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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
C. Praveen Kumar, M. Ganga Rao, JJ.
Jampani Krishna Babu and Ors.- Appellant
Vs.
Canara Bank and Ors. - Respondent
W.P. No. 4430 of 2020
Decided On : 04-12-2020
SARFAESI ACT - SECTION 14 - APPOINTMENT OF ADVOCATE COMMISSIONER - SUBSTANTIAL COMPLIANCE - ALTERNATIVE REMEDY - WRIT PETITION DISMISSED: 1. The Chief Judicial Magistrate has the authority to appoint an Advocate Commissioner to take possession of the property under Section 14 of the SARFAESI Act, even though the Advocate Commissioner is not an officer subordinate to the Magistrate. 2. Substantial compliance with the requirements of Section 14(1) of the Act is sufficient, and minor deviations will not invalidate the order. 3. The borrower has an alternative remedy under Section 17 of the Act to challenge any action taken by the secured creditor under Section 13(4), including the appointment of an Advocate Commissioner under Section 14. 4. A writ petition under Article 226 of the Constitution of India is not maintainable when an alternative remedy is available under the Act.
Fact of the Case:
The Petitioners obtained housing loans from the Respondent Bank and defaulted on their payments. The Bank initiated action under the SARFAESI Act, including issuing notices, taking symbolic possession of the property, and publishing a possession notice. The Petitioners challenged the order appointing an Advocate Commissioner to take physical possession of the property, arguing that the Chief Judicial Magistrate lacked the authority to make such an appointment and that there was non-compliance with the provisions of the Act.
Finding of the Court:
The Court held that the Chief Judicial Magistrate has the authority to appoint an Advocate Commissioner under Section 14 of the SARFAESI Act, even though the Advocate Commissioner is not an officer subordinate to the Magistrate. The Court also held that there was substantial compliance with the requirements of Section 14(1) of the Act and that the Petitioners had an alternative remedy under Section 17 of the Act to challenge the appointment of the Advocate Commissioner.
Issues: 1. Whether the Chief Judicial Magistrate has the authority to appoint an Advocate Commissioner to take possession of the property under Section 14 of the SARFAESI Act. 2. Whether there was compliance with the requirements of Section 14(1) of the Act. 3. Whether the Petitioners have an alternative remedy under Section 17 of the Act.
Ratio Decidendi: 1. The Court relied on the provisions of Section 14(1A) of the SARFAESI Act, which authorizes the District Magistrate or Chief Metropolitan Magistrate to appoint any officer subordinate to him to take possession of secured assets. The Court held that this provision does not bar the appointment of an Advocate Commissioner as a Receiver/Advocate Commissioner. 2. The Court relied on the judgment of the Delhi High Court in Rahul Chaudhary v. Andhra Bank And Ors, which held that there are two ways of appreciating the provision of Section 14(1A). The first is that the expression "may" relates to the choice of the subordinate officer, and the other is that the District Magistrate/Chief Metropolitan Magistrate is vested with discretion to appoint officers subordinate to him to take possession of the secured asset. The Court held that the latter interpretation is more reasonable and that the District Magistrate/Chief Metropolitan Magistrate has the discretion to appoint even their subordinate officers as Receivers/Advocate Commissioners. 3. The Court relied on the judgments of the Kerala High Court in Canara Bank Limited v. Stephen John and others and the Madras High Court in S. Lalitha v. District Collector, which held that the power of the Chief Judicial Magistrate under Section 14 of the Act is administrative in nature and that substantial compliance with the requirements of Section 14(1) is sufficient.
Final Decision: The Court dismissed the Writ Petition, holding that the Petitioners had failed to satisfy the Court on any of the points urged, namely, (1) the power of Chief Judicial Magistrate to appoint Advocate Commissioner to take possession of the property; (2) non-compliance of Section 14(1) of the Act; and (3) approaching this Court under Article 226 of the Constitution of India without availing the remedy of appeal under Section 17 of the Act.
ORDER :
C. Praveen Kumar, J.
1. Challenging the Order passed by the Chief Judicial Magistrate-cum-Principal Assistant Sessions Judge, Guntur, in an application filed by the Secured Creditor under Section 14(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 ['SARFAESI Act'], the borrowers/Petitioners filed the present Writ Petition under Section (sic Article) 226 of the Constitution of India.
2. The facts, in nutshell, are as under:
(ii) The 1st Respondent Bank issued Section 13(2) notice calling upon the Petitioners to pay the outstanding dues in the loan accounts within 60 days. Thereafter, the 1st Respondent Bank initiated action under Section 13(4) of the Act and took symbolic possession of the property. Thereafter, the possession notice was published in leading newspapers. With a view to take physical possession of the secured asset, proceedings under Section 14 of the Act came to be issued by the 1st Respondent Bank by making an application under Section 14 of the Act vide Crl. M.P. No. 272 of 2019 before the Chief Judicial Magistrate-cum-Principal Assistant Sessions Judge, Guntur. By an Order, dated 13.01.2020, the said application was allowed, appointing one, Smt. G. Indira Priya Darshini, Advocate, as Advocate Commissioner for taking physical possession of the schedule property, to be handed over to the 1st Respondent Bank. Challenging the same, the present Writ Petition came to be filed.
3. Sri T. Lakshminarayana, learned counsel for the Petitioners, would contend that, the order impugned is totally contrary to Section 14 of the Act.
He pleads that, the Chief Judicial Magistrate is not having any authority to authorise or appoint an Advocate Commissioner to take possession of the property. Referring to Section 14(1A) of the Act, he would submit that, the District Magistrate or Chief Metropolitan Magistrate for such purposes can only authorise an officer subordinate to him to act, and the Advocate Commissioner appointed is not an officer subordinate to the District Magistrate. In other words, his plea is that the officer, who was entrusted with the task of executing the warrant, should be an officer working under the Chief Metropolitan Magistrate or District Magistrate on the date of passing of the order.
The Counsel for the Petitioners would further contends that, in view of the proviso to Section 14(1) of the Act, any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorized officer of the secured creditor, declaring the aggregate amount of financial assistance granted and the total claim of the bank as on the date of filing the application. In the absence of the same, he would contend that, the order stands vitiated.
The Counsel for the Petitioners further contends that the details of the properties over which the borrower has created security interest are not mentioned in the application filed under Section 14(2) of the Act. For all the above said reasons, he would submit that the order under challenge is liable to be set-aside.
4. Opposing the same, Sri K. Hari Narayana, learned Counsel appearing for the Respondent Bank, would submit that, in view of the fact that, the Advocate Commissioner has taken possession of the property on 06.03.2020, which is evident from the panchanama placed on record, the Writ Petition has become infructuous. Apart from that, he would contend that the argument of the learned counsel for the Petitioners that there was total non-compliance of Section 14 of the
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