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TMI Blog2019 (7) TMI 1540X X X X Extracts X X X X X X X X Extracts X X X X ..... assed within the said time limit and the secured creditor concerned approached this Court for expeditious disposal of such applications. The said outer limit of 60 days comprising an initial period of 30 days and an extended period of a further 30 days was stipulated by an amendment effected through Act 44 of 2016 which came into force on 01.09.2016 and it is the admitted position that the said amendment applies in all these Writ Petitions. Therefore, the primary question that arises for consideration, in these Writ Petitions, is whether the said time limit is mandatory and, if so, whether the District Collector/District Collector is divested of jurisdiction to decide the application on expiry of 60 days. In addition, in certain cases, the borrower concerned challenges the order under Section 14 on the basis that the requirements of the amended Section 14 with regard to the filing of an affidavit with the requisite details was not satisfied by the respective secured creditor therein. 3. For the purposes of adjudicating these Writ Petitions, the relevant facts with regard to: the date of filing of the respective application under Section 14 of the SARFAESI Act and the date of prono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 14 (3) wherein it is specified that no act of the District Magistrate can be challenged before a court or authority and that, therefore, there is no statutory appeal against an order passed under Section 14. The said amended section 14 reads as under: "14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset- (1) where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured assets is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, shall, on such request being made to him- (a) take possession of such asset and documents relating thereto; and (b) forward such assets and documents to the secured creditor: p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons in writing for the same, pass the order within such period not exceeding in the aggregate 60 days.(emphasis added). Provided also that the requirement of filing the affidavit stated in the proviso shall not apply to proceedings pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act." 5. He next referred to section 17 and, in particular, to sub-clause 4-A thereof which provides for an appeal by a lessee in respect of orders passed under section 14. In this regard, he pointed out that only a lessee can maintain an appeal under the aforesaid sub-clause. 6. The learned senior counsel, thereafter, referred to and relied upon the following authorities, which are set out below along with a brief description of the proposition laid down therein: (a) Harshad Govardhan Sondagar vs. International Assets Reconstruction Co. Ltd. 2014 (5) CTC 546 (SC) wherein, at paragraph 29, the Supreme Court held that the Debts Recovery Tribunal does not have the power to restore possession of the secured asset to the lessee if an application is filed under section 17 of the SARFAESI Act. This judgement was referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislative intention of making the provision absolute, peremptory and imperative becomes loud and clear and ordinarily has to be inferred as such...." (g) Vijay Narayan Thatte vs. State of Maharashtra (2009) 9 SCC 92 wherein, at paragraph 4, the principle of construction that statutes that are couched in negative language are ordinarily regarded as peremptory and mandatory was referred to and in paragraph 22, the Supreme Court upheld the proposition that when the language of the statute is plain and clear, literal interpretation should be adopted. (h) Lachmi Narain vs. Union of India (1976) 2 SCC 953 wherein, at paragraph 68, the Supreme Court held that the expression "not less than three months notice" in Section 6(2) of the Bengal Sales Tax Act, which deals with the power to amend the schedule of exempted goods, is mandatory and not directory. (i) Balasinor Nagrik Cooperative Bank Ltd. vs. Babubhai Shankerlal Pandya (1987) 1 SCC 606, wherein, at paragraph 5, the time limit of three months for the Registrar to approve or disapprove of a resolution expelling a member under Section 36 of the Gujarat Cooperative Societies Act was held to be mandatory. (j) Chhatrapal Singh vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egative language raises a rebuttable presumption that the provision in question is mandatory. However, such presumption is certainly not conclusive. 9. Each of the counsel for the banks that are parties to these Writ Petitions, thereafter, made submissions. The said submissions are summarised herein. Mr.Pala Ramasamy, the learned counsel for the respective Banks in W.P. No. 13654 of 2019 and 15507 of 2019, formulated the following propositions for the consideration of the Court: (a) if a provision in a statute prescribes a procedure for performance and employs the word shall, it would not be held as mandatory. (b) whether a statute is directory or mandatory would not depend on the usage of the words "shall" or "may" but would depend on the object and purpose it seeks to achieve. (c) if the statute prescribes the consequence of noncompliance, the provision in question is mandatory but if no consequences are prescribed, it is directory. In order to substantiate this proposition, he adverted to Rule 9 (3) of the Security Interest (Enforcement) Rules, wherein subrule's 4 and 5 prescribe the consequence of noncompliance. 10. In addition, he referred to the Minutes of the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Jabalpur Bench) in Manish Makhija vs. Central Bank of India (2018) 2 DRTC 289, wherein, the time limit in the proviso to Section 14 of the SARFAESI Act was held to be directory. Paragraph 19 of said judgment reads as under: "19. Thus, in the considered opinion of this Court, the aforesaid proviso was not inserted to give the benefit to a borrower or guarantor, who has not paid the debts. In other words, if the Chief Metropolitan Magistrate or District Magistrate failed to pass the order within stipulated time, the legislature never intended to give free hand to the borrower/guarantor. Putting it differently, the intention of law makers while inserting the said proviso was to compel the said Magistrates to pass orders within a statutory time frame." 