TMI Blog2019 (7) TMI 1540X X X X Extracts X X X X X X X X Extracts X X X X ..... n and other factors such as the consequence of non-compliance - therefore, the use of words such as shall , which are peremptory in form, and negative language such as not exceeding 60 days in the aggregate do not foreclose the necessity to examine the object and purpose or the consequences of non-compliance so as to determine whether the provision is directory or mandatory, and the contention to that effect is not tenable. For the purpose of understanding the object and purpose of the time limit, it is pertinent to examine the Statement of Objects and Reasons of Act 44 of 2016. The object and purpose of the said time limit is to ensure that such applications are decided expeditiously so as to enable secured creditors to take physical possession quickly and realise their dues. Moreover, as stated earlier, the consequences of noncompliance with the time limit are not specified and the sequitur thereof would be that the district collector/district magistrate concerned would not be divested of jurisdiction upon expiry of the time limit. Petition disposed off. - W.P.(MD) Nos. 11986, 13006, 13654, 13726, 15507 of 2019 & 24785 of 2018 AND W.M.P.(MD) Nos.9036, 9037, 9700, 9701 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table below: Sl. No. Writ Petition No. S.14 Application Date Date of Order Whether affidavit filed 1 11986/2019 06.10.2018 08.03.2019 Details unavailable 2 13006/2019 Details unavailable 11.02.2019 Details unavailable 3 13654/2019 25.01.2018 June 2018/ 23.08.2018 Details unavailable 4 13726/2019 18.03.2019 No orders Details unavailable 5 15507/2019 15.10.2018 30.05.2019 Details unavailable 6 24785/2018 01.03.2018 23.11.2018 Details unavailable 4. Mr.Ajmal Khan, the learned senior counsel, appeared for the borrower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, shall, on such request being made to him- (a) take possession of such asset and documents relating thereto; and (b) forward such assets and documents to the secured creditor: provided that any application filed by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that- (i) the aggregate amount of financial assistance granted and the total outstanding of the bank as on the date of filing the application; (ii) the borrower has created security interest of various properties and that the bank or financial institution is holding a valid and subsisting security interest over such properties and the claim of the bank or financial institution is within the limitation period; (iii) the borrower has created security interest over various properties giving the details of properties referred to in sub clause (ii) above; (iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Harshad Govardhan Sondagar vs. International Assets Reconstruction Co. Ltd. 2014 (5) CTC 546 (SC) wherein, at paragraph 29, the Supreme Court held that the Debts Recovery Tribunal does not have the power to restore possession of the secured asset to the lessee if an application is filed under section 17 of the SARFAESI Act. This judgement was referred to in order to establish the object and purpose of the introduction of section 17 (4-A) of the SARFAESI Act. (b) Veena Textiles Limited vs. The Authorised Officer, IFCI Limited 2014 (5) CTC 209 wherein, a Division Bench of this Court in which one of us was a party (KRCBJ) held that a writ petition is maintainable against the order made under section 14 (3) of the SARFAESI Act. (c) Dipak Babaria vs. State of Gujarat (2014) 3 SCC 502, wherein, at paragraph 61, the Supreme Court held that when a statute provides for a thing to be done in a particular manner, then it should be done in that manner and in no other manner. In order to reach this conclusion, the Supreme Court relied upon the rule in Taylor versus Taylor (1875)LR 1 Ch D 426 at 431 (d) K. Arokiaraj vs. The Chief Judicial Magistrate (2013) 6 MLJ 641 (FB) wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndatory and not directory. (i) Balasinor Nagrik Cooperative Bank Ltd. vs. Babubhai Shankerlal Pandya (1987) 1 SCC 606, wherein, at paragraph 5, the time limit of three months for the Registrar to approve or disapprove of a resolution expelling a member under Section 36 of the Gujarat Cooperative Societies Act was held to be mandatory. (j) Chhatrapal Singh vs. State of UP 2003 SCC online All 1161 wherein, at paragraph 12, a Division Bench of the Allahabad High Court held that a provision requiring a meeting to be held within 30 days is mandatory and also reiterated the rule in Taylor vs. Taylor. 7. In response to a question as to how the substantive rights of the borrower/guarantor/lessee is affected if the time limit of 60 days is not adhered to, the learned senior counsel concluded his submissions by pointing out that the property rights of the Petitioner are at stake and such rights are protected by Article 300 A of the Constitution and that a person cannot be deprived of such rights except strictly in accordance with the procedure established by law. 8. In reply, arguments were advanced by the learned Additional Government Pleader on behalf of the official Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibes the consequence of noncompliance, the provision in question is mandatory but if no consequences are prescribed, it is directory. In order to substantiate this proposition, he adverted to Rule 9 (3) of the Security Interest (Enforcement) Rules, wherein subrule's 4 and 5 prescribe the consequence of noncompliance. 