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2022 Supreme(MP) 1135
IN THE HIGH COURT OF MADHYA PRADESH
Sujoy Paul, Prakash Chandra Gupta, JJ.
India Shelter Finance Corporation – Appellant
Versus
State of Madhya Pradesh – Respondent
Writ Petition No. 21960 of 2022
Decided On : 15-12-2022
Amit Khatri, Advocate, Samagra Shrivastava, Advocate, Ankit Agrawal, Advocate, Prabhat Ranjan Trivedi, Advocate
The District Magistrate, after passing an order under Sec. 14 of the SARFAESI Act, has no jurisdiction to review or recall such order, and becomes functus officio after passing the final order under Sec. 14 of the SARFAESI Act.
Headnote:
Securitisation Act - Review of District Magistrate's order under Sec. 14 - 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Summary of Acts and Sections: The court discussed the nature of power to be exercised by the District Magistrate under Sec. 14 of the SARFAESI Act, emphasizing that it cannot be equated with a judicial power. The judgment referenced (2019) 20 SCC 47 and 2013 (9) SCC 620 to support the argument that the District Magistrate mainly exercises administrative or executive power, and there exists no enabling provision which permits the District Magistrate to review, recall, or stay his order. The court also highlighted the provisions of Sec. 37 of the SARFAESI Act, emphasizing that it only provides that the provisions of the SARFAESI Act and rules shall be in addition to and not in derogation of other provisions of law. The court set aside the impugned orders, emphasizing that the District Magistrate became functus officio after passing the final order under Sec. 14 of the SARFAESI Act.
Fact of the Case:
The petitioner, a secured creditor, filed an application under Sec. 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 before the Additional District Magistrate, which was decided by final order dtd. 25/5/2022. The respondent no. 2 preferred an application before the same authority which was entertained by the impugned order dtd. 14/6/2022. The petitioner challenged the impugned order on the grounds that the District Magistrate had no authority, jurisdiction, and competence to review or recall his order.
Finding of the Court:
The court found that the District Magistrate became functus officio after passing the final order under Sec. 14 of the SARFAESI Act, and there exists no enabling provision which empowers him to re-examine or recall his own order. The impugned orders were set aside, allowing the private respondents to avail appropriate remedy against the order dtd. 25/5/2022.
Issues: The issues revolved around the authority, jurisdiction, and competence of the District Magistrate to review or recall his order under Sec. 14 of the SARFAESI Act.
Ratio Decidendi: The District Magistrate, after passing an order under Sec. 14 of the SARFAESI Act, has no jurisdiction to review or recall such order. The District Magistrate became functus officio after passing the final order under Sec. 14 of the SARFAESI Act, and there exists no enabling provision which empowers him to re-examine or recall his own order.
Final Decision: The petition is allowed to the extent indicated above, setting aside the impugned orders of the same date, i.e., 14/6/2022, but not coming in the way of private respondents to avail appropriate remedy against the order dtd. 25/5/2022.
JUDGMENT
SUJOY PAUL, J. - This petition filed under Article 226 of the Constitution of India assails the impugned order dtd. 14/6/2022 (Annexure P-2) whereby learned Additional District Magistrate/Additional Collector has stayed his previous order dtd. 25/5/2022, which was passed in exercise of power under Sec. 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for brevity 'Securitisation Act').
2. Draped in brevity, the admitted facts between the parties are that the petitioner, a secured creditor filed an application under Sec. 14 of the said Act before the Additional District Magistrate, which was decided by final order dtd. 25/5/2022. Thereafter, the respondent no. 2 preferred an application before the same authority which was entertained by the impugned order dtd. 14/6/2022. Learned Additional District Magistrate re-examined/reviewed the case and stayed the effect and operation of the previous order dtd. 25/5/2022. These orders dtd. 14/6/2022 are subject matter of challenge in this petition.
3. Shri Amit Khatri with Shri Samagra Shrivastava, learned counsel for the petitioner submits that learned Additional District Magistrate had no authority, jurisdiction and competence to review or recall his order. He placed reliance on a Division Bench Judgment of Punjab and Haryana High Court in CWP -31871 - 2019 (Shriram Housing Finance Limited Vs. State of Haryana and others). In addition, it is submitted that as per (2019) 20 SCC 47 (Authorised Officer, Indian Bank Vs. D. Visalakshi and another), the District Magistrate/competent authority while exercising power under Sec. 14 of the said Act mainly exercises administrative or executive power and by no stretch of imagination, it can be treated to be an exercise of judicial power. At best, it can be treated to be an exercise of quasi judicial nature. 2013 (9) SCC 620 (Standard Chartered Bank Vs. V. Noble Kumar and others) was also relied upon for the same purpose. Shri Shrivastava submits that legislative intent behind Sec. 14 of the said Act is only to empower the District Magistrate to ensure the correctness of procedural part and formalities undertaken by the Bank before filing application under Sec. 14 of the Act. After having satisfied with nine point affidavit filed by the Bank, the Additional District Magistrate passed the order dtd. 25/5/2022. Thereafter, there exists no enabling provision which permits the Additional District Magistrate to review, recall or stay his order. Thus, the said order may be axed.
4. Shri Ankit Agrawal, learned Government Advocate for the State has supported the impugned order. In support of his argument, he placed reliance on (1980) Suppl. SCC 420 (Grindlays Bank Ltd. Vs. Central Government Industrial Tribunal and others), it is argued that as per this judgment of the Supreme Court, the review power can be exercised in two kinds of situation. Firstly, a review which is solely based on procedural part of the exercise whereas second type of review can be based on merits. As per this judgment, submits Shri Agrawal that every Tribunal, Court has inherent power to exercise power of review in cases of apparent procedural impropriety. Instant matter is covered under this provision and, therefore, no fault can be found in the order of learned District Magistrate.
5. Shri Trivedi, learned counsel for the private respondents placed reliance on Sec. 37 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and urged that learned Additional District Magistrate was not prevented/barred in exercising any other power flowing from any other enactment/law.
6. Learned counsel for the parties confined their arguments to the extent indicated above.
7. We have heard learned counsel for the parties at length and perused the record.
8. Punjab and Haryana High Court in the case of Shriram Housing Finance Limited (supra) framed a question which reads as under
