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ITC Ltd. Vs. Blue Coast Hotels Ltd. & Ors.
2. The auction purchaser ITC Ltd. is before us in the appeals arising out of SLP (C) Nos.10215-10217/2016. The sale of a five star luxury hotel property purchased in a public auction was set aside by an order1 of the Bombay High Court in favour of the debtor Blue Coast Hotels Ltd.
Industrial Financial Corporation of India (IFCI), [filed appeals arising out of SLP (C) Nos.10196-10198/2016 in this Court], the secured creditor (hereinafter referred to as 'the creditor'), in the capacity of a financial institution entered into a corporate loan agreement2 with Blue Coast Hotels (hereinafter referred to as 'the debtor') for a sum of Rs.150 crores. The agreement included a creation of a special mortgage to secure the corporate loan. The mortgaged property comprised of the whole of the debtor's hotel propertyincluding the agricultural land on which the debtor was to develop villas. The debtor defaulted in repayment of the loan and the debtor's account became a Non- Performing Asset (NPA)3.
4. Several notices intimating default in payment of the total outstanding amount of Rs.133.18 crores were sent by the creditor to the debtor. Upon failure to remit the overdue amount despite the notices, a notice4 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Act") was sent by the creditor calling upon the debtor to pay the amount overdue within a period of 60 days.
5. In reply to the said notice, the debtor sent the creditor a proposal5 for extension of time for the payment of the outstanding dues. The High Court held that the creditor's failure to deal with this representation constituted a violation of Section 13 (3A) of the Act. Further, the High Court held that the notice issued under Section 13 (2) by the creditor comprising of agricultural property despite the bar under Section 31 (i) of the Act is contrary to the law since the land was not converted into non-agricultural land. The High Court also held that the auction/sale of the property based upon symbolic possession of the property is contrary to the scheme of the Act and the Rules.
6. On 18.06.2013, a notice was issued under Section 13 (4) whereby symbolic possession of the hotel property was taken over by the creditor. The debtor filed a securitization application6 before the Debts Recovery Tribunal (hereinafter referred to as 'the DRT') against the taking over of the symbolic possession by the creditor. In the meanwhile, the creditor published the first auction sale notice7 with a reserve price of Rs. 403 crores which came to be postponed in view of the negotiations between the parties for the repayment of the dues. Upon default in the repayment of the outstanding amount, a second sale notice was published on 09.01.2014 with the same reserve price. The DRT passed an interim order,8 directing the creditor to defer the acceptance of bids and not to take any further steps for sale of the property for the next 60 days. Subsequently, no bids were received and the auction failed.
7. The creditor challenged the interim order passed by the DRT order before Debts Recovery Appellate Tribunal (hereinafter referred to as 'the DRAT'). In the challenge, the Appellate Tribunal directed for the second appeal to be disposed off within a month by the DRT.
8. The DRT disposed off the second appeal and set aside the notice under Section 13(2)9 on the ground of non compliance with Section 13(3A) and for issuance of the demand notice jointly for the mortgaged land comprising of agricultural land to which the provisions of the Act did not apply as per Section 31(i) of the Act.
9. The creditor filed an appeal to the order of the DRT10 in the DRAT which came to be allowed11 and the validity of the notice issued under Section 13(2) was upheld. Against the order of the DRAT setting aside the order of the DRT, the debtor filed the Writ Petitions leading up to the present SLP, in the High Court.
10. On 04.09.2013, the creditor published a Notice of Sale by Public Auction in the newspaper fixing the date of auction as 09.10.2013 at a reserve price of Rs 403 crores. In view of this, the debtor sent a letter12 to the creditor undertaking that it will pay all outstanding installments by 31.12.2013 and that the sale of assets be deferred upto the aforesaid date. The debtor further stated that they shall not proceed in respect of their Securitization Application13 before the DRT. In pursuance of it, the creditor deferred the sale by issuing a public notice on 08.10.2013 and granted the debtor an opportunity to clear the loan, however, the creditor extended repayment only by 15-20 days.
11. Thereafter, on 25.11.2013, the debtor gave a letter of undertaking accepting the schedule given by the creditor and also acknowledging the right of the creditor to sell the assets in case of default as per the schedule.
12. On 30.12.2013, the debtor sought further time to repay the loan to which the creditor issued a notice taking over symbolic possession.
13. On 09.01.2014, the creditor published a second notice of sale at the same reserved price of Rs. 403 crores. The DRT14 passed an interim order directing the creditor to defer the acceptance of the bids and not take any further steps with regard to the sale of the property for 60 days.
14. On 08.10.2014 the creditor issued a third Notice of Sale by public auction fixing the auction on 12.11.2014 at a reserve price of Rs. 542.57 crores. Pursuant to the writ petitions filed by the debtor, the High Court15 allowed the bids to be received for the sale of the Goa Hotel to be held in a sealed cover till the next date of hearing which was fixed to be on 19.11.2014. However, no bids were received pursuant to the 3rd Public Auction Notice.
15. In the meanwhile, the debtor wrote to the creditor stating that the corporate loan will be taken over by Hyatt who were the operating service provider for the hotel. Hyatt in turn wrote to the creditor stating that they will not be responsible for the repayment of the loan. On 31.12.2014, a fourth and fresh notice for conducting the auction sale of the Goa Hotel was issued by the creditor setting the reserve price at Rs. 515.44 crores. This notice led to the sale of the Goa Hotel to ITC Ltd. (hereinafter referred to as 'the auction purchaser').
(i) Writ Petition No. 2698 of 2014 (renumbered as 222 of 2015) was filed on 04.10.2014 by the debtor challenging the order of the DRAT.
(ii) Writ Petition No. 1150 of 2015 was filed on 02.03.2015 by the debtor against the order of handing over possession passed by the District Magistrate.
(iii) Writ Petition No. 2486 of 2015 was filed on 19.03.2015 by the debtor challenging the sale of the secured assets in an auction on 25.02.2015.
The writ petitions were filed before the Panaji Bench of the High Court at Goa, though eventually they were heard by the Bombay High Court. The High Court set aside the judgment of the DRT and held the entire proceedings for recovery and sale of the Goa Hotel to be illegal being in violation of the Act.
(i) The recovery proceedings were a breach of Section 13 (3A) for failure of the creditor to reply to the representation of the debtor and reject the same by a reasoned order.
(ii) That a portion of the land mortgaged by the debtor as security interest consisted of agricultural land to which the provisions of the Act do not apply. The land, therefore, could not have been recovered. (iii) The proceedings under Section 14 were initiated by the creditor who was not a secured creditor after having sold the property in auction to the auction purchaser.
(iv) It was incumbent of the creditor to take physical possession of the property before putting it to sale in an auction.
(v) Lastly, having regard to the manner in which the proceedings of the auction sale were conducted, it was held that they were vitiated by fraud and collusion.
18. One of the main contentions on behalf of the debtor which found favour with the High Court was that after the creditor issued the notice under Section 13(2), the debtor made a representation asking for a reschedulement of the loan which the creditor neither considered (constituting a breach of sub-section (3A) which is mandatory), nor communicated the reasons for non-acceptance thereof. Thus, the subsequent action of the creditor in resorting to a measure under Section 13(4) is liable to be annulled.
