M/S R. D. JAIN AND CO. versus CAPITAL FIRST LTD. & ORS. on 27 July 2022

[2022] 13 S.C.R. 57

M/s R. D. JAIN AND CO.

v.

CAPITAL FIRST LTD. & ORS.

(Civil Appeal No. 175 of 2022)

JULY 27, 2022

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

Securitisation and Reconstruction of Financial Assets andEnforcement Security Interest Act, 2002 – ss. 13(4), 14 – ChiefMetropolitan Magistrate (CMM) shall deem to mean and includeAdditional Chief Metropolitan Magistrate (ACMM) – The respondent(secured creditor) instituted proceedings under the SARFAESI Actfor recovery of the amount due and payable by the appellant(borrower) – The borrowers refused to handover the physicalpossession of security asset – Secured creditor filed an applicationu/s 14 of the SARFAESI Act praying for assistance from the CMM intaking physical possession of the secured asset – The matter wasadjourned from time to time – Secured Creditor approached theHigh Court for an order directing the CMM to dispose of applicationu/s 14 in a time bound manner as mandated by second proviso tos.14(1) of Act – The Division Bench considering the large volumeof pendency and workload of the CMM, has observed that theACMM, being invested with all the judicial powers of the CMM,can be considered at par with the CMM – The High Court furtherobserved that the CMM and ACMM stand on the same footing andone cannot be said to be either inferior or subordinate to the other– On appeal, held: As mandated by s.14 of the SARFAESI Act, theCMM/DM has to act within the stipulated time limit and pass asuitable order – Thus, the powers exercised by the CMM/DM is aministerial act – While disposing of the application u/s. 14 of theSARFAESI Act, no element of quasi-judicial function or applicationof mind would require – S.14 does not oblige the CMM/DM to gopersonally and take possession of the secured assets and documentsrelating thereto – The High Court has rightly observed that the powervested in the CMM/District Magistrate is not by way of personadesignata – The judicial powers and the powers, under the Cr.PCwhich may be exercised by the CMM, can be exercised by the ACMMalso – Thus, the ACMM can be said to be at par with the CMM in

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Aso far as the powers to be exercised under the Cr.PC are concerned– The expression “CMM” as appearing in s.14 of the SARFAESIAct shall deem to mean and include ACMM for the purposes of s.14of the SARFAESI Act.

Dismissing the appeal, the CourtB

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

Conclusion

1.2 However, for taking physical possession of the securedassets in terms of Section 14(1) of the SARFAESI Act, the securedcreditor is obliged to approach the CMM/DM by way of a writtenDapplication requesting for taking possession of the secured assetsand documents relating thereto and for being forwarded to it(secured creditor) for further action. The statutory obligationenjoined upon the CMM/DM is to immediately move into actionafter receipt of a written application under Section 14(1) of theSARFAESI Act from the secured creditor for that purpose. AsEsoon as such an application is received, the CMM/DM isexpected to pass an order after verification of compliance of allformalities by the secured creditor referred to in the proviso inSection 14(1) of the SARFAESI Act and after being satisfied inthat regard, to take possession of the secured assets andFdocuments relating thereto and to forward the same to the securedcreditor at the earliest opportunity. As mandated by Section 14of the SARFAESI Act, the CMM/DM has to act within thestipulated time limit and pass a suitable order for the purpose oftaking possession of the secured assets within a period of 30days from the date of application which can be extended for suchGfurther period but not exceeding in the aggregate, sixty days.Thus, the powers exercised by the CMM/DM is a ministerialact. He cannot brook delay. Time is of the essence. This is thespirit of the special enactment. As observed and held by this Courtin the case of NKGSB Cooperative Bank Ltd., the step taken by H

the CMM/DM while taking possession of the secured assets anddocuments relating thereto is a ministerial step. It could be takenby the CMM/DM himself/herself or through any officersubordinate to him/her, including the advocate commissioner whois considered as an officer of his/her court. Section 14 does notoblige the CMM/DM to go personally and take possession ofthe secured assets and documents relating thereto. Thus, thisCourt reiterates that the step to be taken by the CMM/DM underSection 14 of the SARFAESI Act, is a ministerial step. Whiledisposing of the application under Section 14 of the SARFAESIAct, no element of quasi-judicial function or application of mindwould require. The Magistrate has to adjudicate and decide thecorrectness of the information given in the application and nothingmore. Therefore, Section 14 does not involve an adjudicatoryprocess qua points raised by the borrower against the securedcreditor taking possession of secured assets. [Para 8.1][73-D-H; 74-A-D]

1.3 From the relevant provisions of Cr.PC, namely, sections11, 12, 15, 16, 17, 19 and 35, it can be seen that any MetropolitanMagistrate can be appointed by the High Court to be the ChiefMetropolitan Magistrate. The High Court may appoint anyMetropolitan Magistrate to be an Additional Chief MetropolitanMagistrate, and such Magistrate shall have all or any of thepowers of a Chief Metropolitan Magistrate under Cr.PC or underany other law for the time being in force as the High Court maydirect. The Chief Metropolitan Magistrate and every AdditionalChief Metropolitan Magistrate shall be subordinate to theSessions Judge; and every other Metropolitan Magistrate shall,subject to the general control of the Sessions Judge, besubordinate to the Chief Metropolitan Magistrate. Thus thejudicial powers and the powers, under the Cr.PC which may beexercised by the Chief Metropolitan Magistrate, can beexercised by the Additional Chief Metropolitan Magistrate also.Thus, the Additional Chief Metropolitan Magistrate can be saidto be at par with the Chief Metropolitan Magistrate in so far asthe powers to be exercised under the Cr.PC are concerned. TheChief Metropolitan Magistrate in addition, may haveadministrative powers. However, for all other purposes and moreparticularly the powers to be exercised under the Cr.PC both AB

