M/s R.D. Jain and Co. Versus Capital First Ltd. & Ors.

M/s R.D. Jain and Co. Versus Capital First Ltd. & Ors. - Supreme Court Case Judgment 2022 - 

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले


REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.  175 OF 2022
M/s R.D. Jain and Co.       …Appellant(s)
Versus
Capital First Ltd. & Ors.    …Respondent(s)
J U D G M E N T
M.R. SHAH, J.
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment and order dated 22.12.2017 passed by the High
Court   of   Judicature   at   Bombay   in   Writ   Petition   No.
1961/2017,   by   which,   the   Division   Bench   of   the   High
Court while interpreting Section 14 of the Securitisation
and Reconstruction of Financial Assets and Enforcement
Security Interest Act, 2002 (hereinafter referred to as the
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“SARFAESI Act”) has held that (i) the District Magistrate,
Chief Metropolitan Magistrate is not a persona designata
for the purposes of Section 14 of the SARFAESI Act; (ii) the
expression   “District   Magistrate”   and   the   “Chief
Metropolitan Magistrate” as appearing in Section 14 of the
SARFAESI Act shall deem to mean and include Additional
District   Magistrate   and   Additional   Chief   Metropolitan
Magistrate for the purposes of Section 14 of the SARFAESI
Act, the borrower has preferred the present appeal.  
2. The facts leading to the present appeal in a nutshell are as
under: ­
2.1 That   respondent   No.   1   herein   –   Financial   Institution   –
Capital   First   Limited   is   the   secured   creditor   (hereinafter
referred to as the “secured creditor”) within the meaning of
Section   2(1)(zd)   of   the   SARFAESI   Act.   That   the   secured
creditor instituted proceedings under the SARFAESI Act for
recovery of the amount due and payable by the appellant
herein   –   borrower.   The   said   proceedings   initiated   under
Section 13(4) of the SARFAESI Act, the secured creditor
proceeded to take possession of the secured asset. However,
the borrowers refused to handover the physical possession
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of the secured asset. The secured creditor took symbolic
possession of the secured asset on 21.01.2017 and affixed
the possession notice at the said secured asset. That on
17.03.2017, the secured creditor filed an application under
Section   14   of   the   SARFAESI   Act   with  the   learned   Chief
Metropolitan Magistrate Court, Esplanade, Mumbai, interalia,   praying   for   assistance   from   the   learned   Chief
Metropolitan Magistrate in taking physical possession of the
secured asset. The matter was adjourned from time to time
and lastly, it was adjourned to 29.07.2017. As mandated by
second   proviso   to   sub­section   (1)   of   Section   14   of   the
SARFAESI Act, the application was required to be disposed
of within a period of 30 days and as the application was not
decided   within   the   period   mandated   by   the   statute,   the
secured creditor moved an application for advancement. The
said application came to be dismissed by the learned Chief
Metropolitan Magistrate, inter­alia, on the ground that the
said   application   is   a   fresh   application   and   many   old
applications  are  pending.  Therefore,  the  secured  creditor
approached   the   High   Court   by   way   of   the   present   writ
petition for an appropriate direction and order directing the
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learned Chief Metropolitan Magistrate to dispose of their
cases/applications under Section 14 of the SARFAESI Act in
a time bound manner.
2.2 That the Division Bench of the High Court issued directions
to the learned Chief Metropolitan Magistrate to make an
endeavour   to   dispose   of   the   pending   applications   as
expeditiously as possible and preferably within a period of
thirty days from the date of receipt of writ along with the
order.   The   learned   Chief   Metropolitan   Magistrate   vide
communication dated 14.08.2017 brought to the notice of
the High Court that, “Even though, the SARFAESI Act, 2002
provides for expeditious disposal of the applications filed
under Section 14 of the said Act, there are as many as 924
cases pending under the said Act as on 09.08.2017 on the
file   of   the   Court   of   the   Chief   Metropolitan   Magistrate,
Esplanade, Mumbai. Out of 924 cases, 509 cases are filed
in the year 2017. However, there are 27 cases of the year
2014, 96 cases of the year 2015 and 291 cases of the year
2016, still pending for disposal. As per the direction of the
Hon’ble High Court, preference should be given to the old
pending   cases   for   disposing   of   the   same.   Therefore,   the
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preference is being given to the pending old cases rather
than fresh new cases.”   
