Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – s.14 – Chief Judicial Magistrate (CJM) u/s. 14 – Competency of – There were conflicting views of different High Courts regarding the competency of the CJM to process the request of the secured creditors to take possession of the secured asset u/s. 14 of the 2002 Act – The High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand interpreted the said provision to mean that only Chief Metropolitan Magistrate (CMM) in metropolitan areas and the District Magistrate (DM) in non-metropolitan areas were competent to deal with such request – However, the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh took a contrary view of the same provision, to mean that it does not debar or preclude the CJM in the non-metropolitan areas to exercise power u/s. 14 of the 2002 Act – On appeal, held: The powers and functions of the CMM and the CJM are equivalent and similar, in relation to matters specified in the Cr.P.C – These expressions (CMM and CJM) are interchangeable and synonymous to each other – Moreover, s.14 does not explicitly exclude the CJM from dealing with the request of the secured creditor made thereunder – The power to be exercised u/s.14 of the 2002 Act by the concerned Authority is, by its very nature, non-judicial or State’s coercive power – Taking totality of all the aspects, there is nothing wrong in giving expansive meaning to the expression ‘CMM’, as inclusive of CJM concerning non-metropolitan area, who is otherwise competent to discharge administrative as well as the Judicial functions as delineated in the Cr.P.C. on same terms as CMM – Therefore, the CJM is equally competent to deal with the application moved by the secured Creditor u/s. 14 of the Act – Accordingly, the view taken by the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh were upheld and approved.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – ss. 14, 35 and 37 – Code of Criminal Procedure, 1973 – Does Provisions of the 2002 Act override the provisions of the Cr.P.C, whereunder the functions to be discharged by the CMM are similar to that of the CJM – Held: The expressions ‘CMM’ and ‘CJM’ are used interchangeably in Cr. P.C. and are considered as synonymous to each other – s.14, even if read literally, in no manner denotes that allocation of jurisdictions and powers to CMM and CJM under the Code of Criminal Procedure are modified by the 2002 Act – Thus understood, s.14 of the 2002 Act, stricto sensu, cannot be construed as being inconsistent with the provisions of the Code of Criminal Procedure or vice-versa in that regard – Further, s.37 of the 2002 Act predicates that the provisions of the 2002 Act or the Rules made thereunder shall be in addition to the stated enactments or “any other law for the time being in force” – Having said that the Provisions of the s.14 of the 2002 Act are in no way inconsistent with the provisions of the Code of Criminal Procedure, it must then follow that the provisions of the 2002 Act are in addition to and not in derogation of the Code. Disposing of the appeals, the Court
HELD: 1. Be it noted that Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is not a provision dealing with the jurisdiction of the Court as such. It is a remedial measure available to the secured creditor, who intends to take assistance of the authorised officer for taking possession of the secured asset in furtherance of enforcement of security furnished by the borrower. The authorised officer essentially exercises administrative or executive functions, to provide assistance to the secured creditor in terms of State’s coercive power to effectuate the underlying legislative intent of speeding the recovery of the outstanding dues receivable by the secured creditor. At best, the exercise of power by the authorised officer may partake the colour of quasi-judicial function, which can be discharged even by the Executive Magistrate. The authorised officer is not expected to adjudicate the contentious issues raised by the concerned parties but only verify the compliances referred to in the first proviso of Section 14; and being satisfied in that behalf, proceed to pass an order to facilitate taking over possession of the secured assets. [Para 40][216-C-F]
2. It is well established that no Civil Court can interdict the action initiated in respect of any matter, which a Debt Recovery Tribunal or Debt Recovery Appellate Tribunal is empowered by or under the 2002 Act, to determine and in particular, in respect of any action taken or to be taken in pursuance of any power conferred by or under the 2002 Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. That has been ordained by Section 34 of the 2002 Act. [Para 41] [216-F-G]
