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

The Supreme Court held that the District Magistrate, Chief Metropolitan Magistrate is not a persona designata for the purposes of Section 14 of the SARFAESI Act. Thus, 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 bench comprising Justices MR Shah and BV Nagarathna observed while upholding the Bombay High Court judgment. The court therefore overruled the contrary view taken in some judgments of the High Courts of Gujarat, Calcutta and Kerala.The bench was dismissing an appeal against the Bombay High Court judgment which observed that the Additional Chief Metropolitan Magistrate ( "ACMM"), being invested with all the judicial powers of the Chief Metropolitan Magistrate, can be considered at par with the Chief Metropolitan Magistrate.In appeal before the Apex Court, Advocate Purvish Jitendra Malkan relied on Hari Chand Aggarwal Vs. Batala Engineering Co. Ltd. and Ors.; (1969) 2 SCR 201 to contend that District Magistrate and Additional District Magistrate are the distinct authorities and the Additional District Magistrate is subordinate to the District Magistrate and therefore, the Additional District Magistrate being subordinate cannot exercise the powers of the District Magistrate. The counsel also relied on the judgment of (1) Gujarat High Court in Pushpa Devi B Jain W/o Bhawarlal M Jain Vs. Indian Overseas Bank in Special Civil Application No. 19102/2015 (2) Calcutta High Court in the case of Shri Chellaperumal & Anr. Vs. The Authorised Officer & Ors. in M.A. No. 26/2014 and (3) Kerala High Court in the case of Aseena Vs. SubDivisional Magistrate.The State, through Advocate Sachin Patel, supported the impugned judgment contending that looking to the mandate under Section 14 of the SARFAESI Act to decide and dispose of the applications under Section 14 within a maximum period of 60 days and looking to the volume of 11 the work and applications pending with the District Magistrates or the Chief Metropolitan Magistrates and that they have also to look after and consider other duties including the administrative work and with a view to see that the ultimate object and purpose of providing the time lines in deciding the applications under Section 14 of the SARFAESI Act.Thus the issue raised in this appeal was: (1) Whether the Additional District Magistrate or Additional Chief Metropolitan Magistrate may exercise the powers under Section 14 of the SARFAESI Act (2) 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 (for short "DM") and the Chief Metropolitan Magistrate (for short "CMM") under Section 14 of the SARFAESI Act?Section 14 powers exercised by the CMM/DM is a ministerial actThe bench first noticed that the Section 14 does not involve an adjudicatory process qua points raised by the borrower against the secured creditor taking possession of secured assetsHowever, for taking physical possession of the secured assets in terms of Section 14(1) of the SARFAESI Act, the secured creditor is obliged to approach the CMM/DM by way of a written application requesting for taking possession of the secured assets and documents relating thereto and for being forwarded to it (secured creditor) for further action. The statutory obligation enjoined upon the CMM/DM is to immediately move into action after receipt of a written application under Section 14(1) of the SARFAESI Act from the secured creditor for that purpose. As soon as such an application is received, the CMM/DM is expected to pass an 19 order after verification of compliance of all formalities by the secured creditor referred to in the proviso in Section 14(1) of the SARFAESI Act and after being satisfied in that regard, to take possession of the secured assets and documents relating thereto and to forward the same to the secured creditor at the earliest opportunity. As mandated by Section 14 of the SARFAESI Act, the CMM/DM has to act within the stipulated time limit and pass a suitable order for the purpose of taking possession of the secured assets within a period of 30 days from the date of application which can be extended for such further period but not exceeding in the aggregate, sixty days. Thus, the powers exercised by the CMM/DM is a ministerial act. He cannot...

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

Ashok KM

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