Supreme Court of India
THE AUTHORISED OFFICER, INDIAN BANK versus D. VISALAKSHI AND ANR. on 23 September 2019
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[2019] 13 S.C.R. 177
THE AUTHORISED OFFICER, INDIAN BANK
v.
D. VISALAKSHI AND ANR.
(Civil Appeal Nos. 6295 of 2015)
SEPTEMBER 23, 2019
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Securitisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 – s.14 – Chief JudicialMagistrate (CJM) u/s. 14 – Competency of – There were conflictingviews of different High Courts regarding the competency of the CJMto process the request of the secured creditors to take possession ofthe secured asset u/s. 14 of the 2002 Act – The High Courts ofBombay, Calcutta, Madras, Madhya Pradesh and Uttarakhandinterpreted the said provision to mean that only Chief MetropolitanMagistrate (CMM) in metropolitan areas and the District Magistrate(DM) in non-metropolitan areas were competent to deal with suchrequest – However, the High Courts of Kerala, Karnataka,Allahabad and Andhra Pradesh took a contrary view of the sameprovision, to mean that it does not debar or preclude the CJM in thenon-metropolitan areas to exercise power u/s. 14 of the 2002 Act –On appeal, held: The powers and functions of the CMM and theCJM are equivalent and similar, in relation to matters specified inthe Cr.P.C – These expressions (CMM and CJM) are interchangeableand synonymous to each other – Moreover, s.14 does not explicitlyexclude the CJM from dealing with the request of the secured creditormade thereunder – The power to be exercised u/s.14 of the 2002Act by the concerned Authority is, by its very nature, non-judicialor State’s coercive power – Taking totality of all the aspects, thereis 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 asthe Judicial functions as delineated in the Cr.P.C. on same terms asCMM – Therefore, the CJM is equally competent to deal with theapplication 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 andapproved.
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ASecuritisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 – ss. 14, 35 and 37 –Code of Criminal Procedure, 1973 – Does Provisions of the 2002Act override the provisions of the Cr.P.C, whereunder the functionsto be discharged by the CMM are similar to that of the CJM – Held:BThe expressions ‘CMM’ and ‘CJM’ are used interchangeably in Cr.P.C. and are considered as synonymous to each other – s.14, evenif read literally, in no manner denotes that allocation of jurisdictionsand powers to CMM and CJM under the Code of Criminal Procedureare modified by the 2002 Act – Thus understood, s.14 of the 2002
Act, stricto sensu, cannot be construed as being inconsistent withCthe provisions of the Code of Criminal Procedure or vice-versa inthat regard – Further, s.37 of the 2002 Act predicates that theprovisions of the 2002 Act or the Rules made thereunder shall be inaddition to the stated enactments or “any other law for the timebeing in force” – Having said that the Provisions of the s.14 of theD2002 Act are in no way inconsistent with the provisions of the Codeof Criminal Procedure, it must then follow that the provisions of the2002 Act are in addition to and not in derogation of the Code.
Disposing of the appeals, the Court
Conclusion
Disposing of the appeals, the Court
HELD: 1. Be it noted that Section 14 of the SecuritisationEand Reconstruction of Financial Assets and Enforcement ofSecurity Interest Act, 2002 is not a provision dealing with thejurisdiction of the Court as such. It is a remedial measure availableto the secured creditor, who intends to take assistance of theauthorised officer for taking possession of the secured asset inFfurtherance of enforcement of security furnished by the borrower.The authorised officer essentially exercises administrative orexecutive functions, to provide assistance to the secured creditorin terms of State’s coercive power to effectuate the underlyinglegislative intent of speeding the recovery of the outstanding duesreceivable by the secured creditor. At best, the exercise of powerGby the authorised officer may partake the colour of quasi-judicialfunction, which can be discharged even by the ExecutiveMagistrate. The authorised officer is not expected to adjudicatethe contentious issues raised by the concerned parties but onlyverify the compliances referred to in the first proviso of Section H
14; and being satisfied in that behalf, proceed to pass an order tofacilitate taking over possession of the secured assets.[Para 40][216-C-F]
2. It is well established that no Civil Court can interdictthe action initiated in respect of any matter, which a Debt RecoveryTribunal or Debt Recovery Appellate Tribunal is empowered byor under the 2002 Act, to determine and in particular, in respectof any action taken or to be taken in pursuance of any powerconferred by or under the 2002 Act or under the Recovery ofDebts Due to Banks and Financial Institutions Act, 1993. Thathas 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 plainlyindicates that the provisions of the Act will override any otherlaw for the time being in force. The question is: does theprovisions of 2002 Act override the provisions of the Cr. P.C.,whereunder the functions to be discharged by the CMM aresimilar to that of the CJM. Further, the expressions “CMM andCJM” are used interchangeably in Cr.P.C. and are consideredas synonymous to each other. Section 14, even if read literally, inno manner denotes that allocation of jurisdictions and powers toCMM and CJM under the Code of Criminal Procedure aremodified by the 2002 Act. Thus understood, Section 14 of the2002 Act, stricto sensu, cannot be construed as being inconsistentwith the provisions of the Code of Criminal Procedure or vice-versa in that regard. If so, the stipulation in Section 35 of the2002 Act will have no impact on the expansive construction ofSection 14 of the 2002 Act. Whereas, there is force in thesubmission canvassed by the secured creditors (Banks), thatSection 37 of the 2002 Act answers the issue under consideration.The bare text of Section 37 predicates that the provisions of the2002 Act or the Rules made thereunder shall be in addition tothe stated enactments or “any other law for the time being inforce”. Having said that the provisions of the Section 14 of the2002 Act are in no way inconsistent with the provisions of Codeof Criminal Procedure, it must then follow that the provisions ofthe 2002 Act are in addition to, and not in derogation of the Code.[Para 43][217-B-E, G-H]
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A4. Suffice it to observe that keeping in mind the subjectand object of the 2002 Act and the legislative intent and purposeunderlying Section 14 of the 2002 Act, contextual and purposiveconstruction of the said provision would further the legislativeintent. In that, the power conferred on the authorised officer inBSection 14 of the 2002 Act is circumscribed and is only in thenature of exercise of State’s coercive power to facilitate takingover possession of the secured assets. [Para 44][218-A-B]
5. Applying the principle underlying in Janardhan vs. Stateof Maharashtra it must follow that substitution of functionaries(CMM as CJM) qua the administrative and executive or so toCsay non-judicial functions discharged by them in light of theprovisions of Cr.P.C., would not be inconsistent with Section 14of the 2002 Act; nay, it would be a permissible approach in thematter of interpretation thereof and would further the legislativeintent having regard to the subject and object of the enactment.DThat would be a meaningful, purposive and contextualconstruction of Section 14 of the 2002 Act, to include CJM asbeing competent to assist the secured creditor to take possessionof the secured asset. [Para 46][222-E-F]
6. To sum up, this Court holds that the CJM is equallyEcompetent to deal with the application moved by the securedcreditor 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 thedecisions of the High Courts of Bombay, Calcutta, Madras,Madhya Pradesh and Uttarakhand in that regard. Resultantly, itFis unnecessary to dilate on the argument of prospectiveoverruling 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.Gv. State of Kerala and Anr. MANU/KE/0677/2008 (Cr.M.C. No.4369 of 2008 dated 20.11.2008); KaveriMarketing v. The Saraswathi Co-op. Bank Ltd. 111(2013) BC 582; M/s T.R. Jewellery and Another v. StateBank of India and Another AIR (2016) A.P. 125 (FB);Abhishek Mishra v. State of U.P. and Others. AIR (2016)HAll. 210 – approved.
IndusInd Bank Ltd., (formerly known as Ashok LeylandFinance Ltd.) through its Legal Executive,Ravindrakumar Prakash Bhargodev v. The State ofMaharashtra through Police Station 2008 (110) BOMLR 2880 (decided on 22.04.2008); Arjun Urban Co-operative Bank Ltd., Solapur v. Chief JudicialMagistrate, 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 JudicialMagistrate, Srivilliputhur Virudhunagar District andThe Housing Development Finance Corporation LimitedAIR (2013) Mad. 206; T.C. Ramadoss and Ors. v. TheChief Manager & Authorised Officer State Bank of Indiaand Ors. AIR (2015) Mad. 67; Shyam Sunder Rohra v.IndusInd Bank AIR (2017) M.P. 36; Deepak Aggarwalv. State of Uttarakhand and Others MANU/UC/0012/2012; Andhra Bank and Ors. v. Sri Dinesh KumarAgarwal and Ors. (2013) 4 CHN 95 – not approved.
Shankarlal Aggarwal and Ors. v. Shankarlal Poddarand Ors. AIR (1965) SC 507; Municipal Corporationof Delhi v. Shiv Shanker (1971) 1 SCC 442 : [1971] 3SCR 607; Ratan Lal Adukia v. Union of India (1989) 3SCC 537 : [1989] 3 SCR 440;KishorebhaiKhamanchand 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. andAnother v. Rajiv Anand and Others (2004) 11 SCC 625;A.N. Roy, Commissioner of Police and Another v. SureshSham Singh (2006) 5 SCC 745 : [2006] 3 Suppl. SCR165; Standard Chartered Bank v. V. Noble Kumar andOthers (2013) 9 SCC 620 : [2013] 10 SCR 762; ShreeBhagwati Steel Rolling Mills v. Commissioner of CentralExcise and Another. (2016) 3 SCC 643 : [2015] 12 SCR332; Authorized Officer, State Bank of Travancore andOthers. v. Mathew K.C. (2018) 3 SCC 85 : [2018] 1SCR 233; Commissioner of Customs (Import), Mumbaiv. Dilip Kumar and Company and Others (2018) 9 SCC
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1 : [2018] 7 SCR 1191; Sindhi Education Society andAnother v. Chief Secretary, Government of NCT of Delhiand Others (2010) 8 SCC 49 : [2010] 8 SCR 81; RaniKusum (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 ofIndia and Others (2016) 3 SCC 762 : [ 2016] 1 SCR419; State of A.P. v. Polamala Raju Alias Rajarao (2000)7 SCC 75 : [2000] 2 Suppl. SCR 329; Sri Nasiruddinv. State Transport Appellate Tribunal (1975) 2 SCC 671: [1976] 1 SCR 505; Bhudan Singh and Another v. NabiBux and Another (1969) 2 SCC 481 : [1970] 2 SCR10; K.P. Varghese v. Income Tax Officer, Ernakulam andAnother (1981) 4 SCC 173 : [1982] 1 SCR 629; AtmaRam Mittal v. Ishwar Singh Punia (1988) 4 SCC 284 :[1988] 2 Suppl. SCR 528; M/s. Girdhari Lal and Sonsv. Balbir Nath Mathur and Others (1986) 2 SCC 237 :[1986] 1 SCR 383; Mardia Chemicals Ltd. and Othersv. 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 ofIndia v. Pankaj Dilipbhai Hemnani and Others AIR2007 Guj. 201; Solaris Systems Pvt. Ltd. and Anotherv. Oriental Bank of Commerce and Another I.L.R. 2006Ker 645; Bangalore Water Supply and Sewerage Boardv. A. Rajappa and Others (1978) ILLJ 349 SC; NEPCMicon Ltd. v. Magna Leasing Ltd. 1999 CriLJ 2883;Inco Europe Ltd. and Ors. v. First Choice Distribution(a firm) and Ors. 1999 CriLJ 2883; PadmasundaraRao 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); ReserveBank of India and Others v. Peerless General Financeand Investment Company Ltd. and Another (1996) 1SCC 642 : [1996] 1 SCR 58; Kehar Singh and Othersv. State (Delhi Admn.) (1988) 3 SCC 609 : [1988] 2Suppl. SCR 24 ; Mathew Varghese v. M. Amritha Kumarand 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. StateBank of India and Others A.S.T. 1337 of 2011 (dated18[th] October, 2011); K. R. Chandrasekaran v. Unionof India 2012 (2) CWC 115; Indian Overseas Bank v.Sree Aravindh Steels Ltd. 2009 (1) CTC 341; OfficialLiquidator Uttar Pradesh and Uttarakhand v. AllahabadBank and Others (2013) 4 SCC 381 : [2013] 4 SCR207; Indian Administrative Service (S.C.S.) Association,U.P. and Others v. Union of India (1993) Supp. 1 SCC730 : [1992] 2 Suppl. SCR 389; Nasiruddin and Othersv. Sita Ram Agarwal (2003) 2 SCC 577 : [2003] 1 SCR634; High Court of Gujarat and Another v. GujaratKishan Mazdoor Panchayat and Others (2003) 4 SCC712 : [2003] 2 SCR 799; Prakash Kumar Alias PrakashBhutto v. State of Gujarat (2005) 2 SCC 409 : [2005] 1SCR 408; New India Assurance Company Ltd. v. NusliNeville Wadia and Another (2008) 3 SCC 279 : [2007]13 SCR 598 – referred to.
