According to us, there is no casus omissus. We are not reading something into the provision which the Legislature never intended to nor are we trying to interpret the provision so as to defeat the intention of the Legislature. We are only resorting to a purposive interpretation to arrive at the intention of the Legislature depending on the objects for which the enactment was made. As stated earlier, the intention of the Legislature was to achieve speedier recovery of the dues 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. Ergo, by conferring jurisdiction on an authority to exercise the power of assistance, which, his counterpart in a Metropolitan area, is exercising, the Court is not interpreting the provision in a different manner so as to negate the intent of the Legislature. Giving jurisdiction to Chief Judicial Magistrates in non-metropolitan area, who are exercising the same functions as that of Chief Metropolitan Magistrates in metropolitan areas, would not in anyway abrogate or contradict the words used in Section 14 of the SARFAESI Act, thereby causing prejudice to any of the parties. 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.
39. 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.
IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
Writ Petition Nos. 17589 and 17625 of 2014
Decided On: 27.11.2015
Appellants: T.R. Jewellery and Ors.
Vs.
Respondent: State Bank of India and Ors.
Vs.
Respondent: State Bank of India and Ors.
Hon'ble Judges/Coram:D.B. Bhosale, Actg. C.J., C. Praveen Kumar and M.S.K. Jaiswal, JJ.
Citation:AIR 2016 Hyd125
1. 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 to answer the question framed in the order of reference, which is as under :
Whether the Chief Judicial Magistrate exercising his jurisdiction in Corporation area can assist secured creditor in taking possession of secured asset and pass an order in favour of secured creditor for the purpose of taking possession or control of any secured asset?
2. Taking Writ Petition No. 17589 of 2014 as a lead petition, we proceed to decide the reference. An application under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act) came to be filed by a Secured Creditor before the Court of Chief Judicial Magistrate, Nellore requesting the said Court to take physical possession of the schedule property by exercising powers under the said provision. By an order dated 08.05.2014, the learned Chief Judicial Magistrate passed an order appointing an Advocate-Commissioner to take physical possession of the schedule property by making an inventory of the articles in the schedule property after conducting a panchanama. He was further directed to deliver the property to the secured creditor under proper acknowledgment. Challenging the same, the above Writ Petition came to be filed.
3. Referring to Section 14 of the SARFAESI Act, a Division Bench of this Court in W.P. No. 5347 of 2014 while holding that in non-metropolitan areas District Magistrate alone is competent to pass an order under Section 14 of the SARFAESI Act, set-aside the order passed by the Chief Judicial Magistrate. A coordinate bench of this Court, differed with the view expressed therein and referred the matter to a Full Bench observing that the nomenclature Chief Metropolitan Magistrate (CMM) used in Section 14 of the SARFAESI Act is inclusive of the nomenclature Chief Judicial Magistrate (CJM) as the powers and functions of both are one and the same.
4. Sri B. Chandrasen Reddy, the learned counsel for the petitioners mainly submits that under Section 14 of the SARFAESI Act, the Chief Judicial Magistrate has no jurisdiction to entertain an application made under the said provision. According to him, since SARFAESI Act is a self-contained Code, Section 3(2) of the Cr.P.C., cannot be made use of to come to a conclusion that the Chief Metropolitan Magistrate referred to in Section 14 includes C.J.M. in non-metropolitan area. He 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.
5. 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 (2013 (4) L.W. 485) and two Division Bench judgments of the Bombay High Court in Arjun Urban Cooperative Bank Limited, Solapur v. Chief Judicial Magistrate, Solapur and Indusind Bank Limited (formerly known as Ashok Leyland Finance Ltd.) (2009(5) Maharashtra Law Journal, 380) through its Legal Executive, Ravindrakumar Prakash Bhargodev v. The State of Maharashtra through Police Station. (2008 (110) BOMLR 2880) and also another Division Bench judgment of the Madras High Court in T. John Bose v. State Bank of India (2014 (3) MAD.L.J. 750).