2.3 On receiving the aforesaid report, the High Court was of the
opinion that considering the volume of applications filed
under Section 14 of the SARFAESI Act and pendency of
such   applications,   the   learned   Chief   Metropolitan
Magistrate, who is an authority under Section 14 of the
SARFAESI   Act   cannot  decide  such  applications   within   a
time bound period in terms of the first and second proviso
to Section 14(1) of the SARFAESI Act. After opining so, the
High Court proceeded to consider the issue as to how to
minimize the pendency. In this context, after considering
the   relevant   provisions   of   the   SARFAESI   Act   as   well   as
Section   17(2)   and   Section   19   of   the   Code   of   Criminal
Procedure, the High Court has observed that the Additional
Chief   Metropolitan   Magistrate   (for   short   “ACMM”),   being
invested   with   all   the   judicial   powers   of   the   Chief
Metropolitan Magistrate, can be considered at par with the
Chief   Metropolitan   Magistrate.   The   High   Court   has   also
observed that so far as the exercise of judicial powers are
concerned,   the   Chief   Metropolitan   Magistrate   and   the
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Additional Chief Metropolitan Magistrate stand on the same
footing   and   one   cannot   be   said   to   be   either   inferior   or
subordinate to the other. It is further observed and held
that   as   the   status   of   Chief   Metropolitan   Magistrate   and
Additional   Chief   Metropolitan   Magistrate   is   same   and
identical, the Additional Chief Metropolitan Magistrate can
exercise the powers under Section 14 of the SARFAESI Act.
While holding so, the Division Bench of the High Court has
heavily relied upon the decisions of the Division Bench of
the High Court in the case of  State  of  Maharashtra  Vs.
Shanti  Prasad  Jain  in Criminal Reference No. 9 of 1977
decided on 29.09.1977 by which, on a reference the Division
Bench of the High Court held and concluded that the Chief
Metropolitan   Magistrate   and   the   Additional   Chief
Metropolitan   Magistrate   are   courts   of   the   same   status
having the same or identical jurisdiction so far as the trial of
criminal   cases   is   concerned.   Further,   by   taking   into
consideration   the   fact   that   the   powers   of   the   Chief
Metropolitan Magistrate under Section 14 of the SARFAESI
Act   being   purely   executionary   in   nature   and   having   no
element of quasi­judicial functions ultimately it is observed
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and held by the High Court as under: ­ 
“(I)  The   District   Magistrate,   Chief   Metropolitan
Magistrate   is   not   a   persona   designata   for   the
purposes of Section 14 of the SARFAESI Act.
(II)  The expression “District Magistrate” and the
“Chief   Metropolitan   Magistrate”   as   appearing   in
Section   14   of   the   SARFAESI   Act   shall   deem   to
mean   and   include   Additional   District   Magistrate
and   Additional   Chief   Metropolitan  Magistrate   for
the purposes of Section 14 of the SARFAESI Act.” 
2.4 Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment and order passed by the High Court holding that
the District Magistrate, Chief Metropolitan Magistrate is not
by persona designata for the purposes of Section 14 of the
SARFAESI Act and that the expression “District Magistrate”
and   the   “Chief   Metropolitan   Magistrate”   as   appearing   in
Section 14 of the SARFAESI Act shall deem to mean and
include Additional District Magistrate and Additional Chief
Metropolitan Magistrate for the purposes of Section 14 of
the SARFAESI Act, the borrower has preferred the present
appeal.                 
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3.   Shri   Purvish   Jitendra   Malkan,   learned   Advocate   has
appeared on behalf of the appellant – borrower and Shri
Sachin Patil, learned Advocate has appeared on behalf of
the State. None has appeared on behalf of the respondent
No. 1 – secured creditor. 
4. Shri Malkan, learned counsel appearing on behalf of the
borrower has vehemently submitted that the High Court has
committed   a   grave   error   in   holding   that   powers   under
Section 14 of the SARFAESI Act can be exercised by the
Additional   Chief   Metropolitan   Magistrate   and   Additional
District Magistrate also. It is vehemently submitted that the
High Court has also committed a very serious/grave error in
holding   that   the   District   Magistrate   and   the   Chief
Metropolitan Magistrate is not a persona designata for the
purposes of Section 14 of the SARFAESI Act. 
4.1 Shri Malkan, learned counsel appearing on behalf of the
borrower has submitted that the impugned judgment and
order   passed   by   the   High   Court   is   just   contrary   to   the
decisions of the Gujarat High Court, Kerala High Court and
the Calcutta High Court. It is submitted that the High Court
of Gujarat, has been pleased to hold that: ­
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“1) District   Magistrate   and   Additional   District
Magistrate are two different and distinct authorities;
2) The powers conferred on the District Magistrate
or the Chief Metropolitan Magistrate, as the case may
be, under Section 14 are inter­alia that the powers are
conferred specifically on these authorities. One of the
aspects of the power to be exercised is that the District
Magistrate or the Chief Metropolitan Magistrate has to
satisfy himself about compliance of the requirement of
the Section. The satisfaction is personal satisfaction.
