Back
HIGH COURT OF JUDICATOR AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
Sri Dilip Babasaheb Bhosale, ACJ, Sri C. Praveen Kumar and Sri M.S.K. Jaiswal, JJ.
T.R. Jewellery and Ors. —Petitioners
versus
State Bank of India and Anr. —Respondents
Writ Petition Nos.17589 and 17625 of 2014
Decided on 27.11.2015
Held: From the above, it is clear that the object of the Act is to achieve speedier recovery of the dues declared as NPAs without the intervention of Tribunals or the Courts and for quick resolution of disputes arising out of the action taken for recovery of such dues apart from making better availability of capital liquidity and resources to help growth of economy and welfare of the people.
One of the arguments that was advanced before us was that when the Legislature has made a clear demarcation of power by authorizing Chief Metropolitan Magistrates in metropolitan area and District Magistrates in non-metropolitan area to exercise the jurisdiction of assisting the secured creditors and the act being a self-contained code, there is no necessity to give such power to any other Authority than those referred to in Section 14 of the Act. But a plain reading of Section 14 of the Act does not anywhere indicate the same. It only authorizes Chief Metropolitan Magistrate or District Magistrate to assist the secured creditor. On the other hand, section 20 of the Code of Criminal Procedure speaks of State Government appointing one of the Executive Magistrates as District Magistrate even in Metropolitan areas. Such being the position, a secured creditor will have the option of invoking two Forums in a metropolitan area which benefit is lacking to a secured creditor/financial institution in a non- metropolitan area.
Therefore, the application of the provisions of Code of Criminal Procedure would be in addition to and not in derogation of the provisions of SARFAESI Act and the provisions of Code cannot be excluded from consideration while dealing with the SARFAESI Act. Hence, the finding of the Full Bench of the Tamil Nadu High Court that in view of Section 35 of the Act the provisions of SARFAESI Act would override the provisions of Cr.P.C., and the phraseology used in Section 14 should be given its true meaning without any assistance of Cr.P.C., in our view, may not be correct. (Paras 11, 17 and 26)
(B) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002—Section 14—Whether Chief Judicial Magistrate exercising his jurisdiction in Corporation area can assist secured creditor in taking possession of secured asset and pass an order in favour of secured creditor for purpose of taking possession or control of any secured asset—Magistrate is only authorizing subordinate officers to take possession of assets after examining factual correctness of assertion made in the affidavit—Any assistance taken by financial institution/secured creditor for recovery of asset before authority referred to in Section 14 is only procedural in nature and no adjudication is involved—Order used in proviso to Section 14 is only an administrative order, made for taking possession of secured asset, if all other conditions are fulfilled—That being so, authorizing or adding an authority to exercise said power would not amount to delegation of power, thereby violating mandate of the provision.
Held: From the judgments referred to above, it is clear that the Magistrate is only authorizing the subordinate officers to take possession of the assets after examining the factual correctness of the assertion made in the affidavit. Therefore, it can be said beyond any shadow of doubt that any assistance taken by the financial institution/secured creditor for recovery of the asset before the authority referred to in Section 14 is only procedural in nature and no adjudication is involved. Hence, the word order used in proviso to Section 14 is only an administrative order, made for taking possession of the secured asset, if all other conditions are fulfilled. That being so, authorizing or adding an authority to exercise the said power would not amount to delegation of power, thereby violating the mandate of the provision. (Para 33)
(C) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002—Section 14—Whether Chief Judicial Magistrate exercising his jurisdiction in Corporation area can assist secured creditor in taking possession of secured asset and pass an order in favour of secured creditor for purpose of taking possession or control of any secured asset—Nomenclature Chief Metropolitan Magistrate referred to in Section 14 is inclusive of Chief Judicial Magistrate in non-metropolitan area—As such, Chief Judicial Magistrate in a non-metropolitan area gets jurisdiction to entertain an application under Section 14 of SARFAESI Act, 2002.