6. On the other hand, Sri B.S. Prasad the learned counsel for the respondents would submit that the purpose of the enactment would be defeated if the Chief Judicial Magistrate is excluded from exercising the power under Section 14 of the SARFAESI Act. He took us through the scheme and object of the SARFAESI Act in support of his plea. He further submits that in none of the cases referred to above, Section 37 of the SARFAESI Act was taken into consideration and if the same is done, the view taken by the Full Bench of Tamil Nadu High Court and also by the two Division Bench Judgments of the Mumbai High Court would be incorrect. He places reliance on a division bench judgment of the Kerala High Court in Mohd. Ashraf and Smt. C. Arifa v. Union of IndiaAIR 2009 Kerala (14) in support of his case.
7. In order to deal with the rival contentions, it would be necessary to refer to the history of the enactment and the statement of objects and reasons of the SARFAESI Act. Since several hundred crores of public money got blocked in unproductive ventures, the Government of India constituted a committee under the chairmanship of Shri T. Tiwari to examine the legal and other difficulties faced by banks and financial institutions in the recovery of their dues and suggest remedial measures. The Tiwari Committee noted that the existing procedure for recovery was very cumbersome and suggested that special tribunals be set up for recovery of the dues of banks and financial institutions by following a summary procedure. The issue was further examined by the Committee on the Financial System headed by Shri M. Narasimham. In its First Report, the Narasimham Committee suggested setting up of special tribunals with special powers for adjudication of cases involving the dues of banks and financial institutions.
8. After considering the reports of the two Committees and taking cognizance of the fact that as on 30-9-1990 more than 15 lakh cases filed by public sector banks and 304 cases filed by financial institutions were pending in various Courts for recovery of debts, etc. amounting to Rs. 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 Government greatly contributed to the malaise of delay in disposal of the cases instituted before the Tribunals. The survey conducted by the Ministry of Finance, Government of India revealed that as in 2001, a sum of more than Rs. 1,20,000/- crores was due to the banks and financial institutions and this was adversely affecting the economy of the country. Therefore, the Government of India asked the Narasimham Committee to suggest measures for expediting the recovery of debts due to banks and financial institutions. In its Second Report, the Narasimham Committee noted that the non-performing assets of most of the public sector banks were abnormally high and the existing mechanism for recovery of the same was wholly insufficient. The Andhyarujina Committee constituted by the Central Government for examining banking sector reforms also considered the need for changes in the legal system. Both, the Narasimham and Andhyarujina Committees suggested enactment of new legislation for securitization and empowering the banks and financial institutions to take possession of the securities and sell them without intervention of the court. The Government of India accepted the recommendations of the two committees and that led to enactment of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SARFAESI Act'). (United Bank of India v. Satyawati Tondon -MANU/SC/0541/2010 : 2010(8) SCC 110)
9. The crux of the Act is that any security interest created in favour of a creditor, who by definition under the Act becomes a Secured creditor, can be enforced without the intervention either of the Court or Tribunal constituted under Act 51 of 1993 by following the procedure prescribed under Section 13 of the Act (Keshavlal Khemchand and Sons (P) Ltd., v. Union of India MANU/SC/0073/2015 : (2015) (4) SCC 770).
10. It is also to be noted that the SARFAESI Act, 2002 was challenged in Mardia Chemicals Limited v. Union of India MANU/SC/0323/2004 : 2004(4) SCC 311, wherein the Apex Court observed as under :
"81. the borrowers would get a reasonably fair deal and opportunity to get the matter adjudicated upon before the Debts Recovery Tribunal. The effect of some of the provisions may be a bit harsh for some of the borrowers but on that ground the impugned provisions of the Act cannot be said to be unconstitutional in view of the fact that the object of the Act is to achieve speedier recovery of the dues 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."
11. 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.
12. 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.
13. 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 be useful to refer to Section 14 and also certain provisions of the Code of Criminal Procedure.