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Aare at par. Therefore, the Additional Chief MetropolitanMagistrate cannot be said to be subordinate to the ChiefMetropolitan Magistrate in so far as exercise of judicial powersare concerned. [Para 10.1][77-B-E]

2. In view of the above discussion and as observedBhereinabove when the powers to be exercised by the AdditionalChief Metropolitan Magistrate are at par with the powers to beexercised by the Chief Metropolitan Magistrate [Section 17(2)of Cr.PC] and the Chief Metropolitan Magistrate and AdditionalChief Metropolitan Magistrate shall be subordinate to theSessions Judge (Section 19 of the Cr.PC) and the steps to beCtaken by the Chief Metropolitan Magistrate under Section 14 ofthe SARFAESI Act as observed hereinabove are ministerial innature and does not involve any adjudicatory process and thereis no element of any quasi-judicial function, we see no reason totake a different view than the view taken by the Bombay HighDCourt in the impugned judgment. This Court holds that theexpression “Chief Metropolitan Magistrate” as appearing inSection 14 of the SARFAESI Act shall deem to mean and includeAdditional Chief Metropolitan Magistrate for the purposes ofSection 14 of the SARFAESI Act. [Para 10.2][77-F-H; 78-A]

E3. Similarly, when the Additional District Magistrates areconferred with the powers to be exercised by the DistrictMagistrates either by delegation and/or by special orders andthe Additional District Magistrates are exercising the samepowers which are being exercised by the District Magistrates,the same analogy can be applied, more particularly, when theFpowers exercisable under Section 14 of the SARFAESI Act, areministerial steps. [Para 10.3][78-B]

4. The issue/question may also be considered from anotherangle. It cannot be disputed and even judicial notice can be takenof the fact that the CMMs and/or even the DMs are required toGperform so many other duties under different statutes. They haveto perform many administrative duties also. District Magistratesare in overall administrative control of their jurisdiction/district.Similarly, CMMs are also required to perform administrative H

duties and they have also to deal with the other cases/criminaltrials and many trials under special statutes also. It cannot bedisputed that the litigations under the SARFAESI Act andproceedings and/or applications under Section 14 of theSARFAESI Act are increasing. Even as noticed by the High Courtin the impugned judgment and order, as on 09.08.2017, 926 caseswere pending under Section 14 of the SARFAESI Act before onlyone CMM. Therefore, a number of applications under Section14 are pending. It also cannot be disputed that the SARFAESIAct provides for expeditious disposal of the applications filedunder Section 14 of the SARFAESI Act. As per, second provisoto Section 14, suitable orders for the purpose of taking possessionof the secured assets are required to be passed within a maximumperiod of sixty days from the date of the application. Therefore, ifthe submission on behalf of the appellants that only the concernedCMM/DM alone would have jurisdiction to decide the applicationsunder Section 14 of the SARFAESI Act is accepted, in that case,it will be practically impossible for the concerned CMM/DM todecide the application under Section 14 of the SARFAESI Actexpeditiously and within the time stipulated under second provisoto Section 14 of the SARFAESI Act. If the interpretation whichthis Court proposes that, the District Magistrate/ChiefMetropolitan Magistrate under Section 14 of the SARFAESI Actincludes the Additional District Magistrate/Additional ChiefMetropolitan Magistrate, the same can be said to be a purposiveinterpretation to achieve the object and purpose of proceedingsunder the SARFAESI Act, more particularly when as observedhereinabove, the orders to be passed under Section 14 of theSARFAESI Act are ministerial steps and to assist the securedcreditor in getting/obtaining the possession of the securedproperty. Thus, there is no element of exercise of adjudicatorypowers under Section 14 of the SARFAESI Act. All these aspectshave been considered in detail by the High Court in the impugnedjudgment and order. [Para 11][78-C-H; 79-A-B]

5. This Court is in complete agreement with the view takenby the High Court that (i) the District Magistrate, ChiefMetropolitan Magistrate is not a persona designata for the AB

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Apurposes 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 tomean and include Additional District Magistrate and AdditionalChief Metropolitan Magistrate for the purposes of Section 14 ofthe SARFAESI Act. [Para 12][79-C]B

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

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

E[1969] 2 SCR 201

Case Law Reference

referred toPara 4.2

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 175 of2022.

From the Judgment and Order dated 22.12.2017 of the High CourtFof Judicature at Bombay in Writ Petition No. 1961 of 2017.

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Purvish Jitendra Malkan, Ms. Dharita P. Malkan, Ms. DeepaGorasia, Alok Kumar, Ms. Nandini Chhabra, Ms. Khushboo VinodraiMalkan, Ms. Bhavna Sarkar, Advs. for the Appellant.

Sachin Patil, Rahul Chitnis, Aaditya A. Pande, Geo Joseph,Ms. Shwetal Shepal, Advs. for the Respondents.

The Judgment of the Court was delivered by

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 22.12.2017 passed by the High Court of Judicature atBombay in Writ Petition No. 1961/2017, by which, the Division Benchof the High Court while interpreting Section 14 of the Securitisation andReconstruction of Financial Assets and Enforcement Security InterestAct, 2002 (hereinafter referred to as the “SARFAESI Act”) has heldthat (i) the District Magistrate, Chief Metropolitan Magistrate is not apersona designata for the purposes of Section 14 of the SARFAESIAct; (ii) the expression “District Magistrate” and the “Chief MetropolitanMagistrate” as appearing in Section 14 of the SARFAESI Act shalldeem to mean and include Additional District Magistrate and AdditionalChief Metropolitan Magistrate for the purposes of Section 14 of theSARFAESI Act, the borrower has preferred the present appeal.

