Listen to this articleC. Bright v. The District
Collector & Ors.
Civil Appeal No. 3441 of
2020.
Decided on 5.11.2020
Bench: L.Nageswara
Rao, Hemant Gupta, Ajay Rastogi, JJ.
Facts: The
present appeal arises out of challenge to the order of Kerala High Court where
it held that Section 14 of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) mandating
the District Magistrate to deliver possession of a secured asset within 30
days, extendable to an aggregate of 60 days upon recorded reasons in writing,
is a directory provision.
The
Supreme Court upheld the decision of the Kerala High Court.
Issue: Does inability to take possession of
secured assets within time limit renders the District Magistrate Functus Officio?
Held: The court held
that keeping the objective of the SARFAESI Act in mind, the time limit to take
action by the District Magistrate has been fixed to impress upon the authority
to take possession of the secured assets. However, inability to take possession
within time limit does not render the District Magistrate Functus Officio.
The
time limit is to instill a confidence in creditors that the District Magistrate
will make an attempt to deliver possession as well as to impose duty on the
District Magistrate to make an earnest effort to comply with the mandate of the
statute to deliver the possession within 30 days and for reasons to be recorded
within 60 days. The remedy under Section 14 of the SARFAESI Act is not rendered
redundant if the District Magistrate is unable to handover the possession. The
District Magistrate will still be enjoined upon, the duty to facilitate
delivery of possession at the earliest.
Issue: Is Section 14 of the SARFAESI Act a
mandatory provision or directory provision?
Held: Section 14 of the
SARFAESI Act is not to be interpreted literally without considering the object
and purpose of the Act. If any other interpretation is placed upon the language
of Section 14, it would be contrary to the purpose of the Act.
The court also held that the interim
orders should generally not be passed without hearing the secured creditor as
interim orders defeat the very purpose of expeditious recovery of public money.
The borrowers and other aggrieved persons invoking the jurisdiction of the High
Court under Articles 226 or 227 of the Constitution of India without availing
the alternative statutory remedy should first resort to affective alternative
remedies.
[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 r quired 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. (2) For the purpose of
securing compliance with the provisions of sub- section (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 done in
pursuance of this section shall be called in question in any court or before
any authority.]