M/s R. D. Jain and Co. vs Capital First Ltd. & Ors.

HELD: 1.1 Considering the scheme of the SARFAESI Act, it is explicit and crystal clear that possession of the secured assets can be taken by the secured creditor before confirmation of sale of the secured assets as well as post- confirmation of sale. For taking possession of the secured assets, it could be done by the “authorised officer” of the Bank as noted in Rule 8 of the Security Interest (Enforcement) Rules, 2002. [Para 8][73-C-D]

1.2 However, 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 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 brook delay. Time is of the essence. This is the spirit of the special enactment. As observed and held by this Court in the case of NKGSB Cooperative Bank Ltd., the step taken by the CMM/DM while taking possession of the secured assets and documents relating thereto is a ministerial step. It could be taken by the CMM/DM himself/herself or through any officer subordinate to him/her, including the advocate commissioner who is considered as an officer of his/her court. Section 14 does not oblige the CMM/DM to go personally and take possession of the secured assets and documents relating thereto. Thus, this Court reiterates that the step to be taken by the CMM/DM under Section 14 of the SARFAESI Act, is a ministerial step. While disposing of the application under Section 14 of the SARFAESI Act, no element of quasi-judicial function or application of mind would require. The Magistrate has to adjudicate and decide the correctness of the information given in the application and nothing more. Therefore, Section 14 does not involve an adjudicatory process qua points raised by the borrower against the secured creditor taking possession of secured assets. [Para 8.1][73-DH; 74-A-D]

1.3 From the relevant provisions of Cr.PC, namely, sections 11, 12, 15, 16, 17, 19 and 35, it can be seen that any Metropolitan Magistrate can be appointed by the High Court to be the Chief Metropolitan Magistrate. The High Court may appoint any Metropolitan Magistrate to be an Additional Chief Metropolitan Magistrate, and such Magistrate shall have all or any of the powers of a Chief Metropolitan Magistrate under Cr.PC or under any other law for the time being in force as the High Court may direct. The Chief Metropolitan Magistrate and every Additional Chief Metropolitan Magistrate shall be subordinate to the Sessions Judge; and every other Metropolitan Magistrate shall, subject to the general control of the Sessions Judge, be subordinate to the Chief Metropolitan Magistrate. Thus the judicial powers and the powers, under the Cr.PC which may be exercised by the Chief Metropolitan Magistrate, can be exercised by the Additional Chief Metropolitan Magistrate also. Thus, the Additional Chief Metropolitan Magistrate can be said to be at par with the Chief Metropolitan Magistrate in so far as the powers to be exercised under the Cr.PC are concerned. The Chief Metropolitan Magistrate in addition, may have administrative powers. However, for all other purposes and more particularly the powers to be exercised under the Cr.PC both are at par. Therefore, the Additional Chief Metropolitan Magistrate cannot be said to be subordinate to the Chief Metropolitan Magistrate in so far as exercise of judicial powers are concerned. [Para 10.1][77-B-E]

2. In view of the above discussion and as observed hereinabove when the powers to be exercised by the Additional Chief Metropolitan Magistrate are at par with the powers to be exercised by the Chief Metropolitan Magistrate [Section 17(2) of Cr.PC] and the Chief Metropolitan Magistrate and Additional Chief Metropolitan Magistrate shall be subordinate to the Sessions Judge (Section 19 of the Cr.PC) and the steps to be taken by the Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act as observed hereinabove are ministerial in nature and does not involve any adjudicatory process and there is no element of any quasi-judicial function, we see no reason to take a different view than the view taken by the Bombay High Court in the impugned judgment. This Court holds that the expression “Chief Metropolitan Magistrate” as appearing in Section 14 of the SARFAESI Act shall deem to mean and include Additional Chief Metropolitan Magistrate for the purposes of Section 14 of the SARFAESI Act. [Para 10.2][77-F-H; 78-A]

3. Similarly, when the Additional District Magistrates are conferred with the powers to be exercised by the District Magistrates either by delegation and/or by special orders and the Additional District Magistrates are exercising the same powers which are being exercised by the District Magistrates, the same analogy can be applied, more particularly, when the powers exercisable under Section 14 of the SARFAESI Act, are ministerial steps. [Para 10.3][78-B]

4. The issue/question may also be considered from another angle. It cannot be disputed and even judicial notice can be taken of the fact that the CMMs and/or even the DMs are required to perform so many other duties under different statutes. They have to perform many administrative duties also. District Magistrates are in overall administrative control of their jurisdiction/district. Similarly, CMMs are also required to perform administrative duties and they have also to deal with the other cases/criminal trials and many trials under special statutes also. It cannot be disputed that the litigations under the SARFAESI Act and proceedings and/or applications under Section 14 of the SARFAESI Act are increasing. Even as noticed by the High Court in the impugned judgment and order, as on 09.08.2017, 926 cases were pending under Section 14 of the SARFAESI Act before only one CMM. Therefore, a number of applications under Section

14 are pending. It also cannot be disputed that the SARFAESI Act provides for expeditious disposal of the applications filed under Section 14 of the SARFAESI Act. As per, second proviso to Section 14, suitable orders for the purpose of taking possession of the secured assets are required to be passed within a maximum period of sixty days from the date of the application. Therefore, if the submission on behalf of the appellants that only the concerned CMM/DM alone would have jurisdiction to decide the applications under Section 14 of the SARFAESI Act is accepted, in that case, it will be practically impossible for the concerned CMM/DM to decide the application under Section 14 of the SARFAESI Act expeditiously and within the time stipulated under second proviso to Section 14 of the SARFAESI Act. If the interpretation which this Court proposes that, the District Magistrate/Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act includes the Additional District Magistrate/Additional Chief Metropolitan Magistrate, the same can be said to be a purposive interpretation to achieve the object and purpose of proceedings under the SARFAESI Act, more particularly when as observed hereinabove, the orders to be passed under Section 14 of the SARFAESI Act are ministerial steps and to assist the secured creditor in getting/obtaining the possession of the secured property. Thus, there is no element of exercise of adjudicatory powers under Section 14 of the SARFAESI Act. All these aspects have been considered in detail by the High Court in the impugned judgment and order. [Para 11][78-C-H; 79-A-B]

5. This Court is in complete agreement with the view taken by the High Court that (i) the District Magistrate, Chief Metropolitan Magistrate is not a persona designata for the purposes of Section 14 of the SARFAESI Act; (ii) 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. [Para 12][79-C]

NKGSB Cooperative Bank Limited v. Subir Chakravarty & Ors. Civil Appeal No. 1637/2022 decided by the Supreme Court; Hari Chand Aggarwal v. Batala Engineering Co. Ltd. and Ors. [1969] 2 SCR 201– referred to.

State of Maharashtra v. Shanti Prasad Jain in Criminal Reference No. 9 of 1977 decided by the Division Bench of the High Court; Shivam Water Treaters P. Ltd. v. Authorised Officer, State Bank of India in Special Civil Application No. 12632 of 2013 decided by the Division Bench of the Gujarat High Court – referred to.