2. The facts leading to the present appeal in a nutshell are asunder: - 2.1 That respondent No. 1 herein – Financial Institution – CapitalFirst Limited is the secured creditor (hereinafter referred to as the“secured creditor”) within the meaning of Section 2(1)(zd) of theSARFAESI Act. That the secured creditor instituted proceedings underthe SARFAESI Act for recovery of the amount due and payable by theappellant herein – borrower. The said proceedings initiated under Section13(4) of the SARFAESI Act, the secured creditor proceeded to takepossession of the secured asset. However, the borrowers refused tohandover the physical possession of the secured asset. The securedcreditor took symbolic possession of the secured asset on 21.01.2017and affixed the possession notice at the said secured asset. That on17.03.2017, the secured creditor filed an application under Section 14 ofthe SARFAESI Act with the learned Chief Metropolitan Magistrate Court,Esplanade, Mumbai, inter-alia, praying for assistance from the learnedChief Metropolitan Magistrate in taking physical possession of the securedasset. The matter was adjourned from time to time and lastly, it wasadjourned to 29.07.2017. As mandated by second proviso to sub-section(1) of Section 14 of the SARFAESI Act, the application was required tobe disposed of within a period of 30 days and as the application was notdecided within the period mandated by the statute, the secured creditor B

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Amoved an application for advancement. The said application came to bedismissed by the learned Chief Metropolitan Magistrate, inter-alia, onthe ground that the said application is a fresh application and many oldapplications are pending. Therefore, the secured creditor approachedthe High Court by way of the present writ petition for an appropriatedirection and order directing the learned Chief Metropolitan MagistrateBto dispose of their cases/applications under Section 14 of the SARFAESIAct in a time bound manner.

2.2 That the Division Bench of the High Court issued directionsto the learned Chief Metropolitan Magistrate to make an endeavour todispose of the pending applications as expeditiously as possible andCpreferably within a period of thirty days from the date of receipt of writalong with the order. The learned Chief Metropolitan Magistrate videcommunication dated 14.08.2017 brought to the notice of the High Courtthat, “Even though, the SARFAESI Act, 2002 provides for expeditiousdisposal of the applications filed under Section 14 of the said Act, thereDare as many as 924 cases pending under the said Act as on 09.08.2017on the file of the Court of the Chief Metropolitan Magistrate, Esplanade,Mumbai. Out of 924 cases, 509 cases are filed in the year 2017. However,there are 27 cases of the year 2014, 96 cases of the year 2015 and 291cases of the year 2016, still pending for disposal. As per the direction ofthe Hon’ble High Court, preference should be given to the old pendingEcases for disposing of the same. Therefore, the preference is being givento the pending old cases rather than fresh new cases.”

2.3 On receiving the aforesaid report, the High Court was of theopinion that considering the volume of applications filed under Section14 of the SARFAESI Act and pendency of such applications, the learnedFChief Metropolitan Magistrate, who is an authority under Section 14 ofthe SARFAESI Act cannot decide such applications within a time boundperiod in terms of the first and second proviso to Section 14(1) of theSARFAESI Act. After opining so, the High Court proceeded to considerthe issue as to how to minimize the pendency. In this context, afterGconsidering the relevant provisions of the SARFAESI Act as well asSection 17(2) and Section 19 of the Code of Criminal Procedure, theHigh Court has observed that the Additional Chief Metropolitan Magistrate(for short “ACMM”), being invested with all the judicial powers of theChief Metropolitan Magistrate, can be considered at par with the ChiefMetropolitan Magistrate. The High Court has also observed that so farH

as the exercise of judicial powers are concerned, the Chief MetropolitanMagistrate and the Additional Chief Metropolitan Magistrate stand onthe same footing and one cannot be said to be either inferior or subordinateto the other. It is further observed and held that as the status of ChiefMetropolitan Magistrate and Additional Chief Metropolitan Magistrateis same and identical, the Additional Chief Metropolitan Magistrate canexercise the powers under Section 14 of the SARFAESI Act. Whileholding so, the Division Bench of the High Court has heavily relied uponthe decisions of the Division Bench of the High Court in the case ofState of Maharashtra Vs. Shanti Prasad Jain in Criminal ReferenceNo. 9 of 1977 decided on 29.09.1977 by which, on a reference the DivisionBench of the High Court held and concluded that the Chief MetropolitanMagistrate and the Additional Chief Metropolitan Magistrate are courtsof the same status having the same or identical jurisdiction so far as thetrial of criminal cases is concerned. Further, by taking into considerationthe fact that the powers of the Chief Metropolitan Magistrate underSection 14 of the SARFAESI Act being purely executionary in natureand having no element of quasi-judicial functions ultimately it is observedand held by the High Court as under: - “(I) The District Magistrate, Chief Metropolitan Magistrateis not a persona designata for the purposes of Section 14 ofthe SARFAESI Act.

(II) The expression “District Magistrate” and the “ChiefMetropolitan Magistrate” as appearing in Section 14 of theSARFAESI Act shall deem to mean and include AdditionalDistrict Magistrate and Additional Chief MetropolitanMagistrate for the purposes of Section 14 of the SARFAESIAct.”

2.4 Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court holding that the District Magistrate,Chief Metropolitan Magistrate is not by persona designata for thepurposes of Section 14 of the SARFAESI Act and that the expression“District Magistrate” and the “Chief Metropolitan Magistrate” asappearing in Section 14 of the SARFAESI Act shall deem to mean andinclude Additional District Magistrate and Additional Chief MetropolitanMagistrate for the purposes of Section 14 of the SARFAESI Act, theborrower has preferred the present appeal.

