2024 (7) TMI 1211 - HC - Indian Laws

Territorial Jurisdiction of Chief Metropolitan Magistrate (CMM) - jurisdiction of DRT to assess whether the enforcement of security by the secured creditor - HELD THAT - The DRT has the jurisdiction to assess whether the enforcement of security by the secured creditor is in accordance with the provisions of the Act. This Court notes that Section 14 of the SARFAESI Act categorically states that the Chief Metropolitan Magistrate or the District Magistrate has the authority to assist the secured creditor in possession of the secured asset. However, the said section further provides that the Chief Metropolitan Magistrate or the District Magistrate, within whose jurisdiction any such secured asset or other documents related thereto, may be situated or found to take possession thereof, then said Chief Metropolitan Magistrate or the District Magistrate, as the case may be, shall upon application made in this regard by the secured creditor, take possession of such asset. Perusal of Section 14(1) of the SARFAESI Act manifests that the learned CMM has the authority to take action and issue directions for taking over the secured assets, where such secured asset is situated within the jurisdiction of the said CMM - In the present case, the order passed by the learned CMM is clearly without jurisdiction, since as per the submission of the learned Additional Standing Counsel for the GNCTD, the area in question where the property is situated, falls for civil and criminal jurisdiction under the North District. This Court is of the view that the petitioner ought to approach the learned DRT since there is an efficacious remedy available under Section 17 of the SARFAESI Act. Since in the present case, it has come to the fore that the impugned order dated 09th January, 2024 passed by learned CMM, North-West, Rohini Courts is without any jurisdiction, therefore, in order to balance the equities, the order dated 09th January, 2024 is suspended for a period of one week, in order to grant opportunity to the petitioner to approach the learned DRT under Section 17 of the SARFAESI Act. The petition is disposed off.

Issues Involved:
1. Territorial jurisdiction of the Chief Metropolitan Magistrate (CMM) in passing the order.
2. Classification of the petitioner's loan account as Non-Performing Asset (NPA).
3. Enforcement of security interest under the SARFAESI Act.
4. Appropriate forum for challenging the measures taken by the secured creditor.

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction of the Chief Metropolitan Magistrate (CMM):
The petitioner sought quashing of the order dated 09th January, 2024, passed by the learned CMM, North-West, Rohini, alleging lack of territorial jurisdiction. The petitioner argued that the property in question falls under the jurisdiction of the learned CMM, North District, under Police Station: Model Town. A letter from the Office of the Principal District & Sessions Judge (North-West) Rohini Courts, Delhi, confirmed that the property is indeed under the jurisdiction of the North District. Consequently, the court concluded that the order dated 09th January, 2024, was passed without any territorial jurisdiction.

2. Classification of the Petitioner's Loan Account as Non-Performing Asset (NPA):
The petitioner had taken a credit limit of Rs. 1,40,00,000/- from the respondent/Bank, which had kept the first floor of a property as collateral security. The loan account was classified as NPA, leading to the issuance of a notice under Section 13(2) of the SARFAESI Act by the respondent/Bank.

3. Enforcement of Security Interest under the SARFAESI Act:
The respondent/Bank filed a case under Section 14 of the SARFAESI Act to assist in taking possession of the secured asset. The court noted that Section 13(4) of the SARFAESI Act allows the secured creditor to take possession of the secured assets if the borrower fails to discharge their liability. Section 14 empowers the Chief Metropolitan Magistrate or the District Magistrate to assist the secured creditor in taking possession of the secured asset within their jurisdiction.

4. Appropriate Forum for Challenging the Measures Taken by the Secured Creditor:
The court emphasized that under Section 17(2) of the SARFAESI Act, any person aggrieved by the measures taken by the secured creditor can move an application to the Debt Recovery Tribunal (DRT) having jurisdiction. The DRT is authorized to assess whether the enforcement of security by the secured creditor is in accordance with the provisions of the Act. The court advised the petitioner to approach the DRT for an efficacious remedy under Section 17 of the SARFAESI Act.

Conclusion:
The court found that the order dated 09th January, 2024, passed by the learned CMM, North-West, Rohini, was without jurisdiction. To balance the equities, the court suspended the order for one week, granting the petitioner an opportunity to approach the DRT. The petition was disposed of with these directions, and the court acknowledged the assistance provided by Mr. Satyakam, learned Additional Standing Counsel for the Delhi Government.

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