2019 (9) TMI 1020 - SUPREME COURT

Jurisdiction - power of Chief Judicial Magistrate (CJM) to process the request of the secured creditor - SARFAESI Act - whether the CJM is competent to process the request of the secured creditor to take possession of the secured asset under Section 14 of the SARFAESI Act, 2002? - conflicting views of various Courts.

HELD THAT:- Going by the literal interpretation of Section 14 of the 2002 Act, it does appear that CMM or the DM within whose jurisdiction the secured asset is situated in, is bestowed with the authority to entertain the 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 of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand - At the same time, the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh have taken a liberal approach and were persuaded to invoke purposive interpretation and give expansive meaning to the expression “CMM”, to include CJM for the nonmetropolitan areas.

For instance, the High Court of Bombay (Aurangabad Bench) in INDUSIND BANK LTD., (FORMERLY KNOWN AS ASHOK LEYLAND FINANCE LTD.) THROUGH ITS LEGAL EXECUTIVE, RAVINDRAKUMAR PRAKASH BHARGODEV VERSUS THE STATE OF MAHARASHTRA THROUGH POLICE STATION [2008 (4) TMI 791 - BOMBAY HIGH COURT], had taken a diametrically opposite view. It had held that it is not open to substitute the word, “CMM” for “CJM”. For, there is no indication in the 2002 Act that the legislature had intended to empower the CJM outside the metropolitan areas, although the judicial officer (CMM) was entrusted with the power to deal with such request in the metropolitan areas - however, the High Court of Karnataka in M/S KAVERI MARKETING VERSUS THE SARASWAT CO OPERATIVE BANK LTD [2013 (1) TMI 993 - KARNATAKA HIGH COURT] took the same view as taken by the High Court of Kerala that the CJM can also exercise powers under Section 14 of the 2002 Act.

Section 14 of the 2002 Act is not a provision dealing with the jurisdiction of the Court as such. It is a remedial measure available to the secured creditor, who intends to take assistance of the authorised officer for taking possession of the secured asset in furtherance of enforcement of security furnished by the borrower. The authorised officer essentially exercises administrative or executive functions, to provide assistance to the secured creditor in terms of State’s coercive power to effectuate the underlying legislative intent of speeding the recovery of the outstanding dues receivable by the secured creditor. At best, the exercise of power by the authorised officer may partake the colour of quasi-judicial function, which can be discharged even by the Executive Magistrate - It is well established that no Civil Court can interdict the action initiated in respect of any matter, which a Debt Recovery Tribunal or Debt Recovery Appellate Tribunal is empowered by or under the 2002 Act, to determine and in particular, in respect of any action taken or to be taken in pursuance of any power conferred by or under the 2002 Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. That has been ordained by Section 34 of the 2002 Act.

Section 14, even if read literally, in no manner denotes that allocation of jurisdictions and powers to CMM and CJM under the Code of Criminal Procedure are modified by the 2002 Act. Thus understood, Section 14 of the 2002 Act, stricto sensu, cannot be construed as being inconsistent with the provisions of the Code of Criminal Procedure or vice-versa in that regard. If so, the stipulation in Section 35 of the 2002 Act will have no impact on the expansive construction of Section 14 of the 2002 Act - keeping in mind the subject and object of the 2002 Act and the legislative intent and purpose underlying Section 14 of the 2002 Act, contextual and purposive construction of the said provision would further the legislative intent. In that, the power conferred on the authorised officer in Section 14 of the 2002 Act is circumscribed and is only in the nature of exercise of State’s coercive power to facilitate taking over possession of the secured assets.

This Court in JANARDHAN VERSUS STATE OF MAHARASHTRA [1978 (4) TMI 242 - SUPREME COURT] was called upon to examine somewhat similar challenge. In that case, the challenge was to the search warrant issued by the Assistant Commissioner of Police in respect of offences punishable under Section 6 of the Bombay Prevention of Gambling Act, 1887. The Court repelled that challenge by relying on Section 17 of the Bombay General Clauses Act, 1886, which is pari materia to Section 17 of the General Clauses Act, 1897. The Court opined that though Section 6 of the Gambling Act specified the office 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 include an Assistant Commissioner, went on to hold that the search warrant issued by the Assistant Commissioner was valid - A perusal of Section 11 of the Police Act leads to the inescapable conclusion that an Assistant Commissioner appointed under subsection (1) is to perform such duties and functions as can be exercised under the Act or any other law for the time being in force, which undoubtedly includes the Gambling Act which was a law in force at the time when the Police Act was passed. Apart from this the Assistant Commissioner could also perform those functions which could be assigned to him by the Commissioner under the general or special orders of the State Government.

The substitution of functionaries (CMM as CJM) qua the administrative and executive or so to say nonjudicial functions discharged by them in light of the provisions of Cr.P.C., would not be inconsistent with Section 14 of the 2002 Act; nay, it would be a permissible approach in the matter of interpretation thereof and would further the legislative intent having regard to the subject and object of the enactment. That would be a meaningful, purposive and contextual construction of Section 14 of the 2002 Act, to include CJM as being competent to assist the secured creditor to take possession of the secured asset.

It can be finally held and concluded that the CJM is equally competent to deal with the application moved by the secured creditor under Section 14 of the 2002 Act - We accordingly, uphold and approve the view taken by the High Courts of Kerala, Karnataka, Allahabad and Andhra Pradesh and reverse the decisions of the High Courts of Bombay, Calcutta, Madras, Madhya Pradesh and Uttarakhand in that regard.

Appeal disposed off.