2008 (4) TMI 791 - HC - Indian Laws

Summary

Issues Involved:
1. Whether a creditor requesting assistance u/s 14(1) of the NPA Act is required to be armed with a decree for recovery of dues from the borrower from a competent court or DRT.
2. Whether the Chief Judicial Magistrate (CJM) has jurisdiction to assist a secured creditor in taking possession of secured assets u/s 14(1) of the NPA Act.

Summary:

Issue 1: Requirement of Decree for Assistance u/s 14(1) of the NPA Act
The petitioner-bank approached the court feeling aggrieved by the orders of the CJM, Aurangabad, which rejected their applications u/s 14 of the NPA Act. The CJM's rejection was based on the observation that the petitioner-bank did not have a decree from a competent court or DRT. The court examined the judgment in Trade Well v. Indian Bank, which was misinterpreted by the CJM. The court clarified that the NPA Act is a special legislation enabling creditors to recover dues without obtaining a decree from a competent court or DRT. The court emphasized that the secured creditor is not required to obtain a decree before taking steps for enforcement of recovery as permitted by the NPA Act.

Issue 2: Jurisdiction of CJM to Assist u/s 14(1) of the NPA Act
The court noted that Section 14 of the NPA Act refers to the Chief Metropolitan Magistrate (CMM) or District Magistrate (DM) and conspicuously omits any reference to the CJM. The court concluded that in non-metropolitan areas, the secured creditor must approach the DM for assistance under Section 14(1), as the CJM does not have the jurisdiction to entertain such requests. The court upheld the CJM's order rejecting assistance to the petitioner, not on the grounds of the absence of a decree, but because the CJM lacks the jurisdiction to provide such assistance.

Conclusion:
The court disposed of the writ petitions by confirming the CJM's refusal of assistance under Section 14(1) of the NPA Act, clarifying that the petitioner can approach the DM for assistance. The refusal by the CJM will not impede the DM from providing assistance upon fulfillment of the requirements under Sections 13(2) and 13(3-A) of the NPA Act. The writ petitions were disposed of, and the rule was made absolute in these terms.