SURYA KANT, SUDHIR MITTAL
Asset Reconstruction Company (India) Ltd. – Appellant
Versus
State of Haryana – Respondent
Certainly. Here are the key points from the provided legal document:
The District Magistrate's role under Section 14 of the SARFAESI Act is primarily administrative and not quasi-judicial. The Magistrate is obliged to assist secured creditors in taking possession of secured assets when the statutory criteria are met, with no discretion to refuse assistance if the conditions are satisfied (!) .
The powers of the District Magistrate under Section 14 are limited to facilitating the physical possession of secured assets and do not include adjudicatory or review powers. Orders passed by a Magistrate under this section are not subject to review or modification by a successor Magistrate, and such review powers are not conferred by law (!) (!) .
Once the Magistrate has directed assistance under Section 14, the secured creditor's right to recover possession continues until the assets are sold or otherwise transferred. The exercise of powers under Section 14 is ongoing and not a one-time event, and the Magistrate is bound to repeat the process if circumstances change (!) (!) (!) (!) .
The order passed by the Magistrate under Section 14 is a statutory exercise of power, and the Magistrate has no authority to review, recall, or modify such an order. Orders made without jurisdiction are void ab initio (!) (!) .
If possession of the secured assets has already been taken over by the authorized officer of the secured creditor, the Magistrate cannot order re-possession. The exercise of powers under Section 14 is meant to facilitate initial possession, not to re-assert control over assets already in possession of the secured creditor (!) (!) .
The remedy available to borrowers or guarantors against orders under Section 14 is to approach the appropriate Debt Recovery Tribunal under Section 17 of the SARFAESI Act, as orders under Section 14 are considered part of the recovery process and are final unless challenged there (!) (!) .
The Court emphasized that the powers under Section 14 are created by statute and must be exercised strictly within the framework of the law. Any attempt by a Magistrate to review or modify an order under Section 14 without legal authority is invalid (!) .
The Court ultimately directed the District Magistrate to implement the original order under Section 14, which had directed recovery, and to do so within a specified timeframe, with the costs deposited by the respondents to be used for a charitable purpose (!) .
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Mr. Surya Kant, J.:- The petitioner is an Asset Reconstruction and Securitisation Company, registered duly under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, ‘the SARFAESI Act’). It seeks quashing of the order dated 14.06.2016 which eventually merged into the final order dated 24.10.2016 whereby the District Magistrate, Sonepat firstly adjourned the proceedings initiated under Section 14 sine die “till the consideration/disposal of objections…” and thereafter declared the order dated 08.02.2016 (P2) as null and void, vide which the application filed by the petitioner-institution under Section 14 of the SARFAESI Act was allowed, and consequently has dismissed that application.
2. The petitioner-Company (in short, ‘ARCIL’) is the assignee of (i) Industrial Development Bank of India Ltd (IDBI); (ii) Punjab National Bank (PNB); and (iii) the Union Bank. The Assigner-Banks vide their respective Deeds of Assignment dated 30.06.2008, 15.09.2008 and 22.12.2008 have assigned all the rights, title and interest over the dues recoverable from respondent No.3 – Kiran Overseas Exports Ltd. with underlying
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