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TMI Blog2022 (7) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... gistrate" as appearing in Section 14 of the SARFAESI Act shall deem to mean and include Additional District Magistrate and Additional Chief Metropolitan Magistrate for the purposes of Section 14 of the SARFAESI Act, the borrower has preferred the present appeal. 2. The facts leading to the present appeal in a nutshell are as under: 2.1 That respondent No. 1 herein - Financial Institution - Capital First Limited is the secured creditor (hereinafter referred to as the "secured creditor") within the meaning of Section 2(1)(zd) of the SARFAESI Act. That the secured creditor instituted proceedings under the SARFAESI Act for recovery of the amount due and payable by the appellant herein - borrower. The said proceedings initiated under Section 13(4) of the SARFAESI Act, the secured creditor proceeded to take possession of the secured asset. However, the borrowers refused to handover the physical possession of the secured asset. The secured creditor took symbolic possession of the secured asset on 21.01.2017 and affixed the possession notice at the said secured asset. That on 17.03.2017, the secured creditor filed an application under Section 14 of the SARFAESI Act with the learned Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itan Magistrate, who is an authority under Section 14 of the SARFAESI Act cannot decide such applications within a time bound period in terms of the first and second proviso to Section 14(1) of the SARFAESI Act. After opining so, the High Court proceeded to consider the issue as to how to minimize the pendency. In this context, after considering the relevant provisions of the SARFAESI Act as well as Section 17(2) and Section 19 of the Code of Criminal Procedure, the High Court has observed that the Additional Chief Metropolitan Magistrate (for short "ACMM"), being invested with all the judicial powers of the Chief Metropolitan Magistrate, can be considered at par with the Chief Metropolitan Magistrate. The High Court has also observed that so far as the exercise of judicial powers are concerned, the Chief Metropolitan Magistrate and the Additional Chief Metropolitan Magistrate stand on the same footing and one cannot be said to be either inferior or subordinate to the other. It is further observed and held that as the status of Chief Metropolitan Magistrate and Additional Chief Metropolitan Magistrate is same and identical, the Additional Chief Metropolitan Magistrate can exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litan Magistrate and Additional District Magistrate also. It is vehemently submitted that the High Court has also committed a very serious/grave error in holding that the District Magistrate and the Chief Metropolitan Magistrate is not a persona designata for the purposes of Section 14 of the SARFAESI Act. 4.1 Shri Malkan, learned counsel appearing on behalf of the borrower has submitted that the impugned judgment and order passed by the High Court is just contrary to the decisions of the Gujarat High Court, Kerala High Court and the Calcutta High Court. It is submitted that the High Court of Gujarat, has been pleased to hold that: "1) District Magistrate and Additional District Magistrate are two different and distinct authorities; 2) The powers conferred on the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, under Section 14 are interalia that the powers are conferred specifically on these authorities. One of the aspects of the power to be exercised is that the District Magistrate or the Chief Metropolitan Magistrate has to satisfy himself about compliance of the requirement of the Section. The satisfaction is personal satisfaction. The District M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is specifically observed and held that it is only the District Magistrate who can exercise the powers under Section 14 of the SARFAESI Act. 4.4 Making the above submissions and relying upon the decisions of this Court in the case of Hari Chand Aggarwal (supra) and the decisions of High Court of Gujarat, Kerala and Calcutta, it is prayed to allow the present appeal and quash and set aside the impugned judgment and order passed by the High Court and to hold that it is only the District Magistrate or the Chief Metropolitan Magistrate who are conferred with the powers in their specific capacity as Chief Metropolitan Magistrate or District Magistrate to exercise the powers under Section 14 of the SARFAESI Act. 5. Shri Sachin Patil, learned counsel appearing on behalf of the State has supported the impugned judgment and order passed by the High Court. It is submitted that looking to the mandate under Section 14 of the SARFAESI Act to decide and dispose of the applications under Section 14 within a maximum period of 60 days and looking to the volume of the work and applications pending with the District Magistrates or the Chief Metropolitan Magistrates and that they have also to look a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period; (iii)the borrower has created security interest over various properties giving the details of properties referred to in subclause (ii)above; (iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount; (v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a nonperforming asset; (vi) affirming that the period of sixty days notice as required by the provisions of subsection (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower; (vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for nonacceptance of such objection or representation had been communicated to the borrower; (viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by this Court in the recent decision of NKGSB Cooperative Bank Limited Vs. Subir Chakravarty & Ors. (Civil Appeal No. 1637/2022) decided on 25.02.2022, it is open to the CMM/DM to appoint an advocate and authorise him/her to take possession of the secured assets and documents relating thereto and to forward the same to the secured creditor under Section 14(1A) of the SARFAESI Act. 7. Now so far as the powers exercisable by DM and CMM under Section 14 of the SARFAESI Act are concerned, statement of objects and reasons for which SARFAESI Act has been enacted reads as under: " STATEMENT OF OBJECTS AND REASONS The financial sector has been one of the key drivers in India's efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with the international prudential norms and accounting practices there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike internation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer by way of lease, assignment or sale for realising the secured asset. That, they could do through their "authorised officer" as defined in Rule 2(a) of the Security Interest (Enforcement) Rules, 2002. 