"14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset:--
(1) Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset 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 asset, 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[(1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,-
(b) forward such assets 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 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 amount 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 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 (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.]
(i) to take possession of such assets and documents relating thereto; and(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.
(ii) to forward such assets and documents to the secured creditor.]
(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."
14. A reading of the Section 14 of the Act would show that Where the possession of any secured asset is required to be taken by a secured creditor or if secured asset is required to be sold or transferred by the secured creditor, the secured creditor may, for the purpose of taking possession or control of such secured asset, shall request, in writing, the Chief Metropolitan Magistrate or the District Magistrate as the case may be within whose jurisdiction such secured asset or other documents relating thereto may be situated or found, to take possession thereof. Amended Act 1 of 2013 inserted to Section 14 contemplates delegation of power by Chief Metropolitan Magistrate or District Magistrate to any officers subordinate to them to take possession of such assets and documents thereto and forward the same to the secured creditor.
15. Section 12 of the Code of Criminal Procedure (Cr.P.C.) provides that in every District (not being a Metropolitan area) the High Court shall appoint a Judicial Magistrate of First Class to be the Chief Judicial Magistrate. Under Section 17 of Code of Criminal Procedure 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. Therefore, in every District there will be a Chief Judicial Magistrate who will be a senior most Magistrate with all the powers of Judicial Magistrate of First Class. Similarly in Metropolitan areas there will be a Chief Metropolitan Magistrate who will be senior to all the Metropolitan Magistrates. It is not in dispute that the administrative functions of C.J.M., and C.M.M., in their respective local areas would be to guide, supervise and control the work of Judicial Magistrate subject to control of the High Court. Section 3(2) of the Cr.P.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.
16. Section 20 of the Cr.P.C., states that in every District and in every Metropolitan area, the State Government may appoint as many persons as it think fit to be the Executive Magistrates and shall appoint one amongst them to be the District Magistrate. Under Section 22 of the Code, the District Magistrate may, from time to time, define the local limits of the areas within which the Executive Magistrates may exercise all or any of the powers with which they may be invested under the Code subject to control of the State Government. From the above, it is clear that the Chief Judicial Magistrate, Chief Metropolitan Magistrate and the District Magistrate are separately referred to in the Code and the High Court has been empowered to appoint Chief Judicial Magistrate and Chief Metropolitan Magistrate while the State Government appoints one of the Executive Magistrates as District Magistrate in every District and in every Metropolitan area. The Code of Criminal Procedure permits executive powers to be exercised by Executive Magistrate, whereas sifting of evidence, trial etc., shall be exercisable only by a Judicial Magistrate.
17. One of the arguments that was advanced before us was that when the Legislature has made a clear demarcation of power by authorizing Chief Metropolitan Magistrates in metropolitan area and District Magistrates in non-metropolitan area to exercise the jurisdiction of assisting the secured creditors and the act being a self-contained code, there is no necessity to give such power to any other Authority than those referred to in Section 14 of the Act. But a plain reading of Section 14 of the Act does not anywhere indicate the same. It only authorizes Chief Metropolitan Magistrate or District Magistrate to assist the secured creditor. On the other hand, section 20 of the Code of Criminal Procedure speaks of State Government appointing one of the Executive Magistrates as District Magistrate even in Metropolitan areas. Such being the position, a secured creditor will have the option of invoking two Forums in a metropolitan area which benefit is lacking to a secured creditor/financial institution in a non-metropolitan area.
18. Be that as it may, it has been urged by the counsel for the petitioners that in view of Section 35 of the Act and the words used in Section 14 being clear and unambiguous, it would be impermissible to enlarge the jurisdiction by giving the power of assistance to Chief 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?
19. 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 AIR 2009 Kerala (14), 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 MANU/SC/1218/2002 : AIR 2003 SC 2103 observed that there is no casus omissus and that Chief Judicial Magistrate in non-metropolitan area stands on the same footing as Chief Metropolitan Magistrate in metropolitan area. Their designations are used synonymously depending upon the area where one is situated, and, therefore, apart from the District Magistrate, the powers can be exercised by the Chief Judicial Magistrate also.