19. The statutory scheme in this regard has been enumerated under Section 13 of the Act18.
20. The Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as 'the Rules') framed under the Act19 elaborate on the manner in which the representation of the borrower is required to be dealt with. Section 13 (4) enables any creditor to enforce any security interest without the intervention of a court or tribunal. The procedure prescribed is that after classifying the debt as a non-performing asset, the creditor may, by a notice in writing require the debtor/borrower to discharge his liabilities within 60 days. On receipt of a notice, the borrower may make a representation or raise any objection.
The creditor is then bound to consider the representation or objection. If the creditor comes to the conclusion that the representation is not acceptable or tenable, the creditor is required to communicate the reasons for the non-acceptance of the representation/ objection within fifteen days. Where the borrower fails to discharge his liability in full, the creditor may take any of the actions under sub- section (4) which include the taking over of possession of the secured assets et cetera.
21. Rule 3A of the Rules requires the authorized officer who is an officer specified by the Board of Directors of the secured creditor to consider the representation and modify the notice of demand if satisfied of the need to do so in that regard. If the authorized officer comes to the conclusion that such representation or objection is not tenable or acceptable, he must communicate the reasons for nonacceptance of the representation or objection within fifteen days.
22. The Act and the Rules thus provide for a locus poenitentiae. The borrower may raise an objection or make a representation of any nature that the creditor must consider, and if found not acceptable, may reject the same before proceeding to resort to any of the measures provided by Section 13(4) of the Act. The borrower may thus raise an objection against the proposed measures or make a representation explaining the circumstances in which he cannot discharge his liabilities and propose reschedulement. This may result in reconsideration by the creditor of whether or not it would be prudent to carry out the proposed measures and may even result in a renovation of the contract.
"45. ...The purpose of serving a notice upon the borrower under sub-section (2) of Section 13 of the Act is, that a reply may be submitted by the borrower explaining the reasons as to why measures may or may not be taken under sub-section (4) of Section 13 in case of non-compliance with notice within 60 days. The creditor must apply its mind to the objections raised in reply to such notice and an internal mechanism must be particularly evolved to consider such objections raised in the reply to the notice. There may be some meaningful consideration of the objections raised rather than to ritually reject them and proceed to take drastic measures under sub-section (4) of Section 13 of the Act.
Once such a duty is envisaged on the part of the creditor it would only be conducive to the principles of fairness on the part of the banks and financial institutions in dealing with their borrowers to apprise them of the reason for not accepting the objections or points raised in reply to the notice served upon them before proceeding to take measures under sub-section (4) of Section 13. Such reasons, overruling the objections of the borrower, must also be communicated to the borrower by the secured creditor.
It will only be in fulfillment of a requirement of reasonableness and fairness in the dealings of institutional financing which is so important from the point of view of the economy of the country and would serve the purpose in the growth of a healthy economy. It would certainly provide guidance to the secured debtors in general in conducting the affairs in a manner that they may not be found defaulting and being made liable for the unsavoury steps contained under sub-section (4) of Section 13.
At the same time, more importantly, we must make it clear unequivocally that communication of the reasons for not accepting the objections taken by the secured borrower may not be taken to give occasion to resort to such proceedings which are not permissible under the provisions of the Act. But communication of reasons not to accept the objections of the borrower, would certainly be for the purpose of his knowledge which would be a step forward towards his right to know as to why his objections have not been accepted by the secured creditor who intends to resort to harsh steps of taking over the management/business of viz. secured assets without intervention of the court.
Such a person in respect of whom steps under Section 13(4) of the Act are likely to be taken cannot be denied the right to know the reason of non-acceptance and of his objections. It is true, as per the provisions under the Act, he may not be entitled to challenge the reasons communicated or the likely action of the secured creditor at that point of time unless his right to approach the Debts Recovery Tribunal as provided under Section 17 of the Act matures on any measure having been taken under sub-section (4) of Section 13 of the Act."
24. The Parliament transformed the observations of this Court into a provision in the Act with a plain intention to introduce a pause for the creditor to rethink and reconsider the action proposed by the debtor. It is a departure from the usual steps that an ordinary creditor is bound to take for recovering the loan i.e. through the intervention of the Court.
25. The question that arises for consideration before us is whether the Parliament intended for a total invalidity to result from the failure to reply and give reasons for the non-acceptance of the borrower's representation. In other words, whether sub-section (3A) of Section 13 is mandatory or directory in nature.
26. There is no doubt that if a reply with reasons is an integral and indispensable part of the statutory scheme, the Courts would not excuse a departure from it. But, on the other hand, if the reply is merely a direction and not of substance to the scheme, the noncompliance may be excused.
27. This question must be answered upon a construction of the statute according to its true intent by taking into account the language in which the intent is clothed. In a passage from Crawford's Statutory Construction, it is stated - "The question as to whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The meaning and intention of the Legislature must govern, and these are to be ascertained not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other."
This has been followed in several decisions of the Supreme Court22. Subbarao, J. in State of U.P. v. Babu Ram Upadhya23 points out, "For ascertaining the real intention of the Legislature, the court may consider inter alia, the nature and design of the statute, and the consequences which would follow from construing it the one way or the other; the impact of other provisions whereby the necessity of complying with the provisions in question is avoided; the circumstances, namely, that the statute provides for a contingency of the noncompliance with the provisions; the fact that the non-compliance with the provisions is or is not visited by some penalty; the serious or the trivial consequences, that flow therefrom; and above all, whether the object of the legislation will be defeated or furthered".
28. We find the language of sub-section (3A) to be clearly impulsive. It states that the secured creditor "shall consider such representation or objection and further, if such representation or objection is not acceptable or tenable, he shall communicate the reasons for nonacceptance" thereof. We see no reason to marginalize or dilute the impact of the use of the imperative 'shall' by reading it as 'may'. The word 'shall' invariably raises a presumption that the particular provision is imperative24.
29. There is nothing in the legislative scheme of Section 13 (3A) which requires the Court to consider whether or not, the word 'shall' is to be treated as directory in the provision. As the Section stood originally, there was no provision for the above mentioned requirement of a debtor to make a representation or raise any objection to the notice issued by the creditor under Section 13(2). As it was introduced via sub-section (3A), it could not be the intention of the Parliament for the provision to be futile and for the discretion to ignore the objection/representation and proceed to take measures, be left with the creditor. There is a clear intendment to provide for a locus poenitentiae which requires an active consideration by the creditor and a reasoned order as to why the debtor's representation has not been accepted.
30. Moreover, this provision provides for communication of the reasons for not accepting the representation/objection and the requirement to furnish reasons for the same. A provision which requires reasons to be furnished must be considered as mandatory. Such a provision is an integral part of the duty to act fairly and reasonably and not fancifully. We are not prepared in such circumstances to interpret the silence of the Parliament in not providing for any consequence for non-compliance with a duty to furnish reasons. The provision must nonetheless be treated as 'mandatory'.
We agree with the view of this Court in this regard in Mardia Chemicals Ltd. v. Union of India25, Transcore v. Union of India26 and Keshavlal Khemchand & Sons (P) Ltd. v. Union of India27.
We also approve of the view of several High Courts in this regard28.
