Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: s.14 – Whether mandatory or directory provision – Held: s.14 mandating the District Magistrate to deliver possession of a secured asset within 30 days, extendable to an aggregate of 60 days upon reasons recorded in writing, is a directory provision – The purpose of enactment of the 2002 Act was to provide a machinery for empowering banks and financial institutions, so that they may have power to take possession of secured assets and to sell them – Keeping the objective of the Act in mind, the time limit to take action by the District Magistrate was fixed to impress upon the authority to take possession of the secured assets – However, inability to take possession within time limit does not render the District Magistrate functus officio – The time limit is to instill a confidence in creditors that the District Magistrate will make an attempt to deliver possession as well as to impose a duty on the District Magistrate to make an earnest effort to comply with the mandate of the statute to deliver the possession within 30 days and for reasons to be recorded within 60 days – In this light, the remedy under s.14 of the Act is not rendered redundant if the District Magistrate is unable to handover the possession.
Interpretation of Statutes: Word ‘shall’ – Connotation of – Held: The use of the word “shall” in a statute, does not necessarily mean that in every case it is mandatory that unless the words of the statute are literally followed, the proceeding or the outcome of the G proceeding, would be invalid – It is also not always correct to say that if the word “may” has been used, the statute is only permissive or directory in the sense that non-compliance with those provisions will not render the proceeding invalid and that when a statute uses the word “shall”, prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – s.14.
Dismissing the appeal, the Court
HELD: 1. A well settled rule of interpretation of the statutes is that the use of the word “shall” in a statute, does not necessarily mean that in every case it is mandatory that unless the words of the statute are literally followed, the proceeding or the outcome of the proceeding, would be invalid. It is not always correct to say that if the word “may” has been used, the statute is only permissive or directory in the sense that non-compliance with those provisions will not render the proceeding invalid and that when a statute uses the word “shall”, prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. The principle of literal construction of the statute alone in all circumstances without examining the context and scheme of the statute may not serve the purpose of the statute. [Para 7] [1004-B-D]
2. The DRT Act was first enacted to streamline the recovery of public dues but the proceedings under the said Act have not given desirous results. Therefore, the Act in question was enacted. Keeping the objective of the Act in mind, the time limit to take action by the District Magistrate has been fixed to impress upon the authority to take possession of the secured assets. However, inability to take possession within time limit does not render the District Magistrate Functus Officio. The secured creditor has no control over the District Magistrate who is exercising jurisdiction under Section 14 of the Act for public good to facilitate recovery of public dues. Therefore, Section 14 of the Act is not to be interpreted literally without considering the object and purpose of the Act. If any other interpretation is placed upon the language of Section 14, it would be contrary to the purpose of the Act. The time limit is to instill a confidence in creditors that the District Magistrate will make an attempt to deliver possession as well as to impose a duty on the District Magistrate to make an earnest effort to comply with the mandate of the statute to deliver the possession within 30 days and for reasons to be recorded within 60 days. In this light, the remedy under Section 14 of the Act is not rendered redundant if the District Magistrate is unable to handover the possession. [Para 20][1008-B-F]
Montreal Street Railway Company v. Normandin AIR 1917 PC 142; Dattatraya Moreshwar Pangarkar v. State of Bombay & Ors. AIR 1952 SC 181 : [1952] SCR 612; Hari Vishnu Kamath v. Ahmad Ishaque & Ors. AIR 1955 SC 233 : [1955] SCR 1104 – followed.
Mardia Chemicals Ltd. & Ors. v. Union of India & Ors. (2004) 4 SCC 311 : [2004] 3 SCR 982; Hindon Forge Private Limited & Anr. v. State of Uttar Pradesh through District Magistrate, Ghaziabad & Anr. (2019) 2 SCC
198 : [2018] 11 SCR 1019 – relied on
New India Assurance Company Limited v. Hilli Multipurpose Cold Storage Private Limited (2020) 5 SCC 757 – Distinguished.
Dipak Babaria & Anr. v. State of Gujarat & Ors. (2014)
3 SCC 502 : [2014] 2 SCR 71 – held inapplicable. Manish Makhija v. Central Bank of India & Ors. (2018) SCC OnLine MP 553 – approved.
Transcore v. Union of India and Another (2008) 1 SCC
125 : [2006] 9 Suppl. SCR 785; Union of India & Ors. v. A.K. Pandey (2009) 10 SCC 552 : [2009] 14 SCR 528; Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited & Ors. (2014)
6 SCC 1 : [2014] 11 SCR 605; Remington Rand of India Ltd. v. Workmen AIR 1968 SC 224 : [1968] SCR 164; T.V. Usman v. Food Inspector, Tellicherry Municipality, Tellicherry (1994) 1 SCC 754; Nasiruddin & Ors.v. Sita Ram Agarwal, (2003) 2 SCC 577 : [2003]
1 SCR 634; P.T. Rajan v. T.P.M. Sahir & Ors. (2003) 8 SCC 498 : [2003] 4 Suppl. SCR 84; State of U.P. v. Manbodhan Lal Srivastava AIR 1957 SC 912 : [1958] SCR 533; State of U.P. & Ors. v. Babu Ram Upadhya AIR 1961 SC 751 : [1961] SCR 679; Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. & Ors. (1987) 1 SCC 424 : [1987] 2 SCR 1; United Bank of India v. Satyawati Tondon & Ors. (2010) 8 SCC 110 : [2010] 9 SCR 1 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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