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High Court of Judicature at Madras
N. PAUL VASANTHAKUMAR & P.R. SHIVAKUMAR, JJ.
S. Chandramohan & Another
Versus
The Chief Metropolitan Magistrate, Chennai & Others
W.P. No. 29366 of 2014 & M.P. Nos. 1 & 2 of 2014
Decided on: 19-11-2014
SARFAESI Act, 2002 - Section 14 - Possession of properties - Physical possession of secured assets - Third respondent herein was Principal Debtor of loan - Petitioners herein are mortgagors absolute owners of properties mentioned in schedule and title deeds of properties were also mortgaged - Petitioners and third respondent committed willful default in spite of various demands and requests and hence loan account became NPA - Demand Notice under Section 13(2) of Act was issued for an outstanding amount plus interest which was received by parties - Even after expiry of statutory period of days petitioners and third respondents failed to repay dues - Hence action was initiated under section 13(4) of Act and symbolic possession of properties was taken and notice was issued to petitioners and third respondent - Said notice was also published in two newspapers and in spite of taking best efforts Bank was unable to take physical possession of secured assets and bring said properties for auction sale - Hence said petition was filed before Chief Metropolitan Magistrate – Held, Generally speaking provisions of a statute creating public duties are directory and those conferring private rights are imperative - When provisions of a statute relate to performance of a public duty and case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with duty and at same time would not promote main object of legislature it has been practice of Courts to hold such provisions to be directory only neglect of them not affecting validity of acts done - Procedural laws like Code are intended to control and regulate procedure of judicial proceedings to achieve objects of justice and expeditious disposal of cases - Provisions of procedural law which do not provide for penal consequences in default of their compliance should normally be construed as directory in nature and should receive liberal construction - Court should always keep in mind object of statute and adopt an interpretation which would further such cause in light of attendant circumstances - In said judgment earlier decision of Supreme Court reported in AIR was considered and followed - Object of amendment introduced in Act 1 of 2013 being to give assistance to Chief Metropolitan Magistrate District Magistrate Chief Metropolitan Magistrate is justified in appointing Advocate Commissioners instead of authorizing Subordinate Officers to take possession - It is well settled in law that Advocates are also Officers of Court though not subordinate to Chief Metropolitan Magistrate - As Officers of Court Advocates can perform their duty more effectively than Officers subordinate to Chief Metropolitan Magistrate in taking possession of assets and documents and in delivering same to Secured Creditor -- Thus in any event contention raised by counsel appearing for petitioner is devoid of merits - Writ petition is dismissed
N. Paul Vasanthakumar, J.
1. This writ petition is filed by the petitioners challenging the order passed by the Chief Metropolitan Magistrate, Chennai, in Crl.M.P.No.979 of 2014 dated 19.3.2014 under Section 14 of the SARFAESI Act, 2002.
2. The Bank of Baroda, second respondent herein, filed Crl.M.P.No.979 of 2014 before the Chief Metropolitan Magistrate, Chennai, contending that at the request of the petitioners and third respondent, the Bank sanctioned cash credit limit of Rs.250 lakhs on 31.12.2008, which was subsequently increased as Cash Credit Hype Review of Rs.250 lakhs and Working Capital Demand Loan of Rs.50 lakhs. For availing the said loan, the petitioners and the third respondent have executed various documents in favour of the bank and also agreed to repay the loan amount together with interest.
3. The third respondent herein was the Principal Debtor of the loan. Petitioners herein are mortgagors/absolute owners of the properties mentioned in the schedule and the title deeds of the properties were also mortgaged. Petitioners and third respondent committed wilful default in spite of various demands and requests, and hence the loan account became NPA on 31.3.2011. Demand Notice under Section 13(2) of the Act was issued on 23.5.2011 for an outstanding amount of Rs.2,86,60,940/- plus interest, which was received by the parties. Even after expiry of statutory period of 60 days, petitioners and third respondents failed to repay the dues. Hence action was initiated under section 13(4) of the Act and symbolic possession of the properties was taken on 1.10.2011 and notice was issued to the petitioners and third respondent. The said notice was also published in two newspapers on 2.10.2011, and in spite of taking best efforts, the Bank was unable to take physical possession of the secured assets and bring the said properties for auction sale. Hence the said petition was filed before the learned Chief Metropolitan Magistrate.
4. The said petition was ordered by the Chief Metropolitan Magistrate, Chennai on 19.3.2014 by appointing two advocates to take possession of the properties, A and B schedule, after taking inventory, if necessary with the assistance of the Station House Officers of K2 Ayanavaram Police Station and K5 Peravallur Police Station, Chennai respectively. The said order is challenged by the petitioners contending that the learned Chief Metropolitan Magistrate was not justified in appointing Advocate Commissioners to take possession of the Schedule mentioned assets in the light of the statutory provision viz., Section 14 of the Act, as amended by Act 1 of 2013, in particular Section 14(1-A), which states that the Chief Metropolitan Magistrate may authorise any Officers subordinate to him to take possession of such assets and documents relating thereto.
5. The learned counsel appearing for the petitioner was asked a specific question as to whether the petitioners are in a position to repay the loan amount at least in installments to avoid taking of possession of the properties. The learned counsel submitted that the petitioners are not having any means to repay the dues and he has only argued that in view of the procedural violation while passing orders by the Chief Metropolitan Magistrate, the petitioners have filed this writ petition.
6. It is relevant to note at this juncture that petitioners have challenged the order of the Chief Metropolitan Magistrate before the DRT-III, Chennai in SARFAESI Application - S.A.No.168 of 2014 and challenged the possession notice dated 1.10.2011 as well as the order of the Chief Metropolitan Magistrate dated 19.3.2014. The DRT-III, Chennai, relying upon sub-Section (3) of Section 14 of SARFAESI Act, which states that 'no act of the Chief Metropolitan Magistrate or the District Magistrate or any officer authorised by the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of Section 14 shall be called in question in any Court or before any authori
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