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2019 (9) TMI 1020 - SC - Indian LawsJurisdiction - power of Chief Judicial Magistrate (CJM) to process the request of the secured creditor - SARFAESI Act - whether the CJM is competent to process the request of the secured creditor to take possession of the secured asset under Section 14 of the SARFAESI Act, 2002? - conflicting views of various Courts. HELD THAT - Going by the literal interpretation of Section 14 of the 2002 Act, it does appear that CMM or the DM within whose jurisdiction the secured asset is situated in, is bestowed with the authority to entertain the request of the secured creditor for possession of such secured asset. It also appears that remedy is provided before the designated authority, persona designata. That is the view taken by the High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand - At the same time, the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh have taken a liberal approach and were persuaded to invoke purposive interpretation and give expansive meaning to the expression CMM , to include CJM for the nonmetropolitan areas. For instance, the High Court of Bombay (Aurangabad Bench) in INDUSIND BANK LTD., (FORMERLY KNOWN AS ASHOK LEYLAND FINANCE LTD.) THROUGH ITS LEGAL EXECUTIVE, RAVINDRAKUMAR PRAKASH BHARGODEV VERSUS THE STATE OF MAHARASHTRA THROUGH POLICE STATION 2008 (4) TMI 791 - BOMBAY HIGH COURT , had taken a diametrically opposite view. It had held that it is not open to substitute the word, CMM for CJM . For, there is no indication in the 2002 Act that the legislature had intended to empower the CJM outside the metropolitan areas, although the judicial officer (CMM) was entrusted with the power to deal with such request in the metropolitan areas - however, the High Court of Karnataka in M/S KAVERI MARKETING VERSUS THE SARASWAT CO OPERATIVE BANK LTD 2013 (1) TMI 993 - KARNATAKA HIGH COURT took the same view as taken by the High Court of Kerala that the CJM can also exercise powers under Section 14 of the 2002 Act. Section 14 of the 2002 Act is not a provision dealing with the jurisdiction of the Court as such. It is a remedial measure available to the secured creditor, who intends to take assistance of the authorised officer for taking possession of the secured asset in furtherance of enforcement of security furnished by the borrower. The authorised officer essentially exercises administrative or executive functions, to provide assistance to the secured creditor in terms of State s coercive power to effectuate the underlying legislative intent of speeding the recovery of the outstanding dues receivable by the secured creditor. At best, the exercise of power by the authorised officer may partake the colour of quasi-judicial function, which can be discharged even by the Executive Magistrate - It is well established that no Civil Court can interdict the action initiated in respect of any matter, which a Debt Recovery Tribunal or Debt Recovery Appellate Tribunal is empowered by or under the 2002 Act, to determine and in particular, in respect of any action taken or to be taken in pursuance of any power conferred by or under the 2002 Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. That has been ordained by Section 34 of the 2002 Act. Section 14, even if read literally, in no manner denotes that allocation of jurisdictions and powers to CMM and CJM under the Code of Criminal Procedure are modified by the 2002 Act. Thus understood, Section 14 of the 2002 Act, stricto sensu, cannot be construed as being inconsistent with the provisions of the Code of Criminal Procedure or vice-versa in that regard. If so, the stipulation in Section 35 of the 2002 Act will have no impact on the expansive construction of Section 14 of the 2002 Act - keeping in mind the subject and object of the 2002 Act and the legislative intent and purpose underlying Section 14 of the 2002 Act, contextual and purposive construction of the said provision would further the legislative intent. In that, the power conferred on the authorised officer in Section 14 of the 2002 Act is circumscribed and is only in the nature of exercise of State s coercive power to facilitate taking over possession of the secured assets. This Court in JANARDHAN VERSUS STATE OF MAHARASHTRA 1978 (4) TMI 242 - SUPREME COURT was called upon to examine somewhat similar challenge. In that case, the challenge was to the search warrant issued by the Assistant Commissioner of Police in respect of offences punishable under Section 6 of the Bombay Prevention of Gambling Act, 1887. The Court repelled that challenge by relying on Section 17 of the Bombay General Clauses Act, 1886, which is pari materia to Section 17 of the General Clauses Act, 1897. The Court opined that though Section 6 of the Gambling Act specified the office of Commissioner of Police as the authorised officer, however, considering the sweep of Section 2(6) of the Bombay Police Act, 1951, which mentions that the term Commissioner of Police would include an Assistant Commissioner, went on to hold that the search warrant issued by the Assistant Commissioner was valid - A perusal of Section 11 of the Police Act leads to the inescapable conclusion that an Assistant Commissioner appointed under subsection (1) is to perform such duties and functions as can be exercised under the Act or any other law for the time being in force, which undoubtedly includes the Gambling Act which was a law in force at the time when the Police Act was passed. Apart from this the Assistant Commissioner could also perform those functions which could be assigned to him by the Commissioner under the general or special orders of the State Government. The substitution of functionaries (CMM as CJM) qua the administrative and executive or so to say nonjudicial functions discharged by them in light of the provisions of Cr.P.C., would not be inconsistent with Section 14 of the 2002 Act; nay, it would be a permissible approach in the matter of interpretation thereof and would further the legislative intent having regard to the subject and object of the enactment. That would be a meaningful, purposive and contextual construction of Section 14 of the 2002 Act, to include CJM as being competent to assist the secured creditor to take possession of the secured asset. It can be finally held and concluded that the CJM is equally competent to deal with the application moved by the secured creditor under Section 14 of the 2002 Act - We accordingly, uphold and approve the view taken by the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh and reverse the decisions of the High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand in that regard. Appeal disposed off.
