Granting leave to directly appeal against Chief Judicial Magistrate's order, the Supreme Court noted that there are conflicting views by different High Courts with regard to the jurisdiction of the Chief Judicial Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI).
Section 14 of the SARFAESI Act empowers the Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset. Following the precedent set by Kerala High Court, Chief Judicial Magistrates in the state entertain application under Section 14.
One such order was passed by the Special Additional CJM, Ernakulam in favour of Federal Bank against Harley Carmbel India Pvt Ltd. This order was directly assailed before the Apex Court.
The vacation bench comprising of Justice Indira Banerjee and Justice Sanjiv Khanna passed an interim order, restraining the bank from dispossessing the company from the property in question for a period of seven weeks and also from transferring, encumbering or creating any third party right in respect of the said property.
The bench has tagged this case with another civil appeal against a Kerala High Court judgment.
In that case, it was also noted that Calcutta, Bombay and Madras high courts have taken a view that the Chief Judicial Magistrate has no power to entertain applications filed under Section 14 of the SARFAESI Act, whereas Kerala, Andhra Pradesh and Allahabad high courts have taken a view that the Chief Judicial Magistrate can exercise the powers.
The Kerala High Court, in Mohd. Ashraf v. Union of India, had held that Chief Judicial Magistrate in non- metropolitan area stands on the same footing as Chief Metropolitan Magistrate in metropolitan area and thus have jurisdiction under Section 14 of the SARFAESI Act. The Allahabad High Court has also taken a similar view in Abhishek Mishra vs State Of UP.
Full bench of Andhra High Court has also held that the nomenclature Chief Metropolitan Magistrate referred to in Section 14 is inclusive of Chief Judicial Magistrate in non- metropolitan area and as such the Chief Judicial Magistrate in a non- metropolitan area gets jurisdiction to entertain an application under Section 14 of the SARFAESI Act, 2002.