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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 ..... e event a default is committed by the borrower in discharging his liability in full within the period specified in subsection (2), the secured creditor may take recourse to one or more of the measures provided in subsection (4). One of the measures is to take possession of the secured assets of the borrower including the right to transfer 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. Considering the scheme of the SARFAESI Act, it is explicit and crystal clear that possession of the secured assets can be taken by the secured creditor before confirmation of sale of the secured assets as well as postconfirmation of sale. For taking possession of the secured assets, it could be done by the authorised officer of the Bank as noted in Rule 8 of the Security Interest (Enforcement) Rules, 2002 - 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 cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ms. Dharita P Malkan, Adv Ms. Nandini Chhabra, Adv For the Respondent : Mr. Sachin Patil, AOR Mr. Rahul Chitnis, Adv Mr. Aaditya A. Pande, Adv. Mr. Geo Joseph, Adv. Ms. Shwetal Shepal, Adv. JUDGMENT M. R. SHAH, J. 1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 22.12.2017 passed by the High Court of Judicature at Bombay in Writ Petition No. 1961/2017, by which, the Division Bench of the High Court while interpreting Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act ) has held that (i) the District Magistrate, Chief Metropolitan Magistrate is not a persona designata for the purposes of Section 14 of the SARFAESI Act; (ii) the expression District Magistrate and the Chief Metropolitan Magistrate 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious disposal of the applications filed under Section 14 of the said Act, there are as many as 924 cases pending under the said Act as on 09.08.2017 on the file of the Court of the Chief Metropolitan Magistrate, Esplanade, Mumbai. Out of 924 cases, 509 cases are filed in the year 2017. However, there are 27 cases of the year 2014, 96 cases of the year 2015 and 291 cases of the year 2016, still pending for disposal. As per the direction of the Hon ble High Court, preference should be given to the old pending cases for disposing of the same. Therefore, the preference is being given to the pending old cases rather than fresh new cases. 2.3 On receiving the aforesaid report, the High Court was of the opinion that considering the volume of applications filed under Section 14 of the SARFAESI Act and pendency of such applications, the learned Chief Metropolitan 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, afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of Section 14 of the SARFAESI Act and that the expression District Magistrate and the Chief Metropolitan Magistrate 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. 3. Shri Purvish Jitendra Malkan, learned Advocate has appeared on behalf of the appellant borrower and Shri Sachin Patil, learned Advocate has appeared on behalf of the State. None has appeared on behalf of the respondent No. 1 secured creditor. 4. Shri Malkan, learned counsel appearing on behalf of the borrower has vehemently submitted that the High Court has committed a grave error in holding that powers under Section 14 of the SARFAESI Act can be exercised by the Additional Chief Metropolitan 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 Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egated by a Chief Metropolitan Magistrate in favour of the Additional Chief Metropolitan Magistrate. In that context, this bench held that the action of the Chief Metropolitan Magistrate, Ahmedabad in exercise of his powers under Section 19 Clause (3) of the Code of Criminal Procedure, 1973 read with Rule 10 Clause (1) of Chapter XXXII of the Criminal Manual, 1977 regarding the distribution of business amongst the Metropolitan Magistrates, Ahmedabad, thereby empowering the Additional Chief Metropolitan Magistrate, Ahmedabad to accept and decide the cases under the provisions of the Securitisation Act, arising within the limits of Ahmedabad Municipal Corporation, was without jurisdiction. 8. In the case before us, the question is a bit different one as to whether a District Magistrate can delegate such power to the Sub Divisional Magistrate. It is submitted that thereafter it 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 G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opolitan 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 as the case may be, the District Magistrate shall, on such request being made to him- (a) take possession of such asset and documents relating thereto; and (b) forward such asset and documents to the secured creditor: [Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that- (i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application; (ii)the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting 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; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... District Magistrate [any officer authorised by the Chief Metropolitan Magistrate or District Magistrate] done in pursuance of this section shall be called in question in any court or before any authority. 6.1 That in the year 2013 by Act 1 of 2013, Section 14 (1A) has been inserted by which now, while exercising the powers under Section 14 of the SARFAESI Act, the District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him to take possession of such assets and documents relating thereto; and to forward such assets and documents to the secured creditor. Section 14 (1A) as inserted in the year 2013 reads as under: [( 1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,- (i)to take possession of such assets and documents relating thereto; and (ii) to forward such assets and documents to the secured creditor.] 