The   District   Magistrate   or   the   Chief   Metropolitan
Magistrate   are   conferred   with   the   powers   in   their
specific capacity as Chief Metropolitan Magistrate of
the District Magistrate. They themselves only are the
competent   authorities   to   exercise   the   powers.   The
nature of powers under Section 14 would not permit
transfer/delegate of exercise of powers under the said
provision to different person or authorities.” 
4.2 It is submitted that while holding as above the Gujarat High
Court heavily relied upon the decision of this Court in the
case of Hari Chand Aggarwal Vs. Batala Engineering Co.
Ltd. and Ors.; (1969) 2 SCR 201. It is submitted that as
held by this Court in the case of  Hari   Chand   Aggarwal
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(supra)   the   District   Magistrate   and   Additional   District
Magistrate are the distinct authorities and the Additional
District Magistrate is subordinate to the District Magistrate
and   therefore,   the   Additional   District   Magistrate   being
subordinate   cannot   exercise   the   powers   of   the   District
Magistrate. 
4.3 It   is   submitted   that   the   Gujarat   High   Court   has   also
considered   and   relied   upon   its   earlier   Division   Bench
judgment in the case of Shivam Water Treaters P. Ltd. Vs.
Authorised  Officer,  State  Bank  of   India  in Special Civil
Application No. 12632 of 2013 decided on 17.09.2013 by
which the Division Bench of the High Court observed and
held as under: ­ 
“7. In the past, this very Bench had an occasion to
consider   the   question   as   to   whether   the   power
conferred under Section 14 of the Securitisation Act
can be delegated by a Chief Metropolitan Magistrate in
favour of the Additional Chief Metropolitan Magistrate.
In that context, this bench held that the action of the
Chief Metropolitan Magistrate, Ahmedabad in exercise
of his powers under Section 19 Clause (3) of the Code
of Criminal Procedure, 1973 read with Rule 10 Clause
(1) of Chapter XXXII of the Criminal Manual, 1977
regarding   the   distribution   of   business   amongst   the
Metropolitan   Magistrates,   Ahmedabad,   thereby
empowering   the   Additional   Chief   Metropolitan
Magistrate, Ahmedabad to accept and decide the cases
under the provisions of the Securitisation Act, arising
within   the   limits   of   Ahmedabad   Municipal
Corporation, was without jurisdiction. 
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8. In   the   case   before   us,   the   question   is   a   bit
different one as to whether a District Magistrate can
delegate such power to the Sub Divisional Magistrate.”
It is submitted that thereafter it is specifically observed
and held that it is only the District Magistrate who can
exercise the powers under Section 14 of the SARFAESI Act. 
  
4.4 Making   the   above   submissions   and   relying   upon   the
decisions of this Court in the case of Hari Chand Aggarwal
(supra) and the decisions of High Court of Gujarat, Kerala
and Calcutta, it is prayed to allow the present appeal and
quash   and   set   aside   the   impugned   judgment   and   order
passed by the High Court and to hold that it is only the
District Magistrate or the Chief Metropolitan Magistrate who
are conferred with the powers in their specific capacity as
Chief   Metropolitan   Magistrate   or   District   Magistrate   to
exercise the powers under Section 14 of the SARFAESI Act.
5. Shri Sachin Patil, learned counsel appearing on behalf of
the State has supported the impugned judgment and order
passed by the High Court. It is submitted that looking to the
mandate under Section 14 of the SARFAESI Act to decide
and dispose of the applications under Section 14 within a
maximum period of 60 days and looking to the volume of
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the   work   and   applications   pending   with   the   District
Magistrates or the Chief Metropolitan Magistrates and that
they   have   also   to   look   after   and   consider   other   duties
including the administrative work and with a view to see
that the ultimate object and purpose of providing the time
lines in deciding the applications under Section 14 of the
SARFAESI Act, it is prayed to dismiss the present appeal. 
6. Heard. While considering the issue whether the Additional
District   Magistrate   or   Additional   Chief   Metropolitan
Magistrate may exercise the powers under Section 14 of the
SARFAESI   Act   and/or   the   issue   whether   the   expression
“District Magistrate” and the “Chief Metropolitan Magistrate”
as appearing in Section 14 of the SARFAESI Act shall deem
to   mean   and   include   Additional   District   Magistrate   and
Additional Chief Metropolitan Magistrate for the purposes of
Section 14 of the SARFAESI Act, the powers exercisable by
the   District   Magistrate   (for   short   “DM”)   and   the   Chief
Metropolitan Magistrate (for short “CMM”) under Section 14
of the SARFAESI Act are first required to be considered.