Harshad Govardhan Sondagar v. International AssetsReconstruction Company Limited and Others (2014) 6SCC 1 : [2014] 11 SCR 605 – distinguished.
All India Judges’ Association and Others v. Union ofIndia and Others (2002) 4 SCC 247 : [2002] 2 SCR712; Janardhan v. State of Maharashtra (1978) 2 SCC465 : [1978] 3 SCR 586 – relied on.
Holmes v. Bradfield Rural District Council 1949 (1) AllER 381; Seaford Court Estates Ltd. v. Asher (1949) 2All ER 155; M. Pentiah v.. Muddala Veeramallapa[1961] 2 SCR 295 – referred to.
Case Law Reference
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[2019] 13 S.C.R.
[1982] 1 SCR 629[1988] 2 Suppl. SCR 528[1986] 1 SCR 383[2004] 3 SCR 982[2006] 9 Suppl. SCR 785AIR 2007 Guj. 201I.L.R. 2006 Ker 6451949 (1) All ER 381(1949) 2 All ER 155(1961) 2 SCR 295(1978) ILLJ 349 SC1999 CriLJ 2883(2002) 255ITR 147 (SC)2007 (2) KLT 470 (SC)[1996] 1 SCR 58[1988] 2 Suppl. SCR 24[2014] 2 SCR 736(2007) Cri. LJ 25442012 (2) CWC 1152009 (1) CTC 341[2013] 4 SCR 207[1992] 2 Suppl. SCR 389[2003] 1 SCR 634[2003] 2 SCR 799[2005] 1 SCR 408[2007] 13 SCR 598[2014] 11 SCR 605[1978] 3 SCR 586
ACIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 6295of 2015.
From the Judgment and Order dated 27.08.2013 of the MaduraiBench of Madras High Court in Writ Petition being W.P. (MD) No.7155 of 2012.
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With
Civil Appeal Nos. 7554-7555, 7557, 7558, 7560-7561 of 2019,Criminal Appeal Nos. 900, 945, 1463-1464, 1465, 1478, 1466, 1467,1468, 1469, 1470, 1471, 1472, 1473, 1475, 1476, 1477 of 2019.
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Dhruv Mehta, Sudhivasudevan, Jaideep Gupta, Jayanth Muthraj,Sr. Advs., Himanshu Munshi, Manish Garani, Avinash Kumar Bharti,Sanjay Kapur, Ms. Megha Karnwal, Bharath Gangadharan, KauserHusain, Ms. Shubhra Kapur, V. Balaji, MSM Asaithambi, C. Kannan,Rakesh K. Sharma, Sriram P., M. S. Vishnu Shankar, Anshuman Ashok,DG. Prakash, Jishnu M. L., Ms. Priyanka Prakash, Ms. Beena Prakash,Garvesh Kabra, Ms. Pooja Kabra, A. C. Philip, Rajvardhan Singh, RabinMajumder, P. V. Dinesh, Ms. Sindhu T. P., Mukund P. Unny, Bineesh K.,Lakshman R. S., Ashwini Kumar Singh, Hiren Dasan, Uday Gupta, ChandQureshi, Harish Dasan, M. K. Tripathi, Ananga Bhattacharyya, RohitERao N., Ms. Devahuti Tamuli, Shourya Garg, M/S Veritas Legis, GovindManoharan, Manu Krishnan, A. Karthik, B. Sulaiman, Biju P Raman,Ms. Usha Nandini V., Roy Abraham, Ms. Reena Roy, Ms. Seema Jain,Akhil Abraham, Himinder Lal, Kuriakose Varghese, Divyam Agarwal,Ms. Piyusha Singh, M/s. KMNP Law, P. V. Yogeswaran, Ashish KumarFUpadhyay, Y. Lokesh, Babul Kumar, Dr. Lalit Bhasin, Ms. Nina Gupta,Ms. Palak Chadha, Dhawal Jain, Mudit Sharma, V. Prabhakar, Ms. JyotiParasher, N. J. Ramchandar, S. Rajappa, Rajesh Kumar-I, AnantGautam, Anmol Mehta, Ms. Sakshi Gaur, Ms. Khushboo Aggarwal (forM/S. Mitter & Mitter Co.), E. Easwaran, Sajith P. Warrier, Haris Beeran,GMushtaq Salim, Usman Ghani Khan, Radha Shyam Jena, K. Rajeev,Sarfaraz Khan, Firasat Ali Siddiqui, Arvind Kumar, Vijay Pal, Ram SwarupSharma, Janendra Lal, Ms. Yasmin Tarapore, M/S. Janendra Lal & Co.,P. I. Jose, Ms. P. S. Chandralekha, Philip K. Varghse, Aravindh S., SanjayKapur, Bharath Gangadharan, Advs. for the appearing parties.
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The Judgment of the Court was delivered by
A. M. KHANWILKAR, J.
1. Delay condoned. Leave granted in Special Leave Petitions.
2. The seminal question involved in these appeals is: whether theChief Judicial Magistrate (for short, “CJM”) is competent to processthe request of the secured creditor to take possession of the securedasset under Section 14 of the Securitisation and Reconstruction ofFinancial Assets and Enforcement of Security Interest Act, 2002 (forshort, “2002 Act”)? There are conflicting views of different High Courtson this question. The High Courts of Bombay, Calcutta, Madras, MadhyaPradesh and Uttarakhand have interpreted the said provision to meanthat only the Chief Metropolitan Magistrate (for short, “CMM”) inmetropolitan areas and the District Magistrate (for short, “DM”) in non-metropolitan areas are competent to deal with such request. On theother hand, the High Courts of Kerala, Karnataka, Allahabad and AndhraPradesh have taken a contrary view of the same provision, to mean thatit does not debar or preclude the CJM in the non-metropolitan areas toexercise power under Section 14 of the 2002 Act.
3. The earliest decision is of the Division Bench of the High Courtof Kerala at Ernakulam in Muhammed Ashraf and Anr. Vs. Union ofIndia (UOI) and Others[1]. The Court noted that Section 14 of the 2002Act expressly refers to CMM in relation to metropolitan areas and DMfor non-metropolitan areas. It then went on to observe that as the powersand functions of CJM in non-metropolitan areas and CMM in metropolitanareas are one and the same (with only difference that CMM exercisespowers in metropolitan areas and CJM in non-metropolitan areas); andthe expression CJM and CMM are interchangeably used namely, one issynonymous for the other depending on the area under its jurisdiction, byinterpretative process, it concluded that in non-metropolitan areas, apartfrom DM, the CJM is also competent to exercise powers under Section14 of the 2002 Act. This decision was carried in appeal before this Courtbeing SLP (C) No.1671 of 2009 which, however, came to be dismissedon 2[nd] February, 2009 as no ground to interfere with the impugnedjudgment was made out.
1 AIR (2009) Ker. 14
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A4. Soon thereafter, another Division Bench of the High of Keralain Radhakrishnan, V.N. Vs. State of Kerala and Anr.[2], reiterated theview taken in Muhammed Ashraf (supra) and declined to refer thematter to a full bench for reconsideration.
5. However, around the same time, the High Court of BombayB(Aurangabad Bench) in IndusInd Bank Ltd., (formerly known asAshok Leyland Finance Ltd.) through its Legal Executive,Ravindrakumar Prakash Bhargodev Vs. The State of Maharashtrathrough Police Station[3], had taken a diametrically opposite view. It hadheld that it is not open to substitute the word, “CMM” for “CJM”. For,Cthere is no indication in the 2002 Act that the legislature had intended toempower the CJM outside the metropolitan areas, although the judicialofficer (CMM) was entrusted with the power to deal with such requestin the metropolitan areas. Again in Arjun Urban Co-operative BankLtd., Solapur Vs. Chief Judicial Magistrate, Solapur and Ors.[4],another Division Bench of the High Court of Bombay opined that SectionD14 of the 2002 Act, in no univocal terms, constricts the exercise of powersonly by the CMM or DM, as the case may be.
6. However, in 2013, the High Court of Karnataka in KaveriMarketing Vs. The Saraswathi Co-op. Bank Ltd.[5]took the same viewas taken by the High Court of Kerala that the CJM can also exerciseEpowers under Section 14 of the 2002 Act. But the Single Judge of theHigh Court of Calcutta in Dinesh Kumar Agarwal Vs. State of WestBengal[6]and the full bench of Madras High Court in K. Arockiyaraj Vs.The Chief Judicial Magistrate, Srivilliputhur Virudhunagar Districtand The Housing Development Finance Corporation Limited[7] tookFa different view as taken by the High Court of Bombay and held that theCMM or DM, as the case may be, alone can exercise powers underSection 14 of the 2002 Act. Later, the High Court of Madras in T.C.Ramadoss and Ors. Vs. The Chief Manager & Authorised OfficerState Bank of India and Ors.[8], the High Court of Madhya Pradesh in G2 MANU/KE/0677/2008 (Cr. M.C. No.4369 of 2008 dated 20.11.2008)3 2008 (110) BOM LR 2880 (decided on 22.04.2008)4 2009 (5) Mh. L.J. 3805 111 (2013) BC 5826 2013 (1) CHN 6717 AIR (2013) Mad. 206H8 AIR (2015) Mad. 67
Shyam Sunder Rohra Vs. IndusInd Bank[9], the High Court ofUttarakhand at Nainital in Deepak Aggarwal Vs. State of Uttarakhandand Others[10] and the Division Bench of the High Court of Calcutta inAndhra Bank and Ors. Vs. Sri Dinesh Kumar Agarwal and Ors.[11]alsoheld that CMM or DM, as the case may be, alone can exercise powerunder Section 14 of the 2002 Act.
7. Whereas, the High Court of Judicature at Hyderabad for theState of Telangana and the State of Andhra Pradesh in M/s T.R. Jewelleryand Another Vs. State Bank of India and Another[12] and the HighCourt of Allahabad in Abhishek Mishra Vs. State of U.P. and Others.[13],by interpretative process opined that even the CJM was competent toexercise powers under Section 14 of the 2002 Act.
