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CMM/ DM does not need to adjudicate any dispute between the borrower, secured creditor & 3rd parties


The Bombay High Court bench comprising Justices Nitin Jamdar and Abhay Ahuja was recently hearing a Petition on the SARFAESI proceeding and held that 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 parties should be dealt with under the SARFESI Act before the Debts Recovery Tribunal.


In the present case, the petitions are filed by the secured creditors who had applied under section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Since the applications have not been disposed of by the Chief Metropolitan Magistrate, the Petitioners have filed these petitions for directions for early disposal of these Petitions. The principal grievance of the Petitioners is common that, 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. 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 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 High Court bench noted, "The powers of the Chief Judicial Magistrate/Chief Metropolitan 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 HC Bench further noted.


The High Court bench reiterated "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 parties should be dealt with under the SARFESI Act before the Debts Recovery Tribunal."


High Court directed the District Magistrate/Collector in the state of Maharashtra, the Application filed by a Secured creditor under section 14 of the SARFAESI Act with due compliance (the Application) should be disposed of not later than 30 days after the Application is filed.


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