Section 14 of the SARFAESI Act reads as under: ­ 
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“14. Chief Metropolitan Magistrate or District Magistrate to
assist secured creditor in taking possession of secured asset.
—(1) Where the possession of any secured assets is required
to be taken by the secured creditor or if any of the secured
assets is required to be sold or transferred by the secured
creditor under the provisions of this Act, the secured creditor
may, for the purpose of taking possession or control of any
such   secured   assets,   request,   in   writing,   the   Chief
Metropolitan   Magistrate   or   the   District   Magistrate   within
whose   jurisdiction   any   such   secured   asset   or   other
documents relating thereto may be situated or found, to take
possession thereof, and the Chief Metropolitan Magistrate or
as the case may be, the District Magistrate shall, on such
request being made to him—
(a) take possession of such asset and documents relating
thereto; and 
(b)   forward   such   asset   and   documents   to   the   secured
creditor: 
[Provided that any application 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  claim  of  the   Bank  as  on   the   date   of  filing  the
application; 
(ii)the borrower has created security interest over 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 subclause (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 non­performing asset; 
(vi) affirming that the period of sixty days notice as required
by the provisions of sub­section (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  non­acceptance of such
objection or representation had been communicated to the
borrower; 
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(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 sub­section (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
[within a period of thirty days from the date of application]
[Provided also that if no order is passed by the Chief
Metropolitan   Magistrate   or   District   Magistrate   within   the
said period of thirty days for reasons beyond his control, he
may, after recording reasons in writing for the same, pass
the order within such further period but not exceeding in
aggregate sixty days.] 
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.]
(2) For the purpose of securing compliance with the
provisions   of   sub­section   (1),   the   Chief   Metropolitan
Magistrate or the District Magistrate may take or cause to be
taken such steps and use, or cause to be used, such force,
as may, in his opinion, be necessary. 
(3) No act of the Chief Metropolitan Magistrate or the
District   Magistrate   [any   officer   authorised   by   the   Chief
Metropolitan   Magistrate   or   District   Magistrate]   done   in
pursuance of this section shall be called in question in any
court or before any authority.”
6.1 That in the year 2013 by Act 1 of 2013, Section 14 (1A) has
been inserted by which now, while exercising the powers
under   Section   14   of   the   SARFAESI   Act,   the   District
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Magistrate   or   the   Chief   Metropolitan   Magistrate   may
authorise any officer subordinate to him to take possession
of   such   assets   and   documents   relating   thereto;   and   to
forward such assets and documents to the secured creditor.
Section   14   (1A)   as   inserted   in   the   year   2013   reads   as
under:­
“[(1A) The District Magistrate or the Chief Metropolitan
Magistrate may authorise any officer subordinate to him,— 
(i)to take possession of such assets and documents
relating thereto; and 
(ii)   to   forward   such   assets   and   documents   to   the
secured creditor.]” 
6.2 Even   as  observed  and   held  by  this   Court  in   the   recent
decision of  NKGSB  Cooperative  Bank  Limited  Vs.  Subir
Chakravarty & Ors. (Civil Appeal No. 1637/2022) decided
on 25.02.2022, it is open to the CMM/DM to appoint an
advocate and authorise him/her to take possession of the
secured   assets   and   documents   relating   thereto   and   to
forward  the   same   to   the  secured   creditor  under  Section
14(1A) of the SARFAESI Act. 
7. Now so  far as the powers exercisable by DM and  CMM
under   Section   14   of   the   SARFAESI   Act   are   concerned,
statement of objects and reasons for which SARFAESI Act
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has been enacted reads as under: ­
“STATEMENT OF OBJECTS AND REASONS 
The financial sector has been one of the key drivers in India's
efforts to achieve success in rapidly developing its economy.