8. The borrowers or the persons claiming through borrowers, wouldcontend that literal interpretation of Section 14 of the 2002 Act must bepreferred. In which case, the secured creditor can seek assistance “only”of CMM in metropolitan areas and DM in non-metropolitan areas, forthe purpose of taking over possession of the secured asset or property(instead of resorting to recovery of property by other means). As theprovision is univocal, it cannot be interpreted in any other manner. To doso would entail in doing violence to the legislative intent. There ispresumption that Parliament had complete knowledge of the existinglaws and was conscious of the distinction or similarity between the scopeof powers to be exercised by the CMM, DM and CJM, as the case maybe, in terms of the provision of Cr.P.C. and other laws. Despite suchawareness, the parliament consciously chose to identify clearly, theauthority which can entertain the application(s) of the secured creditorunder Section 14 of the 2002 Act. In that sense, the provision is in thenature of defining the authority persona designata, namely CMM andDM for the concerned area.
9. If so, contends the learned counsel, it is not open for the Courtto take recourse of interpretative process to include another authoritysuch as CJM merely because the functions discharged by the CJM andCMM under the Cr.P.C. and other laws are similar. There is no room for9 AIR (2017) M.P. 3610 MANU/UC/0012/201211 (2013) 4 CHN 9512 AIR (2016) A.P. 125 (FB)13 AIR (2016) All. 210
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Ainvoking the doctrine of Casus Omissus in light of the unambiguousprovision in the form of Section 14 of the 2002 Act. Thus, the similarityof functions discharged by the CMM and CJM under the Cr.P.C. wouldbe of no avail. Rather, the Court must follow the maxim “cum inverbisnulla ambiguitas est, non debet admitti voluntatis quaestio” and preferBthe plain language of the statute. To demonstrate the distinction betweenthe hierarchy of the judicial officers, reliance has been placed on a chartwhich clearly distinguishes them on the basis of their functions as non-Judicial Magistrate and Judicial Magistrate in the concerned area. Theoffice of DM essentially discharges executive functions and comes withinthe non-Judicial Magistrate category. On the other hand, the office ofCCMM or CJM would involve both executive and judicial functions. Thisdistinction is crucial and it must be presumed that the Parliament wasconscious about this distinction. It is also urged that the Parliament invarious Acts, including the Sick Industrial Companies (Special Provision)Act, 1985 – Section 29, Banking Regulation Act, 1949 – Section 45S,DIndustrial Reconstruction Bank of India, 1984 – Section 51, NationalHousing Bank Act, 1987 – Section 36-H, Companies Act, 1956 – Section10FP, Companies Act, 2013 – Section 429 and Small IndustriesDevelopment Bank of India Act, 1989 - Section 39, have enacted similarprovisions empowering CMM/DM, for seeking assistance to takepossession of the property sold or leased.E
10. It is urged that taking any other view would require re-writingof Section 14 of the 2002 Act and in the process doing violence to thelegislative intent. That must be eschewed. It is urged that incontradistinction to the expression used in Section 14 “CMM” and “DM”,Section 30 of the same Act (2002 Act) refers to the authority asF“Metropolitan Magistrate” or a “Judicial Magistrate”, as the case maybe for taking cognizance of offences punishable under the Act.
11. To buttress the above submissions, reliance is placed onShankarlal Aggarwal and Ors. Vs. Shankarlal Poddar and Ors.[14],Municipal Corporation of Delhi Vs. Shiv Shanker[15], Ratan LalGAdukia Vs. Union of India[16], Kishorebhai Khamanchand Goyal Vs.State of Gujarat and Another[17], M/s. Unique Butyle Tube Industries 14 AIR (1965) SC 50715 (1971) 1 SCC 44216 (1989) 3 SCC 537H17 (2003) 12 SCC 274
Pvt. Ltd. Vs. U.P. Financial Corporation and Ors.[18], Delhi FinancialCorpn. and Another Vs. Rajiv Anand and Others[19], A.N. Roy,Commissioner of Police and Another Vs. Suresh Sham Singh[20],Standard Chartered Bank Vs. V. Noble Kumar and Others[21],Harshad Govardhan Sondagar Vs. International AssetsReconstruction Company Limited and Others[22], Shree BhagwatiSteel Rolling Mills Vs. Commissioner of Central Excise andAnother.[23], Authorized Officer, State Bank of Travancore and Others.Vs. Mathew K.C.[24], Commissioner of Customs (Import), MumbaiVs. Dilip Kumar and Company and Others[25].
12. Per contra, the secured creditors (Banks) and auctionpurchasers would commend us with the view taken by the High Courtsof Kerala, Andhra Pradesh, Allahabad and Karnataka. According tothem, the process under Section 14 of the 2002 Act can be invoked bythe secured creditor only for taking possession of the secured assets.The application is required to be filed by the secured creditor supportedby an affidavit stating due compliances of the stipulations providedtherefor. The inquiry envisaged under Section 14 of the 2002 Act, to beundertaken by the CMM or DM, is minimal and basic in nature. It is onlyto satisfy itself about the factual position stated by the secured creditorin the concerned application including the appended affidavit filedtherewith. It is not an adjudicatory process muchless to decide about therights and liabilities of the contesting parties. The nature of inquiry isessentially one of exercise of administrative or executive powers. Sub-Section (1A) enables the DM or CMM to authorise any officersubordinate to him to take possession.
13. The CMM and CJM are clothed withpowers as per the schemeof Cr.P.C.. The office of CMM and CJMareinterchangeable and theydischarge similar functions in their respective jurisdictions namely,metropolitan and non-metropolitan areas, as the case may be. The recentenunciation of this Court expounds that the inquiry requires judicious 18 AIR (2003) SC 2103
19 (2004) 11 SCC 625
20 (2006) 5 SCC 745
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Aapproach. Therefore, it could be effectively exercised by CJM in a non-metropolitan area. There is no express provision in the 2002 Act, so asto disregard the dispensation under the Cr.P.C., concerning the exerciseof powers by the CMM and CJM respectively. On the other hand, Section37 of the 2002 Act makes it amply clear that the application of provisionsBof Cr.P.C. is not completely ruled out. Section 37 of the 2002 Actpostulates that the application of other laws in force would continue toapply and the provisions of 2002 Act or the Rules made thereunder shallbe in addition thereto and not in derogation thereof.
14. It is urged that the 2002 Act does not define the term “CMM”Cor “DM”. Reliance is then placed on Section 2(k) of Cr.P.C. whichdefines the expression “metropolitan area” and Section 3 of Cr.P.C.which defines the expression “CMM” or “DM”. The adjudicatory processlike sifting of evidence, trial etc. is required to be undertaken only by aJudicial Magistrate. The Executive Magistrate can exercise only executivepowers. Indisputably, the powers of CJM in non-metropolitan area andDCMM in metropolitan area are equal and those terms are used assynonymous. Additionally, reliance is placed on Section 12 of Cr.P.C.concerning the Judicial Magistrate and Additional Judicial Magistrate,Section 14 concerning local jurisdiction, Section 16 and 17 concerningcourts of Metropolitan Magistrate, CMM and Additional ChiefEMetropolitan Magistrate respectively. Section 20 of Cr.P.C. deals withthe office of Executive Magistrates. Relying on the exposition of thisCourt in All India Judges’ Association and Others Vs. Union of Indiaand Others[26], it is urged that incontrovertibly the post of CJM and CMMmust be equated and they have to be placed in the same cadre of CivilJudge (Senior Division). Reliance is also placed on Standard CharteredFBank (supra), to contend that there is no difference in the jurisdiction orpowers exercisable by the CJM and CMM, except operating in differentterritorial area. It is thus urged that expressions “CMM/DM” in Section14 be construed as also including “CJM” in a non-metropolitan area.
15. Reliance is then placed on Sindhi Education Society andGAnother Vs. Chief Secretary, Government of NCT of Delhi andOthers[27], Rani Kusum (Smt.) Vs. Kanchan Devi (Smt.) and Others[28]
26 (2002) 4 SCC 24727 (2010) 8 SCC 49H28 (2005) 6 SCC 705
and Vinay Tyagi Vs. Irshad Ali Alias Deepak and Others[29], to buttressthe submission that Section 14 of the 2002 Act must receive a constructionwhich would advance the cause of justice and legislative object soughtto be achieved. A purposive interpretation of Section 14 as including theoffice of CJM in a non-metropolitan area would further the legislativeintent as it would enable the secured creditor to approach the CJM totake possession of the secured assets thereat.
16. It is urged that the borrowers or the persons claiming throughborrowers, cannot be heard to make any grievance, if the applicationfiled under Section 14 is dealt with by a judicial mind; and moreso becausethe nature of inquiry to be undertaken is circumscribed. In that, it ismerely verification of compliances by the secured creditor. In any case,the aggrieved borrower has a statutory remedy of appeal against theorder passed by the CJM as would be available against the order passedby CMM/DM. Similarly, all contentious issues available to the borrowersor the persons claiming through them could be raised by them evenbefore the CJM, who would be equally competent to deal with the sameas would be done by the CMM/DM, as per law. Considering the factthat the CMM and CJM both discharge similar functions and are treatedequivalent for all purposes in the respective territorial jurisdictions, it isnot a case of application being processed by someone who is inferiorand not competent or qualified to do so.
17. To buttress the above submissions reliance is placed on VishalN. Kalsaria Vs. Bank of India and Others[30], State of A.P. Vs.Polamala Raju Alias Rajarao[31], Sri Nasiruddin Vs. State TransportAppellate Tribunal[32], Bhudan Singh and Another Vs. Nabi Bux andAnother[33], K.P. Varghese Vs. Income Tax Officer, Ernakulam andAnother[34], Atma Ram Mittal Vs. Ishwar Singh Punia[35] and M/s.Girdhari Lal and Sons Vs. Balbir Nath Mathur and Others[36].
31 (2000) 7 SCC 75
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36 (1986 2 SCC 237
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A18. It is also urged that in certain States, the functions of the DMare discharged by the Deputy Commissioner of the State such as in theState of Jharkhand. Therefore, the interpretation put forth by the HighCourts that application under Section 14 of the 2002 Act can also bemoved before the CJM in a non-metropolitan area, would sub-serve theBinterests of all concerned and also effectuate the legislative intent ofexpeditious resolution of matters under the 2002 Act without interventionof the Court. Lastly, it is urged that if this Court upholds the view takenby the concerned High Courts that CJM is not competent to deal withthe action under Section 14 of the 2002 Act, this Court may invoke thedoctrine of prospective overruling and save all the orders passed by theCCJM’s to this end.
19. We have heard Mr. Dhruv Mehta, Mr. Sudhivasudevan, Mr.Jaideep Gupta and Mr. Jayanth Muthraj, Senior Advocates, Mr. KuriakoseVarghese, Mr. A. Karthik, Mr. E. Easwaran, Mr. Sajith P. Warrier Mr.Govind Manoharan, Ms. Nina Gupta, Mr. Roy Abraham, Mr. Philip K.DVarghse, Mr. Rakesh K. Sharma, Mr. Radha Shyam Jena, Mr. HimanshuMunshi, Mr. Ram Swarup Sharma, and Mr. Mudit Sharma, Advocates.
