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2023 Supreme(Cal) 943
IN THE HIGH COURT AT CALCUTTA
SABYASACHI BHATTACHARYYA, J.
Aditya Birla Finance Limited and another – Appellant
Versus
The State of West Bengal and others – Respondent
WPA No. 16614 of 2023
Decided on : 26-07-2023
Advocate Appeared:
For the Appellant : Mr. A. Nag, Mr. Soumavo Mukherjee, Mr. Subhankar Chatterjee
For the Respondent: Mr. Somnath Ganguli, Mr. Srinath Singha Roy, Mr. Kishore Dutta, Mr. Arijit Bardhan, Mr. Avik Ghatak, Mr. Saibal Krishna Dasgupta, Mr. Ratikanta Pal
The Magistrate's power to take possession of secured assets under Section 14 of the 2002 Act does not extend to movable properties. The Magistrate becomes functus officio after passing orders under Section 14 and cannot subsequently recall or modify such orders.
Headnote:
SECURED CREDITOR - POSSESSION OF SECURED ASSETS - SECTION 14 OF THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITIES INTEREST ACT, 2002 - Magistrate's power to take possession of immovable properties under Section 14 does not extend to movable properties - Magistrate becomes functus officio after passing orders under Section 14 and cannot subsequently recall or modify such orders - Magistrate's order directing return of movable properties to borrower is without jurisdiction.
Fact of the Case:
The petitioners, secured creditors, applied under Section 14 of the 2002 Act before the Magistrate for taking possession of secured assets. The Magistrate directed the Court Commissioner to take possession of the secured assets, including any articles/documents found therein, and deliver them to the Authorized Officer of the petitioners. The borrower/respondent filed an application seeking to have the movable items/goods/articles mentioned in the inventory lists, which were lying in the premises of the secured assets, returned to the borrower. The Magistrate allowed the application and directed the Commissioner to oversee the process of valuation and removal of the movable properties from the secured assets.
Finding of the Court:
The Magistrate's order directing the return of the movable properties to the borrower is without jurisdiction. The Magistrate's power to take possession of secured assets under Section 14 does not extend to movable properties. The Magistrate becomes functus officio after passing orders under Section 14 and cannot subsequently recall or modify such orders.
Issues: 1. Whether the Magistrate has the power to take possession of movable properties under Section 14 of the 2002 Act? 2. Whether the Magistrate becomes functus officio after passing orders under Section 14? 3. Whether the Magistrate can subsequently recall or modify such orders?
Ratio Decidendi: 1. The Magistrate's power to take possession of secured assets under Section 14 does not extend to movable properties. Section 14 of the 2002 Act is conspicuously silent regarding any movable property, which might be lying in the secured assets, but is not a part of the secured assets. 2. The Magistrate becomes functus officio after passing orders under Section 14. There cannot be any doubt that after taking steps under Section 14 of the 2002 Act, the Magistrate becomes functus officio for all purposes. 3. The Magistrate cannot subsequently recall or modify such orders. The Magistrate, unlike the Civil Court, does not have any inherent power to pass “appropriate orders”, subsequent to the exhaustion of his authority under Section 14.
Final Decision: The Magistrate's order directing the return of the movable properties to the borrower is set aside. The petitioner and its Authorized Officer are restrained by an order of injunction from dealing with and/or parting with and/or creating any encumbrance on the movable articles/properties lying in the secured assets, till appropriate orders with regard to the movables are passed by the Tribunal.
JUDGMENT :
Sabyasachi Bhattacharyya, J.
1. The petitioners are secured creditors. After having proceeded under Section 13(2) and Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (in short, “the 2002 Act”), the petitioners/creditors made an application under Section 14 of the said Act before the concerned Magistrate for taking possession. The Chief Judicial Magistrate, Alipore, vide order dated January 6, 2023, directed the Court Commissioner to take such steps and use such force, including breaking open the lock or any hurdle, taking assistance of police, if required, at the expenses of the applicant “and if any articles/documents found in the secured asset, then deliver its possession to the Authorized Officer of the petitioner after preparing list of articles and making inventory”. Photographs were also directed to be taken as proof of the same. Copies of the inventory were to be handed over to the borrowers, if present at the site, under acknowledgment and also to the Authorized Officer of the petitioner. The Seal Bailiff of the court was also directed to file his report along with photographs/video, CD, documents if any, inventory prepared if any, etc., within two months from the date of the order.
2. It is contended that thereafter, the borrower/respondent filed an application, which was allowed by the impugned order dated June 23, 2023 by the Chief Judicial Magistrate, Alipore, directing the Seal Bailiff of the court, being the appointed Commissioner who had delivered possession, to oversee the process of valuation and removal of movable items/goods/articles mentioned in the four inventory lists, which are lying in the premises of the four immovable properties, secured assets, possession of which has been handed over to the Secure Creditor between May 15, 2023 to May 17, 2023, pursuant to the order dated January 6, 2023 passed by the said court under Section 14 of the 2002 Act. The Secured Creditor and the respondents, in consultation with the Commissioner so appointed, were directed to fix the date/dates on which the process of valuation and removal of movable properties would be carried out from the schedule mentioned immovable properties. The entire process was to be completed within 45 days of the order.
3. The Commissioner was given liberty to requisition police help if necessary and the entire process was directed to be videographed for future reference.
4. Learned counsel for the petitioners contends that the Judicial Magistrate, under Section 14 of the 2002 Act, does not have the power of reviewing his own order. That apart, it is argued that the magistrate became functus officio after disposing of the application under Section 14 of the said Act and, as such, acted de hors his jurisdiction in passing the impugned order.
5. It is further submitted that the borrower got sufficient opportunity to remove the movable properties, which opportunity was given by specific notice in writing by the Authorized Officer. However, the borrower chose not to avail of such opportunity, for which the said movables were inventorized duly by the initial order under Section 14 and the possession thereof was handed over to the Authorized Officer of the petitioner. It is argued that there was no occasion for the Magistrate to recall the said order or reverse the same by directing the possession to be handed over to the borrower.
6. Insofar as the prayer made by learned senior counsel appearing for the respondent-borrower for a fresh inventory, it is argued by the petitioners that the said prayer ought to be turned down, since the movable properties have already been duly inventorized by the order of the Magistrate. It is further argued that the Magistrate acted without jurisdiction in passing the impugned order, since an application under Section 17 of the 2002 Act is already pending at the behest of the borrower before the Tribunal itself. In the event any order was t