Issues Involved:
1. Competency of Chief Judicial Magistrate (CJM) to process the request of the secured creditor under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). 2. Conflicting views of different High Courts regarding the interpretation of Section 14 of the SARFAESI Act. 3. Interpretation and application of Section 14 of the SARFAESI Act in light of the provisions of the Code of Criminal Procedure (Cr.P.C). 4. Examination of the legislative intent and judicial precedents related to the interpretation of Section 14 of the SARFAESI Act. 5. Consideration of the doctrine of prospective overruling. Detailed Analysis: 1. Competency of Chief Judicial Magistrate (CJM) to Process the Request of the Secured Creditor under Section 14 of the SARFAESI Act: The primary issue in these appeals is whether the CJM is competent to process the request of the secured creditor to take possession of the secured asset under Section 14 of the SARFAESI Act. The Supreme Court noted that different High Courts had conflicting views on this matter. The High Courts of Bombay, Calcutta, Madras, Madhya Pradesh, and Uttarakhand held that only the Chief Metropolitan Magistrate (CMM) in metropolitan areas and the District Magistrate (DM) in non-metropolitan areas are competent to deal with such requests. Conversely, the High Courts of Kerala, Karnataka, Allahabad, and Andhra Pradesh opined that the CJM in non-metropolitan areas is also competent to exercise power under Section 14 of the SARFAESI Act. 2. Conflicting Views of Different High Courts Regarding the Interpretation of Section 14 of the SARFAESI Act: The Supreme Court reviewed various judgments from different High Courts. The earliest decision was from the High Court of Kerala in Muhammed Ashraf and Anr. Vs. Union of India (UOI) and Others, which concluded that in non-metropolitan areas, apart from the DM, the CJM is also competent to exercise powers under Section 14 of the SARFAESI Act. This view was reiterated by the High Court of Kerala in Radhakrishnan, V.N. Vs. State of Kerala and Anr. However, the High Court of Bombay in IndusInd Bank Ltd. Vs. The State of Maharashtra and Arjun Urban Cooperative Bank Ltd., Solapur Vs. Chief Judicial Magistrate, Solapur and Ors., held that only the CMM or DM, as the case may be, can exercise powers under Section 14 of the SARFAESI Act. Similar views were held by the High Courts of Calcutta, Madras, Madhya Pradesh, and Uttarakhand. 3. Interpretation and Application of Section 14 of the SARFAESI Act in Light of the Provisions of the Cr.P.C: The Supreme Court noted that the expressions "CMM" and "DM" are not defined in the SARFAESI Act and can be traced to the provisions of the Cr.P.C. The Court observed that the powers and functions of the CMM and CJM are equivalent and similar, and these expressions are used interchangeably and synonymously. The Court emphasized that the inquiry conducted by the designated authority under Section 14 of the SARFAESI Act is a sui generis inquiry, which is majorly administrative or executive in nature. The CJM, being competent to discharge administrative as well as judicial functions as delineated in the Cr.P.C., can be considered equivalent to the CMM for the purposes of Section 14 of the SARFAESI Act. 4. Examination of the Legislative Intent and Judicial Precedents Related to the Interpretation of Section 14 of the SARFAESI Act: The Supreme Court examined the legislative intent and judicial precedents related to the interpretation of Section 14 of the SARFAESI Act. The Court referred to various judgments, including Standard Chartered Bank Vs. V. Noble Kumar and Others, Harshad Govardhan Sondagar Vs. International Assets Reconstruction Company Limited and Others, and All India Judges’ Association and Others Vs. Union of India and Others. The Court concluded that the legislative intent behind Section 14 of the SARFAESI Act is to provide a remedial measure for the secured creditor to take possession of the secured asset with the assistance of the State's coercive power. The Court held that the CJM in non-metropolitan areas is equally competent to deal with the application under Section 14 of the SARFAESI Act. 5. Consideration of the Doctrine of Prospective Overruling: The Supreme Court addressed the argument of prospective overruling pressed by the secured creditors (Banks). The Court noted that the doctrine of prospective overruling is an integral part of the Indian legal system and is applied in cases where a settled position of law is unsettled by a new decision. However, the Court held that in the present case, the interpretation given by the Court does not amount to reading anything into the provision that the legislature never intended. Therefore, the Court found it unnecessary to apply the doctrine of prospective overruling. Conclusion: The Supreme Court upheld and approved the view taken by the High Courts of Kerala, Karnataka, Allahabad, and Andhra Pradesh that the CJM is equally competent to deal with the application moved by the secured creditor under Section 14 of the SARFAESI Act. The Court reversed the decisions of the High Courts of Bombay, Calcutta, Madras, Madhya Pradesh, and Uttarakhand in this regard. The appeals were disposed of with liberty to the parties to pursue such other remedies as may be permissible in law with regard to other issues, if any.
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