20. We deem it apposite to reproduce Section 14 of the 2002 Act.The same reads thus:
“14. Chief Metropolitan Magistrate or DistrictEMagistrate to assist secured creditor in takingpossession of secured asset.-(1) Where the possessionof any secured asset is required to be taken by the securedcreditor or if any of the secured asset is required to be soldor transferred by the secured creditor under the provisionsFof this Act, the secured creditor may, for the purpose oftaking possession or control of any such secured asset,request, in writing, the Chief Metropolitan Magistrate orthe District Magistrate within whose jurisdiction any suchsecured asset or other documents relating thereto may besituated or found, to take possession thereof, and the ChiefGMetropolitan Magistrate or, as the case may be, the DistrictMagistrate shall, on such request being made to him—
(a) take possession of such asset and documents relatingthereto; and (b) forward such assets and documents to the secured creditor:
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1[Provided that any application by the secured creditor shall beaccompanied by an affidavit duly affirmed by the authorised officer ofthe 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;
(ix) that the provisions of this Act and the rules made thereunderhad been complied with:
Provided further that on receipt of the affidavit from the AuthorisedOfficer, the District Magistrate or the Chief Metropolitan Magistrate, as A
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Athe case may be, shall after satisfying the contents of the affidavit passsuitable orders for the purpose of taking possession of the secured assets2[within a period of thirty days from the date of application]:
3[Provided 4[also] that if no order is passed by the ChiefMetropolitan Magistrate or District Magistrate within the said period ofBthirty days for reasons beyond his control, he may, after recording reasonsin writing for the same, pass the order within such further period but notexceeding in aggregate sixty days.]
Provided also that the requirement of filing affidavit stated in thefirst proviso shall not apply to proceeding pending before any DistrictCMagistrate or the Chief Metropolitan Magistrate, as the case may be, onthe date of commencement of this Act.]
5[(1A) The District Magistrate or the Chief MetropolitanMagistrate may authorise any officer subordinate to him,—
(i) to take possession of such assets and documents relatingDthereto; and
(ii) to forward such assets and documents to the securedcreditor.]
(2) For the purpose of securing compliance with the provisions ofsub-section (1), the Chief Metropolitan Magistrate of the DistrictEMagistrate may take or cause to be taken such steps and use, or causeto be used, such force, as may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the DistrictMagistrate[6 ][any officer authorised by the Chief Metropolitan Magistrateor District Magistrate] done in pursuance of this section shall be calledFin question in any court or before any authority.
1. Ins. By Act 1 of 2013, sec. 6(a) (w.e.f. 15-1-2013, videS.O. 171 (E), dated 15-1-2013).
2. Subs. By Act 44 of 2016, sec. 12(i) (w.e.f. 1-9-2016, videGS.O. 2831(E), dated 1[st] September, 2016).
3. Ins. By Act 44 of 2016, sec. 12(ii) (w.e.f. 1-9-2016, videS.O. 2831(E), dated 1[st] September, 2016).
4. Corrected by Corrigendum Notification, published in theGazette of India, Extra., Pt.II, Sec. 1, No.56, dated 8[th]HSeptember, 2016.
5. Ins. By Act 1 of 2013, sec. 6(b) (w.e.f. 15-1-2013, videAS.O. 171(E), dated 15-1-2013).
6. Ins. By Act 1 of 2013, sec. 6(c) (w.e.f. 15-1-2013, videS.O. 171(E), dated 15-1-2013).”
The unamended provision as applicable at the relevant time whenthe decision was rendered by the High Court of Kerala in MuhammedAshraf (supra), was somewhat different. Sub-section (1A) was not invogue.That has come by way of an amendment in 2013. The provisionwas amended in 2013 and further amended in 2016, as is reproduced inthe extracted portion hitherto.
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21. The Division Bench of the High Court of Kerala in MuhammedAshraf (supra), after adverting to the unamended Section 14 of the2002 Act had opined that the said provision is a procedural measurewhereby the CMM or DM, as the case may be, is obligated to renderassistance to the secured creditor to take possession of the securedassets or documents. The said authority is empowered to take suchsteps and use such force, as may be necessary for taking possession ofthe secured assets and documents relating thereto. Strikingly, the act ofthe authority is protected and its action cannot be questioned in anyCourt or before any authority in terms of Section 34 of the 2002 Act. Italso noted that a trial or adjudication of dispute by the authority is notcontemplated under this Section. However, the limited inquiry to beundertaken is whether secured property is identifiable and whether 60days’ notice was issued under Section 13(2) enabling the secured creditorto resort to Section 13(4) and take possession of the secured assets.The Court unerringly opined that Section 14 of the 2002 Act is only forthe purpose of executing the power and assisting the secured creditor totake possession of the secured assets. The borrower or person affectedby such action has a right of judicial review before the Writ Court asordained by this Court in Mardia Chemicals Ltd. and Others v. Unionof India and Others[37]. The Division Bench then noted that the 2002Act is a self-contained code, including the powers of the Tribunal todeclare any of the measures taken by the secured creditor invalid andconsequential restoration of possession to persons from whom thepossession was taken. The Court reiterated that in absence of anyadjudicatory power vested in the authority referred to in Section 14 ofthe 2002 Act, it had no powers to exercise the powers vested in the D
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ATribunal. Whereas, it can only facilitate the secured creditor in takingpossession of the secured assets after verification of the basic factsregarding the entitlement of the secured creditor to get such possession.The Court then adverted to the exposition of this Court in TranscoreVs. Union of India and Another[38], which had analysed the provisionsof the 2002 Act. It then adverted to the Gujarat High Court decision inBBank of India Vs. Pankaj Dilipbhai Hemnani and Others[39] andagreed with the dictum therein that the authority referred to under Section14 of the 2002 Act can only verify whether 60 days’ notice as prescribedunder Section 13(2) was issued or not and whether secured asset isidentifiable. It then noted that after such inquiry the authority beforeCtaking action is obliged to satisfy itself in that regard. At the same time,it cannot enter upon adjudication or trial of a dispute while exercisingpower under Section 14 of the 2002 Act. The Parliament has investedpower under Section 14 of the 2002 Act, in a senior functionary so as toavoid an arbitrary and high-handed action at the instance of securedcreditor. The Court then adverted to the decision in Solaris SystemsDPvt. Ltd. and Another Vs. Oriental Bank of Commerce and Another[40],of a Single Judge of the same High Court, which for the first time hadheld that CJM for non-metropolitan areas was competent to deal withthe application under Section 14 of the 2002 Act. The Court then noticedthe definition of metropolitan area in Section 2(k) of Cr.P.C., Section 3Eregarding construction of references which equates the CJM to that ofthe CMM whilst exercising jurisdiction in the concerned areas.Considering the legislative scheme in that regard, the Court concludedthat the powers of the CJM in non-metropolitan areas and CMM inmetropolitan areas, are one and the same with only difference being thatthe CMM exercises powers in metropolitan areas. The Court thenFanalysed the decision of this Court in Unique Butyle Tube IndustriesPvt. Ltd. (supra) and distinguished the same by holding that in the presentcase, the question was whether the term CMM in metropolitan areaswill include CJM in non-metropolitan areas. The Court went on to observethat the legislation must be understood in a reasonable manner. For that,Git took support from the dictum in Holmes Vs. Bradfield Rural DistrictCouncil[41]and also in Sri Nasiruddin (supra) wherein this Court adopted 38 (2008) 1 SCC 125 (paragraph No.74)39 AIR 2007 Guj. 20140 I.L.R. 2006 Ker 645H41 1949 (1) All ER 381 (Page 384)
“just reasonable and sensible” interpretation of the provision. The Courtthen noted the dictum of Denning, L.J. in Seaford Court Estates Ltd.Vs. Asher[42]which was quoted with approval by this Court in M. PentiahVs. Muddala Veeramallapa[43], Bangalore Water Supply andSewerage Board Vs. A. Rajappa and Others[44] and NEPC MiconLtd. Vs. Magna Leasing Ltd.[45]etc.. The Court also adverted to theenunciation of House of Lords in Inco Europe Ltd. and Ors. Vs. FirstChoice Distribution (a firm) and Ors.[46] wherein it is observed thatCourt can add words in its interpretative process in suitable cases togive effect to the purpose of legislature. The Court then noted that inPadmasundara Rao and Others Vs. State of Tamil Nadu andOthers[47], a Constitution Bench of this Court had held that “a casusomissus cannot be supplied by the Court except in the case of clearnecessity and when reason for it is found in the four corners of thestatute itself…”. Lastly, the Court adverted to the decision in NationalInsurance Co. Ltd. Vs. Laxmi Narain Dhut[48] which had consideredthe dictum in Reserve Bank of India and Others Vs. Peerless GeneralFinance and Investment Company Ltd. and Another[49]; and KeharSingh and Others Vs. State (Delhi Admn.)[50] to hold that if the statutoryprovision is open to more than one interpretation, then the Court mustadopt the one which represents the true intent of the legislature. However,the function of the Court is only to expound and not to legislate. At thesame time, the process of construction combines both literal and purposiveapproaches. Finally, the Court went on to observe that in the presentcase there was no casus omissus. In that, CJM in metropolitan areasare designated as CMM and vice versa mutatis-mutandis by implicationand reference by the areas of jurisdiction both stand on the same footingto denote the authority depending upon where he is situated. On thatbasis, it concluded that in non-metropolitan areas, apart from the DM,the powers can be exercised by the CJM also to render assistance tothe secured creditor in taking possession of the secured assets; and in 42 (1949) 2 All ER 155, P. 164(CA)43 (1961) 2 SCR 29544 (1978) ILLJ 349 SC45 1999 CriLJ 288346 2000 (2) All ER 109
47 (2002) 255ITR 147 (SC)
48 2007 (2) KLT 470 (SC) (paragraph Nos.34 and 35)
50 (1988) 3 SCC 609
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Adoing so, the Magistrate can appoint a Commissioner for identificationof the secured assets and taking possession thereof and if there is anyresistance, ask for police assistance and take any effective steps tohave possession of the secured assets taken over.
22. The full Bench of the High Court of Judicature at HyderabadBfor the State of Telangana and the State of Andhra Pradesh in M/s T.R.Jewellery (supra) also analysed the provisions of the 2002 Act and notedthat the object of the Act is to achieve speedier recovery of the duesdeclared as Non-Performing Assets (NPAs), without the intervention ofthe Tribunals or the Courts and for quick resolution of disputes arisingout of the action taken for recovery of such dues apart from makingCbetter availability of capital liquidity and resources to help in the growthof economy and welfare of the people. As regards to Section 14 of theAct, it noted that the purpose underlying is to assist the secured creditorfor taking possession or control of the secured assets by requesting theauthority referred to therein. The Court then went on to analyse theDscheme of the Cr.P.C. and noted that the executive powers are to beexercised by the Executive Magistrate, whereas sifting of evidence shallbe exercisable only by a Judicial Magistrate. Further, from the schemeof the Cr.P.C., it is clear that the CJM, CMM and the DM are separatelyreferred to in the Code and High Court has been empowered to appointCJM and CMM while the State Government appoints one of theEExecutive Magistrate as DM in every District. The Court then advertedto the decisions of different High Courts which have had the occasion todeal with the question under consideration in reference to Section 14 ofthe 2002 Act, as to whether the CJM in non-metropolitan areas, is equallycompetent to entertain or deal with the application moved by the securedFcreditor. It then adverted to Sections 35 and 37 of the 2002 Act andnoted the decision of this Court in Mathew Varghese Vs. M. AmrithaKumar and Others[51]to conclude that the application of the provisionsof the Cr.P.C., would be in addition to and not in derogation of theprovisions of 2002 Act and the provisions of the Code cannot be excluded from consideration while dealing with the 2002 Act. It disagreed withGthe Full Bench of the Madras High Court that Section 35 of the 2002Act would override the provisions of Cr.P.C.. After analysing the otherdecisions, it went on to hold that in terms of Section 14 of the 2002 Act,the CJM can authorise any officer subordinate to him to take possession
of such assets after examining the correctness of the assertion made inthe affidavit. Thus, it is only a procedural step without any adjudicationof any dispute whatsoever. The action is therefore, only an administrativeorder made for taking possession of the secured assets, if all otherconditions are fulfilled. Having already noted that the powers exercisedby the CMM and DM in terms of Section 14 of the 2002 Act aresynonymous to each other and that they are not adjudicatory in nature, itanswered the question under consideration in the affirmative. The Courtthen noted that there was no casus omissus nor it was reading somethinginto the provision which the legislature never intended nor trying to interpretthe provision so as to defeat the intention of the legislature. Whereas,the Court was only resorting to a purposive interpretation to effectuatethe intention of the legislature for which the enactment was made. Thus,it concluded that exercise of power by the CJM in non-metropolitanareas, who exercises the same powers as that of CMM in metropolitanareas, would not in any way abrogate or contradict the dispensationpredicated in Section 14 of the 2002 Act. Moreso, it would not causeeven a tittle of prejudice to any of the parties. Whereas, it would ensurea just process under the aegis of a judicial mind (CJM) in renderingassistance to the secured creditors to recover possession of their assetsthereby achieving the object for which the 2002 Act has been enacted.