3. The construction of s.35 of the 2002 Act provision plainly indicates that the provisions of the Act will override any other law for the time being in force. The question is: does the provisions of 2002 Act override the provisions of the Cr. P.C., whereunder the functions to be discharged by the CMM are similar to that of the CJM. Further, the expressions “CMM and CJM” are used interchangeably in Cr.P.C. and are considered as synonymous to each other. Section 14, even if read literally, in no manner denotes that allocation of jurisdictions and powers to CMM and CJM under the Code of Criminal Procedure are modified by the 2002 Act. Thus understood, Section 14 of the 2002 Act, stricto sensu, cannot be construed as being inconsistent with the provisions of the Code of Criminal Procedure or viceversa in that regard. If so, the stipulation in Section 35 of the 2002 Act will have no impact on the expansive construction of Section 14 of the 2002 Act. Whereas, there is force in the submission canvassed by the secured creditors (Banks), that Section 37 of the 2002 Act answers the issue under consideration. The bare text of Section 37 predicates that the provisions of the 2002 Act or the Rules made thereunder shall be in addition to the stated enactments or “any other law for the time being in force”. Having said that the provisions of the Section 14 of the 2002 Act are in no way inconsistent with the provisions of Code of Criminal Procedure, it must then follow that the provisions of the 2002 Act are in addition to, and not in derogation of the Code. [Para 43][217-B-E, G-H]
4. Suffice it to observe that keeping in mind the subject and object of the 2002 Act and the legislative intent and purpose underlying Section 14 of the 2002 Act, contextual and purposive construction of the said provision would further the legislative intent. In that, the power conferred on the authorised officer in Section 14 of the 2002 Act is circumscribed and is only in the nature of exercise of State’s coercive power to facilitate taking over possession of the secured assets. [Para 44][218-A-B]
5. Applying the principle underlying in Janardhan vs. State of Maharashtra it must follow that substitution of functionaries (CMM as CJM) qua the administrative and executive or so to say non-judicial functions discharged by them in light of the provisions of Cr.P.C., would not be inconsistent with Section 14 of the 2002 Act; nay, it would be a permissible approach in the matter of interpretation thereof and would further the legislative intent having regard to the subject and object of the enactment. That would be a meaningful, purposive and contextual construction of Section 14 of the 2002 Act, to include CJM as being competent to assist the secured creditor to take possession of the secured asset. [Para 46][222-E-F]
6. To sum up, this Court holds that the CJM is equally competent to deal with the application moved by the secured creditor under Section 14 of the 2002 Act. This Court accordingly, uphold and approve the view taken by the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh and reverse the decisions of the High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand in that regard. Resultantly, it is unnecessary to dilate on the argument of prospective overruling pressed into service by the secured creditors (Banks). [Para 48][222-G-H; 223-A]
Muhammed Ashraf and Anr. v. Union of India (UOI) and Others AIR (2009) Ker. 14; Radhakrishnan, V.N. v. State of Kerala and Anr. MANU/KE/0677/2008 (Cr. M.C. No.4369 of 2008 dated 20.11.2008); Kaveri Marketing v. The Saraswathi Co-op. Bank Ltd. 111 (2013) BC 582; M/s T.R. Jewellery and Another v. State Bank of India and Another AIR (2016) A.P. 125 (FB); Abhishek Mishra v. State of U.P. and Others. AIR (2016) All. 210 – approved.
IndusInd Bank Ltd., (formerly known as Ashok Leyland Finance Ltd.) through its Legal Executive, Ravindrakumar Prakash Bhargodev v. The State of Maharashtra through Police Station 2008 (110) BOM LR 2880 (decided on 22.04.2008); Arjun Urban Cooperative Bank Ltd., Solapur v. Chief Judicial Magistrate, Solapur and Ors. 2009 (5) Mh. L.J. 380; Dinesh Kumar Agarwal v. State of West Bengal 2013
(1) CHN 671; K. Arockiyaraj v. The Chief Judicial Magistrate, Srivilliputhur Virudhunagar District and The Housing Development Finance Corporation Limited AIR (2013) Mad. 206; T.C. Ramadoss and Ors. v. The Chief Manager & Authorised Officer State Bank of India and Ors. AIR (2015) Mad. 67; Shyam Sunder Rohra v. IndusInd Bank AIR (2017) M.P. 36; Deepak Aggarwal v. State of Uttarakhand and Others MANU/UC/0012/2012; Andhra Bank and Ors. v. Sri Dinesh Kumar Agarwal and Ors. (2013) 4 CHN 95 – not approved.
