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Additional Chief Metropolitan Magistrate & Additional District Magistrate Can Exercise Section 14 SARFAESI Powers: Supreme Court Overrules 3 HC Judgments

Sravika Reddy Kohir ,
  02 August 2022       Share Bookmark

Court :
Supreme Court of India
Brief :

Citation :
Civil Appeal No. 175 Of 2022

CASE TITLE:
M/s R.D. Jain and Co. Vs. Capital First Ltd. & Ors

DATE OF JUDGEMENT:
July 27, 2022

BENCH:
Justice. M.R. Shah
Justice. B.V. Nagarathna

PARTIES:
Appellant – M/s R.D. Jain and Co
Respondent – Capital First Ltd. & Ors

SUBJECT

  • The appeal was filed against the impugned judgement of the High Court of Judicature at Bombay, wherein the court held that the District Magistrate under the section 14 of the SARFAESI Act, includes Additional District Magistrate and Additional Chief Metropolitan Magistrate and the Chief Metropolitan Magistrate under the same section is not an individual rathera member of a class or group.

ISSUES RAISED

  • Whether the scope of Section 14 of the SARFAESI Act, extends the powers to Additional District Magistrate or Additional Chief Metropolitan Magistrate?
  • Whether Chief Metropolitan Magistrate under Section 14 also includes Additional Chief Metropolitan?

IMPORTANT PROVISIONS

SECTION 14 OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT SECURITY INTEREST ACT, 2002: The section provides for the possession of secured asset to be taken by the creditor may request in writing to the Chief Metropolitan Magistrateor the District Magistrate.

SECTION 19 OF THE CODE OF CRIMINAL PROCEDURE, 1973: The section deals with the subordination of metropolitan magistrates. The chief Metropolitan magistrate and the Additional Chief Metropolitan Magistrate are subordinates to the Sessions Judge.

OVERVIEW

  • The respondent is a secured creditor under section 2(1) (zd) of the SARFAESI Act, 2002, and has initiated the proceedings under the Section 13(4) of the SARFAESI Act to recover the amount due from the appellant and take the possession of the secured asset which the appellants refused. For the possession of the same the respondent filed an application under section 14 of the SARFAESI Act which was not disposed within 30 days of the time period and for the same the respondent fled writ petition and the high court looking into the matter and at the reason for such pendency held that for speedy disposal of cases the Chief Metropolitan Magistrate and District Magistrate shall also include the Additional Chief Metropolitan Magistrate and also Additional District Magistrate. For the same the appellant filed an appeal.

ARGUMENTS ADVANCED BY THE APPELLANT

  • The counsel on behalf of the appellant submitted that the High Court had made a grave error in considering that the Additional Chief Metropolitan Magistrate and Additional District Magistrate can exercise the powers under Section 14 of the SARFAESI Act.
  • The counsel further submitted that the judgement passed by the High Court is contrary to that of the precedents passed in the High Courts of Gujarat, Kerala and Calcutta that Chief Metropolitan Magistrate is not a persona designata as par the provisions of SARFAESI Act and not two distinct authorities.
  • The counsel relied on the judgement in the case Hari Chand Aggarwal Vs. Batala

Engineering Co. Ltd. and Ors. [(1969) 2 SCR 201] and held that both District Magistrate, Additional District Magistrate are distinct authorities the latter being subordinate to the former and both exercise different powers.

ARGUMENTS ADVANCED BY THE RESPONDENTS

  • The counsel on behalf of the respondents held that the essence of section 14 of the SARFAESI Act, 2002 is to dispose off the applications under the sections quickly within a maximum period of 60 days.
  • The counsel further submitted that the said judgement was valid as it was made to decrease the pendency of cases or applications made under the section 14 of the SARFAESI Act, 2002.
  • The counsel further referred the recent decision of the court in NKGSB Cooperative Bank Limited Vs. Subir Chakravarty & Ors. [Civil Appeal No. 1637/2022] held that it was open to the Chief Metropolitan Magistrate and District Magistrate to appoint an advocate to authorise them to take up the applications regarding to the possession of the secured assets under section 14 of the SARFAESI Act.

JUDGEMENT ANALYSIS

  • The court observed contentions of both the parties and held that the power exercised by the Chief Metropolitan Magistrate and District Magistrate under section14 of SARFAESI Act is that of ministerial nature.
  • Thus,the court upheldthe judgement given by the High Court judicature of Bombayi.e., the Chief Metropolitan Magistrate and the District Magistrate are not a persona designata according to section 14 of the SARFAESI Act, 2002.
  • The court further held that Chief Metropolitan Magistrate and District Magistrate under section 14 of the SARFAESI Act, 2002 also includes the Additional District Magistrate and Additional Chief Metropolitan Magistrate for the purposes of ministerial work.

CONCLUSION

  • Thus, the court has dismissed the said appeal and held that under section 14 of the SARFAESI Act, 2002 both the Additional District Magistrate and Additional Chief Metropolitan Magistrate also have the jurisdiction with regard to the applications made for the possession of secured assets along with Chief Metropolitan Magistrates and District Magistrate.

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