Summary
Faced with a large backlog of Section 14 SARFAESI applications before the Chief Metropolitan Magistrate, Mumbai, the Bombay High Court held that the CMM and District Magistrate are not personae designatae. It held that the terms include the Additional CMM and Additional District Magistrate. A borrower appealed. The Supreme Court dismissed the appeal. Taking possession under Section 14 is a ministerial step: the Magistrate verifies the secured creditor's affidavit and must act within 30 to 60 days, with no adjudication of the borrower's objections. Under Sections 17(2) and 19 CrPC, an Additional CMM may exercise all the CMM's powers and is not subordinate to the CMM in judicial matters. The same reasoning applies to an Additional District Magistrate empowered by delegation or special order. The contrary High Court decisions were overruled.
Issues
- Whether the Chief Metropolitan Magistrate and District Magistrate act as personae designatae under Section 14 of the SARFAESI Act.
- Whether an Additional Chief Metropolitan Magistrate or Additional District Magistrate may exercise powers under Section 14 of the SARFAESI Act.
Provisions considered
- Section 14, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002Assisting the secured creditor to take possession is a ministerial, time-bound step. It follows verification of the affidavit under the first proviso and involves no adjudication, so the powers are not conferred as persona designata. (¶¶ 6, 7.1, 8.1, 9)
- Section 14(1A), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002The power to authorise a subordinate officer, including an advocate commissioner, to take possession only restates an implicit power and confirms the ministerial character of the step (NKGSB Co-operative Bank). (¶¶ 6.1, 6.2, 7.2, 8.1)
- Sections 17(2) and 19, Code of Criminal Procedure, 1973An Additional CMM may have all the powers of the CMM, and both are subordinate to the Sessions Judge. The Additional CMM is therefore at par with, not subordinate to, the CMM in exercising judicial powers. (¶¶ 10, 10.1, 10.2)
Held
- Section 14 does not involve adjudication of the borrower's objections. The Magistrate checks the information in the application and must pass an order within 30 days, extendable to 60, so the power is not vested by way of persona designata. (¶¶ 8.1, 9)
- Under Sections 17(2) and 19 CrPC, the Additional CMM exercises the CMM's powers and is not subordinate to the CMM in judicial matters. 'Chief Metropolitan Magistrate' in Section 14 therefore includes the Additional CMM. (¶¶ 10.1, 10.2)
- By the same reasoning, 'District Magistrate' includes an Additional District Magistrate who exercises the District Magistrate's powers by delegation or special order, since the step is ministerial. (¶¶ 10.3, 14)
- CMMs and District Magistrates carry heavy judicial and administrative loads, and Section 14 applications are rising. Confining the power to them alone would defeat the 60-day limit, so the wider reading is purposive. (¶ 11)
- The contrary decisions of the Gujarat High Court (Pushpa Devi B. Jain), the Calcutta High Court (Chellaperumal) and the Kerala High Court (Aseena) were overruled. (¶ 13)
Result
Appeal dismissed. Powers under Section 14 of the SARFAESI Act may be exercised by Additional Chief Metropolitan Magistrates and by Additional District Magistrates exercising the District Magistrate's powers by delegation or special order. No costs.