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2025 Supreme(Ker) 420
IN THE HIGH COURT OF KERALA AT ERNAKULAM
GOPINATH P., J
The South Indian Bank Ltd. - Appellant
Versus
Jahfer M.,Proprietor Of M/s. City Aluminium - Respondent
OP (DRT) NO. 336 OF 2024
Decided On : 18-03-2025
Advocate Appeared:
For the Appellant : ADV. K.K. CHANDRAN PILLAI (SR.), ADV. P.A. AUGUSTINE (AREEKATTEL)
For the Respondent: ADVS. V. PHILIP MATHEWS, ATHULYA SEBASTIAN
IMPORTANT POINT
The Chief Judicial Magistrate's role under Section 14 of the SARFAESI Act is administrative and does not involve adjudication; orders must reflect application of mind.
Headnote:
(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14 - Jurisdiction of Chief Judicial Magistrate - The Tribunal set aside the order of the Chief Judicial Magistrate as it was passed without due application of mind and in a printed format. The Chief Judicial Magistrate's role is administrative, not adjudicative, under Section 14 of the SARFAESI Act. (Paras 1 , 2 , 4 )
(B) Judicial Approach - The Chief Judicial Magistrate must display a judicial approach in considering facts asserted by parties, even though the inquiry is quasi-judicial and non-judicial. (Paras 3 , 4 )
(C) Practice of Orders - The practice of passing orders in a printed format without proper application of mind is deprecated. (Paras 4 )
Facts of the case:
The petitioners challenge the Tribunal's order setting aside a Chief Judicial Magistrate's order regarding possession of secured assets, asserting that the Magistrate's role is merely administrative.
Findings of Court:
The Tribunal's order is sustained as the Chief Judicial Magistrate's order lacked proper application of mind and was issued in a printed format.
Issues: The main issues were the nature of the Chief Judicial Magistrate's authority under the SARFAESI Act and the validity of the Tribunal's interference with his order.
Ratio Decidendi: The court confirmed that the Chief Judicial Magistrate's role under Section 14 is ministerial and requires application of mind, not mere formality.
Result: Original Petition dismissed.
Key Points: - The Chief Judicial Magistrate's role under Section 14 of the SARFAESI Act is administrative and ministerial, not adjudicative (!) (!) (!) (!) (!) . - Although the role is administrative, the Magistrate must display a judicial approach and apply their mind to the facts asserted by the parties (!) (!) (!) . - Passing orders in a printed format by filling in blank spaces without proper application of mind is deprecated and unsustainable (!) (!) (!) . - The inquiry under Section 14 is quasi-judicial through a non-judicial process but does not result in adjudication of inter se rights (!) (!) . - The Magistrate must satisfy themselves that all conditions for exercising power under Section 14 have been met before passing an order (!) (!) . - The Tribunal was justified in setting aside the Magistrate's order because it was issued in a printed format without due application of mind (!) (!) . - The practice of adopting a 'cut, copy, paste' method in passing orders under Section 14 is deprecated (!) . - The Original Petition filed by the bank challenging the Tribunal's order was dismissed (!) (!) . - The Registry was directed to communicate the judgment to the Chief Judicial Magistrate who issued the original order (!) . - Parties aggrieved by the Magistrate's order should challenge it before the Debts Recovery Tribunal, not via an Original Petition under Article 227 (!) .
What is the nature of the Chief Judicial Magistrate's role under Section 14 of the SARFAESI Act?
How to determine if an order passed by a Chief Judicial Magistrate under Section 14 of the SARFAESI Act is valid?
What are the rights of parties regarding the practice of passing orders in a printed format under Section 14?
JUDGMENT :
The first petitioner in this Original Petition (DRT) is a banking Company registered under the Companies Act, of 1913 and the 2nd petitioner is one of the Authorized Officers of the first petitioner under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act). The petitioners are before this Court challenging Ext.P6 order of the Debts Recovery Tribunal-I, Ernakulam (hereinafter referred to as the Tribunal) in S.A.No.286/2024. Through the said order the Tribunal set aside an order of the Chief Judicial Magistrate, Manjeri in M.C.No.929/2023 on the file of that Court, on the ground that the said order was passed without due application of mind and in a printed format. The contention that the properties in question are agricultural lands was rejected by the Tribunal.
2. Sri. K.K. Chandran Pillai, the learned senior counsel appearing for the petitioners on the instructions of Adv. P. A. Augustine would contend that the Chief Judicial Magistrate is not an Adjudicating Authority under the provisions of the SARFAESI Act. It is submitted that, while exercising powers under Section 14 of the SARFAESI Act, the Chief Judicial Magistrate only exercises an administrative power as it is clear from a reading of the provisions of Section 14 of the SARFAESI Act that the duty of the learned Magistrate is only to assist the secured creditor in taking possession of the secured asset. The learned senior counsel referred to the judgments of the Supreme Court in Indian Bank v. D. Visalakshi ; (2019) 20 SCC 47 , R.D. Jain & Co. v. Capital First Ltd., (2023) 1 SCC 675 and Balkrishna Rama Tarle v. Phoenix ARC (P) Ltd.; (2023) 1 SCC 662 and also to the judgment of this Court in Canara Bank Ltd. v. Stephen John and others ; 2018 (3) KHC 670 in support of his contention that the Chief Judicial Magistrate exercising powers under Section 14 of the SARFAESI Act is only exercising a ministerial power and is not exercising a judicial power. It is submitted that, in such circumstances, the act of the Tribunal in interfering with the order of the learned Chief Judicial Magistrate, Manjeri in M.C.No.929/2023 is clearly unsustainable as the order was set aside only on the ground that it was issued in a printed format.
3. Sri. V. Philip Mathews, the learned counsel appearing for the respondent (applicant in S.A.No.286/2024 before the Tribunal) vehemently contends that the order of the Tribunal is correct in law and ought to be sustained by this Court. It is submitted that there is no jurisdictional error or other defect in Ext.P6 order warranting interference at the hands of this Court in an Original Petition under Art.227 of the Constitution of India. It is submitted that, if the petitioners are in any manner aggrieved by Ext.P6 order, they have to challenge it before the Debts Recovery Appellate Tribunal instead of approaching this Court in an Original Petition under Art.227 of the Constitution of India. The learned counsel places reliance on the judgment of the Supreme Court in Visalakshi (supra) and contends that the enquiry by a Magistrate under Section 14 is a quasi-judicial enquiry through a non- judicial process. It is submitted that this Court in the judgment in Sama Rubbers v. South Indian Bank Ltd. ; 2023 KLT OnLine 1955 has held that the Chief Judicial Magistrate must display a judicial approach in considering the relevant facts asserted by the parties. It is submitted that, when faced with an application under Section 14 of the SARFAESI Act, the learned Magistrate is not expected to adjudicate any lis, the learned Magistrate ought to satisfy himself that all the conditions for the exercise of the power under Section 14 of the SARFAESI Act have been satisfied in the particular case before him. It is submitted that this Court in the judgment in Jimmy Thomas v. Indian Bank ; 2023 (3) KLT 630 has deprecated the practice of the Tribun
