Both Additional CMM And Additional DM Can Exercise Section 14 SARFAESI Act Powers – SC Overrules 3 Existing Precedents

The Bench also specifically overruled the existing precedent by holding that 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 Vs. Indian Overseas Bank; Calcutta High Court in the case of Shri Chellaperumal & Anr. Vs. The Authorised Officer & Ors.; and Kerala High Court in the case of Aseena Vs. Sub­Divisional Magistrate and Ors. - was not good law.

Counsel Purvish Jitendra Malkan appeared on behalf of the Appellant. Counsel Sachin Patil appeared on behalf of the State. No one appeared on behalf of the Secured Creditor.

In this case, the Secured Creditor instituted proceedings under Section 13(4) of the SARFAESI Act for the recovery of an amount that was due and payable by the Appellant, to take possession of the secured asset. However, the Appellant refused to handover the physical possession of the secured asset.

The Secured Creditor filed an application under Section 14 of the SARFAESI Act, with the Chief Metropolitan Magistrate Court. The Secured Creditor prayed for assistance in taking physical possession of the secured asset. This application was adjourned from time to time.

It is mandated in Section 14 of the SARFAESI Act that the application must be disposed of within 30 days. As the application was not decided within the period mandated by the statute, the Secured Creditor moved an application for advancement. This was dismissed by the Chief Metropolitan Magistrate on the ground that there were several old applications pending.

The Secured Creditor then approached the High Court, praying for an order directing the Chief Metropolitan Magistrate to dispose of their applications in a time-bound manner.

The Division Bench of the High Court issued directions to the Chief Metropolitan Magistrate to make an endeavor to dispose of the pending applications as expeditiously as possible and preferably within a period of 30 days from the date of receipt of writ along with the order.

However, it was brought to the notice of the High Court by the Chief Metropolitan Judge that there are several cases pending from the previous years, and therefore, a preference was being given to the pending old cases.

The High Court then opined that since there was such a large volume of applications filed under Section 14 of the SARFAESI Act, the Chief Metropolitan Magistrate cannot decide on such applications within the time period. After considering the relevant provisions of the SARFAESI Act as well as Section 17(2) and Section 19 of the Code of Criminal Procedure, the High Court has observed that the Additional Chief Metropolitan Magistrate, being invested with all the judicial powers of the Chief Metropolitan Magistrate, can be considered at par with the Chief Metropolitan Magistrate.

Therefore, the High Court held that the Additional Chief Metropolitan Magistrate can exercise the powers under Section 14 of the SARFAESI Act.

Aggrieved by this judgment, the Appellant appeared before the Supreme Court.

The main issues considered by the Supreme Court were–

i) Whether the Additional District Magistrate or Additional Chief Metropolitan Magistrate may exercise the powers under Section 14 of the SARFAESI Act?

ii) 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?

After taking into account the scheme of the SARFAESI Act and the nature of the powers to be exercised by the Chief Metropolitan Magistrate/District Magistrate, the Apex Court opined that the High Court had rightly observed and held that the power vested in the Chief Metropolitan Magistrate/ District Magistrate is not by way of persona designata. The Court also relied on the case of NKGSB Cooperative Bank Limited Vs. Subir Chakravarty & Ors.

The Apex Court then appraised the provisions of Sections 11, 12, 15, 16, 17, 19, and 35 of the CrPC to opine that the judicial powers and the powers, under the CrPC which may be exercised by the Chief Metropolitan Magistrate, can be exercised by the Additional Chief Metropolitan Magistrate also. Therefore, it was held that the Additional Chief Metropolitan Magistrate can be said to be at par with the Chief Metropolitan Magistrate.

To that end, the Court said that "We hold that 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."

Analyzing the matter from the angle of providing expeditious disposal, the Court opined that considering the quantum of cases and the other duties that have to be performed under other statutes, it is practically impossible for the concerned Chief Metropolitan Magistrate/District Magistrate to decide the application under Section 14 of the SARFAESI Act expeditiously and within the time stipulated under the second proviso to Section 14 of the SARFAESI Act.

Therefore, the Court held that "We are in complete agreement with the view taken by the High Court that (i) the District Magistrate, Chief Metropolitan Magistrate is not a persona designata for the purposes of Section 14 of the SARFAESI Act; (ii) 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."

To that end, the Appeal failed and was dismissed.