11. Mr. N. Dilip Kumar, the learned counsel for the Bank in W.P. No. 11986 of 2019, opened his submissions by pointing out that Section 13 is the primary provision and that Section 14 is ancillary thereto. With regard to Section 14 (3), he submitted that it pertains to immunity to officers for acts done in order to secure physical possession for and on behalf of secured creditors. In other words, he submitted that the said sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registrar of Co-operative Societies, Tiruvannamalai Circle (2008) 8 MLJ 231 on section 81 (4) of the T.N. Cooperative Societies Act, which prescribes a time limit that "shall not exceed six months in the aggregate" for completing an inquiry was interpreted as being directory and not mandatory and it was held, in paragraph 12, that "....the members of general public who have been cheated have no control over those who hold the enquiry in respect of the time limit." 13. Mr C. Jawahar Ravindran, learned counsel for the Bank in W.P. No. 13726 of 2019, thereafter, made submissions. Once again, he submitted that orders passed under Section 14 are ministerial and not judicial. He referred to and relied upon the judgment reported in Bachahan Devi vs. Nagar Nigam, Gorakhpur (2008) 12 SCC 372 and, in particular, paragraph 17 and 18 thereof with regard to the principle that the words " shall" and " may" are not conclusive as to whether a provision is directory or mandatory. He further submitted that the bank has no control over the district magistrate and that, therefore, great prejudice would be caused to secured creditors if the time limit is construed as mandatory and not directory. He fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rformance of statutory duties. (f) the decision of the Madhya Pradesh High Court in the Manish Makhija case is not correct because such interpretation is unwarranted when the language of the provision is unambiguous. (g) Section 17 (5) of the SARFAESI Act is different because the word preferably is used in the context of the time limit. (h) the exercise of jurisdiction under Section 14 is not ministerial but quasi-judicial. (i) the judgments relating to the directory nature of provisions in the CPC are distinguishable because the said provisions deal with obligations imposed on the defendant in a litigation and not with the exercise of jurisdiction by a quasi-judicial authority. 15. We carefully considered the pleadings, documents, oral submissions and the authorities relied upon by all the parties. On examining Section 14, as amended by Act 44 of 2016, it is clear that the amendment relating to the imposition of time limits uses words such as "shall" and "not exceeding 60 days". Therefore, it is self-evident that the time limit is unambiguous. In light of such unambiguous language, which is both peremptory in form and couched in negative language, the question that arises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured creditors are in a position to take possession of secured assets quickly. It is further evident that the amended Section 14 does not stipulate any consequence if the time limit is not observed. More importantly, it is abundantly clear that the said time limits are not intended to be used as a weapon by borrowers or guarantors, or even lessees in mortgaged properties, to defeat or delay attempts by a secured creditor to take physical possession of assets in which it has security interest. 16. As correctly contended by Mr. Pala Ramasamy, provisions that prescribe a time limit for the performance of statutory duties or obligations are largely construed as directory. The reason for so construing such provisions is that the non-performance of such statutory duties or obligations would affect or prejudice public interest and not the person who fails to perform the statutory duty. In this regard, we are unable to countenance the distinction made by the learned senior counsel, Mr. Ajmal Khan, between provisions that stipulate a time limit for the performance of statutory duties and provisions, such as Section 14, that fix a time limit for the exercise of jurisdiction under a statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e "consequences of non-compliance" test is that provisions that are intended to protect or further substantive rights of a party, including time limits in that regard, are generally construed as mandatory whereas provisions that do not impact the substantive rights of a party are generally construed as directory and not mandatory. (f) provisions that stipulate a time limit for the performance of statutory duties and obligations, including time limits for exercise of jurisdiction under a statute, are generally construed as directory because it is public interest and not the interest of the officer or authority concerned that is affected in the event of noncompliance with the stipulated time limit. In addition, the affected persons or members of the public are not in a position to control the exercise or performance of statutory duties and obligations by the public official or authority concerned. 18. The primary question in these Writ Petitions, namely, whether the time limits in section 14 of the SARFAESI Act are mandatory or directory should be answered in light of the principles enumerated above. As stated above, the object and purpose of the said time limit is to ensure that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate proceedings before the DRT provided symbolic/constructive or physical possession was taken so as to challenge the measure under section 13 (4) of the SARFAESI Act by filing an appeal under Section 17 thereof. 20. In conclusion, we hold as follows: (a) all the Writ Petitions filed by borrowers, namely, W.P.(MD)Nos.11986, 13006, 13654, 15507 of 2019 and 24785 of 2018, challenging orders passed in Section 14 applications on the ground that the time limit prescribed by the amended Section 14 was exceeded are disposed of in the above terms by granting liberty to challenge the taking of possession by filing an appeal before the DRT concerned under Section 17 of the SARFAESI Act within two weeks from the date of receipt of a copy of the order; (b) the Writ Petition filed by the secured creditor seeking expeditious disposal of the Section 14 application, namely, W.P. No.13726 of 2019, is allowed and the District Collector concerned is directed to dispose of the application within a period of one month from the date of receipt of a copy of the order; (c) there shall be no order as to costs in any of these Writ Petitions; and (d) all connected miscellaneous petitions are closed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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