7.1 After taking over possession of the secured assets, further steps to lease, assign or sale the same could also be taken by the secured creditor. However, Section 14 of the SARFAESI Act predicates that if the secured creditor intends to take possession of the secured assets, must approach the CMM/DM by way of an application in writing, and on receipt of such request, the CMM/DM must move into action in right earnest. After passing an order thereon, he/she (CMM/DM) must proceed to take possession of the secured assets and documents relating thereto for being forwarded to the secured creditor in terms of Section 14(1) read with Section 14(2) of the SARFAESI Act. As noted earlier, Section 14(2) is an enabling provision and permits the CMM/DM to take such steps and use force, as may, in his opinion, be necessary. 7.2 At this stage, it is required to be noted that along with insertion of subsection (1A), a proviso has also been inserted in subsection (1) of Section 14 of the SARFAE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the essence. This is the spirit of the special enactment. As observed and held by this Court in the case of NKGSB Cooperative Bank Ltd. (supra), the step taken by the CMM/DM while taking possession of the secured assets and documents relating thereto is a ministerial step. It could be taken by the CMM/DM himself/herself or through any officer subordinate to him/her, including the advocate commissioner who is considered as an officer of his/her court. Section 14 does not oblige the CMM/DM to go personally and take possession of the secured assets and documents relating thereto. Thus, we reiterate that the step to be taken by the CMM/DM under Section 14 of the SARFAESI Act, is a ministerial step. While disposing of the application under Section 14 of the SARFAESI Act, no element of quasi judicial function or application of mind would require. The Magistrate has to adjudicate and decide the correctness of the information given in the application and nothing more. Therefore, Section 14 does not involve an adjudicatory process qua points raised by the borrower against the secured creditor taking possession of secured assets. 9. Thus, in view of the scheme of the SARFAESI Act, more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being in force as the High Court may direct. (3) (a) The High Court may designate any Judicial Magistrate of the first class in any subdivision as the Subdivisional Judicial Magistrate and relieve him of the responsibilities specified in this section as occasion requires. (b) Subject to the general control of the Chief Judicial Magistrate, every Subdivisional Judicial Magistrate shall also have and exercise, such powers of supervision and control over the work of the Judicial Magistrates (other than Additional Chief Judicial Magistrates) in the subdivision as the High Court may, by general or special order, specify in this behalf. 15. Subordination of Judicial Magistrates.-(1) Every Chief Judicial Magistrate shall be subordinate to the Sessions Judge; and every other Judicial Magistrate shall, subject to the general control of the Sessions Judge, be subordinate to the Chief Judicial Magistrate. (2) The Chief Judicial Magistrate may, from time to time, make rules or give special orders, consistent with this Code, as to the distribution of business among the Judicial Magistrates subordinate to him. 16. Courts of Metropolitan Magistrates.-(1) In every metropolitan area, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of any Magistrate, the Chief Judicial Magistrate, or the District Magistrate, as the case may be, shall determine by order in writing the Magistrate who shall, for the purpose of this Code or of any proceedings or order thereunder, be deemed to be the successorinoffice of such Magistrate." 10.1 From the aforesaid provisions, it can be seen that any Metropolitan Magistrate can be appointed by the High Court to be the Chief Metropolitan Magistrate. The High Court may appoint any Metropolitan Magistrate to be an Additional Chief Metropolitan Magistrate, and such Magistrate shall have all or any of the powers of a Chief Metropolitan Magistrate under Cr.PC or under any other law for the time being in force as the High Court may direct. The Chief Metropolitan Magistrate and every Additional Chief Metropolitan Magistrate shall be subordinate to the Sessions Judge; and every other Metropolitan Magistrate shall, subject to the general control of the Sessions Judge, be subordinate to the Chief Metropolitan Magistrate. Thus the judicial powers and the powers, under the Cr.PC which may be exercised by the Chief Metropolitan Magistrate, can be exercised by the Additional Chief Metropolita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... district. Similarly, CMMs are also required to perform administrative duties and they have also to deal with the other cases/criminal trials and many trials under special statutes also. It cannot be disputed that the litigations under the SARFAESI Act and proceedings and/or applications under Section 14 of the SARFAESI Act are increasing. Even as noticed by the High Court in the impugned judgment and order, as on 09.08.2017, 926 cases were pending under Section 14 of the SARFAESI Act before only one CMM. Therefore, a number of applications under Section 14 are pending. It also cannot be disputed that the SARFAESI Act provides for expeditious disposal of the applications filed under Section 14 of the SARFAESI Act. As per, second proviso to Section 14, suitable orders for the purpose of taking possession of the secured assets are required to be passed within a maximum period of sixty days from the date of the application. Therefore, if the submission on behalf of the appellants that only the concerned CMM/DM alone would have jurisdiction to decide the applications under Section 14 of the SARFAESI Act is accepted, in that case, it will be practically impossible for the concerned CMM/D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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