31. It was submitted on behalf of the creditor that the conduct of the debtor does not warrant an interference in this case. However, we are of the view that the construction of the Act should not be affected by the facts of a particular case. For, indeed, where the remedy invoked is a discretionary remedy, the Court may deny relief if the circumstances so warrant.
(i) On 26.03.2013, the creditor issued a notice under Section 13(2) to the debtor to discharge his liabilities within 60 days. On 27.05.2013 the debtor made a representation to the creditor containing a proposal for reschedulement (which was the same as the one made as far back as on 22.08.2012) and reserving the right to file a reply.
(ii) On 07.06.2013, the debtor again sent a proposal for extension of time for repayment, repeating its proposal dated 27.05.2013.
(iii) On 20.06.2013, the creditor issued the notice of possession under Section 13(4). The taking over of possession was purely symbolic. We are informed that the debtor is in possession of the hotel till date and is running its business without any noteworthy repayment.
(iv) On the next day 21.06.2013, the debtor wrote a letter to the creditor seeking extension of time and enclosed six cheques for upfront payment of Rs.33.16 crores without making any reference to the notice of taking over of possession. The cheques were dishonoured.
(v) On 04.09.2013, the creditor published a Notice of Sale by Public Auction in the newspaper fixing the date of auction as 09.10.2013 at a reserve price of Rs. 403 crores. (vi) Following this the debtor sent a letter to the creditor on 19.09.2013 undertaking that it will repay all outstanding installments by 31.12.2013 and that the sale of assets be deferred up to the said date. The debtor further stated that it shall not proceed further in respect of their Securitization Application before the DRT.
(vii) On 08.10.2013, the creditor deferred the sale by issuing a public notice while considering the debtor's proposal.
(viii) On 29.10.2013, the creditor granted an opportunity to the debtor to clear the debt as stated in the debtor's letter dated 03.10.2013 wherein it sent forth another proposal for extension of time for repayment stating that it will repay a principal installment of the corporate loan of a total of Rs. 89 crores by 31.12.2013. However, the creditor only extended the time for repayment by 15-20 days.
"A Letter of Undertaking" was given by the debtor accepting the schedule given by the creditor on 29.10.2013 and also acknowledging the right of the creditor to sell the assets in case of default as per the above mentioned schedule.
(x) The creditor wrote to the debtor on 08.01.2014 informing the debtor that due to the default in repayment, the creditor is proceeding with steps to recover the dues and accordingly rejected the debtor's request letter dated 30.12.2013 seeking further time to repay the outstanding dues.
33. From the above, it is clear that the creditor was induced by the debtor not to take action against them through assurances and promises. The creditor appeared to have entered into negotiations for the settlement of the dues and even accepted cheques in repayment much after the notice30 under Section 13(2) and after the debtor's letter of representation31. Many opportunities were granted by the creditor to the debtor to repay the debt which were all met by proposals for extension of time. Eventually, the debtor even executed "A Letter of Undertaking32" acknowledging the right of IFCI to sell the assets in the case of default.
34. In these circumstances, we have no doubt that the failure to furnish a reply to the representation is not of much significance since we are satisfied that the creditor has undoubtedly considered the representation and the proposal for repayment made therein and has in fact granted sufficient opportunity and time to the debtor to repay the debt without any avail. Therefore, in the fact and circumstances of this case, we are of the view that the debtor is not entitled to the discretionary relief under Article 226 of the Constitution which is indeed an equitable relief.
Letter of Undertaking "Without Prejudice"
35. Much was sought to be made of the words "without prejudice" in the letter33 containing the undertaking that if the debt was not paid, the creditor could take over the secured assets. The submission on behalf of the debtor that the letter of undertaking was given in the course of negotiations and cannot be held to be an evidence of the acknowledgement of liability of the debtor, apart from being untenable in law, reiterates the attempt to evade liability and must be rejected.
The submission that the letter was written without prejudice to the legal rights and remedies available under any law and therefore the acknowledgement or the undertaking has no legal effect must likewise be rejected. This letter is reminiscent of a letter that fell for consideration in Spencer's34 case as pointed out by Mr. Harish Salve, "as a rule the debtor who writes such letters has no intention to bind himself further than is bound already, no intention of paying so long as he can avoid payment, and nothing before his mind but a desire, somehow or other, to gain time and avert pressure."
"But when a statement is used as acknowledgement for the purpose of s. 29 (5), it is not being used as evidence of anything. The statement is not an evidence of an acknowledgement. It is the acknowledgement."
Therefore, the without prejudice rule could have no application.
It said: "Here, the respondent, Mr. Rashid was not offering any concession. On the contrary, he was seeking one in respect of an undisputed debt. Neither an offer of payment nor actual payment."
We, thus, find that the mere introduction of the words "without prejudice" have no significance and the debtor clearly acknowledged the debt even after action was initiated under the Act and even after payment of a smaller sum, the debtor has consistently refused to pay up.
36. All in all, as the matter stands, the debtor did not repay the loan. The debtor managed to submit a letter purporting to be a representation, containing a proposal for reschedulement made much earlier to the creditor's notice and reserved a right to file a reply. Apparently, the debtor induced the creditor to enter into negotiations to ward off the reply and avoid the taking over of possession. The debtor ignored the symbolic possession taken over by the creditor and 21 continued to negotiate and even gave six cheques which were dishonoured.
The debtor then gave a final letter of undertaking agreeing that the creditor could take over possession of the assets if the debt was not repaid. All along, the debtor's response has been that of seeking extension of time to pay, with the usual unfulfilled promise of repayment. We see no reason why the debtor should not be stopped from questioning the taking over of possession, particularly since, neither the debt nor the liability is in dispute. The debt has not been repaid in fact, and the objection raised is merely on the ground that the taking of assets is illegal because the creditor failed to reply to the representation.
39. In the present case, security interest was created in respect of several parcels of land, which were meant to be a part of single unit i.e. the five star hotel in Goa. Some parcels of land now claimed as agricultural land were apparently purchased by the debtor from agriculturists and are entered as agricultural lands in the revenue records. The debtor applied to the revenue authorities for the conversion of these lands to non-agricultural lands which is pending till date due to policy decision.
40. It is undisputed that these lands were mortgaged in favour of the creditor under a deed dated 26.02.2010. Obviously, since no security interest can be created in respect of agricultural lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and that the debtor offered the land as security on this basis. The undisputed position is that the total land on which the Goa Hotel was located admeasures 182225 sq. mtrs. Of these, 2335 sq. mtrs. are used for growing vegetables, fruits, shrubs and trees for captive consumption of the hotel. There is no substantial evidence about the growing of vegetables but what seems to be on the land are some trees bearing curry leaves and coconut. This amounts to about 12.8 % of the total area.
"The Borrower shall create mortgage on Exclusive basis on the 'Park Hyatt Goa Resort and Spa" Hotel Property admeasuring 1, 82, 225 Sq Mtrs with a built up area of 25182 Sq. Mtrs situated at 263 C, Arossim, Canasaulim Goa."
The mortgage is thus intended to cover the entire property of the Goa Hotel. Prima facie, apart from the fact that the parties themselves understood that the lands in question are not agricultural, it also appears that having regard to the use to which they are put and the purpose of such use, they are indeed not agricultural.