20. In W.P. No. 5241 of 2012 a Division Bench of this Court, after considering Section 3(1)(d) and Section 3(2) of the Act held that the Chief Judicial Magistrate is always construed as Chief Metropolitan Magistrate and that the Chief Judicial Magistrate at Rajahmundry does not suffer from inherent lack of jurisdiction to entertain a petition under Section 14 of the SARFAESI Act. Similar view was taken by a Single Judge of the Madras High Court in Dhanalakshmi Bank v. Kovai Foods and Beverages (Crl.P.No.7312 of 2004). It is also brought to our notice that the Hon'ble Court has issued a Circular dated : 21.01.2013 directing all the Principal District Judges/Unit Heads in the State to issue necessary instructions to all Chief Judicial Magistrates/Chief Metropolitan Magistrates working under their control to take steps for early disposal of cases filed under the SARFAESI Act.
21. However, in Indusind Banks case, the Aurangabad Bench of Bombay High Court after referring to Section 14 of the Act held that in the absence of any reference to Chief Judicial Magistrate in the provision, it is only Chief Metropolitan Magistrate in the metropolitan area and District Magistrate in non metropolitan area who can entertain an application under Section 14. While dealing with Section 3 of the Code of Criminal Procedure, the Bench held that Section 3 of the Code of Criminal Procedure is only for the purpose of Cr.P.C; that Section 3(2) is not applicable to other Acts and Section 3(3) of the Code relates to other Acts, which are passed before commencement of the Cr.P.C.
22. In Arjun Urban Co-operative Bank Limited, Solapur v. Chief Judicial Magistrate, Solapur (2009(5) Maharashtra Law Journal, 380) a Division Bench of Bombay High Court while upholding the view taken by the Kerala High Court in Mohd. Ashraf and Smt. C. Arifa v. Union of India AIR 2009 Kerala (14) with regard to there being no casus omissus since Chief Judicial Magistrate and Chief Metropolitan Magistrate stand on same footing and their designation are used synonymously, however held that as there 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.
23. The Full Bench judgment of the Madras High Court (Madurai Bench) in K. Arockiyaraj v. The Chief Judicial Magistrate, Srivilliputhur and another (2013 (4) L.W. 485), 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 provided with a Forum to seek assistance even in non-metropolitan area, there is no necessity to add something and interpret the same in a different manner which the Legislature never contemplated. It was also held that when there is no casus omissus and when the SARFAESI Act is a complete code by itself, there is no need to import Section 3 of Criminal Procedure Code.
24. But it is to be noted that none of the judgments referred to above, dealt with Section 37 of the Act, which reads as under :
"37. Application of other laws not barred:-- The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force."