6.2 Even as observed and 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g powers to take possession of securities, sell them and reduce nonperforming assets by adopting measures for recovery or reconstruction. Thus, the underlying purpose of the SARFAESI Act is to empower the financial institutions in India to have similar powers as enjoyed by their counterparts, namely, international banks in other countries. One such feature is to empower the financial institutions to take possession of securities and sell them. The same has been translated into provisions falling under Chapter III of the SARFAESI Act. Section 13 deals with enforcement of security interest. SubSection (4) thereof envisages that in the event a default is committed by the borrower in discharging his liability in full within the period specified in subsection (2), the secured creditor may take recourse to one or more of the measures provided in subsection (4). One of the measures is to take possession of the secured assets of the borrower including the right to transfer 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately move into action after receipt of a written application under Section 14(1) of the SARFAESI Act from the secured creditor for that purpose. As soon as such an application is received, the CMM/DM is expected to pass an order after verification of compliance of all formalities by the secured creditor referred to in the proviso in Section 14(1) of the SARFAESI Act and after being satisfied in that regard, to take possession of the secured assets and documents relating thereto and to forward the same to the secured creditor at the earliest opportunity. As mandated by Section 14 of the SARFAESI Act, the CMM/DM has to act within the stipulated time limit and pass a suitable order for the purpose of taking possession of the secured assets within a period of 30 days from the date of application which can be extended for such further period but not exceeding in the aggregate, sixty days. Thus, the powers exercised by the CMM/DM is a ministerial act. He cannot brook delay. Time is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local area shall have jurisdiction to try any case or class of cases for the trial of which such Special Court of Judicial Magistrate has been established.] (2) The presiding officers of such Courts shall be appointed by the High Court. (3) The High Court may, whenever it appears to it to be expedient or necessary, confer the powers of a Judicial Magistrate of the first class or of the second class on any member of the Judicial Service of the State, functioning as a Judge in a Civil Court. 12. Chief Judicial Magistrate and Additional Chief Judicial Magistrate, etc.-(1) In every district (not being a metropolitan area), the High Court shall appoint a Judicial Magistrate of the first class to be the Chief Judicial Magistrate. (2) The High Court may appoint any Judicial Magistrate of the first class to be an Additional Chief Judicial Magistrate, and such Magistrate shall have all or any of the powers of a Chief Judicial Magistrate under this Code or under any other law for the time 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any, of the Additional Chief Metropolitan Magistrates to the Chief Metropolitan Magistrate. (3) The Chief Metropolitan Magistrate may, from time to time, make rules or give special orders, consistent with this Code, as to the distribution of business among the Metropolitan Magistrates and as to the allocation of business to an Additional Chief Metropolitan Magistrate. 35. Powers of Judges and Magistrates exercisable by their successors in office.-( 1) Subject to the other provisions of this Code, the powers and duties of a Judge or Magistrate may be exercised or performed by his successorinoffice. (2) When there is any doubt as to who is the successorinoffice of any Additional or Assistant Sessions Judge, the Sessions Judge shall determine by order in writing the Judge who shall, for the purposes of this Code or of any proceedings or order thereunder, be deemed to be the successorinoffice of such Additional or Assistant Sessions Judge. (3) When there is any doubt as to who is the successorinoffice 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief Metropolitan Magistrate as appearing in Section 14 of the SARFAESI Act shall deem to mean and include Additional Chief Metropolitan Magistrate for the purposes of Section 14 of the SARFAESI Act. 10.3 Similarly, when the Additional District Magistrates are conferred with the powers to be exercised by the District Magistrates either by delegation and/or by special orders and the Additional District Magistrates are exercising the same powers which are being exercised by the District Magistrates, the same analogy can be applied, more particularly, when the powers exercisable under Section 14 of the SARFAESI Act, are ministerial steps. 11. The issue/question may also be considered from another angle. It cannot be disputed and even judicial notice can be taken of the fact that the CMMs and/or even the DMs are required to perform so many other duties under different statutes. They have to perform many administrative duties also. District Magisters are in overall administrative control of their jurisdiction/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 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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