CJM Orders Under SARFAESI Section 14: Can They Be Enforced When the DRT Stays Proceedings?

Can CJM Pass Orders When Case Stayed by DRT?

In the complex world of debt recovery under the SARFAESI Act, 2002, borrowers and lenders often grapple with jurisdictional overlaps between the Chief Judicial Magistrate (CJM) and the Debt Recovery Tribunal (DRT). A common question arises: Whether CJM can pass order when case stayed by DRT? This issue frequently surfaces in possession proceedings under Section 14 of SARFAESI, where secured creditors seek CJM's assistance, only for DRT stays to complicate matters.

This blog post breaks down the legal principles, key judgments, and practical implications. Note: This is general information based on case law and not specific legal advice. Consult a qualified lawyer for your situation.

Understanding the Roles: CJM vs. DRT under SARFAESI

The SARFAESI Act empowers banks to recover dues without court intervention, but Section 14 allows CJM to assist in taking possession of secured assets. Borrowers challenge this via Section 17 applications before DRT, which can grant interim stays.

CJM's Role: Primarily facilitative; verifies affidavits and appoints commissioners for possession. JAMES JACOB, Versus THE CHIEF MANAGER - Kerala (2024)
DRT's Role: Adjudicates borrower challenges, with power to stay CJM orders or proceedings.
Hall Mark Steel Pvt. Ltd. VS Federal Bank - Punjab and Haryana (2017)

The tension arises when DRT stays a case—does this halt CJM entirely?

Key Legal Principles on CJM Jurisdiction During DRT Stays

Courts have clarified that CJM retains statutory powers, but they are subject to higher court or DRT interventions. Here's a breakdown:

1. DRT Jurisdiction Persists Despite Stays

The Delhi High Court held that DRT can entertain applications even if underlying orders are stayed by higher courts. In one case, a stay on an order led to dismissal of securitisation applications, yet DRT proceeded.

Hall Mark Steel Pvt. Ltd. VS Federal Bank - Punjab and Haryana (2017)

2. CJM Powers Not Automatically Negated

CJM can exercise jurisdiction under SARFAESI even with civil court injunctions, indicating resilience against stays unless explicitly restricted. JAMES JACOB, Versus THE CHIEF MANAGER - Kerala (2024)

3. Effect of Stays on Proceedings

Courts may stay DRT proceedings for settlements, like a one-month stay for One Time Settlement (OTS) negotiations. 2020 0 Supreme(Kar) 1809

However, other precedents emphasize limitations:- DRT stays on CJM orders suspend their operation. For instance, the effect and operation of the order dated 28/10/2024 passed by the CJM, Raipur shall remain stayed till 20/01/2025. 2025 Supreme(Online)(CHH) 70- This court had stayed the operation of order dated 23.1.2010 passed by CJM, Chandauli. 2016 0 Supreme(All) 1789

Case Studies: CJM Orders and DRT Stays in Practice

Stay Precedence Over CJM Actions

In multiple instances, DRT or higher courts stayed CJM orders, preventing enforcement:- Courts directed dismissal or abstention from coercive steps during stays. 2025 Supreme(Online)(Ker) 29932- It is clarified that proceedings before DRT is not stayed by this court nor any order of D.R.T is stayed. Yet, this underscores DRT's independent operation. 2016 0 Supreme(Guj) 2194

CJM Continuing Despite Transfers or Stays?

Some cases show CJM acting post-transfer, but without explicit stays:- CJM passed orders even after assurances otherwise, converting applications. 2019 5 Supreme 469- No further orders by CJM after transfer, highlighting jurisdictional bounds. 2018 0 Supreme(J&K) 732

DRT Directing CJM Compliance

DRT often modifies or stays CJM orders:- Since, by the impugned order, DRT had directed the peti.... 2024 Supreme(Online)(MP) 36508- Directions to pass orders on appeals within timelines. 2023 Supreme(Online)(KER) 12252

From additional analysis:- CJM orders under Section 14 are subject to DRT stays. In 2021 Supreme(Online)(MAD) 49805 and 2024 Supreme(Online)(Kar) 38877, DRT's interim relief takes precedence, halting execution.- During stays, all coercive proceedings should be stayed pending the outcome. 2024 Supreme(Online)(Ker) 83846

Judicial Discretion and Limitations

CJM must respect stays:- The CJM has statutory powers to verify affidavits... but must exercise these within the framework of stay orders. Failure invites criticism. 2024 Supreme(Online)(Kar) 38877 2025 Supreme(Online)(Ker) 45882- Company courts may stay DRT proceedings under Section 391(6). 2009 0 Supreme(Guj) 504

Key Takeaway: CJM may pass orders if no explicit stay binds it, but enforcement halts under DRT stays. Jurisdiction isn't ousted; operation is suspended.

Practical Recommendations for Parties

For Lenders: File detailed Section 14 applications noting stay status. Seek DRT vacation of stays promptly.
For Borrowers: Challenge via Section 17; request explicit stays on CJM actions.
Disclosure: Always outline stays/injunctions in filings. 2023 Supreme(Online)(KER) 17061
Consider OTS during stays to resolve amicably. 2020 0 Supreme(Kar) 1809

Analysis: Can CJM Pass Orders When Stayed by DRT?

Generally, yes—but with caveats:1. No Automatic Bar: CJM jurisdiction under SARFAESI persists unless higher court explicitly restricts. JAMES JACOB, Versus THE CHIEF MANAGER - Kerala (2024)2. Stay Effects Operation: Orders passed remain inoperative. E.g., stays till specific dates. 2025 Supreme(Online)(CHH) 703. Subordination: DRT stays prevail; CJM cannot bypass. 2022 Supreme(Online)(KER) 611494. Discretion Limited: Acting against stays risks reversal.

Main Point: CJM can pass Section 14 orders, but if DRT stays the case, they cannot be enforced until lifted. Courts prioritize DRT's appellate role.

Conclusion and Key Takeaways

Navigating CJM and DRT interplay requires understanding that CJM authority remains intact unless explicitly curtailed, yet DRT stays suspend execution. Parties should monitor proceedings closely and seek relief in appropriate forums.

Key Takeaways:- CJM passes orders under SARFAESI Section 14, subject to DRT/higher court stays.- Stays halt enforcement, not jurisdiction per se.- Always disclose stay status; pursue settlements.- Approach DRT for reliefs, as its powers endure stays.

Hall Mark Steel Pvt. Ltd. VS Federal Bank - Punjab and Haryana (2017)

References:-

Hall Mark Steel Pvt. Ltd. VS Federal Bank - Punjab and Haryana (2017)