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SUPREME COURT OF INDIA
A.M. KHANWILKAR, DINESH MAHESHWARI, JJ.
The Authorised Officer, Indian Bank – Appellant
Versus
D. Visalakshi and Another – Respondents
Civil Appeal Nos. 6295 of 2015, 7554-7555, 7557, 7558, 7560-7561 of 2019, Criminal Appeal Nos. 900, 945, 1463, 1464, 1465, 1466, 1467, 1468, 1469, 1470, 1471, 1472, 1473, 1475, 1476, 1477, 1478 of 2019, SLP (Crl.) Nos. 393-394, 3507, 3689, 4293, 4351, 4387, 5058, 5268, 5346, 5351, 5368, 8870, 8871, 8872 of 2019, SLP (C) Nos. 7121, 23193 of 2019, 13722-13723, 12430-12431 of 2015, Diary Nos. 15461, 15465, 15467 of 2019, 47134 of 2018
Decided On : 23-09-2019
(a) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 37 - Not ruling out application of Code of Criminal Procedure, 1973 - Provisions of the Act and Rules framed thereunder to be in addition to other law. (Para 13)
(b) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14 - Expressions “CMM/DM” - Whether include CJM - CMM and DM not defined in the Act - Definitions in Code of Criminal Procedure, 1973 will apply - Enquiry by designated authority limited to matters specified in Clauses (i) to (ix) of the first proviso in Section 14 (1) - Such enquiry sui generis - Administrative or executive function - Quasi judicial enquiry - Nothing wrong in giving expansive meaning to the expression “CMM” as inclusive of CJM concerning non-metropolitan area. (Para 32, 33, 34)
(c) Code of Criminal Procedure, 1973 - Section 2(k) and 3 - CJM is equated with the CMM for the purposes of the Code. (Para 39)
(d) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14 - Not dealing with the jurisdiction of the Court as such - A remedial measure available to the secured creditor - Power, at best, quasi judicial - Can be discharged by an Executive Magistrate - Authorised officer not expected to adjudicate the contentious issues raised - He is only verify compliances according to first proviso of Section 14; and being satisfied, pass an order to facilitate taking over possession of the secured assets. (Para 40, 44)
(e) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 34 - Civil court debarred from interdicting action under the Act. (Para 41)
(f) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 35 and 37 - Provisions of Code of Criminal Procedure, 1973 - Not inconsistent with provisions of the Act - Applicability not barred. (Para 43)
(g) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14 r/w section 17, General Clauses Act, 1897 - Substitution of CMM as CJM in non metropolitan areas qua non-judicial functions - Permissible. (Para 46)
Facts of the case:
The question involved in these appeals is: whether the Chief Judicial Magistrate is competent to process the request of the secured creditor to take possession of the secured asset under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Finding of the Court:
CJM is equally competent to deal with the application moved by the secured creditor under Section 14 of the 2002 Act.
Result : Appeals disposed of.
>Key Points: - The judgment discusses whether CJM in non-metropolitan areas is competent to process Section 14 applications to take possession of secured assets. (!) (!) (!) - It analyzes the interchangeability and inclusive construction of CMM and CJM, and the distinction between metropolitan vs non-metropolitan areas for Section 14 powers. (!) (!) (!) - It considers the relationship between SARFAESI Act provisions (Sections 14, 37) and other laws including Cr.P.C., and whether Cr.P.C. can be applied in conjunction with SARFAESI. (!) (!) (!) - It references purposive/teleological interpretation to include CJM within Section 14 in non-metropolitan areas. (!) (!) (!) - It notes that the inquiry under Section 14 is administrative or executive, not adjudicatory, and that the borrower has remedies under Section 17 and judicial review. (!) (!) (!) - It confirms the official position that, in non-metropolitan areas, CJM can be equated with CMM for purposes of Section 14. (!) (!) - It discusses the doctrine of prospective overruling in the context of conflicting High Court decisions. (!)
JUDGMENT :
A.M. KHANWILKAR, J.
1. Delay condoned. Leave granted in Special Leave Petitions.
2. The seminal question involved in these appeals is: whether the Chief Judicial Magistrate (for short “CJM”) is competent to process the request of the secured creditor to take possession of the secured asset under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “2002 Act”). There are conflicting views of different High Courts on this question. The High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand have interpreted the said provision to mean that only the Chief Metropolitan Magistrate (for short “CMM”) in metropolitan areas and the District Magistrate (for short “DM”) in non-metropolitan areas are competent to deal with such request. On the other hand, the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh have taken a contrary view of the same provision, to mean that it does not debar or preclude the CJM in the non-metropolitan areas to exercise power under Section 14 of the 2002 Act.
3. The earliest decision is of the Division Bench of the High Court of Kerala at Ernakulam in Muhammed Ashraf and Another vs. Union of India and Others, AIR (2009) Ker. 14. The Court noted that Section 14 of the 2002 Act expressly refers to CMM in relation to metropolitan areas and DM for non-metropolitan areas. It then went on to observe that as the powers and functions of CJM in non-metropolitan areas and CMM in metropolitan areas are one and the same (with only difference that CMM exercises powers in metropolitan areas and CJM in non-metropolitan areas); and the expression CJM and CMM are interchangeably used namely, one is synonymous for the other depending on the area under its jurisdiction, by interpretative process, it concluded that in non-metropolitan areas, apart from DM, the CJM is also competent to exercise powers under Section 14 of the 2002 Act. This decision was carried in appeal before this Court being SLP (C) No. 1671 of 2009 which, however, came to be dismissed on 2nd February, 2009 as no ground to interfere with the impugned judgment was made out.
4. Soon thereafter, another Division Bench of the High of Kerala in Radhakrishnan, V.N. vs. State of Kerala and Another, MANU/KE/0677/2008 (Cr. M.C. No. 4369 of 2008 dated 20.11.2008) reiterated the view taken in Muhammed Ashraf (supra) and declined to refer the matter to a full bench for reconsideration.
5. However, around the same time, the High Court of Bombay (Aurangabad Bench) in IndusInd Bank Ltd. (formerly known as Ashok Leyland Finance Ltd.) through its Legal Executive, Ravindrakumar Prakash Bhargodev vs. State of Maharashtra through Police Station, 2008 (110) Bom. LR 2880 (decided on 22.04.2008) had taken a diametrically opposite view. It had held that it is not open to substitute the word “CMM” for “CJM.” For, there is no indication in the 2002 Act that the legislature had intended to empower the CJM outside the metropolitan areas, although the judicial officer (CMM) was entrusted with the power to deal with such request in the metropolitan areas. Again in Arjun Urban Cooperative Bank Ltd. Solapur vs. Chief Judicial Magistrate, Solapur and Others, 2009 (5) Mh. L.J. 380 another Division Bench of the High Court of Bombay opined that Section 14 of the 2002 Act, in no univocal terms, constricts the exercise of powers only by the CMM or DM, as the case may be.
6. However, in 2013, the High Court of Karnataka in Kaveri Marketing vs. The Saraswathi Coop. Bank Ltd. (2013) 111 BC 582 took the same view as taken by the High Court of Kerala that the CJM can also exercise powers under Section 14 of the 2002 Act. But the Single Judge of the High Court of Calcutta in Dinesh Kumar Agarwal vs. State of West Bengal, 2013 (1) CHN 671 and the full bench of Madras High Court in K. Arockiyaraj vs. The Chief Judicial Magistrate, Srivilliputhur Virudhunagar District and The Housing Development Finan
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