While   the   banking   industry   in   India   is   progressively
complying   with   the   international   prudential   norms   and
accounting practices there are certain areas in which the
banking and financial sector do not have a level playing field
as compared to other participants in the financial markets in
the   world.   There   is   no   legal   provision   for   facilitating
securitisation   of   financial   assets   of   banks   and   financial
institutions. Further, unlike international banks, the banks
and financial institutions in India do not have power to take
possession of securities and sell them. Our existing legal
framework relating to commercial transactions has not kept
pace with the changing commercial practices and financial
sector reforms. This has resulted in slow pace of recovery of
defaulting   loans   and   mounting   levels   of   non­performing
assets   of   banks   and   financial   institutions.   Narasimham
Committee I and II and Andhyarujina Committee constituted
by the Central Government for the purpose of examining
banking sector reforms have considered the need for changes
in   the   legal   system   in   respect   of   these   areas.   These
Committees, inter alia, have suggested enactment of a new
legislation   for   securitisation   and   empowering   banks   and
financial institutions to take possession of the securities and
to sell them without the intervention of the court. Acting on
these suggestions, the Securitisation and Reconstruction of
Financial   Assets   and   Enforcement   of   Security   Interest
Ordinance, 2002 was promulgated on the 21st June, 2002 to
regulate securitisation and reconstruction of financial assets
and   enforcement   of   security   interest   and   for   matters
connected therewith or incidental thereto. The provisions of
the Ordinance would enable banks and financial institutions
to   realise   long­term   assets,   manage   problem   of   liquidity,
asset   liability   mismatches   and   improve   recovery   by
exercising powers to take possession of securities, sell them
and reduce nonperforming assets by adopting measures for
recovery or reconstruction.”   
Thus, the underlying purpose of the SARFAESI Act is
to   empower   the   financial   institutions   in   India   to   have
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similar powers as enjoyed by their counterparts, namely,
international banks in other countries. One such feature is
to empower the financial institutions to take possession of
securities and sell them. The same has been translated into
provisions falling under Chapter III of the SARFAESI Act.
Section 13 deals with enforcement of security interest. SubSection (4) thereof envisages that in the event a default is
committed by the borrower in discharging his liability in full
within the period specified in sub­section (2), the secured
creditor may take recourse to one or more of the measures
provided in sub­section (4). One of the measures is to 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. That, they could do through
their   “authorised   officer”   as   defined   in   Rule   2(a)   of   the
Security Interest (Enforcement) Rules, 2002.
7.1 After taking over possession of the secured assets, further
steps to lease, assign or sale the same could also be taken
by   the   secured   creditor.   However,   Section   14   of   the
SARFAESI   Act   predicates   that   if   the   secured   creditor
intends   to   take   possession   of   the   secured   assets,   must
17
approach the CMM/DM by way of an application in writing,
and on receipt of such request, the CMM/DM must move
into action in right earnest. After passing an order thereon,
he/she (CMM/DM) must proceed to take possession of the
secured assets and documents relating thereto for being
forwarded to the secured creditor in terms of Section 14(1)
read   with   Section   14(2)   of   the   SARFAESI   Act.   As   noted
earlier, Section 14(2) is an enabling provision and permits
the CMM/DM to take such steps and use force, as may, in
his opinion, be necessary.
7.2 At this stage, it is required to be noted that along with
insertion   of   sub­section   (1A),   a   proviso   has   also   been
inserted in sub­section (1) of Section 14 of the SARFAESI
Act whereby the secured creditor is now required to comply
certain   conditions   and   to   disclose   that   by   way   of   an
application accompanied by affidavit duly affirmed by its
authorised officer in that regard. Sub­Section (1A) is in the
nature of an explanatory provision and it merely restates
the implicit power of the CMM/DM in taking services of any
officer subordinate to him. As observed and held by this
Court   in   the   case   of  NKGSB   Cooperative   Bank   Ltd.
18
(supra), the insertion of sub­section (1A) is not to invest a
new power for the first time in the CMM/DM as such. 
8. Thus, considering the scheme of the SARFAESI Act, it is
explicit  and crystal  clear  that  possession  of the  secured
assets   can   be   taken   by   the   secured   creditor   before
confirmation of sale of the secured assets as well as postconfirmation of sale. For taking possession of the secured
assets, it could be done by the “authorised officer” of the
Bank   as   noted   in   Rule   8   of   the   Security   Interest
(Enforcement) Rules, 2002. 
8.1 However,   for   taking   physical   possession   of   the   secured
assets in terms of Section 14(1) of the SARFAESI Act, the
secured creditor is obliged to approach the CMM/DM by
way of a written application requesting for taking possession
of the secured assets and documents relating thereto and
for being forwarded to it (secured creditor) for further action.
The statutory obligation enjoined upon the CMM/DM is to
immediately   move   into   action   after   receipt   of   a   written
application under Section 14(1) of the SARFAESI Act from
the secured creditor for that purpose. As soon as such an
application is received, the CMM/DM is expected to pass an
19
order after verification of compliance of all formalities by the
secured creditor referred to in the proviso in Section 14(1) of
the SARFAESI Act and after being satisfied in that regard, to
take   possession   of   the   secured   assets   and   documents
relating thereto and to forward the same to the secured
creditor at the earliest opportunity. As mandated by Section
14 of the SARFAESI Act, the CMM/DM has to act within the
stipulated   time   limit   and   pass   a   suitable   order   for   the
purpose of taking possession of the secured assets within a
period of 30 days from the date of application which can be
extended for such further period but not exceeding in the
aggregate, sixty days. Thus, the powers exercised by the
CMM/DM is a ministerial act. He cannot brook delay. Time
is of the essence. This is the spirit of the special enactment.
