TMI Blog2016 (3) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the other hand, it would hasten the process of rendering assistance to the secured creditors to recover possession of their assets thereby achieving the object for which the SARFAESI Act has been introduced. For the aforesaid reasons, we answer the reference holding that the nomenclature Chief Metropolitan Magistrate referred to in Section 14 is inclusive of Chief Judicial Magistrate in non- metropolitan area and as such the Chief Judicial Magistrate in a non- metropolitan area gets jurisdiction to entertain an application under Section 14 of the SARFAESI Act, 2002. - WRIT PETITION Nos. 17589 of 2014 - - - Dated:- 27-11-2015 - SRI DILIP BABASAHEB BHOSALE, C.PRAVEEN KUMAR, AND SHI M.S.K. JAISWAL, JJ. For The Petitioner : Sri B.Chandrasen Reddy For The Respondent : Sri B.S. Prasad, Standing counsel COMMON JUDGMENT: (Per Justice C.Praveen Kumar) Disagreeing with the view expressed in W.P.No.5347 of 2014 another Division Bench of this Court vide its order dated 24.07.2014 in W.P.Nos.17589 and 17625 of 2014 referred the following question to be decided by a Full Bench. In terms of the said order of reference, these Writ Petitions are posted before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that if really the legislature intended to extend such power to C.J.M., they would have incorporated the same atleast in the amendment brought to Section 14 in the year 2013. Since the language of Section 14 is clear and unambiguous, no jurisdiction can be vested with the Chief Judicial Magistrate in a non-metropolitan area for exercising the power of assistance under Section 14 of the SARFAESI Act. He further submits that since the power is exercised by the Chief Metropolitan Magistrate while doing a judicial act, the same cannot be delegated to Chief Judicial Magistrate by giving a wider meaning to the nomenclature Chief Metropolitan Magistrate. He places reliance on the word orders used in proviso to Section 14 of the SARFAESI Act in support of his plea. Sri Sharad Sanghi, learned counsel for petitioners, in connected matter, urged that the Court cannot supply the omissions if any made by the Legislature and can only interpret the Law. Both the counsel placed reliance on the Full Bench judgment of the Madras High Court (Madurai Bench) in K.Arockiyaraj v. The Chief Judicial Magistrate, Srivilliputhur and another and two Division Bench judgments of the Bombay High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various Courts for recovery of debts, etc. amounting to ₹ 6000 crores, the Parliament enacted the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, 'the DRT Act'). The new legislation facilitated creation of specialised forums i.e., the Debts Recovery Tribunals and the Debts Recovery Appellate Tribunals for expeditious adjudication of disputes relating to recovery of the debts due to banks and financial institutions. Simultaneously, the jurisdiction of the Civil Courts was barred and all pending matters were transferred to the Tribunals from the date of their establishment. For few years, the new dispensation worked well and the officers appointed to man the Tribunals worked with great zeal for ensuring that cases involving recovery of the dues of banks and financial institutions are decided expeditiously. However, with the passage of time, the proceedings before the Tribunals became synonymous with those of the regular Courts and the lawyers representing the borrowers and defaulters used every possible mechanism and dilatory tactics to impede the expeditious adjudication of such cases. The flawed appointment procedure adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared as NPAs and better availability of capital liquidity and resources to help in growth of the economy of the country and welfare of the people in general which would sub serve the public interest. From the above, it is clear that the object of the Act is to achieve speedier recovery of the dues declared as NPAs without the intervention of Tribunals or the Courts and for quick resolution of disputes arising out of the action taken for recovery of such dues apart from making better availability of capital liquidity and resources to help growth of economy and welfare of the people. But it is to be noted that neither Section 14 of the Act was specifically challenged nor the point that is canvassed before us now was agitated before the Apex Court. Therefore, keeping in view the scheme and object of the enactment, we shall now proceed to deal with the issue on hand. As stated earlier, one of the main grounds urged by the learned counsel for the petitioner is that Chief Judicial Magistrate has got no power to entertain an application made under Section 14 of the Act in view of the phraseology used in Section 14 of the SARFAESI Act. In order to appreciate the same, it may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 (4) of Section 13 read with Section 14 of the principal Act; (ix) that the provisions of this Act and the rules made