Shankarlal Aggarwal and Ors. v. Shankarlal Poddar and Ors. AIR (1965) SC 507; Municipal Corporation of Delhi v. Shiv Shanker (1971) 1 SCC 442 : [1971] 3 SCR 607; Ratan Lal Adukia v. Union of India (1989) 3 SCC 537 : [1989] 3 SCR 440; Kishorebhai
Khamanchand Goyal v. State of Gujarat and Another (2003) 12 SCC 274 : [2003] 5 Suppl. SCR 1; M/s. Unique Butyle Tube Industries Pvt. Ltd. v. U.P. Financial Corporation and Ors. AIR (2003) SC 2103 : [2002] 5 Suppl. SCR 666; Delhi Financial Corpn. and Another v. Rajiv Anand and Others (2004) 11 SCC 625; A.N. Roy, Commissioner of Police and Another v. Suresh Sham Singh (2006) 5 SCC 745 : [2006] 3 Suppl. SCR 165; Standard Chartered Bank v. V. Noble Kumar and Others (2013) 9 SCC 620 : [2013] 10 SCR 762; Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise and Another. (2016) 3 SCC 643 : [2015] 12 SCR 332; Authorized Officer, State Bank of Travancore and Others. v. Mathew K.C. (2018) 3 SCC 85 : [2018] 1 SCR 233; Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and Others (2018) 9 SCC
1 : [2018] 7 SCR 1191; Sindhi Education Society and Another v. Chief Secretary, Government of NCT of Delhi and Others (2010) 8 SCC 49 : [2010] 8 SCR 81; Rani Kusum (Smt.) v. Kanchan Devi (Smt.) and Others (2005)
6 SCC 705 : [2005] 2 Suppl. SCR 752; Vinay Tyagi v. Irshad Ali Alias Deepak and Others (2013) 5 SCC 762 : [2012] 13 SCR 1005; Vishal N. Kalsaria v. Bank of India and Others (2016) 3 SCC 762 : [ 2016] 1 SCR 419; State of A.P. v. Polamala Raju Alias Rajarao (2000)
7 SCC 75 : [2000] 2 Suppl. SCR 329; Sri Nasiruddin v. State Transport Appellate Tribunal (1975) 2 SCC 671 : [1976] 1 SCR 505; Bhudan Singh and Another v. Nabi Bux and Another (1969) 2 SCC 481 : [1970] 2 SCR 10; K.P. Varghese v. Income Tax Officer, Ernakulam and Another (1981) 4 SCC 173 : [1982] 1 SCR 629; Atma Ram Mittal v. Ishwar Singh Punia (1988) 4 SCC 284 : [1988] 2 Suppl. SCR 528; M/s. Girdhari Lal and Sons v. Balbir Nath Mathur and Others (1986) 2 SCC 237 : [1986] 1 SCR 383; Mardia Chemicals Ltd. and Others v. Union of India and Others (2004) 4 SCC 311 : [2004]
3 SCR 982; Transcore v. Union of India and Another (2008) 1 SCC 125 : [2006] 9 Suppl. SCR 785; Bank of India v. Pankaj Dilipbhai Hemnani and Others AIR 2007 Guj. 201; Solaris Systems Pvt. Ltd. and Another v. Oriental Bank of Commerce and Another I.L.R. 2006 Ker 645; Bangalore Water Supply and Sewerage Board v. A. Rajappa and Others (1978) ILLJ 349 SC; NEPC Micon Ltd. v. Magna Leasing Ltd. 1999 CriLJ 2883; Inco Europe Ltd. and Ors. v. First Choice Distribution (a firm) and Ors. 1999 CriLJ 2883; Padmasundara Rao and Others v. State of Tamil Nadu and Others (2002) 255ITR 147 (SC); National Insurance Co. Ltd. v. Laxmi Narain Dhut 2007 (2) KLT 470 (SC); Reserve Bank of India and Others v. Peerless General Finance and Investment Company Ltd. and Another (1996) 1 SCC 642 : [1996] 1 SCR 58; Kehar Singh and Others v. State (Delhi Admn.) (1988) 3 SCC 609 : [1988] 2 Suppl. SCR 24 ; Mathew Varghese v. M. Amritha Kumar and Others (2014) 5 SCC 610 : [2014] 2 SCR 736; Trade Well and Another v. Indian Bank and Another (2007) Cri. LJ 2544; Ronit Nirman Pvt. Ltd. v. State Bank of India and Others A.S.T. 1337 of 2011 (dated
18 th October, 2011); K. R. Chandrasekaran v. Union of India 2012 (2) CWC 115; Indian Overseas Bank v. Sree Aravindh Steels Ltd. 2009 (1) CTC 341; Official Liquidator Uttar Pradesh and Uttarakhand v. Allahabad Bank and Others (2013) 4 SCC 381 : [2013] 4 SCR 207; Indian Administrative Service (S.C.S.) Association, U.P. and Others v. Union of India (1993) Supp. 1 SCC
730 : [1992] 2 Suppl. SCR 389; Nasiruddin and Others v. Sita Ram Agarwal (2003) 2 SCC 577 : [2003] 1 SCR 634; High Court of Gujarat and Another v. Gujarat Kishan Mazdoor Panchayat and Others (2003) 4 SCC
712 : [2003] 2 SCR 799; Prakash Kumar Alias Prakash Bhutto v. State of Gujarat (2005) 2 SCC 409 : [2005] 1 SCR 408; New India Assurance Company Ltd. v. Nusli Neville Wadia and Another (2008) 3 SCC 279 : [2007]
13 SCR 598 – referred to.
Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited and Others (2014) 6 SCC 1 : [2014] 11 SCR 605 – distinguished. All India Judges’ Association and Others v. Union of India and Others (2002) 4 SCC 247 : [2002] 2 SCR 712; Janardhan v. State of Maharashtra (1978) 2 SCC
465 : [1978] 3 SCR 586 – relied on.
Holmes v. Bradfield Rural District Council 1949 (1) All ER 381; Seaford Court Estates Ltd. v. Asher (1949) 2 All ER 155; M. Pentiah v.. Muddala Veeramallapa [1961] 2 SCR 295 – referred to.
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