As observed and held by this Court in the case of NKGSB
Cooperative   Bank   Ltd.  (supra),   the   step   taken   by   the
CMM/DM while taking possession of the secured assets and
documents relating thereto is a ministerial step. It could be
taken   by   the   CMM/DM   himself/herself   or   through   any
officer   subordinate   to   him/her,   including   the   advocate
commissioner who is considered as an officer of his/her
20
court.   Section   14   does   not   oblige   the   CMM/DM   to   go
personally and take possession of the secured assets and
documents relating thereto. Thus, we reiterate that the step
to   be   taken   by   the   CMM/DM   under   Section   14   of   the
SARFAESI Act, is a ministerial step. While disposing of the
application   under   Section   14   of   the   SARFAESI   Act,   no
element of quasi­judicial function or application of mind
would require.  The Magistrate has to adjudicate and decide
the correctness of the information given in the application
and nothing more. Therefore, Section 14 does not involve an
adjudicatory   process   qua   points   raised   by   the   borrower
against the secured creditor taking possession of secured
assets.    
9. Thus, in view of the scheme of the SARFAESI Act, more
particularly, Section 14 of the SARFAESI Act and the nature
of the powers to be exercised by learned Chief Metropolitan
Magistrate/learned District Magistrate, the High Court in
the impugned judgment and order has rightly observed and
held that the power vested in the learned Chief Metropolitan
Magistrate/learned   District   Magistrate   is   not   by   way   of
persona designata.   
21
10. Now the next question which is posed for consideration of
this Court is, whether, the Additional Chief Metropolitan
Magistrate   can   be   said   to   be   subordinate   to   the   Chief
Metropolitan   Magistrate.   For   that   purpose   the   relevant
provisions of the Cr.PC, namely, Sections 11, 12, 15, 16, 17,
19 and 35, are required to be referred to which are extracted
as under:­ 
“11. Courts of Judicial Magistrates.—(1) In every district (not
being   a   metropolitan   area)   there   shall   be   established   as
many Courts of Judicial Magistrates of the first class and of
the   second   class,   and   at   such   places,   as   the   State
Government may, after consultation with the High Court, by
notification, specify: 1 [Provided that the State Government
may, after consultation with the High Court, establish, for
any   local   area,   one   or   more   Special   Courts   of   Judicial
Magistrates of the first class or of the second class to try any
particular case or particular class of cases, and where any
such   Special   Court   is   established,   no   other   Court   of
Magistrate in the local area shall have jurisdiction to try any
case or class of cases for the trial of which such Special
Court of Judicial Magistrate has been established.] (2) The
presiding officers of such Courts shall be appointed by the
High Court. (3) The High Court may, whenever it appears to
it   to   be   expedient   or   necessary,   confer   the   powers   of   a
Judicial Magistrate of the first class or of the second class on
any member of the Judicial Service of the State, functioning
as a Judge in a Civil Court.
12. Chief Judicial Magistrate and Additional Chief Judicial
Magistrate,   etc.—(1)   In   every   district   (not   being   a
metropolitan area), the High Court shall appoint a Judicial
Magistrate   of   the   first   class   to   be   the   Chief   Judicial
Magistrate. (2) The High Court may appoint any Judicial
Magistrate of the first class to be an Additional Chief Judicial
Magistrate, and such Magistrate shall have all or any of the
powers of a Chief Judicial Magistrate under this Code or
under any other law for the time being in force as the High
22
Court may direct. (3) (a) The High Court may designate any
Judicial Magistrate of the first class in any sub­division as
the Sub­divisional Judicial Magistrate and relieve him of the
responsibilities specified in this section as occasion requires.
(b)   Subject   to   the   general   control   of   the   Chief   Judicial
Magistrate,   every   Sub­divisional   Judicial   Magistrate   shall
also   have   and   exercise,   such   powers   of   supervision   and
control over the work of the Judicial Magistrates (other than
Additional Chief Judicial Magistrates) in the sub­division as
the High Court may, by general or special order, specify in
this behalf.
15. Subordination of Judicial Magistrates.—(1) Every Chief
Judicial   Magistrate   shall   be   subordinate   to   the   Sessions
Judge; and every other Judicial Magistrate shall, subject to
the general control of the Sessions Judge, be subordinate to
the   Chief   Judicial   Magistrate.   (2)   The   Chief   Judicial
Magistrate may, from time to time, make rules or give special
orders, consistent with this Code, as to the distribution of
business   among   the   Judicial   Magistrates   subordinate   to
him.