23. Similarly, the Karnataka High Court at Bangalore in KaveriMarketing (supra), opined that the expression CMM be construed asinclusive of CJM for non-metropolitan areas, as the powers of CJM andCMM are identical. Thus, the High Court of Karnataka also opined thatthe CJM in non-metropolitan areas would be competent to entertain anddeal with application under Section 14 of the 2002 Act.
24. Similar view has been taken by the Division Bench of theHigh Court of Allahabad in Abhishek Mishra (supra). It is held thatSection 14 of the 2002 Act is a procedural measure enabling the securedcreditor to take possession of the secured assets by making applicationto the authority specified therein. Even the Allahabad High Court advertedto the scheme of the provisions in the Cr.P.C. bestowing executive andjudicial power in the concerned authority. Besides, it made reference tothe same decisions as noticed by the High Court of Kerala in MuhammedAshraf (supra) and concluded as under:
“34. Applying the above well settled principles of interpretation ofStatute, the answer to the issue is nomenclature ‘Chief AB
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Metropolitan Magistrate’ used by legislature is Section 14 of theAct includes Chief Judicial Magistrate functioning in non-metropolitan area and shall have jurisdiction to entertain anapplication made under Section 14 of the SARFAESI Act, 2002.In our considered opinion, there is no casus omissus. Theinterpretation given by us does not amount to reading anything inthe provision, which the legislature never intended to, nor theinterpretation given by us, in any way, defeats the intention of theLegislature. It is a purposive interpretation to advance the trueintention of the legislature for enacting the Act, viz. speedyrecovery of bad debts of the banks and financial institutions declaredas NPAs. On the contrary, adopting the principles of literalconstruction in interpretation of the word ‘Chief MetropolitanMagistrate’ would not only defeat the object and purpose oflegislation but would lead to manifestly anomalous result whichcould not have been intended by the legislature. As per Lord Reidin the case of Luke Vs. IRC, 1966 AC 557, where to apply wordswould literally defeat the obvious intention of the legislation andproduce a wholly unreasonable result, we must do some violenceto the words and so achieve that obvious intention and produce arational construction.
35. The view taken by us finds support from the Full Bench decisionof Andhra Pradesh High Court in the case of T.R. Jewellery &Ors. Vs. State Bank of India & Ors. (supra) and a Division Benchof High Court of Kerala in the case of Muhammed Ashraf, C.Arifa Vs. Union of India, we are unable to agree with contraryview taken by Bombay High Court in the case of Indusind BankLtd. Vs. State of Maharashtra and High Court of Madras in K.Arockiyaraj Vs. The Chief Judicial Magistrate, Srivilliputhur &Anr., MANU/TN/1796/2013 : 2013 (4) L.W. 485. The Full Benchof Madras High Court in the case of K. Arockiyaraj (supra) wasof the view that phraseology used in Section 14 of the Act, 2002should be given its true meaning without taking any assistancefrom Code of Criminal Procedure in view of Section 35 of Act,2002, which provides that provisions of the Act will override allother laws which includes Code of Criminal Procedure. It wasalso held that when SARFAESI Act is a complete code, there isno need to take resort to Section 3 of Cr.P.C.
36. With respect to the learned Judges, we have been unable topersuade ourselves to agree to the view taken. The Full Benchfailed to take notice of Section 37 of the Act, 2002 which providesthat application of other laws is not barred. The said section readsas under.
“37. Application of other laws not barred.-The provisions ofthis Act or the rules made thereunder shall be in addition to,and not in derogation of, the Companies Act, 1956 (1 of 1956),the Securities Contracts (Regulation) Act, 1956 (42 of 1956),the Securities and Exchange Board of India Act 1992 (15 of1992), the Recovery of Debts Due to Banks and FinancialInstitutions Act, 1993 (51 of 1993) or any other law for thetime being in force.”
37. There can be no manner of doubt that words “any other lawfor time being in force” used in Section 37 would also include Code ofCriminal Procedure within its ambit and the application of provisions ofCr.P.C. cannot be excluded from consideration while dealing with theprovisions of Act, 2002. Hence, the view taken by Full Bench of MadrasHigh Court that in view of Section 35 of Act, 2002, the provisions of saidAct would override the provisions of Cr.P.C. and the words ‘ChiefMetropolitan Magistrate’ used in Section 14 should be given literalinterpretation without taking any aid or assistance of Cr.P.C. does not, tous, appear to be correct.
38. Fort the aforesaid facts and discussions, we are of theconsidered view that nomenclature ‘Chief Metropolitan Magistrate’used in Section 14 of Act, 2002 is inclusive of ‘Chief JudicialMagistrate’ functioning in a non-metropolitan area and shall havejurisdiction to entertain an application made by a secured creditorunder Section 14 of Act, 2002.”
25. We shall now turn to the other decisions taking the view thatonly DM in a non-metropolitan area is competent to deal with theapplication filed by the secured creditor under Section 14 of the 2002Act. The Division Bench of the High Court of Bombay in IndusIndBank Ltd. (supra) after adverting to the statement of objects and reasonsof the 2002 Act, opined that the secured creditor is not required to obtaina decree from a competent Court/DRT before being entitled to takesteps for the purpose of enforcement of recovery in relation to the secured A
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Aassets. While dealing with the specific issue as to whether, the CJM iscompetent to deal with the application filed by the secured creditor underSection 14 of the 2002 Act, the Court went by the plain text of Section14 of the 2002 Act to hold that the CJM was not competent to do so; andthat only the CMM in metropolitan areas and DM in non-metropolitanareas is competent to assist the secured creditor in taking possession ofBthe secured assets, in terms of the 2002 Act. It noted that the referenceto expression CJM is conspicuously absent in Section 14 of the 2002 Actand, therefore, the legislature did not intend to entrust the stated functionto CJM in a non-metropolitan area, although the same is entrusted toCMM, a judicial officer, in metropolitan area. Yet again, in Arjun UrbanCCo-operative Bank Ltd. (supra), another Division Bench of the HighCourt of Bombay reiterated the exposition in IndusInd Bank Ltd. (supra)after adverting to the dictum in Trade Well and Another Vs. IndianBank and Another[52], Transcore (supra) and Unique Butyle TubeIndustries Pvt. Ltd. (supra). It noticed the Kerala High Court decisionin Muhammed Ashraf (supra) and agreed therewith only to the extentDthat there was no casus omissus in Section 14 of the 2002 Act - as itrefers to two distinct authorities. However, it went on to disagree withthe view taken therein that CJM is also competent to deal with suchapplications; because, in its view, when literal construction of Section 14of the 2002 Act was explicit then there was no need to supplement anyEword(s) thereto. For, the interpretation of Section 14 of the 2002, as itstands, does not lead to any absurd results. It did notice that the authorityreferred to in Section 14 of the 2002 Act has no power to adjudicateupon any rights of the parties but can only render assistance to the securedcreditor to recover possession. It opined that nothing prevented thelegislature from adding the words CJM in Section 14 of the 2002 Act. ItFthen went on to advert to the dictum of Lord Denning in Seaford CourtEstates Ltd. (supra) and House of Lords in Inco Europe Ltd. (supra)wherein, it was held that a Court can add words in its interpretativeprocess in suitable cases, if omission or inadvertence of drafting is noticedto give effect to the purpose of the legislation, but not otherwise. It heldGthat there was no inadvertence in drafting of Section 14 of the 2002 Act,when it referred to two distinct authorities, namely, CMM and DM. TheHigh Court of Bombay thus, adopted the route of literal interpretation ofthe provision as it stands.
26. The next decision is of the High Court of Uttarakhand at Nainitalin Deepak Aggarwal (supra), which adopted the view taken by theHigh Court of Bombay in IndusInd Bank Ltd. (supra) and concludedthat only CMM in metropolitan areas and DM in non-metropolitan areaswould be competent to deal with the application moved by the securedcreditor under Section 14 of the 2002 Act for taking possession of thesecured assets.
27. The Single Judge of High Court of Calcutta in Dinesh KumarAgarwal (supra), while dealing with the question under considerationrelied on his previous decision in Ronit Nirman Pvt. Ltd. Vs. StateBank of India and Others[53], wherein he had agreed with the principleexpounded by the High Court of Bombay in IndusInd Bank Ltd. (supra).The Court opined that once an authority has been named for the purposeof rendering assistance, the Court cannot confer jurisdiction on any otherauthority, who has not been named in the statutory provision for exercisingsuch powers. That would amount to usurping legislative function. It,thus, disagreed with the view taken by the High Court of Kerala, whichhad held to the contrary that the CJM is equally competent to entertainapplication filed by the secured creditor under Section 14 of the 2002Act. This decision of the Single Judge was carried in appeal before theDivision Bench in Andhra Bank (supra), which in turn upheld the viewtaken by the Single Judge that only CMM in metropolitan areas and DMin non-metropolitan areas were competent to deal with the applicationfiled by the secured creditor under Section 14 of the 2002 Act. TheDivision Bench disagreed with the view taken by the High Court ofKerala on the ground that the language of Section 14 of the 2002 Actwas unambiguous and did not warrant construction to empower the CJMin non-metropolitan areas.
28. The Full Bench of the High Court of Madras in K. Arockiyaraj(supra) adverted to the exposition in Mardia Chemicals Ltd. (supra),K. R. Chandrasekaran Vs. Union of India[54], which had consideredthe objects of enactment in question. It noted that the 2002 Act is a self-contained code and after adverting to the relevant provisions observedin paragraph Nos.15 and 16 of its judgment as under:
“15. On perusal of Sections 13(2), 13(4), 14(1) & 14(2), it is evidentthat the Secured Creditor can proceed against the Secured Assets, 53 A.S.T. 1337 of 2011 (dated 18th October, 2011)
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Aif the borrower makes any default in repayment of secured debtsor any installment thereof. Any person aggrieved against the orderpassed under Section 13(4) of the Act is given a right of Appealunder Section 17 of the Act. The adjudication of the rights ofparties will come only if the action of the Secured Creditor ischallenged in an Appeal filed under Section 17. A further appealBto the Appellate Tribunal (DRAT) is also provided under Section18 of the Act.
