STANDARD CHARTERED BANK versus V. NOBLE KUMAR & OTHERS

Citation: [2013] 10 S.C.R. 762 · Decided: 22-08-2013 · Supreme Court of India · Bench: H.L. GOKHALE · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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[2013] 10 S.C.R. 762 
STANDARD CHARTERED BANK 
V. 
V. NOBLE KUMAR & OTHERS 
(Criminal Appeal No. 1218 of 2013) 
AUGUST 22, 2013 
[H.L. GOKHALE AND J. CHELAMESWAR, JJ.] 
Securitisation and Reconstruction of Financial Assets 
and Enforcement of Security Interest Act, 2002: 
ss. 13( 4) and 14 - Possession of secured assets - Method 
and manner of - Invocation of s. 14 - Without invoking 
provisions of s. 13(4) - And without following procedure 
contemplated u/r. 8 of Security Interest (Enforcement) Rules, 
D 2002 - Permissibility - Held: It is not mandatory for the secured 
creditor to obtain possession on its own resorting to provision 
u/s. 13(4), before approaching the Magistrate uls. 14 - The 
secured creditor is also not required to follow the procedure 
laid down u/r. 8 of 2002 Rules before invoking provisions ul 
E s. 14 - Functioning of the Magistrate is structured by the 
provisions under Cr.P.C. - r.8 provides procedure to be 
followed when possession of the secured asset is taken without 
intervention of the Court ~ Security Interest (Enforcement) 
Rules, 2002 - r. 8 - Code of Criminal Procedure, 1973. 
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s. 17 - Appeal under - Scope and nature of - Held: A 
borrower is always entitled to prefer an 'appeal' under s. 17 
after losing possession of the property - It is immaterial 
whether such possession is obtained either directly u/s. 13( 4) 
or through the Magistrate u/s. 14 - The remedy uls. 17 is 
G essentially like filing a suit. 
The questions for consideration in the present 
appeals were whether the secured creditor/Bank can by 
pass the provisions u/s. 13(4) of Securitisation and 
H 
762 
STANDARD CHARTERED BANK v. V. NOBLE 
763 
KUMAR & ORS. 
Reconstruction of Financial Assets and Enforcement of A 
Security Interest Act, 2002 and invoke the provisions of 
s.14; whether the resort to s. 14 by bypassing the 
provisions u/s. 13(4) would make the provisions of 
appeal u/s. 17 illusory, because the proceeding u/s. 14 
cannot be questioned in appeal; and whether not a 
following the procedures contemplated u/r. 8 of the 
Security Interest (Enforcement) Rules, 2002 before 
invoking provisions u/s. 14 would make the order passed 
u/s. 14 liable to be set aside, being contrary to the Rules. 
Allowing the appeals, the Court 
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HELD: 1.1. In every case where the objections raised 
by the borrower are rejected by the secured creditor, the 
secured creditor is entitled to take possession of the 
secured assets. 
Such action - having regard to the 
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object and scheme of Securitisation and Reconstruction 
of Financial Assets and Enforcement of Security Interest 
Act, 2002 - could be taken directly by the secured creditor 
u/s. 13(4) of the Act. However, visualising the possibility 
of resistance for such action, Parliament under section 
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14 also provided for seeking the assistance of the judicial 
po~er of the State for obtaining possession of the 
secured asset, in those cases where the secured creditor 
seeks it. [Para 23) [778-F-G, 779-A] 
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1.2. The scheme of sections 13 and 14 and the object 
of the enactment, do not warrant the High Court to 
record the conclusion that it is only after making an 
unsuccessful attempt to take possession of the secured 
asset, a secured creditor can approach the Magistrate. 
No doubt that a secured creditor may initially resort to the 
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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 
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764 
SUPREME COURT REPORTS 
[2013] 10 S.C.R. 
A submission that such a construction would deprive the 
borrower of a remedy under section 17 is rooted in a 
misconception of the scope of section 17. (Para 29) (782-
C-E] 
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1.3. The "appeal" under section 17 is available to the 
borrower against any measure taken under section 13(4). 
Taking possession of the secured asset is only one of the 
measures that can be taken by the secured creditor. 
Depending upon the nature of the secured asset and the 
C terms and conditions of the security agreement, 
measures other than taking the possession of the 
secured asset are possible under section 13(4). 
Alienating the asset either by lease or sale etc. and 
appointing a person to manage the secured asset are 
0 some of those possible measures. On the other hand, 
section 14 authorises the Magistrate only to take 
po

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