"14....... Entry 45 of List I relates to "banking". Banking operations would inter alia, include accepting of loans and deposits, granting of loans and recovery of the debts due to the bank. There can be little doubt that under Entry 45 of List I, it is Parliament alone which can enact a law with regard to the conduct of business by the banks. Recovery of dues is an essential function of any banking institution. In exercise of its legislative power relating to banking, Parliament can provide the mechanism by which monies due to the banks and financial institutions can be recovered."
"43....... the entire Act, including Sections 17-A and 18-B, would in pith and substance be referable to Entries 45 and 95 of List I,...."
43. The validity of Section 31(i) which in any case deals with security interest created over agricultural land and not agricultural land itself, is an integral part of the Act and cannot be questioned on the ground of legislative competence.
"It would be quite an erroneous approach to the question to view such a statute not as an organic whole, but as a mere collection of sections, then disintegrate it into parts, examine under what heads of legislation those parts would severally fall, and by that process determine what portions thereof are intra vires, and what are not."
Thus, this contention on behalf of the debtor must be rejected.
"We agree that the determination of the character of land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case. What is really required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of land, by some possible future owner or possessor, for an agricultural purpose.
It is not the mere potentiality, which will only affect its valuation as part of "assets", but its actual condition and intended user which has to be seen for purposes of exemption from wealth-tax. One of the objects of the exemption seemed to be to encourage cultivation or actual utilisation of land for agricultural purposes. If there is neither anything in its condition, nor anything in evidence to indicate the intention of its owners or possessors, so as to connect it with an agricultural purpose, the land could not be "agricultural land" for the purposes of earning an exemption under the Act. Entries in revenue records are, however, good prima facie evidence."
Similarly, in the case of Kunjukutty Saheb v. State of Kerala43, this Court held as follows: "We suppose that something or other can be, and often is, grown on any vacant land, but that would not necessarily make it agricultural land for our purposes. To give an example the possibility of cultivating, or even the actual cultivation of, what is essentially a building site in the heart of a town would not make it agricultural land.
It is the purpose for which it is held that determines its character and the existence of a few coconut trees or a vegetable patch on the land cannot alter the fact that it is held for purposes of building and not for purposes of agriculture." In any event, having regard to the character of the land and the purpose for which it is set apart, we are of the view that the land in question is not an agricultural land. The High Court mis-directed itself in holding that the land was an agricultural land merely because it stood as such in the revenue entries, even though the application made for such conversation lies pending till date.
45. As noticed earlier, the creditor took over symbolic possession of the property on 20.06.2013. Thereupon, it transferred the property to the sole bidder ITC and issued a sale certificate for Rs.515,44,01,000/- on 25.02.2015. On the same day, i.e., 25.02.2015, the creditor applied for taking physical possession of the secured assets under Section 14 of the Act.
46. 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.
47. 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.Narasimhaswami44 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 144 of the Limitation Act would start from such date of the delivery.
48. The question, however, whether the creditor could maintain an application of possession under Section 14 of the Act; even though it had taken over only symbolic possession before the sale of the property to the auction purchaser, depends on whether it remained a secured creditor after having done so. Section 2(d) of the Act defines `secured creditor' to mean a "banking company" having the meaning assigned to it in clause (c) of section 5 of the Banking Regulation Act, 1949; Clause 2(L)45 includes debts or receivables and any right or interest in the security whether full or part underlying such debt or receivables or any beneficial interest in property vide (L)(i)(iv) & (v)46. Sub-section (6) of Section 1347 posits that the transfer of the secured asset by the secured creditor shall vest in the transferee all the rights as if the transfer had been made by the owner of the secured asset.
"The section (s.8) does not apply to court sales, for such sales effect a transfer by the operation of law.
The effect of applying s 8 is to strengthen the sale certificate by transferring the lien along with it."
"What is sold at a court sale is the right, title and interest of the judgment debtor, and the extent of that interest is a mixed question of fact and law to be decided according to the circumstances of each particular case, and depends upon what the court intended to sell, and the purchaser intended to buy."
We note that even though the entire right, title and interest were purported to have been transferred, all the rights, transfer and interest could not be said to have been transferred since the possession of the property was not transferred to creditor. The possession was retained by the debtor who continued to do business and receive rent from the rooms on the property and has in fact continued to do so till date. There is no doubt that after taking over the property from debtor, the creditor also acquired the right to receive the usufruct of the property i.e. the rent in this case. However, this was an interest in the property which was not at any point of time transferred to the auction purchaser.
50. In this case, the creditor did not have actual possession of the secured asset but only a constructive or symbolic possession. The transfer of the secured asset by the creditor therefore cannot be construed to be a complete transfer as contemplated by Section 8 of the Transfer of Property Act. The creditor nevertheless had a right to take actual possession of the secured assets and must therefore be held to be a secured creditor even after the limited transfer to the auction purchaser under the agreement50. Thus, the entire interest in the property not having been passed on to the creditor in the first place, the creditor in turn could not pass on the entire interest to the auction purchaser and thus remained a secured creditor in the Act.
51. Finally, the High Court in its judgment renders a finding that there was in fact fraud and collusion between the creditor and the auction purchaser. According to the High Court, since the measures were taken in breach of all laws, the inference of manipulation and collusion cannot be ruled out.
52. We fail to see how such a finding of manipulation and collusion is sustainable on account of breach of law in the present case. A risk of this kind taken up by an intending purchaser cannot lead to an inference of collusion. Mainly, the finding is based on the fact that the sale is a collusion because the auction purchaser was aware that a dispute between the parties was pending and still went ahead and made a bid for the property. It is not unusual in the sale of immovable properties to come across difficulties in finding suitable buyers for the property. We find that the property was eventually sold on the fourth auction, and all the auctions were duly advertised.
53. Another fact on the basis of which the High Court has observed an inference of collusion is that the property was sold and the sale was confirmed in favour of ITC Ltd. though a statement was made in the morning of 23.02.2015 before the DRT that the sale would not be confirmed till the order is passed. This seems to be recorded in the order of the DRT. However, what is overlooked is the fact that in the statement on behalf of the creditor, the creditor only agreed to not confirm the sale till 3 pm. In the absence of any finding as to what actually transpired, it is not possible for us to infer manipulation and collusion on this account. There is no dispute that the property was actually purchased by ITC Ltd. in pursuance of a public auction and that the entire amount of sale consideration has been deposited by it.
54. We have anxiously considered the entire matter and find that the undisputed facts of the case are that a loan was taken by the debtor which was not paid, the debtor did not respond to a notice of demand and made a representation which was not replied to in writing by the creditor. The creditor, however, considered the proposals for repayment of the loan as contained in the representation in the course of negotiations which continued for a considerable amount of time. Several opportunities were in fact availed of by the debtor for the repayment of the loan after the proceedings were initiated by the secured creditor. The debtor failed to discharge its liabilities and eventually undertook that if the debtor fails to discharge the debt, the creditor would be entitled to take realize the secured assets.
55. As held, we are of the view that non-compliance of sub-section (3A) of Section 13 cannot be of any avail to the debtor whose conduct has been merely to seek time and not repay the loan as promised on several occasions.
