2023 (4) TMI 1364 - HC - Indian Laws

Delay in disposal of applications under Section 14 of the SARFAESI Act - principal grievance of the Petitioners is that, despite the power under section 14 of the SARFAESI Act of 2002 being ministerial and to be used to aid the secured creditors in taking steps to realize their dues expeditiously, the applications are kept pending for an unduly long period - HELD THAT - Section 14 of the SARFAESI Act, thus, places an obligation upon the Chief Metropolitan Magistrate or District Magistrate to assist secured creditors in taking possession of the secured asset. Section 14 of the SARFAESI Act enables the secured creditor to approach the District Magistrate/Chief Metropolitan Magistrate with a written application requesting for taking possession of the secured assets and forwarding it to the secured creditor for further action. The powers of the Chief Judicial Magistrate and the District Magistrate under Section 14 of the SARFESI Act are merely administrative and do not involve pronouncing any judgment on the borrower's objections to the secured creditor taking possession of the secured assets. Once the secured creditor has met all the requirements under Section 14 of the SARFESI Act, it is the duty of the CMM/DM to assist the secured creditor in obtaining possession of the assets and related documents, with the help of any subordinate officer or appointed advocate commissioner. The learned counsel for the High Court Administration stated that currently there is no separate category assigned for applications under Section 14 of the SARFAESI Act in the Case Information System (CIS) software. Steps can be taken to create a separate category for these cases so they can be identified for the special drive. The learned counsel also mentioned exploring options to issue necessary instructions to facilitate e-filing and the creation of a portal within the existing CIS. It was also submitted that a special day can be assigned by the CMM for taking up the pending applications. Initiatives be taken pursuant to this position. The Application filed by a Secured creditor under section 14 of the SARFAESI Act with due compliance (the Application) should be disposed of by the District Magistrate/ Collector in the State of Maharashtra not later than 30 days of the Application is filed - Petition disposed off.

Summary

Issues Involved:
1. Delay in disposal of applications under Section 14 of the SARFAESI Act.
2. Statutory obligations and powers of the Chief Metropolitan Magistrate (CMM) and District Magistrate (DM) under Section 14 of the SARFAESI Act.
3. Implementation of guidelines for expeditious disposal of applications.
4. Role of police support and implementation of orders.
5. Introduction of e-system for tracking applications and orders.

Detailed Analysis:

1. Delay in Disposal of Applications:
The petitions were filed by secured creditors seeking directions for the early disposal of applications under Section 14 of the SARFAESI Act. The principal grievance was the undue delay in the disposal of these applications, which are meant to aid secured creditors in realizing their dues expeditiously. The court noted that despite the ministerial nature of the power under Section 14, applications were kept pending for an extended period. Data presented during the hearings revealed significant backlogs, with thousands of applications pending across Maharashtra, some for over a year.

2. Statutory Obligations and Powers of CMM and DM:
Section 14 of the SARFAESI Act obligates the CMM/DM to assist secured creditors in taking possession of secured assets. The Supreme Court has interpreted this section as imposing a ministerial duty on the CMM/DM to act expeditiously upon receiving a written application from a secured creditor. The court emphasized that the CMM/DM must verify compliance with formalities and take possession of the secured assets promptly, as time is of the essence in these proceedings. The powers exercised by the CMM/DM are administrative and do not involve adjudicating disputes between borrowers and secured creditors.

3. Implementation of Guidelines:
The State Government issued guidelines to address the backlog and ensure timely disposal of applications. These guidelines mandate that all pending applications as of 31 March 2023 be disposed of by 30 April 2023, and new applications filed after this date be resolved within 30 days. Orders under Section 14 must be implemented within four weeks. Monthly reports on pending applications and orders must be submitted to the Divisional Commissioner, and parties can make representations if applications or orders are delayed beyond 60 days.

4. Role of Police Support and Implementation of Orders:
The court acknowledged the issue of unimplemented orders due to the lack of police support. While general directions were not issued, the court noted that police authorities should assist in the implementation of orders as feasible. The guidelines allow for the appointment of advocates to implement orders if officers are overburdened, following the Supreme Court's judgment in NKGSB Co-operative Bank Ltd. v. Subir Chakravarty.

5. Introduction of E-System:
An e-system is to be implemented to enhance transparency and efficiency, allowing all relevant information about applications and orders to be uploaded and tracked online. This initiative aims to streamline the process and keep all parties informed about the status of applications. The court directed that this system be operational within 16 weeks.

Conclusion:
The court disposed of the writ petitions with specific directions to ensure the expeditious disposal of applications under Section 14 of the SARFAESI Act. These directions include strict timelines for the disposal and implementation of orders, the potential appointment of advocates for execution, and the introduction of an e-system for tracking applications. The court emphasized that these measures are intended to facilitate the legislative intent of the SARFAESI Act and do not alter the legal rights of the parties involved.