16. Section 14, inserted through the Amendment Act No. 1 of2013, contemplates delegation of power to assist, by the DistrictMagistrate/Chief Metropolitan Magistrate, to any officerCsubordinate to him, amplifies the intention of the Parliament totreat the power of assistance as an executive function and not asa judicial function. If the power is a judicial function, adjudicatoryin nature, there may not be such delegation to any subordinateofficer. It is well settled in law that the adjudicating authority cannotDdelegate his power as it will run contrary to the Principle ‘Delegatapotestas non potest deligari’.”
It then adverted to the dictionary clause of the 2002 Act and notedthat sub-section 2(2) saved in the Indian Contract Act 1872; Transfer ofProperty Act, 1882; the Companies Act, 1956; the Securities and ExchangeEBoard of India Act, 1992; and which are not inconsistent with the definitiongiven in the 2002 Act. It also noted that the authority referred to inSection 14 is not expected to undertake adjudication of rights of theconcerned parties. It then noted Section 34 and 35 of the 2002 Act andwent on to observe as follows:
“20. From the perusal of the above Section 35, it is evident thatthe provisions of SARFAESI Act, 2002, shall have the effectnotwithstanding anything inconsistent therewith contained in anyother law for the time being in force. Thus, the SARFAESI Actwill override other laws including the provisions of Crl. P.C. Section36 of the Act deals with limitation. The limitation question can beraised after passing an order under Section 13(4), if the claim inrespect of the financial asset is not made within the period oflimitation prescribed under the Limitation Act. Thus, theapplicability of Limitation Act, 1963, is permitted under Section36, however, as per Section 35, the application of Crl. P.C. is notpermitted.”
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In this backdrop the Full Bench examined the decision of theDivision Bench of the same High Court in Indian Overseas Bank Vs.Sree Aravindh Steels Ltd.[55],which had relied on Sections 3, 5 and 8 ofthe Cr.P.C. concerning the jurisdictions of CJM, CMM and AdditionalChief Metropolitan Magistrate. It then noticed Section 20 of the Cr.P.C.relating to the Executive Magistrates and their local jurisdictions asspecified therein. After analysing these provisions, it went on to observethus:
“25. On a perusal of the above referred provisions of the Code ofCriminal Procedure, Chief Metropolitan Magistrate, Chief JudicialMagistrate and District Magistrate are separately dealt with andonly for the purpose of convenience, the High Court is empoweredto appoint the Chief Judicial Magistrate to perform the functionsakin to Chief Metropolitan Magistrate in Metropolitan areas, whichincludes judicial functions and administrative functions. When Crl.P.C. itself is dealing with District Magistrates and their jurisdiction,the phraseology used in Section 14(1) should be given its truemeaning without any assistance from the Criminal Procedure Code,particularly in the light of Section 35 read with Section 2(2) of theSARFAESI Act, 2002.
26. Section 14 of the Act is very clear and unambiguous. It statesthat the Chief Metropolitan Magistrate or the District Magistratecan assist the Secured Creditors in taking possession of theSecured Assets. It means, in Metropolitan areas, the SecuredCreditors can approach either the Chief Metropolitan Magistrateor the District Magistrate and in Non-Metropolitan areas, wherethere is no Chief Metropolitan Magistrate, the Secured Creditorscan seek the assistance of the District Magistrate alone, as nopower is vested on the Chief Judicial Magistrate to give assistanceto the Secured Creditors in Non-Metropolitan areas. There is noomission in the said section as contended by the learned SeniorCounsel for the respondents. If there is no authority mentioned toassist the Secured Creditor in Non-Metropolitan areas, the SecuredCreditors may be justified in contending that in case of omission,the meaning given in Crl. P.C. can be imported for the effectiveimplementation of the SARFAESI Act. The said situation beingnot there, the learned Senior Counsel for the Respondent is not AB
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Ajustified in contending that wherever there is no Chief MetropolitanMagistrate, the Chief Judicial Magistrate will automatically getthe powers to assist the Secured Creditors. If such an interpretationis accepted, the phraseology used in Section 14 that ChiefMetropolitan Magistrate or District Magistrate will have nomeaning.”B
29. To buttress the above view, the Full Bench agreed with thedecisions of the High Court of Bombay in IndusInd Bank Ltd. (supra),Arjun Urban Co-operative Bank Ltd. (supra). It also relied on thedecision of the High Court of Calcutta, which took similar view ascommended to the Full Bench. The Full Bench then noted the decisionsCof this Court in Official Liquidator Uttar Pradesh and Uttarakhand
Vs. Allahabad Bank and Others[56], Sri Nasiruddin (supra), BhudanSingh and Another (supra), K.P. Varghese (supra), Atma Ram Mittal(supra), Indian Administrative Service (S.C.S.) Association, U.P. andOthers Vs. Union of India[57], Nasiruddin and Others Vs. Sita RamDAgarwal[58], High Court of Gujarat and Another Vs. Gujarat KishanMazdoor Panchayat and Others[59], Prakash Kumar Alias PrakashBhutto Vs. State of Gujarat[60]and New India Assurance CompanyLtd. Vs. Nusli Neville Wadia and Another[61]and also the dictum inSeaford Court Estates Ltd. (supra), to conclude as follows:
E“35. From the perusal of the above judgments as well as thestatutory provisions contained in Section 14 of the SARFAESIAct, 2002, in its independent existence, we are of the firm viewthat Section 14 does not contemplate the Secured Creditors toapproach the Chief Judicial Magistrates for assistance to securetheir assets and the Secured Creditors can approach the ChiefFMetropolitan Magistrate in Metropolitan areas and in Non-Metropolitan areas, the Secured Creditors has to approach theDistrict Magistrate, and not the Chief Judicial Magistrate.”
The Full Bench decision has been followed by the Division Benchof the same High Court in T.C. Ramadoss (supra). In this decision, theG
56 (2013) 4 SCC 38157 (1993) Supp. 1 SCC 73058 (2003) 2 SCC 57759 (2003) 4 SCC 71260 (2005) 2 SCC 409H61 (2008) 3 SCC 279
Court, additionally, considered the submission regarding prospectiveoverruling and went on to observe as follows:
“15. The doctrine of prospective overruling was recognised forthe first time in the American jurisprudence in Great NorthernRailway Co. Vs Sunburst Oil & Refining Co. 287 U.S. 358 (1932)The said doctrine was for the first time applied in Golak Nath VsState of Punjab MANU/SC/0029/1967 : AIR 1967 SC 1643 inIndia and thereafter referred and relied on in various decisions,and as such, the doctrine of prospective overruling is now an integralpart of the Indian Legal System. It is well settled that the overrulingdecision is a new decision, because it has overruled the settledprecedent and it has decided an issue of first impression, whereat least one earlier case has not foreshadowed the overrulingdecision. In the case on hand, the Full Bench in K. ArokiyarajMANU/TN/1796/2013 : 2013 (6) MLJ 641: 2013 (4) LW 485(supra) has not unsettled the settled position of law. The settledposition of law has been interpreted on plain reading of theprovisions. Thus, the contention of the learned counsel for therespondent that the decision of the Full Bench would be applicableprospectively does not merit acceptance and it is accordinglyrejected. The language of the relevant provision is plain and clearadmitting no confusion, which has been interpreted by the FullBench in its decision.
16. It is a well settled principle of law that any order passed by anauthority without jurisdiction is void and non est and as such, anyconsequential action taken on the basis of the said order falls tothe ground. (See Chief Justice of A.P. Vs L.V.A. Dixitulu MANU/SC/0416/1978 : (1979) 2 SCC 34, A. Jithendernath Vs JubileeHills Cooperative House Building Society MANU/SC/8138/2006: (2006) 10 SCC 96, Ashok Leyland Ltd. Vs State of Tamil NaduMANU/SC/0020/2004 : (2004) 3 SCC 1, Union of India VsPramod Gupta MANU/SC/0549/2005 : (2005) 12 SCC 1, NationalInstitute of Technology Vs Niraj Kumar Singh MANU/SC/0687/2007 : (2007) 2 SCC 481, Hasham Abbas Sayyad Vs UsmanAbbas Sayyad MANU/SC/5541/2006 : (2007) 2 SCC 355, DeepakAgro Foods Vs State of Rajasthan MANU/SC/7812/2008 : (2008)7 SCC 748, Chandrabhai K. Bhoir Vs Krishna Arjun BhoirMANU/SC/8230/2008 : (2009) 2 SCC 315 and Union of India Vs A
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17. Resultantly, we set aside the impugned order dated 23.07.2012passed by the CJM, reserving liberty to the respondent bank totake recourse to the appropriate jurisdictional forum under theBprovisions of law.”
30. The Single Judge of the Madras High Court in Shyam SunderRohra (supra), adopted the view taken by the Full Bench of High Courtof Madras in K. Arockiyaraj (supra) and concluded that Section 14 ofthe 2002 Act does not permit secured creditors to approach the CJM forCassistance to secure their assets but they must approach only CMM inMetropolitan area and DM in non-metropolitan area.
31. Going by the literal interpretation of Section 14 of the 2002Act, it does appear that CMM or the DM within whose jurisdiction thesecured asset is situated in, is bestowed with the authority to entertainDthe request of the secured creditor for possession of such secured asset.It also appears that remedy is provided before the designated authority,persona designata. That is the view taken by the High Courts ofBombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand. At thesame time, the High Courts of Kerala, Karnataka, Allahabad and AndhraPradesh have taken a liberal approach and were persuaded to invokeEpurposive interpretation and give expansive meaning to the expression“CMM”, to include CJM for the non-metropolitan areas. That has beendone in the context of the nature of inquiry required to be conducted bythe concerned authority.
32. Indisputably, the expressions “CMM” and “DM” have notFbeen defined in the 2002 Act. That definition can thus, be traced to theprovisions of Cr.P.C.. It is also well established by now that the 2002Act, is a self-contained code. Concededly, the nature of inquiry to beconducted by the designated authorities under the 2002 Act, is spelt outin Section 14 of the 2002 Act. The same is circumscribed and is limitedGto matters specified in Clauses (i) to (ix) of the first proviso in sub-section (1) of Section 14 of the 2002 Act, inserted in 2013. Prior to theinsertion of that proviso, it was always understood that in such inquiry, itis not open to adjudicate upon contentious pleas regarding the rights ofthe parties in any manner. The stated authorities could only do verificationof the genuineness of the plea and upon being satisfied that it is genuine, H
the adjudication thereof could then be left to the Court of competentjurisdiction.
33. Suffice to observe that an inquiry conducted by the statedauthority under Section 14 of the 2002 Act, is a sui generis inquiry. Inthat, majorly it is an administrative or executive function regardingverification of the affidavit and the relied upon documents filed by theparties. That inquiry is required to be concluded within the stipulatedtime frame. While undertaking such an inquiry, as is observed by thisCourt, the authority must display judicious approach, in considering therelevant factual position asserted by the parties. That pre-supposes thatit is a quasi-judicial inquiry though, a non-judicial process. The inquirydoes not result in adjudication of inter se rights of the parties in respectof the subject property or of the fact that the transaction is a fraudulentone or otherwise.