"19. Power of the High Court to be exercised under Article 226 of the Constitution, if is discretionary, its exercise must be judicious and reasonable, admits of no controversy. It is for that reason, a person's entitlement for relief from a High Court under Article 226 of the Constitution, be it against the State or anybody else, even if is founded on the allegation of infringement of his legal right, has to necessarily depend upon unblameworthy conduct of the person seeking relief, and the court refuses to grant the discretionary relief to such person in exercise of such power, when he approaches it with unclean hands or blameworthy conduct."
It relied on the judgment of the Privy Council in Lindsay Petroleum Co. v. Hurd52, where the Privy Council observed:- ".......Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as it relates to the remedy."
57. Therefore, the debtor is not entitled for the discretionary equitable relief under Articles 226 and 136 of the Constitution of India in the present case.
58. We accordingly, set aside the impugned judgment of the High Court and direct the debtor and its agents to handover possession of the mortgaged properties to the auction purchaser within a period of six months from the date of this judgment along with the relevant accounts.
59. Appeals are allowed accordingly.
(1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of court or tribunal, by such creditor in accordance with the provisions of this Act.
(2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4).
PROVIDED that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section or the Court of District Judge under section 17A.
PROVIDED FURTHER that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt.
(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.
(a) After issue of demand notice under sub-section (2) of section 13, if the borrower makes any representation or raises any objection to the notice, the Authorised Officer shall consider such representation or objection and examine whether the same is acceptable or tenable.
(b) If on examining the representation made or objection raised by the borrower, the secured creditor is satisfied that there is a need to make any changes or modifications in the demand notice, he shall modify the notice accordingly and serve a revised notice or pass such other suitable orders as deemed necessary, within fifteen days from the date of receipt of the representation or objection.
(c) If on examining the representation made or objection raised, the Authorized Officer comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within fifteen days of receipt of such representation or objection, the reasons for non-acceptance of the representation or objection, to the borrower.
22 State of U.P.v. Manbodhan Lal Shrivastava, AIR 1957 SC 912, p. 918: 1958 SCR 533; State of U.P. v. Baburam, Upadhya, AIR 1961 SC 751, p. 765 : (1961) 2 SCR 679; Article 143 of the Constitution of India, In the matter of, supra, p. 769; State of Mysore v. V.K. Kangan, AIR 1975 SC 2190, p. 2192: (1976) 2 SCC 895; Govindlal Chhagan-lal Patel v. Agriculture Produce Market Committee, AIR 1976 SC 263, p. 267 : (1976) 1 SCC 369; Ganesh Prasad Sah Kesari v. Lakshmi Narayan, (1985) 3 SCC 53, pp. 59, 60 : AIR 1985 SC 964; B.P. Khemka Pvt. Ltd. v. Birendra Kumar Bhowmik, (1987) 2 SCC 407, p. 415 : AIR 1987 SC 1010; Owners and Parties interested in M.V. "Vali Pero" v. Fernandes Lopez, AIR 1989 SC 2206, p. 2213 : (1989) 4 SCC 671; State of M.P. v. Pradeep Kumar, (2000) 7 SCC 372, p. 377 : (2000) 10 JT 349; Sarla Goel v. Krishanchand, (2009) 7 SCC 658 pp. 668, 669 para 30 : (2009) 9 JT 21.
28 Kiran Devi Bansal v. DGM SIDBI, AIR 2009 Guj 100 (DB)(para 9 and 10); Clarity Gold Pvt. Ltd. v. State Bank of India, AIR 2011 Bom. 42 (DB)(para 11, 12 and 13); Vinay Container Services Pvt. Ltd. v. Axis Bank, 2011 (1) Mh. L.J. 882 (para 6); Krushna Chandra Sahoo v. Bank of India, AIR 2009 Orissa 35 (para 6 and 7); Tensile Steel Ltd. & Anr. v. Punjab and Sind Bank & Ors., AIR 2007 Guj 126 (para 21); M/s Jayant Agencies v. Canara Bank & Ors., Jharkhand HC in WP (C) No. 4048 of 2010 (para 27, 28, 29, 32 and 33); M/s Tetulia Coke Plant Pvt. Ltd. v. Bank of India, AIR 2013 Jhar 12 (para 5, 9, 20, 22, 23 and 24); Mrs. Sunanda Kumari v. Standard Chartered Bank, (2007) 135 Comp Cases 604 (Kar) (para 5); Palash Mukherjee v. U.O.I, W.P. 9876 (W) of 2014 Calcutta High Court (para 1, 2 and 67); Jaideep Singh and Ors. v. Union of India and Anr., 2008 2 GLT (91) (para 25 and 28); Malabar Sand and Stones (Pvt.) Ltd. v. Catholic Syrian Bank Ltd. & Ors., AIR 2013 Ker 25 (para 7, 8, 9 and 10).
36. Thus, security interest cannot be created in respect of property specified in Section 31.
47 13 (6) Any transfer of secured asset after taking possession thereof or take over of management under sub-section (4), by the secured creditor or by the manager on behalf of the secured creditor shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset.
49 Abdul Aziz v. Appayasami (1904) ILR 27 Mad 131, 31 IA 1.

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This piece is co-authored by Tom Flynn, Ronald A. Lindsay, and Nicholas J. Little. It will be published as the lead editorial in the February-March 2015 issue of Free Inquiry.
Litigation always carries risk – first of all, the risk of losing one’s case, but also the risk that a court decision will bring unintended consequences. The Freedom From Religion Foundation discovered that in Hein v. Freedom From Religion Foundation (2007), a taxpayer suit challenging the White House Office of Faith-Based and Community Initiatives that resulted in a sweeping decision sharply limiting the ability of taxpayers to bring future cases challenging executive-branch spending decisions under the Establishment Clause of the First Amendment. On October 30, 2014, the American Humanist Association had what may prove to be a similar experience. In American Humanist Association v. United States of America, a federal district court in Oregon ruled that a prisoner had a valid legal claim when he alleged that prison officials refused to authorize a humanist study group. So far, so good. However, in reaching this conclusion the court bizarrely ruled that secular humanism is a religion, when the nature of secular humanism was never even an issue in the case. Of course, the judge may have been persuaded to reach this conclusion because in its arguments to the court the AHA vigorously contended that humanism is a religion, and made no effort to distinguish its brand of humanism from secular humanism.
Background of the Case. Jason Michael Holden has been an inmate at the Federal Correctional Institution at Sheridan, Oregon, since 2010. A self-described Humanist (apparently, his capitalization), Holden repeatedly sought permission to organize a Humanist study group and was repeatedly denied. Prison officials claimed that humanism was not a religion. At various times they characterized humanism as a philosophy, not a religion, or offered to allow Holden to organize an atheist or Unitarian Universalist study group, neither of which reflected Holden’s lifestance. Holden was apparently quite consistent in maintaining that he viewed Humanism as his religion and that he sought to have his Humanism accommodated in the same way the prison accommodated other religions, from Christianity to Adventists, Sikhs, or Odinists. In April, 2014, the AHA joined Holden in filing suit against the United States, the Federal Bureau of Prisoners, and other defendants. The defendants had sought to have the suit dismissed; on October 30, United States District Judge Ancer L. Haggerty refused that request for dismissal. In constitutional cases, a refusal to dismiss usually leads to a motion for summary judgment by the other party and, not infrequently, swift settlement of the case on the terms of the refusal to dismiss. So the October 30 decision is a weighty matter.
