Summary
Resolving conflicting High Court views, the Court held that a Chief Metropolitan Magistrate or District Magistrate may appoint an advocate commissioner to take possession of secured assets and related documents and forward them to the secured creditor under Section 14 of the SARFAESI Act. An advocate is an officer of the court and functionally subordinate for this limited ministerial task, without needing public employment. The Bombay appeals succeeded; the Madras borrowers’ separate affidavit-compliance challenge was retained for later consideration.
Issues
- Whether an advocate commissioner falls within the permissible assistance contemplated by Section 14(1A).
- Whether the borrowers’ separate challenge to statutory affidavit compliance was concluded by deciding the appointment question.
Provisions considered
- Section 14(1), (1A), (2) and (3), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002The provisions permitted appointment of an advocate commissioner for ministerial execution of the magistrate’s possession order, applying functional subordination. (¶¶ 24-25, 28-30, 36, 42-44)
Held
- The magistrate must verify the statutory formalities and satisfy himself or herself before ordering possession. The subsequent taking and forwarding of assets and documents is ministerial work that may be entrusted to an advocate commissioner. (¶¶ 25, 28, 36)
- Section 14(1A) explains an existing implicit power and does not prohibit the earlier practice of using advocates. As officers of the court, advocates have a functional subordinate relationship to the magistrate for this task; appointment to the public-service establishment is unnecessary. (¶¶ 24, 29-30, 42-44)
- The magistrate must prudently choose someone capable of executing the order. An advocate authorised for this work receives the protection contemplated by Section 14(3). (¶¶ 30, 42)
- The contrary Bombay High Court view was rejected, and the conclusions of the Kerala, Madras and Delhi High Courts on appointment were approved. The secured creditors’ appeals were allowed and the Bombay writ petition dismissed. (¶¶ 45, 47(i))
- The Madras borrowers’ special leave petition was delinked for admission on 4 March 2022 solely on compliance with the affidavit requirements in clauses (i) to (ix). That issue remained for consideration on its own merits. (¶¶ 46, 47(ii))
Result
Secured creditors’ appeals allowed; Bombay judgment set aside and writ petition dismissed. Borrowers’ Madras special leave petition delinked for the limited statutory-compliance issue. No costs; pending applications disposed of.