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A3. Shri Purvish Jitendra Malkan, learned Advocate has appearedon behalf of the appellant – borrower and Shri Sachin Patil, learnedAdvocate has appeared on behalf of the State. None has appeared onbehalf of the respondent No. 1 – secured creditor.

4. Shri Malkan, learned counsel appearing on behalf of theBborrower has vehemently submitted that the High Court has committeda grave error in holding that powers under Section 14 of the SARFAESIAct can be exercised by the Additional Chief Metropolitan Magistrateand Additional District Magistrate also. It is vehemently submitted thatthe High Court has also committed a very serious/grave error in holdingthat the District Magistrate and the Chief Metropolitan Magistrate is notCa persona designata for the purposes of Section 14 of the SARFAESIAct.

4.1 Shri Malkan, learned counsel appearing on behalf of theborrower has submitted that the impugned judgment and order passedby the High Court is just contrary to the decisions of the Gujarat HighDCourt, Kerala High Court and the Calcutta High Court. It is submittedthat the High Court of Gujarat, has been pleased to hold that: - “1) District Magistrate and Additional District Magistrate are twodifferent and distinct authorities; E2) The powers conferred on the District Magistrate or the ChiefMetropolitan Magistrate, as the case may be, under Section 14are inter-alia that the powers are conferred specifically on theseauthorities. One of the aspects of the power to be exercised isthat the District Magistrate or the Chief Metropolitan Magistratehas to satisfy himself about compliance of the requirement of theFSection. The satisfaction is personal satisfaction. The DistrictMagistrate or the Chief Metropolitan Magistrate are conferredwith the powers in their specific capacity as Chief MetropolitanMagistrate of the District Magistrate. They themselves only arethe competent authorities to exercise the powers. The nature ofGpowers under Section 14 would not permit transfer/delegate ofexercise of powers under the said provision to different person orauthorities.”

4.2 It is submitted that while holding as above the Gujarat HighCourt heavily relied upon the decision of this Court in the case of HariChand Aggarwal Vs. Batala Engineering Co. Ltd. and Ors.; (1969)H

2 SCR 201. It is submitted that as held by this Court in the case of HariChand Aggarwal (supra) the District Magistrate and Additional DistrictMagistrate are the distinct authorities and the Additional DistrictMagistrate is subordinate to the District Magistrate and therefore, theAdditional District Magistrate being subordinate cannot exercise thepowers of the District Magistrate.

4.3 It is submitted that the Gujarat High Court has also consideredand relied upon its earlier Division Bench judgment in the case of ShivamWater Treaters P. Ltd. Vs. Authorised Officer, State Bank of Indiain Special Civil Application No. 12632 of 2013 decided on 17.09.2013 bywhich the Division Bench of the High Court observed and held as under:-

“7. In the past, this very Bench had an occasion to consider thequestion as to whether the power conferred under Section 14 ofthe Securitisation Act can be delegated by a Chief MetropolitanMagistrate in favour of the Additional Chief MetropolitanMagistrate. In that context, this bench held that the action of theChief Metropolitan Magistrate, Ahmedabad in exercise of hispowers under Section 19 Clause (3) of the Code of CriminalProcedure, 1973 read with Rule 10 Clause (1) of Chapter XXXIIof the Criminal Manual, 1977 regarding the distribution of businessamongst the Metropolitan Magistrates, Ahmedabad, therebyempowering the Additional Chief Metropolitan Magistrate,Ahmedabad to accept and decide the cases under the provisionsof the Securitisation Act, arising within the limits of AhmedabadMunicipal Corporation, was without jurisdiction.

8. In the case before us, the question is a bit different one as towhether a District Magistrate can delegate such power to theSub Divisional Magistrate.”

It is submitted that thereafter it is specifically observed and heldthat it is only the District Magistrate who can exercise the powers underSection 14 of the SARFAESI Act.

4.4 Making the above submissions and relying upon the decisionsof this Court in the case of Hari Chand Aggarwal (supra) and thedecisions of High Court of Gujarat, Kerala and Calcutta, it is prayed toallow the present appeal and quash and set aside the impugned judgmentand order passed by the High Court and to hold that it is only the DistrictMagistrate or the Chief Metropolitan Magistrate who are conferred with A

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Athe powers in their specific capacity as Chief Metropolitan Magistrateor District Magistrate to exercise the powers under Section 14 of theSARFAESI Act.

5. Shri Sachin Patil, learned counsel appearing on behalf of theState has supported the impugned judgment and order passed by theBHigh Court. It is submitted that looking to the mandate under Section 14of the SARFAESI Act to decide and dispose of the applications underSection 14 within a maximum period of 60 days and looking to the volumeof the work and applications pending with the District Magistrates or theChief Metropolitan Magistrates and that they have also to look after andconsider other duties including the administrative work and with a viewCto see that the ultimate object and purpose of providing the time lines indeciding the applications under Section 14 of the SARFAESI Act, it isprayed to dismiss the present appeal.

