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TMI Blog2008 (8) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... section. A reading of the statutory provisions would show that u/s 14 of the Securitisation Act, the Magistrate is only rendering assistance to the secured creditor in taking possession of the secured assets as provided u/s 13(4) of the Securitisation Act. After 60 days' notice as prescribed u/s 13(2), secured creditor can approach the Magistrate for taking possession of the land. Magistrate has no power to refuse the request, but, before taking action, he can verify whether 60 days' notice as prescribed u/s 13(2) was issued or not and whether secured asset is identifiable. Powers of the Chief Judicial Magistrates in non-metropolitan areas and Chief Metropolitan Magistrates in metropolitan areas are one and the same. Here, in this case, there is no casus omissus also. Chief Judicial Magistrates in metropolitan areas are designated as Chief Metropolitan Magistrates and vice versa mutatis-mutandis by implication and by reference to the area of jurisdiction. Chief Judicial Magistrate in a non-metropolitan area stands in the same footing as Chief Metropolitan Magistrate in metropolitan area and, their designations are used synonymously to denote the authority depen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the main point argued by the petitioners is that Chief Judicial Magistrate is not vested with the power and jurisdiction to deal with application under section 14 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Act 54 of 2002) (in short `the Securitisation Act'). In some of the writ petitions, constitutional validity of section 14 of the Securitisation Act was also challenged, but, no arguments were raised regarding the same. In two writ petitions, it was also contended that Chief Judicial Magistrate, even if has jurisdiction, cannot depute a Commissioner for taking possession of the secured assets. We note that the Hon'ble Supreme Court has in Mardia Chemicals Ltd. etc. v. Union of India and others (AIR 2004 SC 237) upheld the validity of the provisions of the Securitisation Act except sub section 2 of section 17 which was declared ultra vires Article 14 of the Constitution of India. The said sub-section originally provided deposit of seventy five per W.A.428/2008 connected cases 2 cent of the amount claimed before entertaining an appeal before the Debts Recovery Tribunal under section 17 of the Securitisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (3) of section 14 further provides that such act of the authority is protected and the action shall not be questioned in any court or before any authority. As pointed out by the petitioners, a trial or adjudication of dispute is not contemplated by the Magistrate under the above section. Of course, Magistrate can consider whether secured property is identifiable and whether 60 days' notice was issued under section 13(2) as secured creditor can resort to section 13(4) and take possession of the secured assets only after issuing notice. In this connection, we refer to section 13 of the Securitisation Act which reads as follows: 13. Enforcement of security interest.- (1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Supreme Court in Mardia's case (supra) at paragraphs 80 and 81. We quote the same as follows: 80. Under the Act in consideration, we find that before taking action a notice of 60 days is required to be given and after the measures under Section 13(4) of the Act have been taken, a mechanism has been provided under Section 17 of the Act to approach the Debt Recovery Tribunal. The above noted provisions are for the purposes of giving some reasonable protection to the borrower. Viewing the matter in the above perspective, we find what emerges from different provisions of the Act, is as follows:- 1. Under sub-section (2) of Section 13 it is incumbent upon the secured creditor to serve 60 days notice before proceeding to take any of the measures as provided under sub-section (4) of Section 13 of the Act. After service of notice, if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower. In connection with this conclusion we have already held a dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the date on which such measures had been taken. The Debts Recovery Tribunal/the appellate forum is also given power to restore possession. Section 17(1) to (4) of the Securitisation Act are quoted below: 17. Right to appeal.- (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, (may make an application along with such fee, as may be prescribed) to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken: (Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.) (Explanation.- For the removal of doubts it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from whom the possession was taken. In the absence of any adjudicatory power vested in the Magistrate under section 14, the above authority cannot exercise statutory powers vested in the Tribunal. From orders of the Tribunal a further appeal will lie to Appellate Tribunal under section 18 of the Securitisation Act. Under section 34 of the Securitisation Act, jurisdiction of Civil Courts to entertain any suit or proceeding is barred. Therefore, aggrieved person has to approach the Tribunal or Appellate Tribunal, as the case may be, under sections 17 and 18 and if possession is taken under section 14, other authorities are prohibited from dealing with the subject matter which can be exclusively determined by the Tribunal. Hence, the authority who is called upon to act under section 14 of the Securitisation Act can only assist the secured creditor in taking possession of the secured assets. The disputes raised between the parties before the authority cannot be adjudicated by it, but, the authority can relegate the aggrieved person to seek statutory remedy under the Securitisation Act after taking possession and handing over to the secured creditor. It is for the borrower to move for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old or transferred, the secured creditor may, for the purpose of taking possession, request in writing to the District Magistrate to take possession thereof. Section 17(1) of NPA Act refers to right of appeal. Section 17(3) states that if the DRT as an appellate authority after examining the facts and circumstances of the case comes to the conclusion that any of the measures under Section 13(4) taken by the secured creditor are not in accordance with the provisions of the Act, it may by order declare that the recourse taken to any one or more measures is invalid, and consequently, restore possession to the borrower and can also restore management of the business of