IN THE HIGH COURT OF ALLAHABAD
Sunita Agarwal, Vipin Chandra Dixit, JJ.
Shipra Hotels Limited and Anther – Petitioner
Versus
State of U.P. And Others – Respondents
Writ C No. 22594, 19555, 25346, 27814, 28176 of 2022
Decided On : 25-11-2022
Constitution of India, 1950 – Articles 226, 227 – Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 – Section 14, 17, 13(2) –Transfer of Property Act, 1882 – Section 65A, 111 – Recovery of Debts due to Banks and Financial Institutions Act, 1993 – Security Interest (Enforcement) Rules’ 2002 – Rule 8 – common dispute raised in all connected writ petitions is about validity of order passed under Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 by authorized officer namely Additional District Magistrate (Finance & Revenue), Ghaziabad, Meerut Commissionerate and Additional District Magistrate (Finance & Revenue), Varanasi, on ground that no notice or opportunity of hearing has been granted to petitioners herein who are borrowers and, thus, orders impugned suffer from violation of principles of natural justice – Hence, they have been heard together and are being decided by this common judgment – Held, It is held that the CMM/DM acting under Section 14 of SARFAESI Act, 2002 is not required to give notice to the borrower at stage of decision or passing order as no hearing can be demanded by borrower at this stage – However, it is clarified that order passed by such Magistrate has to be duly served upon borrower before taking any steps for his forcible dispossession by such steps or use of force, as may be necessary in opinion of Magistrate, and date fixed for such forcible action shall be duly intimated to such borrower in advance giving him sufficient time to remove his belongings, or to make alternative arrangement – Writ petitions dismissed.
JUDGMENT :
1. Heard Sri Amit Saxena learned Senior Counsel assisted by Sri Komal Mehrotra learned counsel for the petitioners, Sri Manish Goyal learned Additional Advocate General assisted by Sri Apoorva Hajela learned Standing Counsel for the State-respondents, Sri Anurag Khanna learned Senior Counsel assisted by Sri Veerendra Kumar Shukla learned counsel for the respondent No.3 and Sri Navin Sinha learned Senior Counsel assisted by Sri Raghav Dwivedi learned counsel for respondent No. 4. Ms. Rekha Singh learned Advocate holding brief of Sri Sanjay Kumar Gupta appeared for the respondent bank. Sri Utkarsh Singh learned counsel for the petitioner in Writ-C No. 27814 of 2022 has adopted the arguments of Sri Amit Saxena learned Senior Counsel on the issue of providing opportunity of hearing at the stage of the decision by CMM/DM under Section 14 of the SARFAESI Act' 2002. Learned counsels for the petitioners in other connected writ petitions have also adopted the arguments of the learned Senior Counsels for the petitioners.
2. The common dispute raised in all the connected writ petitions is about the validity of the order passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter referred to as "SARFAESI Act, 2002”) by the authorized officer namely the Additional District Magistrate (Finance & Revenue), Ghaziabad, Meerut Commissionerate and the Additional District Magistrate (Finance & Revenue), Varanasi, on the ground that no notice or opportunity of hearing has been granted to the petitioners herein who are the borrowers and, thus, the orders impugned suffer from violation of principles of natural justice. Hence, they have been heard together and are being decided by this common judgment.
3. In Writ-C No. 22594 of 2022 (Shipra Hotels Limited and another vs. State of U.P. and 3 others), an issue with regard to the jurisdiction of the Additional District Magistrate (F.&R.), Ghaziabad has also been raised to pass such order beyond the period of 60 days prescribed in the 3rd proviso to sub-section (1) of Section 14 of the SARFAESI Act, 2002.
4. The main prayer of the petitioners, thus, is that a declaration that natural justice as implied mandatory requirement, should be read into Section 14 of the SARFAESI Act, be made by this Court.
5. It is argued by Sri Amit Saxena learned Senior Advocate assisted by Sri Komal Mehrotra learned counsel for the petitioners in the leading writ petition that it is well known principle of law that if a statute does not exclude compliance with the principles of natural justice either expressly or by necessarily implication, compliance with natural justice has to be read into the statute. The fundamental principles of natural justice, including audi altrum paltrum have been insisted by the Courts to bring procedural fairness into a decision and infraction thereof has lead to quashing of such decisions.
It is argued that the applicability of principles of natural justice is not dependent upon any statutory provision. The principle has to be mandatorily applied irrespective of the fact as to whether there is any such statutory provision or not.
Reliance is placed on the decision of the Apex Court in Dharampal Satyapal Limited Vs. Deputy Commissioner of Central Excise, Gauhati and others, (2015) 8 SCC 519 to assert that where a statute authorises interference with properties or other rights and is silent on the question of hearing, the Courts would apply rule of universal application founded on plainest principles of natural justice. [Reference De Smith {Judicial Review of Administrative Action (1980), at page 161}]
It is argued that the fundamental principle of administrative law in Wade [Administrative Law (1977), at page 395] emphasizes that principles of natural justice operate as implied mandatory requirements, non-observance of which invalidates the exercise of power.
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The powers under Section 14 of the SARFAESI Act are ministerial; prior notice to the borrower is not required. Remedies are limited to the Debt Recovery Tribunal following action under the Act.
The SARFAESI Act, 2002 mandates that applications under Section 14 must be disposed of expeditiously without requiring notice to borrowers, as the process is ministerial and non-adjudicatory.
The District Magistrate is not required to grant an opportunity of hearing to the petitioners while examining applications filed by secured creditors under Section 14 of the SARFAESI Act, 2002. The p....
Proceedings under Section 14 of the SARFAESI Act, 2002, are ministerial in nature, requiring no notice to borrowers, aimed at expediting recovery processes.
Point of Law : Nature of powers to be exercised by learned Chief Metropolitan Magistrate/learned District Magistrate, High Court in impugned judgment and order has rightly observed and held that powe....
A District Magistrate's authority under the SARFAESI Act is administrative; subsequent orders can be made to modify the officer assigned for asset possession without it being deemed functus officio.
The Court clarified the jurisdiction of the Chief Judicial Magistrate under Section 14 of the SARFAESI Act, holding that both the District Magistrate and Chief Judicial Magistrate have the jurisdicti....
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