There seems little room for doubt that Holden, who viewed his Humanism as a religious commitment, was seeking a reasonable accommodation of the same sort that the prison already offered to members of some twenty-nine other traditions, including several controversial or minority faiths. Likewise, there seems little room for doubt that prison officials treated Holden unfairly when they repeatedly obstructed his efforts to form a Humanist study group. If the end result of this proceeding is that Mr. Holden and other religious-Humanist prisoners at FCI Sheridan can enjoy their meetings without undue harassment, that will be a most laudable outcome.
But from the perspective of the larger humanist movement – and of humanism as part of the larger fabric of the unbelieving community – there is room to ask whether AHA’s decision to conduct the action as it did was strategically wise. That question seems especially urgent in view of the way the October 30 th ruling unexpectedly – and to our way of thinking, unjustifiably – resulted in a statement by a federal judge that secular humanism is a religion.
The Strategic Issue. In order to present the strategic issues clearly, we must first lay some conceptual groundwork.
Used without a modifier, the term humanism is almost unworkably broad. It encompasses literary and artistic traditions (such as Renaissance humanism and literary humanism) as well as philosophical or religious points of view. In the context of the contemporary humanist movement, humanism is usually understood as a set of viewpoints that do not recognize the authority and truth of traditional religions; do not recognize any set of writings as sacred or any person as having the authority to dictate a creed that must be accepted; do not recognize the existence of any transcendent beings, deities or otherwise; view human beings as the primary objects of moral concern; and seek optimal approaches for living rich and moral lives here on earth in what are considered most probably the only lives we have.
Secular humanism (properly, never capitalized), an explicitly non-religious life stance that rejects all form of supernaturalism or spirituality and is often uninterested in practices borrowed from congregational life.
In this case, it seems uncontroversial that plaintiff Holden can be understood as a religious Humanist – that is, one who views his humanism as a religious identity and a token of religious commitment. It seems clear from the case materials that Holden sought to organize his Humanist study group as a religious exercise, and viewed obstructive efforts by prison officials as religious discrimination against him. The more significant question is whether the AHA was wise to accept the case on Holden’s terms, or whether a higher objective could have been pursued – with reduced risk of unintended consequences, in this case a gratuitous finding that a certain strand of humanism was a religion for Establishment Clause purposes.
Several court decisions have recognized that even though atheism and humanism are not “religions” in the traditional sense of that term, they are secular analogues to religion when they hold a similar place in adherents’ lives. The series of cases so holding goes back to the Supreme Court’s decision in Welsh v. United States, 398 U.S. 333 (1970), which held that the exemption for conscientious objectors to the military draft applied to nonreligious individuals who had serious, deeply held moral beliefs analogous to religious beliefs. Turning to the prison context, the U.S. Court of Appeals for the Seventh Circuit held in Kaufman v. McCaughtry, 419 F.3d 678 (7th Cir. 2005) that when making accommodations to prisoners, atheism must be treated as favorably as religious beliefs.
o was a co-plaintiff in the case, similarly maintained she was not religious. The court pointed out that under the First Amendment’s neutrality principle, the government cannot favor religion vis-à-vis comparable secular belief systems. Accordingly, for purposes of solemnizing marriages, humanism is entitled to be treated as though it were a religion— even though it is not.
It may seem like a subtle difference to say that humanism can be treated as though it were a religion for certain legal purposes as opposed to saying that humanism is a religion, but the subtle difference is very significant. The former approach is consistent with the long-standing principle embraced by most humanists that religion and religious organizations are not entitled to any special privileges. This is a principle for which many humanists have shed blood, sweat, tears, and money. The latter approach essentially says, “If you can’t beat them, join them.” It doesn’t maintain that religion and religious organizations are not entitled to any special privileges; instead it tries to portray humanism as a religion so it can partake of these privileges as well.
For all that Mr. Holden probably sincerely understood his grievance as religious in nature, and for all that a superficially simpler “humanism is a religion” argument might have struck the AHA’s litigators as easier to pursue, there would have been much to gain by recasting Holden’s complaint as an argument that humanism is a secular belief system entitled to be treated as a religion for certain legal purposes. The case might have contributed to the larger expansion of freedom-of-conscience litigation and its gradual replacement of principles rooted solely in religion, an outcome any secularist might be expected to find desirable. Also, by avoiding the misleading argument that any type of “humanism is a religion” it would have provided some protection against a perverse consequence: Judge Haggerty’s finding that not only humanism generally, but secular humanism, is a religion.
Of all the strands of humanism, secular humanism is the one that most consistently and explicitly describes itself as separate from – indeed, wholly other than – religion.
Secular Humanism and Religion. To understand the inappropriateness of this verdict more clearly, some further background is in order. In particular we should review the circumstances that gave rise to the founding of the Council for Secular Humanism, the nation’s only explicitly secular-humanist advocacy organization, in 1980.
The 1970s had seen a precipitous rise in influence and prestige by evangelical and fundamentalist Christian groups with ambitious social agendas. Figures including Jerry Falwell, Pat Robertson, Francis Schaeffer, James Dobson, Tim LaHaye, and others argued vigorously that humanism was an alien religion that needed to be purged from American culture, and especially from public schools. The tenets of this “religion of humanism” were alleged to include most of the fruits of twentieth-century secular culture, from contraception to the theory of evolution. At the time it was widely feared that groups like the Moral Majority might use this mischaracterization of humanism as a religion to damage education, reproductive freedom, and many other areas of life. Sometimes religious Right figures argued that humanism was a religion; at others they argued that secular humanism was a religion, a difficult claim to refute since at that time no organization spoke specifically for secular humanists and their interests.
The Humanist Manifesto (1931), widely viewed as the founding document of American humanism, explicitly described humanism as a new religion.
Religious Humanists existed, if anything, in greater numbers than they do today. There was no shortage of writings demonstrating that some humanists viewed their Humanism as a religious commitment.
Philosopher Paul Kurtz viewed these matters with understandable dismay. In the 1970s, as editor of the AHA’s magazine The Humanist, he had campaigned successfully to move American humanism in a more secular direction. In 1973 he and Edwin H. Wilson drafted Humanist Manifesto II, which explicitly repudiated its predecessor’s description of humanism as a religion and sought to portray humanism as a secular movement, more philosophy than religion.
By the late 1970s Kurtz was no longer active with the AHA. Joining with others, in 1980 he formed the Council for Democratic and Secular Humanism (now the Council for Secular Humanism), in large part to embody secular humanism and to assert its non-religious nature. On more than one occasion Paul confided to one of us (Flynn) that in the event that some future court defined religious Humanism, or humanism generally, as religious, the Council would strive to show that at least one strand of humanism was explicitly non-religious, and that humanism generally could never be accurately described as monolithically religious.
If secular humanism is the most explicitly nonreligious form of humanism, how did it alone come to be labeled as a religion by Judge Haggerty?
