TMI Blog2015 (11) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... f Metropolitan Magistrate had no jurisdiction to entertain the Applications filed by the Respondent Banks under section 14, is wholly without merit. - This doctrine, which is now well established, propounds that the acts of officers “de-facto” performed by them within the scope of their assumed official authority, in the interest of public or third persons and not for their own benefit, are generally as valid and binding, as if they were the acts of officers “de-jure”. This doctrine is founded on good sense, sound policy and practical expedience. It is aimed at the prevention of public and private mischief and the protection of public and private interest. It avoids unnecessary confusion and needless chaos. Even though an illegal appointment may be set aside and a proper appointment may be made, but the acts of those who hold office “de-facto” are not so easily undone and may have lasting repercussions and confusing sequels, if attempted to be undone. Otherwise, as soon as the Judge pronounces a judgment, a litigation may be commenced for a declaration that the judgment is void because the Judge is not a Judge. This is exactly the case before us. Hence, the rule against collater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtraordinary, equitable and discretionary jurisdiction under Article 226 of the Constitution of India. Since this is the only point canvassed and which requires our consideration, we are not setting out the facts in each of the above Writ Petitions. For the sake of completeness of this judgment, we will refer to the facts in Writ Petition (L) No.2634 of 2015. 3. In this Writ Petition, it is the case of the Petitioners that the Respondent Bank had sanctioned certain credit facilities to Respondent No.4 (Sharavan Bishnoi, Proprietor of M/s Ganpat Steel). In respect of the aforesaid facilities, the Respondent Bank claims a mortgage over Flat No.15, 6th Floor, Building No.2, Navjeevan Co-operative Housing Society, Dr. D. V. Marg, Lamington Road, Mumbai, 400 008 (hereinafter referred to as mortgage property ). Since Respondent No.4 defaulted in repayment of the credit facilities granted to him, a Demand Notice dated 20th February, 2013 was issued under section 13(2) of the SARFAESI Act. After the issuance of the aforesaid Demand Notice and since it was not complied with, the Respondent Bank took possession of the mortgaged property under section 13(4) of the SARFAESI Act. 4. To c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which circulation was denied to the Petitioners. It is in these circumstances that the Petitioners are before us. 7. In this background, Mr Cama, learned counsel appearing on behalf of the Petitioners, contended that the orders passed by the In-charge Chief Metropolitan Magistrate were without jurisdiction and ultra-vires the provisions of the SARFAESI Act. According to Mr Cama, as per section 14 of the SARFAESI Act, only the Chief Metropolitan Magistrate (in Metropolitan Cities) and the District Magistrate (outside the Metropolitan Cities), alone have jurisdiction to entertain and pass orders under section 14 of the SARFAESI Act. He submitted that in the present case, the orders under section 14 of the SARFAESI Act had been passed by the In-charge Chief Metropolitan Magistrate and absent a Notification authorizing him to entertain and hear Applications under section 14, the In-charge Chief Metropolitan Magistrate had no authority and/or jurisdiction to do so. In support of the aforesaid argument, Mr Cama relied upon the following three judgments:- (i) Arjun Urban Co-operative Bank Ltd v/s Chief Judicial Magistrate Ors. 2009 (5) Mh. L. J. 380; (ii) K. Arockiyaraj v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the In-charge Chief Metropolitan Magistrate under section 14 of the SARFAESI Act, are a nullity as he is not the authority who can entertain and decide an Application under the provisions of section 14. In this view of the matter, we have not dealt with any other argument/ground that has been set out in the above Writ Petitions. 10. Having said this, we shall now deal with the rival contentions. To understand the above controversy, we would have to refer to certain provisions of the SARFAESI Act as well as the Code of Criminal Procedure, 1973 (for short, the CrPC, 1973 ). 11. The SARFAESI Act was brought into force to regulate the securitization and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. The statements of object and reasons indicate that the financial sector, being one of the key drivers in India's efforts to achieve success in rapidly developing its economy, did not have a level playing field as compared to other participants in the financial markets in the World. There was no legal provision for facilitating securitisation of financial assets of banks and financial inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the period specified in the 13(2) notice, the secured creditor may take recourse to one or more measures [as set out in section 13(4)] to recover his secured debt. Section 13(4) of the SARFAESI Act reads as under:- (4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:- (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; (b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt: Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim 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 amount; (v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a non-performing asset; (vi) affirming that the period of sixty days notice as required by the provisions of sub-section (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower; (vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower; (viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach the Chief Metropolitan Magistrate or the District Magistrate, to take their assistance in that regard. All these provisions have been enacted keeping in mind the object and purpose of quick and efficacious recovery of secured debts due to banks and financial institutions who play a very vital role in our country s economic growth. 