10. In addition, he referred to the Minutes of the State-Level Bankers Committee Meeting so as to emphasise that about 1143 applications under Section 14 of the SARFAESI Act are pending before the District Magistrates and that the amendment fixing the time limit was introduced in this factual context and for the purpose of expediting disposal of such applications. He referred to a judgment of the Full Bench of the Patna High Court in Shiveshwar Prasad Sinha vs. The District Magistrate of Monghyr MANU/BH/0030/1966, where, in paragraph 9, the Court adverted to the factors that should be considered in order to decide whether a provision is directory or mandatory and held as under: Following the aforesaid authorities it appears that the under mentioned factors have to be considered in deciding whether the time limit provided in clause (a) of sub-section (2) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the Bank in W.P. No. 11986 of 2019, opened his submissions by pointing out that Section 13 is the primary provision and that Section 14 is ancillary thereto. With regard to Section 14 (3), he submitted that it pertains to immunity to officers for acts done in order to secure physical possession for and on behalf of secured creditors. In other words, he submitted that the said sub-section does not deal with orders passed in an application under Section 14. By implication, he submitted that such orders are appealable under Section 17 of the SARFAESI Act. He further submitted that Heydon's mischief rule should be applied so as to ascertain the mischief that the amendment to Section 14 was intended to overcome. He further submitted that any person aggrieved is entitled to approach the DRT concerned under section 17 (3) of the SARFAESI Act and, in this regard, he referred to and relied upon the judgement of the Supreme Court in Standard Chartered Bank vs. V. Noble Kumar (2013) 9 SCC 620 (the Standard Chartered Bank case) and, in particular, paragraph 27 thereof wherein it was held that an appeal under Section 17 of the SARFAESI Act is available against any measure under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n particular, paragraph 17 and 18 thereof with regard to the principle that the words shall and may are not conclusive as to whether a provision is directory or mandatory. He further submitted that the bank has no control over the district magistrate and that, therefore, great prejudice would be caused to secured creditors if the time limit is construed as mandatory and not directory. He further submitted that no substantive rights are affected as regards the borrower, guarantor or lessee if the specified time limit is exceeded. He also referred to the order in the Arockiaraj case (cited supra) wherein, a Full Bench of this Court, at paragraph 16 and 18, held that there is no adjudication of rights in a proceeding under Section 14. He also referred to and relied upon the judgments of the Hon'ble Supreme Court in Sharif-ud-Din vs. Abdul Gani Lone AIR 1980 SC 303, at paragraph 9, and in State of Mysore vs. Narasimha Ram Naik AIR 1975 SC 2190, at paragraph 10, in order to contend that provisions such as section 14, as amended, should be construed as directory and not mandatory. He also referred to and relied upon the judgement is reported in Karnal Improvement Trust vs. Parw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by all the parties. On examining Section 14, as amended by Act 44 of 2016, it is clear that the amendment relating to the imposition of time limits uses words such as shall and not exceeding 60 days . Therefore, it is self-evident that the time limit is unambiguous. In light of such unambiguous language, which is both peremptory in form and couched in negative language, the question that arises is whether the Court should, as contended by the learned senior counsel, Mr. Ajmal Khan, treat the time limit as mandatory and not examine the object and purpose of the provision and other factors such as the consequence of non-compliance. In this regard, the judgment of the Supreme Court, which was relied upon by the learned senior counsel and is reported in (2009) 10 SCC 552, is illuminating and the Court therein also held as follows in paragraph 15: ....There being nothing in the context otherwise, in our judgment, there has to be a clear ninety six hours' interval between the accused being charged for which he is to be tried and his arraignment and interval time in Rule 34 must be read as absolute. There is a purpose behind this provision: that purpose is that befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gations would affect or prejudice public interest and not the person who fails to perform the statutory duty. In this regard, we are unable to countenance the distinction made by the learned senior counsel, Mr. Ajmal Khan, between provisions that stipulate a time limit for the performance of statutory duties and provisions, such as Section 14, that fix a time limit for the exercise of jurisdiction under a statute especially when substantive rights of the borrowers, guarantors or lessees are not adversely affected if the time limit is not adhered to. Moreover, as correctly contended by the learned Additional Government Pleader, the words shall and may are not determinative and one needs to examine the object and purpose of the provision in question so as to determine whether it should be construed as directory or mandatory. The further contention of the learned Additional Government Pleader that the object of Act 44 of 2016 is to expedite orders under Section 14 and that it should not be interpreted so as to defeat the object and purpose of the statute in question is well-founded and liable to be accepted. 17. From the foregoing discussion and on examining the relevant provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a position to control the exercise or performance of statutory duties and obligations by the public official or authority concerned. 18. The primary question in these Writ Petitions, namely, whether the time limits in section 14 of the SARFAESI Act are mandatory or directory should be answered in light of the principles enumerated above. As stated above, the object and purpose of the said time limit is to ensure that such applications are decided expeditiously so as to enable secured creditors to take physical possession quickly and realise their dues. Moreover, as stated earlier, the consequences of noncompliance with the time limit are not specified and the sequitur thereof would be that the district collector/district magistrate concerned would not be divested of jurisdiction upon expiry of the time limit. In this connection, it is also pertinent to bear in mind that if the consequences of non-compliance test is applied, the borrower, guarantor or lessee, as the case may be, is not adversely affected or prejudiced, in any manner, whether such applications are decided in 60, 70 or 80 days. On the other hand, the secured creditor is adversely affected if the provision is c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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