The story goes back to Torcaso v. Watkins, a landmark 1961 case that largely ended religious tests for state offices such as notary public. In a footnote to that case, Justice Hugo L. Black wrote: “Among religions in this country which do not teach what would generally be considered a belief in the existence of God are Buddhism, Taoism, Ethical Culture, Secular Humanism, and others.” This observation was startling for multiple reasons. Not only were there no organized secular humanists in 1961, the term appears to have been used only once before, by the prominent church-state attorney Leo Pfeffer, who apparently coined the phrase in his 1958 book, Creeds in Competition. (Pfeffer was Torcaso’s attorney.) Certainly there were in 1961 no Secular Humanists who capitalized the phrase as though it were the name of their church! Justice Black probably composed this list of non-theistic religions using no reference source other than his memory. Unfortunately, it is simply incorrect. Fortunately, it is contained in a footnote to a Supreme Court decision. Footnotes in Supreme Court decisions are generally held not to carry the weight of precedent (as courts do not typically express their holdings in footnotes), though lower courts are sometimes inconsistent in observing that principle.
While some humanists are comfortable explaining their worldview in religious terms, and may even feel that other vocabulary falls short of describing their vibrant intermingling of emotive and rational thought, more and more humanists prefer to describe their convictions in a more clearly secular manner. Indeed, many humanists bristle at the idea of being a dues-paying member of a religious organization.
It was during this time [the 1970s] that the religious right began to gain strength and started to blame secular humanists for society’s ills and accuse the public educational system of teaching the “religion” of secular humanism. Debates continue to this day with fundamentalists who claim that secular humanism is a “religion” taught in schools and secular humanists who argue that it isn’t a religion at all.
It seems clear, then, that AHA leadership must have been cognizant that the claim that humanism is a religion is controversial, freighted with potential dangers, and applicable only to some who claim the label humanist. How unfortunate that all of this was set aside in order to score a simplistic legal victory. As a religious Humanist, Jason Holden deserved to have his rights respected. AHA v. United States achieved that, but it did so in a needlessly retrograde and destructive way.
What Will Follow from This? Fortunately, AHA v. United States is a case whose issues are deeply interwoven with the facts of the controversy. For that reason the likelihood that its defective conclusion that secular humanism is a religion will contribute damaging precedent is probably modest. But in the larger domain of social rhetoric, it will likely resonate like a cannon-shot. In recent years Christian Right activists have been more muted in their arguments that humanism or secular humanism are religions – though there have been exceptions. In the 1990s a California school teacher who was an evangelical Christian sued, seeking to be exempted from a requirement to teach about the theory of evolution because that was part of the “religion of secular humanism.” The Ninth Circuit U.S. Court of Appeals rejected that argument, stating: “Neither the Supreme Court, nor this circuit, has ever held that evolutionism or secular humanism are ‘religions’ for Establishment Clause purposes” (Peloza v. Capistrano Unified School Dist., 37 F. 3d 517 – Court of Appeals, 9th Circuit 1994). (Judge Haggerty’s decision acknowledged this decision but argued that its authority had been weakened by later decisions.) In 2000 evangelist David A. Noebel and high-profile Christian leader Tim LaHaye issued Mind Siege, an integrated series of books, videos, and instructional materials making the specific case that humanism is an alien religion. Noebel, in particular, continues to put forward similar arguments today.
Tom Flynn is executive director of the Council for Secular Humanism and editor of Free Inquiry. Ronald A. Lindsay is the President and CEO of the Council for Secular Humanism and the Center for Inquiry. Nicholas Little is the legal director of the Center for Inquiry.
Revenue Service to change its exemption type to religious in the 1960s. This was done so the organization’s credentialed celebrants, then called Humanist Counselors, would have clergy privileges and be able to solemnize marriages throughout the country. The AHA has again held an educational exemption since the mid-2000s.
*** Paul Kurtz, “Secular Humanism: A New Approach,” Free Inquiry, Fall 2002, p. 6. Available online to Free Inquiry subscribers at https://www.secularhumanism.org/index.php/articles/2579 .
Tom Flynn is the Center for Inquiry’s vice president for media and director of Inquiry Media Productions. He is also executive director of the Council for Secular Humanism and editor of its flagship magazine, Free Inquiry . He designed and directs the Council's museum at the Dresden, N.Y., birthplace of 19th century agnostic orator Robert Green Ingersoll. He has written or edited eight books, including The New Encyclopedia of Unbelief (Prometheus, 2007).

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Reasons for judgement were released today addressing fault for a collision involving a vehicle conducting a U-turn.
In today’s case (Longford v. Tempesta) the Plaintiff was operating a scooter and was travelling behind the Defendant’s vehicle. The Defendant “put on his brakes aggressively” and the Plaintiff then stopped. The Defendant then “went to the right parking lane and stopped, aggressively applying his brakes again, and then hesitated.“. The Plaintiff then proceeded to pass the Defendant who then commenced a U-turn and the vehicles collided.
 I find that the plaintiff could not have anticipated that the defendant, after briefly stopping, would then turn in front of her. Nor do I find that she had enough time to observe the defendant’s actions and avoid the accident.
14. The Plaintiff in her statement seems to have assumed that the Defendant had missed his turn, was driving erratically and ought to have anticipated some other erratic move from the Defendant and driven accordingly.
15. Further, the physical evidence of where the collision took place is more consistent with the Defendant’s version of events than the Plaintiff’s. Impact occurred very near the centre of the road when the Defendant’s vehicle had almost left the west bound lane. This would mean for the Plaintiff’s version to be correct the Defendant would had to have started from a complete stop accelerated through a turn and almost completed it before the Plaintiff arrived at the impact site.
 This does not coincide with the defendant’s evidence that he was three quarters of the way in his driveway, having crossed the eastbound lane.
 In Tucker (Public Trustee of) v. Asleson (1993), 78 B.C.L.R. (2d) 173 (C.A.) at 195-6, Madam Justice Southin noted that drivers are entitled to assume that other drivers will obey the rules of the road, and are required to anticipate, in other drivers, “only those follies which according to the teachings of experience commonly occur”. By implication, and as explained in Walker v. Brownlee,  2 D.L.R. 450 at 461 from which Southin J.A. quoted, a driver may bear liability if he or she became aware of another driver’s disregard of the law, or by the exercise of reasonable care should have become aware, and unreasonably failed to avoid the accident that followed from that disregard.
 When the defendant stopped aggressively in front of the plaintiff, she slowed down and was able to stop. I find there was no erratic driving on the part of the defendant such that she could anticipate that the defendant would perform a U-turn in front of her.
 I conclude that the defendant stopped as he realized that he had overshot the driveway to his workplace. I find he then went to the right, stopped again as to park, intending to go into the driveway and, in doing so, crossed the path of the plaintiff on her scooter. At no time did the defendant observe the scooter and he should have. I find that the plaintiff has met the burden of proof and that the defendant was negligent when he turned from where he was parked and into the path of the plaintiff driving her scooter. The defendant is 100% responsible for the accident. The defendant’s actions were negligent.
It should go without saying that stealing and burning your own vehicle with a view to making an insurance claim is not a good idea.
Reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, dealing with a vehicle theft/fire claim. In last week’s case (Singh v. ICBC ) the Plaintiff purchased a 2007 E-350 Mercedes. On October 24, 2009 the vehicle was found some 15 minutes from the Plaintiff’s home and “had just been ignited with fire” with flames “shooting ten to twenty feet in the air.” The luxury vehicle was rendered a total loss.
The Plaintiff made a claim to ICBC to recover damages for loss of the vehicle but they were suspicious of the circumstances and denied the claim. The Plaintiff sued for damages seeking over $94,000 in replacement cost coverage.
In denying the claim the Court found that the Plaintiff “made a key set available to someone so the Mercedes could be driven to the scene of the fire” and further that the Plaintiff conspired in the destruction of the vehicle with Madam Justice Hyslop finding that “he knew in advance what would happen to the Mercedes“.
 Constable Gibo stated that Mr. Singh was not surprised or did not express shock that the Mercedes was on fire, nor did he ask for any details as to the event. He did not care. I find that is because he knew in advance what would happen to the Mercedes.
 I do not accept that the Mercedes was stolen. Mr. Singh’s evidence was that when he purchased the Mercedes he received two sets of keys to operate it. He claims that he mislaid one set of keys, but was very clear that the keys were not lost or stolen. He refused to say when one set of keys was mislaid.
 Expert evidence is before the court that categorically states that Mr. Singh’s Mercedes could not be driven without the keys. The opinion of Mr. Seroogy is that in order to produce a new key, it requires the proper equipment and people with extensive training and experience “in multiple electronic disciplines”. Mr. Seroogy said that the process is delicate and time consuming and could not have been performed within the timeframe between when the Mercedes was last seen and the time when it was found burning. I accept this evidence.
 Mr. Crowe found that there was damage to the right side of the Mercedes. I find that this was intended to cover up the fact that the Mercedes was driven to the site of the fire with a key.
 I find that the Mercedes was driven to the scene of the fire using the keys. The Mercedes was then set on fire.
 The fact that it is unknown who participated in the theft and the destruction of the Mercedes by fire, is of no consequence.
 In his testimony, Mr. Singh completely resiles from his pleadings in which he alleges theft. Mr. Singh repeatedly testified that he was not claiming the Mercedes was stolen, but rather that it was burned. Nothing in his pleadings mentions that the Mercedes was burned.
 In his Claim File Report (by telephone), Mr. Singh claimed that the Mercedes was stolen. No mention was made of it being burned. In his statement of November 4, 2009, he refers to the fire. In his Proof of Loss, he swears that the cause of his loss was by “burned”. However, whether it was stolen or not, it could not be at the location of the fire without being driven there with the use of one of the sets of keys issued to Mr. Singh when he purchased the Mercedes.
In addition to dismissing the claim the Court ordered that the Plaintiff pay the Defendant’s costs which I would ballpark at $20,000 – $30,000. So, the end result is no vehicle, no insurance payout and a significant debt to ICBC.
While passengers can be found contributorily negligent for riding in the box of a pick-up truck such a finding will depend on the circumstances. Reasons for judgment were released this week by the BC Supreme Court addressing this.
In this week’s case (Tataryn v. Browne) 14 temporary farm workers were being transported from a rural farm to downtown Kamloops. Many of the workers were unrestrained in the box of the pick up truck. The motorist drove negligently leaving the road tumbling down an embankment rolling over several times before coming to a stop.
 I think it is obvious that the purpose of the box of the pickup is to carry cargo and not people….
6) The workers were poor. Most were homeless, on social assistance, and addicted to drugs or alcohol, or both. One plaintiff had a mental health condition for which he was medicated….
296] Annie controlled the workers’ transportation and she called the shots.
 The workers were poor, homeless, and sick. They were told by Annie if they did not get in the truck they would have to walk home. Walking home was not an option. It was 15 kilometres to the NLM. It was dark. It was cold. There were no sidewalks, and no public transportation. Some, if not all of the workers, were not properly clothed and Mr. Moore needed his medication.
 By necessity, the workers had no option but to be passengers in the truck without seatbelts, either in the cab or the box of the pickup truck.
 These thirteen men and one woman were facing conditions more severe than those facing the plaintiffs in Iannone, Bissky, Massey and Fraser.
 Based on the circumstances facing each of these workers, I conclude that not one of them was contributorily negligent.
Adding to this site’s archived case summaries addressing C5/6 disc injuries, reasons for judgement were released this week by the BC Supreme Court, Kamloops Registry, addressing such an injury.
 I have concluded, based on all of the medical evidence and the evidence of Ms. Levens, that as a result of the accident Ms. Levens suffered a herniated disk as seen in the MRI ordered by Dr. Singh in 2011.
 I also conclude that Ms. Levens, due to her pre-existing condition, was more susceptible to a disk herniation as a result of the degenerative changes in her cervical spine.
 At the time of the accident, Ms. Levens was 65 years old and at the time of the trial was age 69. Her most significant injury is the disc herniation in her neck. The pain has been severe. The myofascial pain and arthritis in her back would have been ongoing and not related to the accident. The motor vehicle accident caused increased pain which landed her in the hospital.
 She is disabled as she does not always have a full ROM in her neck. She has been unable to engage in some of her recreational and sporting activities that she engaged in prior to the accident.
 I award the plaintiff $48,000.00 in non-pecuniary damages.
Adding to this site’s BC soft tissue injury caselaw database, reasons for judgement were released recently by the BC Supreme Court, Kamloops Registry, assessing damages for a lingering Grade II soft tissue injury.
 I award the plaintiff $40,000.00 in non-pecuniary damages. In doing so, I take into consideration the difficulties the plaintiff suffered in pursuing his farming activities.
While this is certainly not a new legal development (you can click here to access my archived posts addressing this topic) reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, confirming yet again that a verbal agreement can create a binding injury claim settlement and that refusing to sign the appropriate closing documents does not create an escape route for a litigant that regrets their decision.
In this week’s case (Robertson v. Whistler (Resort Municipality)) the Plaintiff was injured when she fell in a shower owned by the Defendant. She was 8 years old at the time. She started a lawsuit when she was 20. In the course of the lawsuit the Defendant made a global settlement offer of $1,400. The Plaintiff, in a phone conversation with the Defendant’s lawyer stated that she “wished to accept the $1,400 offer“.
The Plaintiff later refused to sign an agreed to Consent Dismissal Order. The Plaintiff testified that “until she signed the offer and signed the order, there was no settlement“. Madam Justice Hyslop disagreed and dismissed the lawsuit finding there was a binding settlement. In addition the Court awarded the Defendant costs from the date of the settlement onward (which could result in the Plaintiff owing the Defendant money).
 Contract law applies to settlement agreements provided no contractual grounds to set aside the contract exist. Example: mutual mistake, lack of capacity, duress or fraud: Robertson v. Walwyn Stodgell Cochrane Murray Ltd.,  4 W.W.R. 283, 24 B.C.L.R. (2d) 385.
 I conclude that on December 16, 2010, the plaintiff entered into a binding settlement agreement. This action is dismissed with costs awarded to the defendant upon the basis that the sum of $1,400.00 due to the plaintiff will be set-off against the defendant’s assessed costs. Costs will be assessed under Appendix B, Scale B of the Supreme Court Civil Rules.

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