Held:For the aforesaid reasons, we answer the reference holding that the nomenclature Chief Metropolitan Magistrate referred to in Section 14 is inclusive of Chief Judicial Magistrate in non-metropolitan area and as such the Chief Judicial Magistrate in a non-metropolitan area gets jurisdiction to entertain an application under Section 14 of the SARFAESI Act, 2002. (Para 39)
Result: Reference answered.
C. Praveen Kumar, J.—Disagreeing with the view expressed in W.P.No.5347 of 2014 another Division Bench of this Court vide its order dated 24.07.2014 in W.P.Nos.17589 and 17625 of 2014 referred the following question to be decided by a Full Bench. In terms of the said order of reference, these Writ Petitions are posted before us to answer the question framed in the order of reference, which is as under:
“Whether the Chief Judicial Magistrate exercising his jurisdiction in Corporation area can assist secured creditor in taking possession of secured asset and pass an order in favour of secured creditor for the purpose of taking possession or control of any secured asset?
2. Taking Writ Petition No.17589 of 2014 as a lead petition, we proceed to decide the reference. An application under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act) came to be filed by a Secured Creditor before the Court of Chief Judicial Magistrate, Nellore requesting the said Court to take physical possession of the schedule property by exercising powers under the said provision. By an order dated 08.05.2014, the learned Chief Judicial Magistrate passed an order appointing an Advocate-Commissioner to take physical possession of the schedule property by making an inventory of the articles in the schedule property after conducting a panchanama. He was further directed to deliver the property to the secured creditor under proper acknowledgment. Challenging the same, the above Writ Petition came to be filed.
3. Referring to Section 14 of the SARFAESI Act, a Division Bench of this Court in W.P. No.5347 of 2014 while holding that in non- metropolitan areas District Magistrate alone is competent to pass an order under Section 14 of the SARFAESI Act, set-aside the order passed by the Chief Judicial Magistrate. A coordinate bench of this Court, differed with the view expressed therein and referred the matter to a Full Bench observing that the nomenclature Chief Metropolitan Magistrate (CMM) used in Section 14 of the SARFAESI Act is inclusive of the nomenclature Chief Judicial Magistrate (CJM) as the powers and functions of both are one and the same.
4. Sri B.Chandrasen Reddy, the learned counsel for the petitioners mainly submits that under Section 14 of the SARFAESI Act, the Chief Judicial Magistrate has no jurisdiction to entertain an application made under the said provision. According to him, since SARFAESI Act is a self-contained Code, Section 3(2) of the Cr.P.C., cannot be made use of to come to a conclusion that the Chief Metropolitan Magistrate referred to in Section 14 includes C.J.M. in non-metropolitan area. He submits that if really the legislature intended to extend such power to C.J.M., they would have incorporated the same atleast in the amendment brought to Section 14 in the year 2013. Since the language of Section 14 is clear and unambiguous, no jurisdiction can be vested with the Chief Judicial Magistrate in a non-metropolitan area for exercising the power of assistance under Section 14 of the SARFAESI Act. He further submits that since the power is exercised by the Chief Metropolitan Magistrate while doing a judicial act, the same cannot be delegated to Chief Judicial Magistrate by giving a wider meaning to the nomenclature Chief Metropolitan Magistrate. He places reliance on the word orders used in proviso to Section 14 of the SARFAESI Act in support of his plea. Sri Sharad Sanghi, learned counsel for petitioners, in connected matter, urged that the Court cannot supply the omissions if any made by the Legislature and can only interpret the Law.
5. Both the counsel placed reliance on the Full Bench judgment of the Madras High Court (Madurai Bench) in K. Arockiyaraj v. The Chief Judicial Magistrate, Srivilliputhur and another and two Division Bench judgments of the Bombay High Court in Arjun Urban Co-operative Bank Limited, Solapur v. Chief Ju
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
