Bombay High Court Issues Directions For Expeditious Disposal Of Creditors' Applications U/S 14 SARFAESI Act For Possession Of Secured Assets

Pendency of secured creditors’ applications for possession of secured assets is bad for financial health of the country, the Bombay High Court held recently.A division bench of Justice Nitin Jamdar and Justice Abhay Ahuja issued several directions to streamline the process of disposal of applications under Section 14 of the SARFAESI Act before Chief Metropolitan Magistrates and District Magistrates.“It is needless to stress the importance of expeditious disposal of the applications under section 14 of the SARFAESI Act, as the pendency of a large number of applications hinders the recovery of bad loans, which has a significant impact on the financial health of the country”, the court stated in its judgment passed on April 17.The court was dealing with a set of writ petitions by various secured creditors whose applications under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 were pending. The court reiterated that the powers of the CMM and the DM under section 14 are merely administrative and do not involve pronouncing a judgement on the borrowers’ objections to the secured creditor taking possession of the assets. Once the secured creditor has met all the requirements under section 14, the CMM/DM has the duty to assist creditor in getting possession of the secured assets and related documents, said the court.The court said that the enormous backlog of SARFAESI Section 14 applications in Maharashtra defeats the legislative intent of the Act.As of March 10- 21,564 applications under section 14 were pending in Maharashtra, and 12,590 had been disposed of, the Advocate General told the court in a hearing.The Advocate General submitted a state government circular dated April 10, 2023 outlining various steps including an online platform for expeditious disposal of the applications. The court opined that the implementation of an e-system will improve transparency and efficiency of the process.The court also accepted the High Court administration’s statement that a separate category for these cases can be created under the Case Information System (CIS) software so that they can be identified for the special drive and the CMM can assign a special day to take up the pending applications. In light of the statements by the State and High Court administration, the court issued the following directions –The DMs in Maharashtra must decide an application under section 14 of the SARFAESI Act within 30 days of filing and every order must be implemented within 4 weeks of passing it. If officers are overburdened, an advocate may be appointed to implement the order as per law.Each DM shall submit a report detailing applications not disposed of within 30 days or orders not implemented within 30 days with reasons to the Divisional Commissioner in the first week of every month.Any party whose application is not disposed of within 60 days of filling or the order has not be implemented within 60 days of passing, may approach the Divisional Commissioner who has to pass appropriate directions within 15 days. The application should be disposed of or the order implemented within 15 days of direction by Divisional Commissioner.Each DM shall submit monthly statistics regarding applications filed, disposed, and implementation of the orders to the Divisional Commissioner before seventh of every month.The state government to take steps to implement an online platform for such applications within 16 weeks of this judgment.The High Court administration to consider issuing necessary directions to the CMM to make a special drive for disposal of such cases.The High Court administration has to consider a separate category in the CIS Software system for applications under section 14 of the surface so that they can be easily identified for the special drive.Case no. – L & T Finance Limited v. State of MaharashtraCitation: 2023 LiveLaw (Bom) 229Case Title – A. S. Writ Petition No. 15285 of 2022Click Here To Read/Download Judgment

Bombay High Court Issues Directions For Expeditious Disposal Of Creditors' Applications U/S 14 SARFAESI Act For Possession Of Secured Assets

Amisha Shrivastava

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Amisha Shrivastava

Bombay High Court Issues Directions For Expeditious Disposal Of Creditors' Applications U/S 14 SARFAESI Act For Possession Of Secured Assets

Amisha Shrivastava

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Amisha Shrivastava

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