6. Heard. While considering the issue whether the AdditionalDistrict Magistrate or Additional Chief Metropolitan Magistrate mayDexercise the powers under Section 14 of the SARFAESI Act and/or theissue whether the expression “District Magistrate” and the “ChiefMetropolitan Magistrate” as appearing in Section 14 of the SARFAESIAct shall deem to mean and include Additional District Magistrate andAdditional Chief Metropolitan Magistrate for the purposes of Section 14Eof the SARFAESI Act, the powers exercisable by the District Magistrate(for short “DM”) and the Chief Metropolitan Magistrate (for short“CMM”) under Section 14 of the SARFAESI Act are first required tobe considered. Section 14 of the SARFAESI Act reads as under:-

“14. Chief Metropolitan Magistrate or District Magistrate to assistFsecured creditor in taking possession of secured asset.—(1) Wherethe possession of any secured assets is required to be taken bythe secured creditor or if any of the secured assets is required tobe sold or transferred by the secured creditor under the provisionsof this Act, the secured creditor may, for the purpose of takingpossession or control of any such secured assets, request, in writing,Gthe Chief Metropolitan Magistrate or the District Magistrate withinwhose jurisdiction any such secured asset or other documentsrelating thereto may be situated or found, to take possessionthereof, and the Chief Metropolitan Magistrate or as the casemay be, the District Magistrate shall, on such request being madeto him—H

(a) take possession of such asset and documents relating thereto;and (b) forward such asset and documents to the secured creditor:

[Provided that any application by the secured creditor shall beaccompanied by an affidavit duly affirmed by the authorised officerof the secured creditor, declaring that—

(i) the aggregate amount of financial assistance granted and thetotal claim of the Bank as on the date of filing the application;

(ii) the borrower has created security interest over variousproperties and that the Bank or Financial Institution is holding avalid and subsisting security interest over such properties and theclaim of the Bank or Financial Institution is within the limitationperiod;

(iii) the borrower has created security interest over variousproperties giving the details of properties referred to in sub-clause(ii)above;

(iv) the borrower has committed default in repayment of thefinancial assistance granted aggregating the specified amount;

(v) consequent upon such default in repayment of the financialassistance the account of the borrower has been classified as anon-performing asset;

(vi) affirming that the period of sixty days notice as required bythe provisions of sub-section (2) of section 13, demanding paymentof the defaulted financial assistance has been served on theborrower;

(vii) the objection or representation in reply to the notice receivedfrom the borrower has been considered by the secured creditorand reasons for non-acceptance of such objection or representationhad been communicated to the borrower;

(viii) the borrower has not made any repayment of the financialassistance in spite of the above notice and the Authorised Officeris, therefore, entitled to take possession of the secured assetsunder the provisions of sub-section (4) of section 13 read withsection 14 of the principal Act; A

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(ix) that the provisions of this Act and the rules made thereunderhad been complied with:

Provided further that on receipt of the affidavit from theAuthorised Officer, the District Magistrate or the ChiefMetropolitan Magistrate, as the case may be, shall after satisfyingthe contents of the affidavit pass suitable orders for the purposeof taking possession of the secured assets [within a period ofthirty days from the date of application]

[Provided also that if no order is passed by the ChiefMetropolitan Magistrate or District Magistrate within the saidperiod of thirty days for reasons beyond his control, he may, afterrecording reasons in writing for the same, pass the order withinsuch further period but not exceeding in aggregate sixty days.]

Provided also that the requirement of filing affidavit statedin the first proviso shall not apply to proceeding pending beforeany District Magistrate or the Chief Metropolitan Magistrate, asthe case may be, on the date of commencement of this Act.]

(2) For the purpose of securing compliance with theprovisions of sub-section (1), the Chief Metropolitan Magistrateor the District Magistrate may take or cause to be taken suchsteps and use, or cause to be used, such force, as may, in hisopinion, be necessary.

(3) No act of the Chief Metropolitan Magistrate or theDistrict Magistrate [any officer authorised by the ChiefMetropolitan Magistrate or District Magistrate] done in pursuanceof this section shall be called in question in any court or beforeany authority.”

6.1 That in the year 2013 by Act 1 of 2013, Section 14 (1A) hasbeen inserted by which now, while exercising the powers under Section14 of the SARFAESI Act, the District Magistrate or the ChiefMetropolitan Magistrate may authorise any officer subordinate to him totake possession of such assets and documents relating thereto; and toforward such assets and documents to the secured creditor. Section 14(1A) as inserted in the year 2013 reads as under:- “[(1A) The District Magistrate or the Chief MetropolitanMagistrate may authorise any officer subordinate to him,—

(i) to take possession of such assets and documents relatingthereto; and

(ii) to forward such assets and documents to the securedcreditor.]”

6.2 Even as observed and held by this Court in the recent decisionof NKGSB Cooperative Bank Limited Vs. Subir Chakravarty &Ors. (Civil Appeal No. 1637/2022) decided on 25.02.2022, it is open tothe CMM/DM to appoint an advocate and authorise him/her to takepossession of the secured assets and documents relating thereto and toforward the same to the secured creditor under Section 14(1A) of theSARFAESI Act.

7. Now so far as the powers exercisable by DM and CMM underSection 14 of the SARFAESI Act are concerned, statement of objectsand reasons for which SARFAESI Act has been enacted reads as under:- “STATEMENT OF OBJECTS AND REASONS

The financial sector has been one of the key drivers in India’sefforts to achieve success in rapidly developing its economy. Whilethe banking industry in India is progressively complying with theinternational prudential norms and accounting practices there arecertain areas in which the banking and financial sector do nothave a level playing field as compared to other participants in thefinancial markets in the world. There is no legal provision forfacilitating securitisation of financial assets of banks and financialinstitutions. Further, unlike international banks, the banks andfinancial institutions in India do not have power to take possessionof securities and sell them. Our existing legal framework relatingto commercial transactions has not kept pace with the changingcommercial practices and financial sector reforms. This hasresulted in slow pace of recovery of defaulting loans and mountinglevels of non-performing assets of banks and financial institutions.Narasimham Committee I and II and Andhyarujina Committeeconstituted by the Central Government for the purpose ofexamining banking sector reforms have considered the need forchanges in the legal system in respect of these areas. TheseCommittees, inter alia, have suggested enactment of a newlegislation for securitisation and empowering banks and financialinstitutions to take possession of the securities and to sell them A

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without the intervention of the court. Acting on these suggestions,the Securitisation and Reconstruction of Financial Assets andEnforcement of Security Interest Ordinance, 2002 waspromulgated on the 21st June, 2002 to regulate securitisation andreconstruction of financial assets and enforcement of securityinterest and for matters connected therewith or incidental thereto.The provisions of the Ordinance would enable banks and financialinstitutions to realise long-term assets, manage problem of liquidity,asset liability mismatches and improve recovery by exercisingpowers to take possession of securities, sell them and reducenonperforming assets by adopting measures for recovery orreconstruction.”