34. Notably, the powers and functions of the CMM and the CJMare equivalent and similar, in relation to matters specified in the Cr.P.C..These expressions (CMM and CJM) are interchangeable andsynonymous to each other. Moreover, Section 14 of the 2002 Act doesnot explicitly exclude the CJM from dealing with the request of the securedcreditor made thereunder. The power to be exercised under Section 14of the 2002 Act by the concerned authority is, by its very nature, non-judicial or State’s coercive power. Furthermore, the borrower or thepersons claiming through borrower or for that matter likely to be affectedby the proposed action being in possession of the subject property, havestatutory remedy under Section 17 of the 2002 Act and/or judicial reviewunder Article 226 of the Constitution of India. In that sense, no prejudiceis likely to be caused to the borrower/lessee; nor is it possible to suggestthat they are rendered remediless in law. At the same time, the securedcreditor who invokes the process under Section 14 of the 2002 Act doesnot get any advantage muchless added advantage. Taking totality of allthese aspects, there is nothing wrong in giving expansive meaning to theexpression “CMM”, as inclusive of CJM concerning non-metropolitanarea, who is otherwise competent to discharge administrative as well asjudicial functions as delineated in the Cr.P.C. on the same terms as CMM.That interpretation would make the provision more meaningful. Suchinterpretation does not militate against the legislative intent nor it wouldbe a case of allowing an unworthy person or authority to undertakeinquiry which is limited to matters specified in Section 14 of the 2002Act.
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35. Such a view has been taken by the High Court of Kerala asearly as in 2006 and on the same lines, are the decisions of the otherHigh Courts (Karnataka, Allahabad and Andhra Pradesh). Be it noted,the challenge to the decision of the High Court of Kerala wasunsuccessful before this Court in SLP (C) No.1671 of 2009, which cameto be dismissed on 2[nd] February, 2009.
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36. Now we may turn to the decision in Standard CharteredBank (supra). The Court was called upon to consider the argument thatsecured creditor before invoking the remedy under Section 14 of the2002 Act, must necessarily make an attempt to take possession of thesecured assets and can take recourse thereto only if he fails in thatCeffort and encounters resistance to such an attempt. While consideringthat argument, the Court analysed Sections 13, 14 and 15 of the 2002Act and opined that Section 14 of the 2002 Act enables the securedcreditor who desires to seek the assistance of “State’s coercive power”for obtaining possession of the secured assets to make a request in writingDto the authority designated therein, within whose jurisdiction the securedasset is located. It also noted that the authority after receiving suchrequest under Section 14 of the 2002 Act, was not expected to do anyfurther scrutiny of the matter except to verify from the secured creditorwhether notice under Section 13(2) of the Act has already been given ornot and whether the secured asset is located within his jurisdiction. ThereEis no adjudication of any kind at this stage. The Court also noticed inparagraph 23 of the reported judgment that after amendment of Section14 of the 2002 Act, by inserting first proviso therein, the designatedauthority has to satisfy itself only with regard to the matters mentionedin clauses (i) to (ix). In paragraph 25 of this decision, the Court noted asFfollows:
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“25. The satisfaction of the Magistrate contemplated under thesecond proviso to Section 14(1) necessarily requires the Magistrateto examine the factual correctness of the assertions made in suchan affidavit but not the legal niceties of the transaction. It is onlyGafter recording of his satisfaction the Magistrate can passappropriate orders regarding taking of possession of the securedasset.”
The Court then went on to observe in paragraph Nos.33 and 36of the reported judgment as follows:
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“33. We are of the opinion that the High Court clearly erred inrecording such a conclusion. The language of Rule 8 does notdemand such a construction. On the other hand, a Magistratewhose functioning is structured by the Code of Criminal Procedureis required to act in accordance with the provisions of the saidCode unless expressly ordained otherwise by any other law. It isnot a case that Cr.P.C. never prescribed for the procedure to befollowed by the Magistrate in a case where the Magistrate isrequired to take possession of property. For example, under Section83 of the Code, a criminal court is authorised to attach the movableor immovable property or both belonging to a proclaimed offender.Sub-sections (3) and (4) to Section 83 specifically provide thatonce an order of attachment under sub-section (1) is made by thecriminal court, the property which is the subject-matter of suchattachment shall either be seized or taken possession of as thecase may be depending upon the fact whether the property ismovable or immovable. Both the sub-sections contemplate theappointment of Receiver. It is declared under sub-section (6) thatthe powers, duties and liabilities of a Receiver appointed underSection 83 are the same as those of a Receiver appointed underthe Code of Civil Procedure, 1908.
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36. Thus, there will be three methods for the secured creditor totake possession of the secured assets:
36.1. (i) The first method would be where the secured creditorgives the requisite notice under Rule 8(1) and where he does notmeet with any resistance. In that case, the authorised officer willproceed to take steps as stipulated under Rule 8(2) onwards totake possession and thereafter for sale of the secured assets torealise the amounts that are claimed by the secured creditor.
36.2. (ii) The second situation will arise where the secured creditormeets with resistance from the borrower after the notice underRule 8(1) is given. In that case he will take recourse to themechanism provided under Section 14 of the Act viz. makingapplication to the Magistrate. The Magistrate will scrutinise theapplication as provided in Section 14, and then if satisfied, appointan officer subordinate to him as provided under Section 14(1-A)
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to take possession of the assets and documents. For that purposethe Magistrate may authorise the officer concerned to use suchforce as may be necessary. After the possession is taken theassets and documents will be forwarded to the secured creditor.
36.3. (iii) The third situation will be one where the secured creditorapproaches the Magistrate concerned directly under Section 14of the Act. The Magistrate will thereafter scrutinise the applicationas provided in Section 14, and then if satisfied, authorise asubordinate officer to take possession of the assets and documentsand forward them to the secured creditor as under clause 36.2.(ii)above.
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36.4. In any of the three situations above, after the possession ishanded over to the secured creditor, the subsequent specifiedprovisions of Rule 8 concerning the preservation, valuation andsale of the secured assets, and other subsequent rules from theSecurity Interest (Enforcement) Rules, 2002, shall apply.”
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37. Concededly, the Court was not called upon to consider thespecific issue that arises for our consideration, in this batch of cases. Towit, whether the CJM is competent to deal with the request made by thesecured creditor under Section 14 of the 2002 Act in the same manneras can be done by the CMM in metropolitan areas and DM in non-Emetropolitan areas. Nevertheless, what is significant to note is that thisdecision clearly delineates the nature of inquiry required to be conductedby the authority referred to in the Section 14 of the 2002 Act. By its verynature the inquiry, is an administrative or executive measure and to borrowthe phrase used in the said judgment, “State’s coercive power” - forFobtaining possession of the secured assets. It is possible to suggest thatas the authority is required to make inquiry and pass an order, it wouldpartake the colour of being a quasi-judicial inquiry. In any case, the statedauthority is not empowered to adjudicate on any issue(s) that may beraised regarding the rights of the concerned parties.
38. Reliance was also placed on the exposition in HarshadGovardhan Sondagar(supra), wherein the appellants claimed to betenants of a mortgaged premises (secured asset); and as borrowers(landlord/owner thereof) had committed default, the secured creditorhad invoked provisions of 2002 Act to enforce the secured asset. In thatbackdrop, application was moved before the CMM, Mumbai under G
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Section 14 of the 2002 Act to take possession of the premises andhandover the possession thereof to the secured creditor. While dealingwith the challenge to this action of the secured creditor, the Court noticingSection 14 of the 2002 Act concluded that for the purpose of transferringthe secured asset and for realising the secured asset, the secured creditorwill require the assistance of the CMM or the DM for taking of possessionof a secured asset from the lessee, where the lease stands determinedby any of the modes mentioned in Section 111 of the Transfer of PropertyAct. The Court then went on to examine the question about the remediesavailable to the lessee where he is threatened to be dispossessed by anyaction taken by the secured creditor under Section 13 of the 2002 Act.In that context, the Court noted that Section 34 of the 2002 Act makes itamply clear that no injunction can be granted by any Court or otherauthority in respect of any action taken or to be take in pursuance of anypower conferred by or under the 2002 Act. Even this decision, if wemay say so, deals with entirely different issue then the question underconsideration in the present cases.
39. It is no more res integra that the CJM is equated with theCMM for the purposes referred to in the Cr.P.C.; and those expressionsare used interchangeably being synonymous of each other. This Court inAll India Judges’ Association (supra), in paragraph 31, opined as under:
“31. As we have already mentioned, the Shetty Commission hadrecommended that the Chief Metropolitan Magistrates should bein the cadre of District Judges. In our opinion, this is neither propernor practical. The appeals from orders passed by the ChiefMetropolitan Magistrates under the provisions of the Code ofCriminal Procedure are required to be heard by the AdditionalSessions Judge or the Sessions Judge. If both the AdditionalSessions Judge and the Chief Metropolitan Magistrate belong tothe same cadre, it will be paradoxical that any appeal from oneofficer in the cadre should go to another officer in the same cadre.If they belong to the same cadre, as recommended by the ShettyCommission, then it would be possible that the junior officer wouldbe acting as an Additional Sessions Judge while a senior may beholding the post of the Chief Metropolitan Magistrate. It cannotbe that against the orders passed by the senior officer it is thejunior officer who hears the appeal. There is no reason given bythe Shetty Commission as to why the post of the Chief Metropolitan A
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AMagistrate be manned by the District Judge, especially when asfar as the posts of the Chief Judicial Magistrates are concerned,whose duties are on a par with those of the Chief MetropolitanMagistrate, the Shetty Commission has recommended, and in ouropinion rightly, that they should be filled from amongst Civil JudgesB(Senior Division). Considering the nature and duties of the ChiefJudicial Magistrates and the Chief Metropolitan Magistrates, theonly difference being their location, the posts of Chief JudicialMagistrate and Chief Metropolitan Magistrate have to be equatedand they have to be placed in the cadre of Civil Judge (SeniorDivision). We order, accordingly.”C
40. Be it noted that Section 14 of the 2002 Act is not a provisiondealing with the jurisdiction of the Court as such. It is a remedial measureavailable to the secured creditor, who intends to take assistance of theauthorised officer for taking possession of the secured asset in furtheranceof enforcement of security furnished by the borrower. The authorisedDofficer essentially exercises administrative or executive functions, toprovide assistance to the secured creditor in terms of State’s coercivepower to effectuate the underlying legislative intent of speeding therecovery of the outstanding dues receivable by the secured creditor. Atbest, the exercise of power by the authorised officer may partake theEcolour of quasi-judicial function, which can be discharged even by theExecutive Magistrate. The authorised officer is not expected to adjudicatethe contentious issues raised by the concerned parties but only verifythe compliances referred to in the first proviso of Section 14; and beingsatisfied in that behalf, proceed to pass an order to facilitate taking overpossession of the secured assets.F
41. It is well established that no Civil Court can interdict the actioninitiated in respect of any matter, which a Debt Recovery Tribunal orDebt Recovery Appellate Tribunal is empowered by or under the 2002Act, to determine and in particular, in respect of any action taken or tobe taken in pursuance of any power conferred by or under the 2002 ActGor under the Recovery of Debts Due to Banks and Financial InstitutionsAct, 1993. That has been ordained by Section 34 of the 2002 Act.
42. The borrowers or the persons claiming through borrowershad placed emphasis on Section 35 of the 2002 Act. The same readsthus:H
35. The provisions of this Act to override other laws.- Theprovisions of this Act shall have effect, notwithstanding anythinginconsistent therewith contained in any other law for the timebeing in force or any instrument having effect by virtue of anysuch law.”
