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TMI Blog2025 (3) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... tan Magistrate is empowered to entertain the application preferred by the 3rd respondent under Section 14 of the Act of 2002 and provide assistance as sought. Thus, a "secured creditor" means a "financial institution", as defined by Section 2(1)(m)(iv) of the Act of 2002, which would thus require such financial institution to satisfy the requirements of the Notification dated 24th February 2020. As per the affidavit-in-reply filed by the Reserve Bank of India, the asset size of the 3rd respondent as on 31st March 2024 was Rs.16.30 crores which is less than the amount of Rs.100 crores as indicated in the Notification dated 24th February 2020 - for the purposes of the Act of 2002, the 3rd respondent is not a financial institution and hence it cannot be a secured creditor so as to invoke the provisions of Section 14 of the Act of 2002. Conclusion - As the 3rd respondent is not shown to be a "financial institution" for the purposes of invoking the provisions of Section 14 of the Act of 2002, the application filed on its behalf before the Chief Metropolitan Magistrate cannot be adjudicated on merits. A case therefore has been made out for a writ of Prohibition to be issued. Applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled an application under the provisions of Section 14 of the Act of 2002 dated 29th April 2024 seeking grant of assistance to obtain possession of the secured asset. On being served with the aforesaid proceedings, the Partnership Firm has approached this Court seeking issuance of a Writ of Prohibition. 3. Mr. Prathamesh Kamat, learned counsel for the petitioner- Partnership Firm referred to various provisions of the Act of 2002 and especially Section 2(1)(zd) which defines "secured creditor", Section 2(1)(m) that defines "financial institution" as well as Section 14 of the Act of 2002 wherein such secured creditor can invoke provisions of Section 14 of the Act of 2002. It was submitted that for a Non-Banking Financial Company to be considered as a "financial institution" as per Notification dated 24th February 2020, it had to have assets worth Rs.100 crores and above, secured debts worth Rs.50 lakhs and above which figure was modified by Notification dated 12th February 2021 reducing that amount to Rs.20 lakhs and above. Referring to the affidavit-in-reply filed on behalf of the Reserve Bank of India - 2nd respondent, it was submitted that the asset worth of the 3rd respondent wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d respondent and the Partnership Firm was entered into on 10th October 2017, the Notification issued by the Ministry of Finance, New Delhi on 24th February 2020 could not be applied retrospectively. In the proceedings filed under Section 14 of the Act of 2002, it was open for the learned Chief Metropolitan Magistrate to consider all contentions of the Partnership Firm and pass an order. Reliance was placed on the decisions in Mardia Chemicals Ltd. Vs. Union of India, (2004) 4 SCC 311, Phoenix ARC (P) Ltd. Vs. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345, Anju Chaudhary Vs. State of U.P., (2013) 6 SCC 384, Union of India Vs. W.N. Chadha, 1993 Supp (4) SCC 260, Samaj Parivartan Samudaya Vs. State of Karnataka, (2012) 7 SCC 407 andManharibhai Muljibhai Kakadia Vs. Shaileshbhai Mohanbhai Patel, (2012) 10 SCC 517 to contend that the writ petition did not deserve to be entertained and that all challenges could be raised by the Partnership Firm in proceedings that could be filed for challenging any adverse order, if passed, under Section 14 of the Act of 2002. It was thus submitted that the writ petition was liable to be dismissed. 5. We have heard the learned counsel for the parties at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zd)(i) of the Act of 2002 to mean a "financial institution" holding any right, title or interest upon any tangible or intangible asset. Section 2(1)(m) of the Act of 2002 defines a 'financial institution' and sub-clause (iv) thereof being material is reproduced hereunder :- 2(1)(m)(iv) Any other institution or non-banking financial company, as defined in clause (f) of Section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934), which the Central Government may, by notification, specify as financial institution for the purposes of this Act". Notification dated 24th February 2020 has been issued by the Central Government wherein it is stated that a financial institution for the purposes of the Act of 2002 ought to have assets worth Rs.100 crores and above to enable enforcement of security interest in secured debts of Rs.50 lakhs and above. The figure "50 lakhs" has been substituted by the figure "Rs.20 lakhs and above" by amending the Notification dated 24th February 2020 on 12th February 2021. Under Section 14 of the Act of 2002, it is only a secured creditor who can invoke the jurisdiction in that regard. Thus, a "secured creditor" means a "financial institution", as define ..... X X X X Extracts X X X X X X X X Extracts X X X X
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