16.   Courts   of   Metropolitan   Magistrates.—(1)   In   every
metropolitan area, there shall be established as many Courts
of Metropolitan Magistrates, and at such places, as the State
Government may, after consultation with the High Court, by
notification, specify. (2) The presiding officers of such Courts
shall be appointed by the High Court. (3) The jurisdiction
and powers of every Metropolitan Magistrate shall extend
throughout the metropolitan area.
17.   Chief   Metropolitan   Magistrate   and   Additional   Chief
Metropolitan   Magistrate.—(1)   The   High   Court   shall,   in
relation   to   every   metropolitan   area   within   its   local
jurisdiction,   appoint   a   Metropolitan   Magistrate   to   be   the
Chief Metropolitan Magistrate for such metropolitan area. (2)
The High Court may appoint any Metropolitan Magistrate to
be an Additional Chief Metropolitan Magistrate, and such
Magistrate shall have all or any of the powers of a Chief
Metropolitan Magistrate under this Code or under any other
law for the time being in force as the High Court may direct.
19.   Subordination   of   Metropolitan   Magistrates.—(1)   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. (2) The
23
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.
35. Powers of Judges and Magistrates exercisable by their
successors­in­office.—(1) Subject to the other provisions of
this Code, the powers and duties of a Judge or Magistrate
may be exercised or performed by his successor­in­office. (2)
When there is any doubt as to who is the successor­in­office
of any Additional or Assistant Sessions Judge, the Sessions
Judge shall determine by order in writing the Judge who
shall, for the purposes of this Code or of any proceedings or
order thereunder, be deemed to be the successor­in­office of
such Additional or Assistant Sessions Judge. (3) When there
is  any doubt  as to  who  is the successor­in­office of  any
Magistrate,   the   Chief   Judicial   Magistrate,   or   the   District
Magistrate, as the case may be, shall determine by order in
writing the Magistrate who shall, for the purpose of this
Code or of any proceedings or order thereunder, be deemed
to be the successor­in­office of such Magistrate.”
10.1 From   the   aforesaid   provisions,   it   can   be   seen   that   any
Metropolitan Magistrate can be appointed by the High Court
to be the Chief Metropolitan Magistrate. The High Court
may   appoint   any   Metropolitan   Magistrate   to   be   an
Additional   Chief   Metropolitan   Magistrate,   and   such
Magistrate shall have all or any of the powers of a Chief
Metropolitan Magistrate under Cr.PC or under any other law
for the time being in force as the High Court may direct. The
Chief Metropolitan  Magistrate and every Additional Chief
24
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. Thus
the judicial powers and the powers, under the Cr.PC which
may be exercised by the Chief Metropolitan Magistrate, can
be exercised by the Additional Chief Metropolitan Magistrate
also. Thus, the Additional Chief Metropolitan Magistrate can
be said to be at par with the Chief Metropolitan Magistrate
in so far as the powers to be exercised under the Cr.PC are
concerned. The Chief Metropolitan Magistrate in addition,
may   have   administrative   powers.   However,   for   all   other
purposes and more particularly the powers to be exercised
under the Cr.PC both are at par. Therefore, the Additional
Chief   Metropolitan   Magistrate   cannot   be   said   to   be
subordinate to the Chief Metropolitan Magistrate in so far as
exercise of judicial powers are concerned.   
10.2 In view of the above discussion and as observed hereinabove
when the powers to be exercised by the Additional Chief
Metropolitan Magistrate are at par with the powers to be
exercised   by   the   Chief   Metropolitan   Magistrate   [Section
25
17(2) of Cr.PC] and the Chief Metropolitan Magistrate and
Additional   Chief   Metropolitan   Magistrate   shall   be
subordinate to the Sessions Judge (Section 19 of the Cr.PC)
and   the   steps   to   be   taken   by   the   Chief   Metropolitan
Magistrate   under   Section   14   of   the   SARFAESI   Act   as
observed hereinabove are ministerial in nature and does not
involve any adjudicatory process and there is no element of
any   quasi­judicial  function,  we   see   no   reason   to   take   a
different  view than  the view  taken by the  Bombay High
Court   in   the   impugned   judgment.   We   hold   that   the
expression “Chief Metropolitan Magistrate” as appearing in
Section 14 of the SARFAESI Act shall deem to mean and
include   Additional   Chief   Metropolitan   Magistrate   for   the
purposes of Section 14 of the SARFAESI Act.          