the borrower. Therefore, the scheme of Section 13(4) read with Section 17(3) shows that if the borrower is dispossessed, not in accordance with the provisions of the Act, then the DRT is entitled to put the clock back by restoring the status quo ante. Therefore, it cannot be said that if possession is taken before confirmation of sale, the rights of the borrower to get the dispute adjudicated upon is defeated by the authorised officer taking possession. As stated above, the NPA Act provides for recovery of possession by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the secured creditor in taking possession of the secured assets as provided under section 13(4) of the Securitisation Act. After 60 days' notice as prescribed under section 13(2), secured creditor can approach the Magistrate for taking possession of the land. Magistrate has no power to refuse the request, but, before taking action, he can verify whether 60 days' notice as prescribed under section 13(2) was issued or not and whether secured asset is identifiable. A similar view was expressed by Gujarat High Court in Bank of India v. Pankaj Dilipbhai Hemnani others (AIR 2007 Gujarat 201). But, even as an executing or administering authority, before taking action, he must himself be satisfied that notice under section 13(2) was issued and the property to be proceeded is the secured property. Even though there is no scope of adjudication or trial of a dispute under section 14, the Chief Metropolitan Magistrate or District Magistrate is not like an Amin of the court executing a court order. The fact that authority is entrusted with a senior functionary shows that Magistrate must satisfy himself that petition is maintainable. Arbitrary and high handed action at the instance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strate exercising jurisdiction in that area. Section 3(2) of the Cr. P.C. reads as follows: 3(2) In this Code, unless the context otherwise requires, any reference to the Court of a Judicial Magistrate shall, in relation to a Metropolitan area, be construed as a reference to the Court of the Metropolitan Magistrate for that area. The Criminal Procedure Code also permits that executive powers can be exercised by an Executive Magistrate. Adjudication like sifting of evidence, trial etc. shall be exercisable by a Judicial Magistrate. Contention of the petitioners is that since a trial is not contemplated in a proceeding under section 14, the power under that section can be exercised by an Executive Magistrate. Learned single Judge held that power of Chief Judicial Magistrates in non-metropolitan areas and Chief Metropolitan Magistrates in metropolitan areas are equal and those terms are used only to indicate the same meaning. But, according to the petitioners, even though it is mentioned in the Cr. P.C. that Chief Judicial Magistrate, wherever mentioned in the Code with respect to metropolitan areas will be the Chief Metropolitan Magistrate, the converse is not mentioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other Acts. Sub-section (2) of section 34 of the above Act provides that it is in addition to certain specified Acts like Financial Corporation Act etc. Uttar Pradesh Public Monies (Recovery of Dues) Act, 1972 (U.P. Act) was not included under section 34(2) of the RDBI Act. Therefore, the Hon'ble Supreme Court has held that Financial Corporation can approach for recovery of dues under the RDBI Act or under the Financial Corporation Act, but, not under the U.P. Act, 1972 as it was not enacted in addition to the U.P. Act, 1972. Here, the position is entirely different. The question is whether the term Chief Metropolitan Magistrate in metropolitan areas will include Chief Judicial Magistrate in non-metropolitan areas. We are of the view that legislation has to be understood in a reasonable manner. In the context of the definition in the Cr. P.C., it can be gathered that a Chief Judicial Magistrate in non-metropolitan area and Chief Metropolitan Magistrate in metropolitan area are used in legal parlance similarly. As held in Holmes v. Bradfield Rural District Council (1949(1) All ER 381 (page 384) and Nasiruddin v. State Transport Appellate Tribunal (AIR 1976 SC 331 (page 338)) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strued according to the intent of those who make it and the duty of the court is to act upon the true intention of the Legislature. If a statutory provision is open to more than one interpretation the Court has to choose that interpretation which represents the true intention of the Legislature. This task very often raises difficulties because of various reasons, in as much as the words used may not be scientific symbols having any precise or definite meaning and the language may be an imperfect medium to convey one's thought or that the assembly of Legislatures consisting of persons of various shades of opinion purport to convey a meaning which may be obscure. It is impossible even for the most imaginative Legislature to foresee all situations exhaustively and circumstances that may emerge after enacting a statute where its application may be called for. Nonetheless, the function of the Courts is only to expound and not to legislate. Legislation in a modern State is actuated with some policy to curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the Legislature based on information derived from past and prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Madras High Court in The Dhanalakshmi Bank Limited v. Kovai Foods and Beverages in Crl.Op.No.7312 of 2004 (MANU/TN/7582/2006) and we are unable to agree with the decision of the Bombay High Court (Aurangabad) in IndusInd Bank Ltd. v. The State of Maharashtra in Crl.W.P.Nos.214 and 215 of 2008 (MANU/MH/0375/2008) which took a contrary view. 6. With regard to the argument that a Commissioner cannot be appointed by the Chief Judicial Magistrate as part of giving assistance in taking possession of the secured assets while rendering assistance to the secured creditor to get possession of the secured assets, we are of the view that it is not necessary that the District Magistrate or the Chief Judicial Magistrate should go personally and take possession. Section 14(2) of the Securitisation Act provides that the Magistrate can order even police assistance and use all necessary powers in taking possession of the secured assets. In Sakiri Vasu v. State of Uttar Pradesh and others ((2008) 2 SCC 409, 2008(1) ILR Kerala 813) the Hon'ble Supreme Court held as follows: 18. It is well settled that when a power is given to a authority to do something it includes such incidental o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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