and that the bank did not act with due diligence. This violated the rights of ST. The NCST has the power to inquire into atrocities against tribal persons. The order of possession should not be enforced until the ownership issue is clarified.
ANALYSIS
The court clarified that Sections 3(1)(f) and (g) of the Atrocities Act will not apply to prevent the exercise of the mortgage right of the petitioner.
It referred to the case of State Bank of India and Anr. v. National Commission for Scheduled Castes and Anr., and observed that the NCST has the powers to summon and enforce the attendance of any person for the specific purpose of enquiring into a complaint. However, requiring the attendance of senior officers should be the last resort, where it is absolutely necessary. Such a necessity may arise when it needs an explanation of a complex policy or technical issues. It may require attendance where it has reasons to believe that officers are withholding specific information or have an ulterior motive. [State Bank of India and Anr. v. National Commission for Scheduled Castes and Anr., W.P(C) 3471/2013]
Following the Supreme Court’s judgment in State of Uttar Pradesh and Ors. V. Jasvir Singh and Ors., the court held that the summons issued to require the presence of the MD and CEO of the petitioner is without jurisdiction. It was observed that no rationale was given for their presence. [State of U.P. v. Jasvir Singh, (2011) 4 SCC 288]
JUDGMENT
Following the above reasoning, the Court held that NCST lacked jurisdiction to restrain Axis Bank from enforcing mortgage rights. It granted a stay on all proceedings before NCST and the summons that was issued to the MD and CEO. It gave the date for the next hearing.
CONCLUSION
The Delhi High Court held that NCST exceeded its jurisdiction by interfering in a commercial mortgage enforcement under SARFAESI and by summoning senior officials. This clarifies the scope of tribal protection laws.
Click here to read more: Axis Bank Limited v National Commission for Scheduled Tribes & Ors
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WRITTEN BY: FARZEEN ZAMAN