16. Having noted the provisions of the SARFAESI Act and the purpose sought to be achieved thereby, we shall now make a brief reference to the provisions of the CrPC, 1973. The CrPC, 1973 is an Act to consolidate and amend the law relating to criminal procedure. Section 6 of the CrPC, 1973 deal with the classes of Criminal Courts and stipulates that besides the High Courts and the Courts constituted under any law, other than this Code, there shall be, in every State, the following classes of Criminal Courts, namely, (i) Courts of Session; (ii) Judicial Magistrates of the first class and, in any metropolitan area, the Metropolitan Magistrate; (iii) Judicial Magistrates of the second class; and (iv) Executive Magistrates. Thereafter, section 8 talks about metropolitan areas and stipulates that the State Government may, by notification, declare that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns Judge, be subordinate to the Chief Metropolitan Magistrate. (2) The High Court may, for the purposes of this Code, define the extent of the subordination, if any, of the Additional Chief Metropolitan Magistrates to the Chief Metropolitan Magistrate. (3) The Chief Metropolitan Magistrate may, from time to time, make rules or give special orders, consistent with this Code, as to the distribution of business among the Metropolitan Magistrates and as to the allocation of business to an Additional Chief Metropolitan Magistrate. 19. Section 19(1) stipulates that the Chief Metropolitan Magistrate and every Additional Chief Metropolitan Magistrate shall be subordinate to the Sessions Judge and every other Metropolitan Magistrate shall, subject to the general control of the Sessions Judge, be subordinate to the Chief Metropolitan Magistrate. Section 19(2) provides that the High Court may, for the purposes of this Code, define the extent of the subordination, if any, of the Additional Chief Metropolitan Magistrates to the Chief Metropolitan Magistrate. Section 19(3) provides that the Chief Metropolitan Magistrate may from time to time make rules or give special orders, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the lack thereof, of the In-charge Chief Metropolitan Magistrate who disposed of their Applications under section 14 of the SARFAESI Act. Furthermore, it is not as if the Incharge Chief Metropolitan Magistrate was a usurper and/or an intruder who had assumed jurisdiction of an office / title he was not entitled to in law. The law does not contemplate that when a judicial officer is absent, a vacuum is created in the process. In these circumstances we do not think that the Petitioners can today question the authority of the said In-charge Chief Metropolitan Magistrate to pass the orders impugned herein and thereby thwart the securitization proceedings initiated by the Respondent Banks. We, therefore, find that the argument canvassed on behalf of the Petitioners that the In-charge Chief Metropolitan Magistrate had no jurisdiction to entertain the Applications filed by the Respondent Banks under section 14, is wholly without merit. 22. Equally without merit, we find the argument canvassed by Mr. Cama that absent a Notification authorizing the In-charge Chief Metropolitan Magistrate to entertain and hear Applications under section 14, he had no authority and/or jurisdiction to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e titles cannot be permitted to bring in issue and litigate upon the title of a judge to his office. Otherwise so soon as a judge pronounces a judgment a litigation may be commenced for a declaration that the judgment is void because the judge is no judge. A judge s title to his office cannot be brought into jeopardy in that fashion. Hence the rule against collateral attack on validity of judicial appointments. To question a judge s appointment in an appeal against his judgment is, of course, such a collateral attack. (emphasis supplied) 24. We find that in the facts of the present case, this judgment will apply with full force. It is not as if the In-charge Chief Metropolitan Magistrate is an intruder or usurper as set out in the aforesaid Supreme Court decision, but is one who holds the office under the color of lawful authority. Even if this doctrine is not strictly applied in the facts of this case, the impugned orders cannot be assailed. To assume that the Presiding Officer entered upon or took office unlawfully or illegally is not correct. It is pertinent to note that the Presiding Officer passing the impugned order was presiding over the Court of the Chief Metropolitan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decide Applications filed under Section 14 of the SARFAESI Act. The said Notification reads as under:- In pursuance of Sub Section (2) of Section 17 of the Code of Criminal Procedure the High Court empowers the Additional Chief Metropolitan Magistrate who hold the charge of the Chief Metropolitan Magistrate in latter's absence, to entertain and decide the applications filed under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. 26. In this view of the matter and considering the fact that a specific Notification has now been issued, it would be an exercise in futility to accept the submissions made on behalf of the Petitioners and set aside the impugned orders and remand the matter back to the Court of the Chief Metropolitan Magistrate for fresh consideration. 27. In all these Petitions, the Petitioners are borrowers as understood under the provisions of the SARFAESI Act and owe huge amounts to the Respondent Banks. We do not think that justice lies on the side of the Petitioners for us to exercise our extraordinary, equitable and discretionary jurisdiction under Article 226 of the Constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powered to entertain and decide Applications filed under section 14 of the SARFAESI Act. It is in these circumstances that the findings given in the aforesaid judgment have to be considered and read. In the facts before us such is not the case. In the present case, admittedly, the Applications (under section 14 of the SARFAESI Act) were filed in the Court of the Chief Metropolitan Magistrate which is admittedly the authority named in section 14 of the SARFESI Act. Since the Chief Metropolitan Magistrate was absent that the orders came to be passed by the In-charge Chief Metropolitan Magistrate under section 14 of the Act. We, therefore, find that this judgment has absolutely no application to the facts of the present case and would not carry the case of the Petitioners any further. 29. The next judgment relied upon by Mr Cama is the judgment of the Madras High Court in the case of K. Arockiyaraj.2 Here also we find that the Application under section 14 of the SARFAESI Act was made to the Chief Judicial Magistrate as was done in the case of Arjun Urban Co-operative Bank Ltd.1 We, therefore, find that for the same reason this decision also would have no application to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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