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2025 Supreme(Ker) 2074
IN THE HIGH COURT OF KERALA AT ERNAKULAM
GOPINATH P., J.
The Federal Bank Limited - Appellant
Versus
Chief Judicial Magistrate, Kozhikode - Respondent
WP(C) No. 3317 of 2025
Decided on : 11-03-2025
Advocate Appeared:
For the Appellant : Mohan Jacob George, P.V.Parvathy (P-41), Reena Thomas, Nigi George, Ananthu V.Lal, Sherin Varghese, Brahma R.K.
For the Respondent: GAYATHRI MURALEEDHARAN, BIJU ABRAHAM (KAIPPANPLACKAL)(K/966/2000), ARCHANA B.(K/3068/2022), ANTIJA JAMES(K/1549/2024), NAEEM(K/002664/2024)
The Chief Judicial Magistrate lacks jurisdiction to adjudicate borrowers' petitions under Section 14 of the SARFAESI Act, as this section is limited to ministerial actions without adjudicatory processes.
Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14 - Jurisdiction of Chief Judicial Magistrate - Petitioner, a banking company, challenged the maintainability of a petition filed by borrows before the CJM regarding a secured asset. Court found that the CJM lacks jurisdiction to adjudicate such issues under Section 14; powers under this section are ministerial, not judicial. (Paras 3, 5)
(B) Judicial Process - The inquiry conducted under Section 14 is administrative and does not adjudicate the borrower’s rights - It has been clarified through several judgments that the borrower has no standing to invoke Section 14. (Paras 4, 5)
(C) Procedural Missteps - The bank filed a counter arguing that the petition was not maintainable and that the 2nd respondent, the borrower, did not comply with the court's order. The court acknowledged the bank's position and reiterated the lack of jurisdiction of the CJM. (Paras 3, 5)
Facts of the case:
The petitioner bank sought recovery of dues under the SARFAESI Act. After failing to comply with a prior court order, the borrower filed a petition with the CJM, which the bank contended was not maintainable.
Findings of Court:
The CJM was found to have no jurisdiction to entertain the application filed by the borrower.
Issues: Whether the CJM has jurisdiction to hear appeals from borrowers against actions taken under Section 14 of the SARFAESI Act.
Ratio Decidendi: The court upheld that Section 14 involves ministerial functions and does not allow for adversarial proceedings regarding borrower rights.
Result: Writ Petition allowed; CJM's proceedings set aside, and petition dismissed.
| Table of Content |
|---|
| 1. petition based on jurisdiction issues. (Para 1 , 2) |
| 2. arguments on the cjm's powers under sarfaesi. (Para 3 , 4) |
| 3. court acknowledges the petitioner's entitlement to succeed. (Para 5) |
JUDGMENT :
GOPINATH P., J.
This Writ Petition has been filed inter-alia seeking a declaration that Ext.P3 petition filed by the 2nd respondent before the Chief Judicial Magistrate Court, Kozhikode (hereinafter referred to as ‘the CJM’) is not maintainable and the issues raised in the petition cannot be adjudicated by the Chief Judicial Magistrate .
The brief facts:-
2. The petitioner, a banking company, initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’) to recover amounts due under a loan availed by respondent Nos.2, 3 and 4 from it. The 2nd respondent challenged the proceedings by an application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal-I, Ernakulam (hereinafter referred to as ‘the Tribunal’). The application was numbered as S.A. No.432 of 2024 before the Tribunal. The Tribunal, on 12.08.2024, issued a conditional interim order on I.A. No.2861 of 2024 in S.A. No.432 of 2024. The interim order of the Tribunal in I.A. No.2861 of 2024 in S.A. No.432 of 2024 was challenged before this Court by the 2nd respondent by filing OP(DRT) No.264 of 2024. This Court, on 22.08.2024, directed that the 2nd respondent shall not be ousted from the secured asset subject to the condition that he pays a sum of Rs.1,00,00,000/- (Rupees one Crore only) towards the loan liability on or before 30.09.2024. When OP(DRT) No.264 of 2024 came up for consideration on 30.09.2024, this Court was informed that no amount had been paid by the 2nd respondent and therefore, this Court, by Exhibit P5(a) judgment dated 30.09.2024 dismissed O.P(DRT) No.264 of 2024. It appears that after the dismissal of OP(DRT) No.264 of 2024, Exhibit P3 petition was filed by the 2nd respondent before the Chief Judicial Magistrate Court, Kozhikode (in the proceedings initiated by the petitioner- bank under Section 14 of the SARFAESI Act before that Court) seeking the following reliefs:-
“a) An order may be issued to recall the Advocate Commissioner appointed in CMP 747/2024;
b) An order and direction may be issued to furnish a fresh affidavit to the petitioner in CMP 747/2024;
c) To pass an order for the dismissal of CMP 747/2024 on the ground that the averments in the affidavit are not satisfactory to this Hon’ble court;
d) To pass an interim order directing the Advocate Commissioner to abstain from executing the order until the disposal of this CMP;
e) For such other relief as this Hon’ble Court may deem fit and proper in the circumstance of this case.’’
The petitioner bank filed an Exhibit P4 counter statement, also arguing that Exhibit P3 petition was not maintainable. The petitioner is before this Court aggrieved by the fact that the CJM has not disposed of the Exhibit P3 petition despite it being brought to the court's notice that the petition is not maintainable.
3. Sri. Mohan Jacob George, the learned counsel appearing for the petitioner, submits that the power of the Magistrate under Section 14 of the SARFAESI Act has been considered by the Supreme Court in Balkrishna Rama Tarle v. Phoenix ARC (P) Ltd.; (2023) 1 SCC 662 . It is submitted that this Court also considered the powers exercised by the Magistrate under Section 14 of the SARFAESI Act in State Bank of India, TVM and Another v. Chief Judicial Magistrate, Kollam and Others; 2021 (6) KHC 83. It is submitted that, on the application of the law laid down by the Supreme Court in Balkrishna Rama Tarle (supra) and this Court in State Bank of India, Tvm (supra), it is clear that no application will lie at the instance of the borrower before the CJM as the CJM does not exercise any adjudicatory power while deciding applications under Section 14 of the SARFAESI Act.
4. Smt. Gayathri
