The Supreme Court Bench comprising of Justices M.R. Shah and B.V. Nagarathna was recently hearing an Appeal of a borrower feeling aggrieved and dissatisfied with the order passed by the Bombay High Court, 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 and held that the District Magistrate, Chief Metropolitan Magistrate is not a persona designata for the purposes of Section 14 of the SARFAESI Act. 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, 2002.
The Supreme Court held that the powers under Section 14 of the SARFAESI Act can be exercised by the concerned Additional Chief Metropolitan Magistrates of the area having jurisdiction and also by the Additional District Magistrates, who otherwise are exercising the powers at par with the concerned District Magistrates either by delegation and/or special order. The present appeal was accordingly dismissed.
That respondent No. 1 – Financial Institution–Capital First Limited was 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–borrower. The said proceedings were initiated under Section 13(4) of the SARFAESI Act, and the secured creditor proceeded to take possession of the secured asset. However, the borrowers refused to hand over 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. On 17.03.2017, the secured creditor filed an application under Section 14 of the SARFAESI Act with the Chief Metropolitan Magistrate Court, Esplanade, Mumbai, inter-alia, praying for assistance from the Chief Metropolitan Magistrate in taking physical possession of the secured asset. The matter was adjourned from time to time and lastly, it was adjourned to 29.07.2017. As mandated by the second proviso to sub-section (1) of Section 14 of the SARFAESI Act, the application was required to be disposed of within a period of 30 days and as the application was not decided within the period mandated by the statute, the secured creditor moved an application for advancement. The said application came to be dismissed by the Chief Metropolitan Magistrate, inter-alia, on the ground that the said application was a fresh application and many old applications were pending. Therefore, the secured creditor approached the High Court by way of the present writ petition for an appropriate direction and order directing the Chief Metropolitan Magistrate to dispose of their cases/applications under Section 14 of the SARFAESI Act in a time-bound manner.
That the Division Bench of the High Court issued directions to the Chief Metropolitan Magistrate to make an endeavour to dispose of the pending applications as expeditiously as possible and preferably within a period of thirty days from the date of receipt of writ along with the order.
The High Court observed that the Additional Chief Metropolitan Magistrate is invested with all the judicial powers of the Chief Metropolitan Magistrate, and can be considered at par with the Chief Metropolitan Magistrate. The High Court also observed that so far as the exercise of judicial powers is 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 was further observed and held that as the status of Chief Metropolitan Magistrate and Additional Chief Metropolitan Magistrate is the same and identical, the Additional Chief Metropolitan Magistrate can exercise the powers under Section 14 of the SARFAESI Act.
Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court holding that the District Magistrate, Chief Metropolitan Magistrate is not by persona designata for the purposes 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.
Supreme Court bench while considering the issue of whether the Additional District Magistrate or Additional Chief Metropolitan Magistrate may exercise the powers under Section 14 of the SARFAESI Act and/or the issue of whether 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 powers exercisable by the District Magistrate and the Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act are first required to be considered.
The Bench noted 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.
Thus, in view of the scheme of the SARFAESI Act, more particularly, Section 14 of the SARFAESI Act and the nature of the powers to be exercised by learned Chief Metropolitan Magistrate/learned District Magistrate, the High Court in the impugned judgment and order has rightly observed and held that the power vested in the learned Chief Metropolitan Magistrate/learned District Magistrate is not by way of persona designate, the Supreme Court bench observed.
In view of the above discussion and as observed hereinabove when the powers to be exercised by the Additional Chief Metropolitan Magistrate are at par with the powers to be exercised by the Chief Metropolitan Magistrate and the Chief Metropolitan Magistrate and Additional Chief Metropolitan Magistrate shall be subordinate to the Sessions Judge and the steps to be taken by the Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act as observed hereinabove are ministerial in nature and does not involve any adjudicatory process and there is no element of any quasi-judicial function, the Bench noted no reason to take a different view than the view taken by the Bombay High Court in the impugned judgment. The expression “Chief 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.
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, the Bench further observed.
The contrary view taken by the other High Courts, namely, Gujarat High Court in the case of Pushpa Devi B. Jain W/o Bhawarlal M. Jain v. Indian Overseas Bank in Special Civil Application No. 19102/2015; Calcutta High Court in the case of Shri Chellaperumal & Anr. v. The Authorised Officer & Ors. in M.A. No. 26/2014 and Kerala High Court in the case of Aseena v. Sub-Divisional Magistrate and Ors. in W.P. (C) No. 3331/2007, is not a good law and were specifically overruled.
The Supreme Court bench concluded that the powers under Section 14 of the SARFAESI Act can be exercised by the concerned Additional Chief Metropolitan Magistrates of the area having jurisdiction and also by the Additional District Magistrates, who otherwise are exercising the powers at par with the concerned District Magistrates either by delegation and/or special order. The present appeal was accordingly dismissed.