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TMI Blog2023 (4) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... ors in taking possession of the secured asset. Section 14 of the SARFAESI Act enables the secured creditor to approach the District Magistrate/Chief Metropolitan Magistrate with a written application requesting for taking possession of the secured assets and forwarding it to the secured creditor for further action. The powers of the Chief Judicial Magistrate and the District Magistrate under Section 14 of the SARFESI Act are merely administrative and do not involve pronouncing any judgment on the borrower's objections to the secured creditor taking possession of the secured assets. Once the secured creditor has met all the requirements under Section 14 of the SARFESI Act, it is the duty of the CMM/DM to assist the secured creditor in obtaining possession of the assets and related documents, with the help of any subordinate officer or appointed advocate commissioner. The learned counsel for the High Court Administration stated that currently there is no separate category assigned for applications under Section 14 of the SARFAESI Act in the Case Information System (CIS) software. Steps can be taken to create a separate category for these cases so they can be identified for the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, despite the power under section 14 of the SARFAESI Act of 2002 being ministerial and to be used to aid the secured creditors in taking steps to realize their dues expeditiously, the applications are kept pending for an unduly long period. 5. With the similar grievance, several secured creditors kept filing writ petitions in this Court alleging authorities' lethargy and reluctance to proceed under Section 14 of the SARFAESI Act. Some petitioners accused borrowers of causing the delay. Consequently, we directed that such petitions be grouped together to direct the State Government and High Court administration to find a solution. Taking cognizance of this grievance, on the earlier dates, we had also called upon the State Government to place data of the pending applications filed under section 14 of the SARFAESI Act of 2002 before various District Magistrates. In Writ Petition No.15285 of 2022, the High Court Administration was made party Respondent since the grievance was that the application under section 14 of the SARFAESI Act of 2002 is not being considered expeditiously by the Chief Metropolitan Magistrates. 6. In this scenario, it has become necessary to emphasis on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 14 was enacted which was amended thereafter. Section 14 reads thus. 14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset. (1) Where the possession of any secured assets 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 assets, 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.]: (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. (2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. (3) No act of the Chief Metropolitan Magistrate or the District Magistrate 1 [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. Section 14 of the SARFAESI Act, thus, places an obligation upon the Chief Metropolitan Magistrate or District Magistrate to assist secured creditors in taking possession of the secured asset. Section 14 of the SARFAESI Act enables the secured creditor to approach the District Magi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, be necessary. 21. At this stage, it is required to be noted that along with insertion of sub-section (1-A), a proviso has also been inserted in sub-section (1) of Section 14 of the Sarfaesi Act whereby the secured creditor is now required to comply with certain conditions and to disclose that by way of an application accompanied by affidavit duly affirmed by its authorised officer in that regard. Sub-section (1-A) is in the nature of an explanatory provision and it merely restates the implicit power of the CMM/DM in taking services of any officer subordinate to him. As observed and held by this Court in NKGSB Coop. Bank [NKGSB Coop. Bank Ltd. v. Subir Chakravarty, (2022) 10 SCC 286 : (2023) 1 SCC (Cri) 157] , the insertion of sub- section (1-A) is not to invest a new power for the first time in the CMM/DM as such. 22. Thus, 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 post-confirmation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (emphasis supplied) The Supreme Court has again emphasized this position in the case of Balkrishna Rama Tarle v. Phoenix ARC (P) Ltd. (2023) 1 SCC 662 8. Thus, the powers of the Chief Judicial Magistrate and the District Magistrate under Section 14 of the SARFESI Act are merely administrative and do not involve pronouncing any judgment on the borrower's objections to the secured creditor taking possession of the secured assets. Once the secured creditor has met all the requirements under Section 14 of the SARFESI Act, it is the duty of the CMM/DM to assist the secured creditor in obtaining possession of the assets and related documents, with the help of any subordinate officer or appointed advocate commissioner. At this stage, the CMM/ DM does not need to adjudicate any dispute between the borrower, third parties, and the secured creditor concerning the secured assets. Any objections raised by the aggrieved part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem into the general guidelines they were proposing to issue. The statements made by the Advocate General and the High Court Administration were accepted. The hearing was adjourned to 17 March 2023. As an interim measure we directed that in cases where petitioners have a grievance regarding inaction, the District Collector should give them an audience, address their grievances, and issue necessary directions as per law. 12. On 17 March 2023, the Counsel for the High Court Administration presented a chart showing that in a special drive conducted from 9 February 2023, 536 applications were disposed of, but the pendency as of 10 March 2023 was 4975, with Thane accounting for 1064. The Advocate General also placed a chart with revised figures stating that as of that day, 21564 applications were pending in Maharashtra, and 12590 had been disposed of. Several petitions from the group were disposed of as their cause was worked out, but we continued hearing of these petitions as it was necessary since the State was yet to submit guidelines for passing general directions. 13. Today, the learned Advocate General has placed before us the guidelines issued by the State Government by way of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er details and records of the filing of the application under Section 14 of SARFAESI Act, the disposal thereof, the implementation of any order passed under Section 14 of SARFAESI Act and submit monthly statistics in that regard to the Divisional Commissioner on or before the 7th day of the following month. A format of submissions as of the report is annexed as Annexure-I. (viii) Action is being taken to implement e-system wherein all information regarding date of filing of application, date of passing of order, date of implementation of the order, would be uploaded so that all statistics are available readily. As soon as the online platform is ready, the District Collectors shall be informed and all the statistics should be uploaded and updated regularly on the online platform. * * * In summary, the guidelines state that all pending applications under Section 14 of the SARFAESI Act as of 31 March 2023, should be disposed of by 30 April 2023. Fresh applications filed after 31 March should be disposed of by the District Magistrates within thirty days. Orders passed under Section 14 must be implemented within four weeks, and if officers are overburdened, an advocate can be appointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns under section 14 of the SARFAESI Act, as the pendency of a large number of applications hinders the recovery of bad loans, which has a significant impact on the financial health of the country. 18. Thus, we dispose of this writ petitions directing as follows: (a) The Application filed by a Secured creditor under section 14 of the SARFAESI Act with due compliance (the Application) should be disposed of by the District Magistrate/ Collector in the State of Maharashtra not later than 30 days of the Application is filed. (b) Every order (Order) passed by the District Collector under section 14 of the SARFAESI Act should be implemented and executed not later than four weeks of the passing of the Order. (c) If the officers entrusted with implementation of the Order are engaged in other pressing public duties, the option of appointing an advocate to implement the Order be explored within the parameters of the law. The same option can also be considered by the Judicial Magistrate, if so permissible in law. (d) The District Magistrates/ Collectors shall submit a report giving the details of the Applications which have not been disposed of within thirty days or any Order which has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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