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Thus, the underlying purpose of the SARFAESI Act is to empowerthe financial institutions in India to have similar powers as enjoyed bytheir counterparts, namely, international banks in other countries. Onesuch feature is to empower the financial institutions to take possessionDof securities and sell them. The same has been translated into provisionsfalling under Chapter III of the SARFAESI Act. Section 13 deals withenforcement of security interest. Sub-Section (4) thereof envisages thatin the event a default is committed by the borrower in discharging hisliability in full within the period specified in sub-section (2), the securedcreditor may take recourse to one or more of the measures provided inEsub-section (4). One of the measures is to take possession of the securedassets of the borrower including the right to transfer by way of lease,assignment or sale for realising the secured asset. That, they could dothrough their “authorised officer” as defined in Rule 2(a) of the SecurityInterest (Enforcement) Rules, 2002.

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7.1 After taking over possession of the secured assets, furthersteps to lease, assign or sale the same could also be taken by the securedcreditor. However, Section 14 of the SARFAESI Act predicates that ifthe secured creditor intends to take possession of the secured assets,must approach the CMM/DM by way of an application in writing, andGon receipt of such request, the CMM/DM must move into action in rightearnest. After passing an order thereon, he/she (CMM/DM) mustproceed to take possession of the secured assets and documents relatingthereto for being forwarded to the secured creditor in terms of Section14(1) read with Section 14(2) of the SARFAESI Act. As noted earlier,Section 14(2) is an enabling provision and permits the CMM/DM to takeHsuch steps and use force, as may, in his opinion, be necessary.

7.2 At this stage, it is required to be noted that along with insertionof sub-section (1A), a proviso has also been inserted in sub-section (1)of Section 14 of the SARFAESI Act whereby the secured creditor isnow required to comply certain conditions and to disclose that by way ofan application accompanied by affidavit duly affirmed by its authorisedofficer in that regard. Sub-Section (1A) is in the nature of an explanatoryprovision and it merely restates the implicit power of the CMM/DM intaking services of any officer subordinate to him. As observed and heldby this Court in the case of NKGSB Cooperative Bank Ltd. (supra),the insertion of sub-section (1A) is not to invest a new power for thefirst time in the CMM/DM as such.

8. Thus, considering the scheme of the SARFAESI Act, it is explicitand crystal clear that possession of the secured assets can be taken bythe secured creditor before confirmation of sale of the secured assetsas well as post-confirmation of sale. For taking possession of the securedassets, it could be done by the “authorised officer” of the Bank as notedin Rule 8 of the Security Interest (Enforcement) Rules, 2002.

8.1 However, for taking physical possession of the secured assetsin terms of Section 14(1) of the SARFAESI Act, the secured creditor isobliged to approach the CMM/DM by way of a written applicationrequesting for taking possession of the secured assets and documentsrelating thereto and for being forwarded to it (secured creditor) for furtheraction. The statutory obligation enjoined upon the CMM/DM is toimmediately move into action after receipt of a written application underSection 14(1) of the SARFAESI Act from the secured creditor for thatpurpose. As soon as such an application is received, the CMM/DM isexpected to pass an order after verification of compliance of all formalitiesby the secured creditor referred to in the proviso in Section 14(1) of theSARFAESI Act and after being satisfied in that regard, to take possessionof the secured assets and documents relating thereto and to forward thesame to the secured creditor at the earliest opportunity. As mandated bySection 14 of the SARFAESI Act, the CMM/DM has to act within thestipulated time limit and pass a suitable order for the purpose of takingpossession of the secured assets within a period of 30 days from thedate of application which can be extended for such further period butnot exceeding in the aggregate, sixty days. Thus, the powers exercisedby the CMM/DM is a ministerial act. He cannot brook delay. Time is ofthe essence. This is the spirit of the special enactment. As observed and AB

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Aheld by this Court in the case of NKGSB Cooperative Bank Ltd.(supra), the step taken by the CMM/DM while taking possession of thesecured assets and documents relating thereto is a ministerial step. Itcould be taken by the CMM/DM himself/herself or through any officersubordinate to him/her, including the advocate commissioner who isconsidered as an officer of his/her court. Section 14 does not oblige theBCMM/DM to go personally and take possession of the secured assetsand documents relating thereto. Thus, we reiterate that the step to betaken by the CMM/DM under Section 14 of the SARFAESI Act, is aministerial step. While disposing of the application under Section 14 ofthe SARFAESI Act, no element of quasi-judicial function or applicationCof mind would require. The Magistrate has to adjudicate and decide thecorrectness of the information given in the application and nothing more.Therefore, Section 14 does not involve an adjudicatory process qua pointsraised by the borrower against the secured creditor taking possession ofsecured assets.

D9. Thus, in view of the scheme of the SARFAESI Act, moreparticularly, Section 14 of the SARFAESI Act and the nature of thepowers to be exercised by learned Chief Metropolitan Magistrate/learnedDistrict Magistrate, the High Court in the impugned judgment and orderhas rightly observed and held that the power vested in the learned ChiefMetropolitan Magistrate/learned District Magistrate is not by way ofEpersona designata.