43. The construction of this provision plainly indicates that theprovisions of the Act will override any other law for the time being inforce. The question is: does the provisions of 2002 Act override theprovisions of the Cr. P.C., whereunder the functions to be discharged bythe CMM are similar to that of the CJM. Further, the expressions “CMMand CJM” are used interchangeably in Cr.P.C. and are considered assynonymous to each other. Section 14, even if read literally, in no mannerdenotes that allocation of jurisdictions and powers to CMM and CJMunder the Code of Criminal Procedure are modified by the 2002 Act.Thus understood, Section 14 of the 2002 Act, stricto sensu, cannot beconstrued as being inconsistent with the provisions of the Code of CriminalProcedure or vice-versa in that regard. If so, the stipulation in Section35 of the 2002 Act will have no impact on the expansive construction ofSection 14 of the 2002 Act. Whereas, there is force in the submissioncanvassed by the secured creditors (Banks), that Section 37 of the 2002Act answers the issue under consideration. The same reads thus:
“37 - Application of other laws not barred.- The provisions ofthis Act or the rules made thereunder shall be in addition to, andnot in derogation of, the Companies Act, 1956 (1 of 1956), theSecurities Contracts (Regulation) Act, 1956 (42 of 1956), theSecurities and Exchange Board of India Act 1992 (15 of 1992),the Recovery of Debts Due to Banks and Financial InstitutionsAct, 1993 (51 of 1993) or any other law for the time being inforce.”
The bare text of this provision predicates that the provisions ofthe 2002 Act or the Rules made thereunder shall be in addition to thestated enactments or “any other law for the time being in force”. Havingsaid that the provisions of the Section 14 of the 2002 Act are in no wayinconsistent with the provisions of Code of Criminal Procedure, it mustthen follow that the provisions of the 2002 Act are in addition to, and notin derogation of the Code.
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A44. Suffice it to observe that keeping in mind the subject andobject of the 2002 Act and the legislative intent and purpose underlyingSection 14 of the 2002 Act, contextual and purposive construction of thesaid provision would further the legislative intent. In that, the powerconferred on the authorised officer in Section 14 of the 2002 Act iscircumscribed and is only in the nature of exercise of State’s coerciveBpower to facilitate taking over possession of the secured assets.45. It would be apposite to now advert to Section 17 of the GeneralClauses Act, 1897. The same reads thus:
“17 - Substitution of functionaries.-(1) In any [Central Act] orCRegulation made after the commencement of this Act, it shall besufficient, for the purpose of indicating the application of a law toevery person or number of persons for the time being executingthe functions of an office, to mention the official title of the officerat present executing the functions, or that of the officer by whomthe functions are commonly executed.D(2) This section applies also to all [Central Acts] made after thethird day of January, 1868, and to all Regulations made on or afterthe fourteenth day of January, 1887.”
This Court in Janardhan Vs. State of Maharashtra[62 ]was called
This Court in Janardhan Vs. State of Maharashtra[62 ]was called Eupon to examine somewhat similar challenge. In that case, the challengewas to the search warrant issued by the Assistant Commissioner ofPolice in respect of offences punishable under Section 6 of the BombayPrevention of Gambling Act, 1887. The Court repelled that challenge byrelying on Section 17 of the Bombay General Clauses Act, 1886, whichis pari materia to Section 17 of the General Clauses Act, 1897. TheFCourt opined that though Section 6 of the Gambling Act specified theoffice of Commissioner of Police as the authorised officer, however,considering the sweep of Section 2(6) of the Bombay Police Act, 1951,which mentions that the term “Commissioner of Police” would includean Assistant Commissioner, went on to hold that the search warrantGissued by the Assistant Commissioner was valid. The Court, while dealingwith the said challenge observed as follows:
“8. Analysing this definition it would appear that any officialtitle of the officer mentioned in any Act made after the H62 (1978) 2 SCC 465
General Clauses Act would deem by fiction of law to includeany such official title referred to in any Act passed after theGeneral Clauses Act.
9. Furthermore, not only the official title but even thefunctions executed by the said officer would also be deemedto have been exercised by the officer designated in thesubsequent Act. The combined effect, therefore, of Section6 of the Gambling Act and Section 17(1) of the GeneralClauses Act would be that the term “Commissioner ofPolice” would include all officers who are executing orperforming the functions of the Commissioner of Police asdefined or authorised under the latter Act, namely, thePolice Act. It would thus be seen that sub-section (6) of Section2 of the Police Act clearly mentions that the term “Commissionerof Police” would include an Assistant Commissioner. Thus sub-section (6) runs thus:
“2. In this Act, unless there is anything repugnant in the subject orcontext:
(6) … A Commissioner of Police including an AdditionalCommissioner of Police, a Deputy Inspector General of Police(including the Director of Police Wireless and Deputy InspectorGeneral of Police appointed under Section 8-A), a DeputyCommissioner of Police and Assistant Commissioner of Police...”
Section 11 of the Police Act runs thus:
11. (1) The State Government may appoint for any area for whicha Commissioner of Police has been appointed under Section 7such number of Assistant Commissioners of Police as it may thinkexpedient.
(2) An Assistant Commissioner appointed under sub-section (1)shall exercise such powers and perform such duties and functionsas can be exercised or performed under the provisions of this Actor any other law for the time being in force or as are assigned tohim by the Commissioner under the general or special orders ofthe State Government.”
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AA perusal of Section 11 of the Police Act leads to the inescapableconclusion that an Assistant Commissioner appointed under sub-section(1) is to perform such duties and functions as can be exercised underthe Act or any other law for the time being in force, which undoubtedlyincludes the Gambling Act which was a law in force at the time whenthe Police Act was passed. Apart from this the Assistant CommissionerBcould also perform those functions which could be assigned to him bythe Commissioner under the general or special orders of the StateGovernment. The provision for assignment of powers by the Governmentto the Commissioner are contained in Section 10(2) of the Police Actwhich runs thus:
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“10. (2) Every such Deputy Commissioner shall, under the ordersof the Commissioner, exercise and perform any of the powers,functions and duties of the Commissioner to be exercised orperformed by him under the provisions of this Act or any otherlaw for the time being in force in accordance with the general orspecial orders of the State Government made in this behalf.”
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10. The High Court has found as a fact that there was a notificationby the State Government dated March 10, 1967 by which all theAssistant Commissioners of Police including that of Nagpur wereconferred powers and functions of the Commissioner of Police.Thus, in the instant case at the time when the offence wascommitted two things had happened: (1) that in Nagpur wherethe offence had taken place there was a Commissioner of Police,and (2) that the Commissioner of Police had been conferred thepower by the Government notification to assign his functions,powers and duties to the Assistant Commissioner. In thesecircumstances, therefore, we do not find any difficulty inaccepting the contention of the respondent that havingregard to the combined reading of the provisions of Section17 of the General Clauses Act and the Police Act the term“Commissioner of Police” appearing in Section 6 of theGambling Act would include even an AssistantCommissioner who was legally and validly assigned thepowers, functions and duties of the Commissioner of Policeby the State Government under Section 10(2) of the PoliceAct. As the General Clauses Act was a statute which was passedbefore the Gambling Act came into force, Section 17 of the General E
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Clauses Act could be called into aid to interpret the scope andambit of the term “Commissioner of Police” as used in Section 6of the Gambling Act.
11. Learned counsel for the appellant, however, submitted thatthe power of assignment of functions by the Government given tothe Commissioner of police or the Assistant Commissioner couldbe exercised only in respect of matters covered by the Police Actand not beyond that. I am however unable to agree with thiscontention which completely overlooks the avowed object ofSection 17 of the General Clauses Act which has been passed toresolve such anomalies and it is not possible to construe theprovisions of the Police Act in complete isolation by ignoring theprovisions of the General Clauses Act which undoubtedly applyto the facts and circumstances of the present case. For thesereasons, therefore, the second contention put forward by theappellant also fails.”
(emphasis supplied)
In the concurring judgment, additionally, the Court observed thus:
“19. It remains for consideration whether the AssistantCommissioner of Police could be said to be executing the functionsof the Commissioner of Police under Section 6(1) of the Act atthe time when he issued the special warrant. Reference in thisconnection may be made to Section 11(2) of the Bombay PoliceAct, 1951, which provides as follows:
“11. (2) An Assistant Commissioner appointed under sub-section(1) shall exercise such powers and perform such duties andfunctions as can be exercised or performed under the provisionsof this Act or any other law for the time being in force or asare assigned to him by the Commissioner under the general orspecial orders of the State Government.”
It was therefore permissible for the Assistant Commissioner ofPolice not only to exercise such powers and perform such dutiesand functions as he could, in terms, exercise or perform under theprovisions of the Bombay Police Act, or any other law for thetime being in force, but also the duties and functions assigned tohim by the Commissioner of Police under the general or special A
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Aorders of the State Government. The High Court has taken notein this connection of the State Government Order APO-3463-C-2896-(III)-(E)-V, dated March 10, 1967, which empowered allCommissioners of Police to assign to the Assistant Commissionersof Police working under them any of their powers, duties andfunctions not only under the provisions of the Bombay Police Act,B1951, but also under any other law for the time being in force.The existence of such an order has not in fact been challengedbefore us. The Assistant Commissioner of Police was thereforethe functionary who could, by virtue of Section 17 of the BombayGeneral Clauses Act, discharge the functions of the CommissionerCof Police under Section 6(1) of the Act in the matter of issuing aspecial warrant like the one issued in the present case. It is alsonot disputed that the Commissioner of Police issued Order 2036,dated September 19, 1967, authorising all Assistant Commissionersof Police working under him to issue search warrants under Section6 of the Act to any Police Officer working under them not belowDthe rank of a Sub-Inspector of Police. As has been shown, thiswas legally permissible, and it is futile to contend that the HighCourt erred in rejecting the appellant’s contention to the contrary.
46. Applying the principle underlying this decision, it must followthat substitution of functionaries (CMM as CJM) qua the administrativeEand executive or so to say non-judicial functions discharged by them inlight of the provisions of Cr.P.C., would not be inconsistent with Section14 of the 2002 Act; nay, it would be a permissible approach in the matterof interpretation thereof and would further the legislative intent havingregard to the subject and object of the enactment. That would be aFmeaningful, purposive and contextual construction of Section 14 of the2002 Act, to include CJM as being competent to assist the secured creditorto take possession of the secured asset.
47. Having said this, we need not to dilate on other decisionspressed into service regarding the approach to be adopted in the matterGof interpretation of statutes.
48. To sum up, we hold that the CJM is equally competent to dealwith the application moved by the secured creditor under Section 14 ofthe 2002 Act. We accordingly, uphold and approve the view taken by theHigh Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh andHreverse the decisions of the High Courts of Bombay, Calcutta, Madras, THE AUTHORISED OFFICER, INDIAN BANK v.D. VISALAKSHI AND ANR. [A. M. KHANWILKAR, J.]
Madhya Pradesh and Uttarakhand in that regard. Resultantly, it isunnecessary to dilate on the argument of prospective overruling pressedinto service by the secured creditors (Banks).
49. While parting we must note that Civil Appeal arising fromSLP (C) No.7121 of 2019 is directed against an interlocutory order passedby the High Court in a pending appeal. This appeal is, therefore, disposedof with liberty to the parties therein to pursue the appeal pending beforethe High Court on any other issue(s), if available as per law. That bedecided in accordance with law.
50. All these appeals are disposed of in the above terms withliberty to the parties to pursue such other remedies as may be permissiblein law with regard to other issues, if any. The same shall be consideredon its own merits, in accordance with law. No order as to costs. Pendingapplications in the respective appeals are also disposed of in the aboveterms.
Ankit Gyan
Appeals disposed of.
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