thereunder had been complied with: Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets: Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.] [(1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,- (i) to take possession of such assets and doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C., postulates that any reference to Court of a Judicial Magistrate shall, in relation to a Metropolitan area be construed as a reference to the court of Metropolitan Magistrate for that area. Section 3(1)(d) states that any reference to Chief Judicial Magistrate shall in relation to a Metropolitan area be construed as a reference to Chief Metropolitan Magistrate exercising jurisdiction in that area. A Chief Judicial Magistrate working in a District Headquarters if posted in a metropolitan area, will be discharging the functions of a Chief Metropolitan Magistrate and similarly, if a Chief Metropolitan Magistrate working in a metropolitan area is posted in a non- metropolitan area, he will be discharging his duties as Chief Judicial Magistrate. Therefore, the nomenclature gets changed depending upon the place of work. A reading of the above provisions, makes it clear that the powers of Chief Judicial Magistrate in non-metropolitan area and powers of Chief Metropolitan Magistrate working in metropolitan area are one and the same; their functions are same and one is synonym to the other depending upon the area under their jurisdiction. Section 20 of the Cr.P.C., states that in ever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judicial Magistrate in non-metropolitan area. Section 35 of the Act states that the provisions of SARFAESI Act shall have effect, notwithstanding anything inconsistent therewith contained in any other Law for the time being in force or any instrument having effect by virtue of any such law. A reading of the said provision makes it clear that if there is any provision in the SARFAESI Act and if there is any provision in any other Law which is inconsistent therewith, the provisions of SARFAESI Act will have effect and not the provisions of any other law. It is nobodys case that there is any inconsistency between the provisions of the SARFAESI Act and the Code of Criminal Procedure. But, whether SARFAESI Act overrides the provisions of Code of Criminal Procedure in view of Section 35 of the said Act? Issues identical to the case on hand came up for consideration before various High Courts. A Bench of the Kerala High Court in Mohd. Ashraf and Smt. C.Arifa v. Union of India, after referring to various provisions of the Code of Criminal Procedure and also the judgments of the Apex Court in M/s. Unique Butyle Tube Industries Private Limited v. U.P. Financial Corporation and others obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no adjudication of any issue, and the authority have to only render assistance to secured creditor to recover possession and where literal construction of Section 14 does not lead to any absurd results, there is no need to add one more authority to the two provided therein. The Full Bench judgment of the Madras High Court (Madurai Bench) in K.Arockiyaraj v. The Chief Judicial Magistrate, Srivilliputhur and another, while observing that for the purpose of convenience the High Court is empowered to appoint the Chief Judicial Magistrate to perform the functions akin to Chief Metropolitan Magistrate in Metropolitan area, which include judicial and administrative function, held that the phraseology used in Section 14(1) should be given its true meaning without any assistance from the Criminal Procedure Code, particularly in the light of Section 35 read with Section 2(2) of the SARFAESI Act 2002. While dealing with Section 35 of the Act, the Full Bench held that the SARFAESI Act will override other laws including the provisions of Criminal Procedure Code. The Full Bench also held that since the language used in Section 14 is clear and unambiguous and when secured creditor is provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so fortified by our above statement of law as the heading of the said Section also makes the position clear that application of other laws are not barred. The effect of Section 37 would, therefore, be that in addition to the provisions contained under the SARFAESI Act, in respect of proceedings initiated under the said Act, it will be in order for a party to fall back upon the provisions of the other Acts mentioned in Section 37, namely, the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debts Due to Banks and Finances Institutions Act, 1993, or any other law for the time being in force. Reference to the above principles laid down in the various decisions also supports our conclusion that the application of the SARFAESI Act will be in addition to, in the present case to Section 29 of the RDDB Act. Once we steer clear of the said position without any hesitation, it can be held that whatever stipulations contained in Section 29 as regards the application of certain provisions of the Income Tax Act, 1961 in particular