10.3 Similarly,   when   the   Additional   District   Magistrates   are
conferred with the powers to be exercised by the District
Magistrates either by delegation and/or by special orders
and the Additional District Magistrates are exercising the
same   powers   which   are   being   exercised   by   the   District
Magistrates,   the   same   analogy   can   be   applied,   more
26
particularly, when the powers exercisable under Section 14
of the SARFAESI Act, are ministerial steps. 
11. The issue/question may also be considered from another
angle. It cannot be disputed and even judicial notice can be
taken of the fact that the CMMs and/or even the DMs are
required to perform so many other duties under different
statutes. They have to perform many administrative duties
also. District Magisters are in overall administrative control
of   their   jurisdiction/district.   Similarly,   CMMs   are   also
required  to  perform  administrative duties  and they  have
also to deal with the other cases/criminal trials and many
trials under special statutes also. It cannot be disputed that
the  litigations under the SARFAESI Act and proceedings
and/or applications under Section 14 of the SARFAESI Act
are increasing. Even as noticed by the High Court in the
impugned judgment and order, as on 09.08.2017, 926 cases
were pending under Section 14 of the SARFAESI Act before
only one CMM. Therefore, a number of applications under
Section 14 are pending. It also cannot be disputed that the
SARFAESI   Act   provides   for   expeditious   disposal   of   the
applications filed under Section 14 of the SARFAESI Act. As
27
per, second proviso to Section 14, suitable orders for the
purpose   of   taking   possession   of   the   secured   assets   are
required to be passed within a maximum period of sixty
days   from   the   date   of   the   application.   Therefore,   if   the
submission   on   behalf   of   the   appellants   that   only   the
concerned CMM/DM alone would have jurisdiction to decide
the applications under Section 14 of the SARFAESI Act is
accepted, in that case, it will be practically impossible for
the concerned CMM/DM to decide the application under
Section 14 of the SARFAESI Act expeditiously and within
the time stipulated under second proviso to Section 14 of
the SARFAESI Act. If the interpretation which we propose
that, the District Magistrate/Chief Metropolitan Magistrate
under   Section   14   of   the   SARFAESI   Act   includes   the
Additional District Magistrate/Additional Chief Metropolitan
Magistrate,   the   same   can   be   said   to   be   a   purposive
interpretation   to   achieve   the   object   and   purpose   of
proceedings   under   the   SARFAESI   Act,   more   particularly
when   as   observed   hereinabove,   the   orders   to   be   passed
under Section 14 of the SARFAESI Act are ministerial steps
and to assist the secured creditor in getting/obtaining the
28
possession   of   the   secured   property.   Thus,   there   is   no
element of exercise of adjudicatory powers under Section 14
of   the   SARFAESI   Act.   All   these   aspects   have   been
considered in detail by the High Court in the impugned
judgment and order. 
12. We are in complete agreement with the view taken by the
High   Court   that   (i)   the   District   Magistrate,   Chief
Metropolitan Magistrate is not a persona designata for the
purposes   of   Section   14   of   the   SARFAESI   Act;   (ii)   the
expression “District Magistrate” and the “Chief Metropolitan
Magistrate” as appearing in Section 14 of the SARFAESI Act
shall   deem   to   mean   and   include   Additional   District
Magistrate and Additional Chief Metropolitan Magistrate for
the purposes of Section 14 of the SARFAESI Act. 
13. The contrary view taken by the other High Courts, namely,
Gujarat High Court in the case of Pushpa Devi B Jain W/o
Bhawarlal M Jain Vs. Indian Overseas Bank in Special Civil
Application No. 19102/2015; Calcutta High Court in the
case   of   Shri   Chellaperumal   &   Anr.   Vs.   The   Authorised
Officer & Ors. in M.A. No. 26/2014 and Kerala High Court
in the case of Aseena Vs. Sub­Divisional Magistrate and
29
Ors. in W.P. (C) No. 3331/2007, is not a good law and are
specifically overruled.           
14. In view of the above and for the reasons stated above, the
present appeal fails and the same deserves to be dismissed
and   is   accordingly   dismissed.   We   hold   that   the   powers
under Section 14 of the SARFAESI Act can be exercised by
the concerned Additional Chief Metropolitan Magistrates of
the   area   having   jurisdiction   and   also   by   the   Additional
District   Magistrates,   who   otherwise   are   exercising   the
powers at par with the concerned District Magistrates either
by delegation and/or special order. The present appeal is
accordingly dismissed. No costs.    
………………………………….J.
[M.R. SHAH]
NEW DELHI; ………………………………….J.
July 27, 2022 [B.V. NAGARATHNA]
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