2020 (11) TMI 1115 - SC - Indian Laws

Directory provision or not - Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 mandating the District Magistrate to deliver possession of a secured asset within 30 days, extendable to an aggregate of 60 days upon reasons recorded in writing - HELD THAT - The question as to whether, a time limit fixed for a public officer to perform a public duty is directory or mandatory has been examined earlier by the Courts as well. A question arose before the Privy Council in respect of irregularities in the preliminary proceedings for constituting a jury panel. The Municipality was expected to revise the list of qualified persons but the jury was drawn from the old list as the Sheriff neglected to revise the same. It was in these circumstances, the decision of the jury drawn from the old list became the subject matter of consideration by the Privy Council. It was thus held that it would cause greater public inconvenience if it were held that neglecting to observe the provisions of the statute made the verdicts of all juries taken from the list ipso facto null and void so that no jury trials could be held until a duly revised list had been prepared. In T.V. Usman v. Food Inspector, Tellicherry Municipality, Tellicherry 1994 (1) TMI 292 - SUPREME COURT , the time period during which report of the analysis of a sample Under Rule 7(3) of the Prevention of Food Adulteration Rules, 1955 was to be given, was held to be directory as there was no time-limit prescribed within which the prosecution had to be instituted. When there was no such limit prescribed then there was no valid reason for holding the period of 45 days as mandatory. Of course, that does not mean that the Public Analyst can ignore the time-limit prescribed under the rules. He must in all cases try to comply with the time-limit. But if there is some delay, in a given case, there is no reason to hold that the very report is void and, on that basis, to hold that even prosecution cannot be launched. This Court distinguished between failure of an individual to act in a given time frame and the time frame provided to a public authority, for the purposes of determining whether a provision was mandatory or directory, when this Court held that it is a well-settled principle that if an act is required to be performed by a private person within a specified time, the same would ordinarily be mandatory but when a public functionary is required to perform a public function within a time-frame, the same will be held to be directory unless the consequences therefor are specified. Even though, this Court in United Bank of India v. Satyawati Tondon and Ors. 2010 (7) TMI 829 - SUPREME COURT held that in cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which will ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. The Hon'ble High Courts are well aware of the limitations in exercising their jurisdiction when affective alternative remedies are available, but a word of caution would be still necessary for the High Courts that interim orders should generally not be passed without hearing the secured creditor as interim orders defeat the very purpose of expeditious recovery of public money. There are no error in the order passed by the High Court - the appeal is dismissed.

Summary

Issues Involved:
1. Whether the time limits specified in Section 14 of the SARFAESI Act are mandatory or directory.
2. Interpretation of the word "shall" in statutory provisions.
3. Impact of non-compliance with the time limits on the jurisdiction of the District Magistrate.
4. Applicability of precedents related to statutory interpretation and public duty.

Detailed Analysis:

1. Whether the time limits specified in Section 14 of the SARFAESI Act are mandatory or directory:
The primary issue is the interpretation of Section 14 of the SARFAESI Act, which mandates the District Magistrate to deliver possession of a secured asset within 30 days, extendable to 60 days for recorded reasons. The High Court held that these time limits are directory, not mandatory, emphasizing that the objective is to ensure expeditious decisions to enable secured creditors to take possession quickly. The absence of specified consequences for non-compliance supports the directory interpretation, as does the fact that borrowers are not adversely affected by slight delays beyond 60 days.

2. Interpretation of the word "shall" in statutory provisions:
The appellant argued that the use of "shall" indicates a mandatory provision. However, the judgment explains that the word "shall" does not always imply mandatory compliance. The court must consider the statute's context and purpose. Citing precedents, the judgment notes that when a public duty is involved, and non-compliance would cause inconvenience or injustice to those without control over the duty, the provision is typically directory. This principle was applied to Section 14, given the public nature of the District Magistrate's duty.

3. Impact of non-compliance with the time limits on the jurisdiction of the District Magistrate:
The judgment clarifies that non-compliance with the 30 or 60-day time limits does not divest the District Magistrate of jurisdiction. The secured creditor has no control over the District Magistrate, who acts for public good to facilitate debt recovery. Thus, interpreting the time limits as mandatory would undermine the Act's purpose by delaying possession and requiring new applications, contrary to the Act's objective of speedy recovery.

4. Applicability of precedents related to statutory interpretation and public duty:
Several precedents were reviewed to support the directory interpretation. For instance, the Privy Council in Montreal Street Railway Co. v. Normandin held that non-compliance with procedural time limits by public officials does not invalidate proceedings if it causes greater public inconvenience. Similarly, the Constitution Bench in Dattatraya Moreshwar Pangarkar v. State of Bombay held that statutory provisions related to public duties are usually directory. The judgment also referenced cases distinguishing between time limits for private individuals and public authorities, reinforcing that public duty time limits are generally directory unless specified otherwise.

Conclusion:
The Supreme Court upheld the High Court's decision, affirming that Section 14's time limits are directory, not mandatory. The judgment emphasized the Act's purpose of facilitating speedy recovery of debts and the impracticality of interpreting the time limits literally. Consequently, the appeal was dismissed, maintaining that the District Magistrate retains the duty to facilitate possession delivery even beyond the specified time limits.