10. Now the next question which is posed for consideration ofthis Court is, whether, the Additional Chief Metropolitan Magistrate canbe said to be subordinate to the Chief Metropolitan Magistrate. For thatpurpose the relevant provisions of the Cr.PC, namely, Sections 11, 12,F15, 16, 17, 19 and 35, are required to be referred to which are extractedas under:-

“11. Courts of Judicial Magistrates.—(1) In every district (notbeing a metropolitan area) there shall be established as manyCourts of Judicial Magistrates of the first class and of the secondGclass, and at such places, as the State Government may, afterconsultation with the High Court, by notification, specify: 1[Provided that the State Government may, after consultation withthe High Court, establish, for any local area, one or more SpecialCourts of Judicial Magistrates of the first class or of the secondHclass to try any particular case or particular class of cases, and where any such Special Court is established, no other Court ofMagistrate in the local area shall have jurisdiction to try any caseor class of cases for the trial of which such Special Court ofJudicial Magistrate has been established.] (2) The presiding officersof such Courts shall be appointed by the High Court. (3) TheHigh Court may, whenever it appears to it to be expedient ornecessary, confer the powers of a Judicial Magistrate of the firstclass or of the second class on any member of the Judicial Serviceof the State, functioning as a Judge in a Civil Court.

12. Chief Judicial Magistrate and Additional Chief JudicialMagistrate, etc.—(1) In every district (not being a metropolitanarea), the High Court shall appoint a Judicial Magistrate of thefirst class to be the Chief Judicial Magistrate. (2) The High Courtmay appoint any Judicial Magistrate of the first class to be anAdditional Chief Judicial Magistrate, and such Magistrate shallhave all or any of the powers of a Chief Judicial Magistrate underthis Code or under any other law for the time being in force as theHigh Court may direct. (3) (a) The High Court may designateany Judicial Magistrate of the first class in any sub-division as theSub-divisional Judicial Magistrate and relieve him of theresponsibilities specified in this section as occasion requires. (b)Subject to the general control of the Chief Judicial Magistrate,every Sub-divisional Judicial Magistrate shall also have andexercise, such powers of supervision and control over the workof the Judicial Magistrates (other than Additional Chief JudicialMagistrates) in the sub-division as the High Court may, by generalor special order, specify in this behalf.

15. Subordination of Judicial Magistrates.—(1) Every ChiefJudicial Magistrate shall be subordinate to the Sessions Judge;and every other Judicial Magistrate shall, subject to the generalcontrol of the Sessions Judge, be subordinate to the Chief JudicialMagistrate. (2) The Chief Judicial Magistrate may, from time totime, make rules or give special orders, consistent with this Code,as to the distribution of business among the Judicial Magistratessubordinate to him.

16. Courts of Metropolitan Magistrates.—(1) In every metropolitanarea, there shall be established as many Courts of MetropolitanMagistrates, and at such places, as the State Government may, AB

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after consultation with the High Court, by notification, specify. (2)The presiding officers of such Courts shall be appointed by theHigh Court. (3) The jurisdiction and powers of every MetropolitanMagistrate shall extend throughout the metropolitan area.

17. Chief Metropolitan Magistrate and Additional ChiefMetropolitan Magistrate.—(1) The High Court shall, in relation toevery metropolitan area within its local jurisdiction, appoint aMetropolitan Magistrate to be the Chief Metropolitan Magistratefor such metropolitan area. (2) The High Court may appoint anyMetropolitan Magistrate to be an Additional Chief MetropolitanMagistrate, and such Magistrate shall have all or any of the powersof a Chief Metropolitan Magistrate under this Code or under anyother law for the time being in force as the High Court may direct.

19. Subordination of Metropolitan Magistrates.—(1) The ChiefMetropolitan Magistrate and every Additional Chief MetropolitanMagistrate shall be subordinate to the Sessions Judge; and everyother Metropolitan Magistrate shall, subject to the general controlof the Sessions Judge, be subordinate to the Chief MetropolitanMagistrate. (2) The High Court may, for the purposes of this Code,define the extent of the subordination, if any, of the AdditionalChief Metropolitan Magistrates to the Chief MetropolitanMagistrate. (3) The Chief Metropolitan Magistrate may, from timeto time, make rules or give special orders, consistent with thisCode, as to the distribution of business among the MetropolitanMagistrates and as to the allocation of business to an AdditionalChief Metropolitan Magistrate.

35. Powers of Judges and Magistrates exercisable by theirsuccessors-in-office.—(1) Subject to the other provisions of thisCode, the powers and duties of a Judge or Magistrate may beexercised or performed by his successor-in-office. (2) When thereis any doubt as to who is the successor-in-office of any Additionalor Assistant Sessions Judge, the Sessions Judge shall determineby order in writing the Judge who shall, for the purposes of thisCode or of any proceedings or order thereunder, be deemed to bethe successor-in-office of such Additional or Assistant SessionsJudge. (3) When there is any doubt as to who is the successor-in-office of any Magistrate, the Chief Judicial Magistrate, or theDistrict Magistrate, as the case may be, shall determine by order in writing the Magistrate who shall, for the purpose of this Codeor of any proceedings or order thereunder, be deemed to be thesuccessor-in-office of such Magistrate.”