Schedule 2 Part 1 Rule 15 of the income Tax Rules, 1962 for effecting a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. But, if really the proceedings before the Chief Metropolitan Magistrate are judicial in nature, the Legislature would not have allowed the District Magistrate or the Chief Metropolitan Magistrate to authorize any Officer subordinate to them to take possession of such assets and documents relating there to and forward such assets and documents to the secured creditor. At this stage, an argument was sought to be advanced, stating that delegation as referred to in Section 14(1A) is only with regard to execution of the order by an Officer subordinate to Chief Metropolitan Magistrate or District Magistrate and not passing of the order. The same cannot be accepted. It is to be noted that Section 14(1)(a)(b) which deal with assistance by Chief Metropolitan Magistrate and District Magistrate also refers to taking possession of such assets and documents and forwarding them to the secured creditor. Dealing with the word possession in Sections 13, 17 and the Rules made under SARFAESI Act, the Apex Court in Transcore v. Union of India (UOI) and another , held as under : 68. The word possession is a relative concept. It is not an absolute concept. The dichotomy between symbolic an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade under Section 14 of the Act, though the point for consideration is different from the one that is before us. In Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd.s case , the issue was with regard to the procedure to be followed if the secured asset is in possession of lessee of a borrower. After referring to the provisions of SARFAESI Act and Transfer of Property Act held that if the lessee surrenders possession, the lease, even if valid gets determined in accordance with clause(f) of Section 111 of the Transfer of Property Act. But if he resists the attempt of the secured creditor, by producing, before authorized officer, proof that he was inducted as a lessee prior to creation of mortgage or that he was a lessee under the mortgagor in accordance with Section 65-A of the Transfer of Property Act and that the lease does not stand determined in accordance with Section 111 of the Transfer of Property Act, the authorized officer cannot evict him by force, but has to file an application before the Chief Metropolitan Magistrate or District Magistrate under Section 14 of the Act along with an affidavit disclosing the name and address of the lessee. Thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke recourse to the mechanism provided under Section 14 of the Act viz., making application to the Magistrate. The Magistrate will scrutinize the application as provided in Section 14, and then if satisfied, appoint an Officer subordinate to him as provided under Section 14(1)(A) to take possession of the assets and documents. For that purpose the Magistrate may authorize the Officer concerned to use such force as may be necessary. After the possession is taken the assets and documents will be forwarded to the secured creditor. (iii) The third situation will be one where the secured creditor approaches the Magistrate concerned directly under Section 14 of the Act. The Magistrate will thereafter scrutinize the application as provided in Section 14, and then if satisfied, authorize a subordinate Officer to take possession of the assets and documents and forwards them to the secured creditor as under Clause (ii) above. From the judgments referred to above, it is clear that the Magistrate is only authorizing the subordinate officers to take possession of the assets after examining the factual correctness of the assertion made in the affidavit. Therefore, it can be said beyond any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e construed according to the intent of those who make it and the duty of the court is to act upon the true intention of the Legislature. If a statutory provision is open to more than one interpretation the Court has to choose that interpretation which represents the true intention of the Legislature. This task very often raises difficulties because of various reasons, in as much as the words used may not be scientific symbols having any precise or definite meaning and the language may be an imperfect medium to convey one's thought or that the assembly of Legislatures consisting of persons of various shades of opinion purport to convey a meaning which may be obscure. It is impossible even for the most imaginative Legislature to foresee all situations exhaustively and circumstances that may emerge after enacting a statute where its application may be called for. Nonetheless, the function of the Courts is only to expound and not to legislate. Legislation in a modern State is actuated with some policy to curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the Legislature based on information derived from past and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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