10.1 From the aforesaid provisions, it can be seen that anyMetropolitan Magistrate can be appointed by the High Court to be theChief Metropolitan Magistrate. The High Court may appoint anyMetropolitan Magistrate to be an Additional Chief MetropolitanMagistrate, and such Magistrate shall have all or any of the powers of aChief Metropolitan Magistrate under Cr.PC or under any other law forthe time being in force as the High Court may direct. The ChiefMetropolitan Magistrate and every Additional Chief MetropolitanMagistrate shall be subordinate to the Sessions Judge; and every otherMetropolitan Magistrate shall, subject to the general control of the SessionsJudge, be subordinate to the Chief Metropolitan Magistrate. Thus thejudicial powers and the powers, under the Cr.PC which may be exercisedby the Chief Metropolitan Magistrate, can be exercised by the AdditionalChief Metropolitan Magistrate also. Thus, the Additional ChiefMetropolitan Magistrate can be said to be at par with the ChiefMetropolitan Magistrate in so far as the powers to be exercised underthe Cr.PC are concerned. The Chief Metropolitan Magistrate in addition,may have administrative powers. However, for all other purposes andmore particularly the powers to be exercised under the Cr.PC both areat par. Therefore, the Additional Chief Metropolitan Magistrate cannotbe said to be subordinate to the Chief Metropolitan Magistrate in so faras exercise of judicial powers are concerned.

10.2 In view of the above discussion and as observed hereinabovewhen the powers to be exercised by the Additional Chief MetropolitanMagistrate are at par with the powers to be exercised by the ChiefMetropolitan Magistrate [Section 17(2) of Cr.PC] and the ChiefMetropolitan Magistrate and Additional Chief Metropolitan Magistrateshall be subordinate to the Sessions Judge (Section 19 of the Cr.PC) andthe steps to be taken by the Chief Metropolitan Magistrate under Section14 of the SARFAESI Act as observed hereinabove are ministerial innature and does not involve any adjudicatory process and there is noelement of any quasi-judicial function, we see no reason to take a differentview than the view taken by the Bombay High Court in the impugnedjudgment. We hold that the expression “Chief Metropolitan Magistrate”as appearing in Section 14 of the SARFAESI Act shall deem to mean A

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Aand include Additional Chief Metropolitan Magistrate for the purposesof Section 14 of the SARFAESI Act.

10.3 Similarly, when the Additional District Magistrates areconferred with the powers to be exercised by the District Magistrateseither by delegation and/or by special orders and the Additional DistrictBMagistrates are exercising the same powers which are being exercisedby the District Magistrates, the same analogy can be applied, moreparticularly, when the powers exercisable under Section 14 of theSARFAESI Act, are ministerial steps.

11. The issue/question may also be considered from another angle.CIt cannot be disputed and even judicial notice can be taken of the factthat the CMMs and/or even the DMs are required to perform so manyother duties under different statutes. They have to perform manyadministrative duties also. District Magisters are in overall administrativecontrol of their jurisdiction/district. Similarly, CMMs are also required toperform administrative duties and they have also to deal with the otherDcases/criminal trials and many trials under special statutes also. It cannotbe disputed that the litigations under the SARFAESI Act and proceedingsand/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 theESARFAESI Act before only one CMM. Therefore, a number ofapplications under Section 14 are pending. It also cannot be disputedthat the SARFAESI Act provides for expeditious disposal of theapplications filed under Section 14 of the SARFAESI Act. As per, secondproviso to Section 14, suitable orders for the purpose of taking possessionof the secured assets are required to be passed within a maximum periodFof sixty days from the date of the application. Therefore, if the submissionon behalf of the appellants that only the concerned CMM/DM alonewould have jurisdiction to decide the applications under Section 14 ofthe SARFAESI Act is accepted, in that case, it will be practicallyimpossible for the concerned CMM/DM to decide the application underGSection 14 of the SARFAESI Act expeditiously and within the timestipulated under second proviso to Section 14 of the SARFAESI Act. Ifthe interpretation which we propose that, the District Magistrate/ChiefMetropolitan Magistrate under Section 14 of the SARFAESI Act includesthe Additional District Magistrate/Additional Chief MetropolitanMagistrate, the same can be said to be a purposive interpretation toH

achieve the object and purpose of proceedings under the SARFAESIAct, more particularly when as observed hereinabove, the orders to bepassed under Section 14 of the SARFAESI Act are ministerial steps andto assist the secured creditor in getting/obtaining the possession of thesecured property. Thus, there is no element of exercise of adjudicatorypowers under Section 14 of the SARFAESI Act. All these aspects havebeen considered in detail by the High Court in the impugned judgmentand order.

12. We are in complete agreement with the view taken by theHigh Court that (i) the District Magistrate, Chief Metropolitan Magistrateis not a persona designata for the purposes of Section 14 of theSARFAESI Act; (ii) the expression “District Magistrate” and the “ChiefMetropolitan Magistrate” as appearing in Section 14 of the SARFAESIAct shall deem to mean and include Additional District Magistrate andAdditional Chief Metropolitan Magistrate for the purposes of Section 14of the SARFAESI Act.

13. The contrary view taken by the other High Courts, namely,Gujarat High Court in the case of Pushpa Devi B Jain W/o Bhawarlal MJain Vs. Indian Overseas Bank in Special Civil Application No. 19102/2015; Calcutta High Court in the case of Shri Chellaperumal & Anr. Vs.The Authorised Officer & Ors. in M.A. No. 26/2014 and Kerala HighCourt in the case of Aseena Vs. Sub-Divisional Magistrate and Ors. inW.P. (C) No. 3331/2007, is not a good law and are specifically overruled.

14. In view of the above and for the reasons stated above, thepresent appeal fails and the same deserves to be dismissed and isaccordingly dismissed. We hold that the powers under Section 14 of theSARFAESI Act can be exercised by the concerned Additional ChiefMetropolitan Magistrates of the area having jurisdiction and also by theAdditional District Magistrates, who otherwise are exercising the powersat par with the concerned District Magistrates either by delegation and/or special order. The present appeal is accordingly dismissed. No costs.

Ankit Gyan

Appeal dismissed.

(Assisted by : Rahul Rathi, LCRA)

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