25. A reading of Section 37 discloses that the provisions of SARFAESI Act or the Rules made there under are in addition to and not in derogation to any other law for the time being in force. The phrase any other law for the time being in force used in Section 37 would definitely be inclusive of the provisions of Code of Criminal Procedure. The usage and interpretation of Sections 35 and 37 of the SARFAESI Act came up for consideration before the Apex Court in Mathew Varghese v. M. Amritha Kumar (MANU/SC/0114/2014 : 2014(5) SCC 610). In the said case the Apex Court was dealing with interpretation of Section 13(8) of SARFAESI Act read with Rule 8 and 9 of Security Interest (Enforcement) Rules 2002. Relying upon Section 29 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and Section 37 of the SARFAESI Act read with Rule 15 of the Second Schedule of the Income Tax Rules, 1962 it was contended that even under the provisions of SARFAESI Act there is a statutory requirement for re-notification to effect the sale and therefore non-compliance with the said requirement would render the sale effected by the Bank invalid in law. Dealing with such a situation, the Apex Court held as under :
"A reading of Section 37 discloses that the application of SARFAESI Act will be in addition to and not in derogation of the provisions of the RDDB Act. In other words, it will not in any way nullify or annul or impair the effect of the provisions of the RDDB Act. We are also 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 sale or transfer would apply automatically. We have already extracted Section 29 of the RDDB Act, as well as Schedule 2 Part 1 Rule 15 of the Income Tax Rules, 1962. Therefore, what is to be considered is as to what is the mode prescribed under the above provisions, namely, Rule 15 prescribed under Schedule 2 Part 1 of the Income Tax Rules, 1962. In such circumstances going by the prescription contained in Section 37 of the SARFAESI Act, as we have reached a conclusion that the provision contained in Section 29 of the RDDB Act will be in addition to and not in derogation of the provisions of the SARFAESI Act, the provisions contained in Rule 15, which is applicable by virtue of the stipulation contained in Section 29 of the RDDB Act, whatever stated in sub -rule (2) of Rule 15 should be followed in a situation where a notice of sale notified as per Rules 8 and 9(1) of the Securitisation Trust Rules, read along with Section 13(8) gets postponed. In our considered view such a construction of the provisions, namely, Sections 37,13(8) and 37 of the SARFAESI Act, read along with Section 29 with the aid of Rule 15 could alone be made and in no other manner."
26. Therefore, the application of the provisions of Code of Criminal Procedure would be in addition to and not in derogation of the provisions of SARFAESI Act and the provisions of Code cannot be excluded from consideration while dealing with the SARFAESI Act. Hence, the finding of the Full Bench of the Tamil Nadu High Court that in view of Section 35 of the Act the provisions of SARFAESI Act would override the provisions of Cr.P.C., and the phraseology used in Section 14 should be given its true meaning without any assistance of Cr.P.C., in our view, may not be correct.
27. Relying upon the word order used in the proviso to Section 14, it has been urged, that the Chief Metropolitan Magistrate is exercising judicial function while assisting the secured creditor and the same cannot be entrusted to Chief Judicial Magistrate in non-metropolitan area when the Legislature never contemplated the same. It has been further urged that if really the intention of the Legislature was to give such power to Chief Judicial Magistrate, it would have referred to it atleast in the amendment brought to Section 14 in the year 2013. It is true that Section 14 of the Act refers only to Chief Metropolitan Magistrate and District Magistrate. 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.
28. 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 SCC 2008(1) 125, held as under :
"68. The word possession is a relative concept. It is not an absolute concept. The dichotomy between symbolic and physical possession does not find place in the Act. As stated above, there is a conceptual distinction between securities by which the creditor obtains ownership of or interest in the property concerned (mortgages) and securities where the creditor obtains neither an interest in nor possession of the property but the property is appropriated to the satisfaction of the debt (charges). Basically, the NPA Act deals with the former type of securities under which the secured creditor, namely, the bank/FI obtains interest in the property concerned. It is for this reason that the NPA Act ousts the intervention of the courts/tribunals."
29. In Union Bank of India v. The State of Maharashtra through the Office of the Government Pleader MANU/MH/0708/2010 : AIR 2010 Bom 150, Public Works Department and others, the Bombay High Court held that Section 14 of the SARFAESI Act is procedural in nature and that the procedure stipulated therein enables the secured creditor to take the assistance of Chief Metropolitan Magistrate or District Magistrate in taking possession of the secured assets. It was also held that Section 14 only empowers the authorities to assist the secured creditor in taking possession of the secured assets as per the procedure contemplated under Section 14, but does not clothe the District Magistrate with the power to adjudicate in respect of any dispute pertaining to any secured asset. Further, it has been held that proviso to Section 14 of the Act does not vest District Magistrate with the jurisdiction to adjudicate and decide any dispute regarding the secured assets. Similar view was taken by a Division Bench of Bombay High Court in International Asset Reconstruction Company Private Limited through its Authorized Representative of the Constituted Attorney Shri Tushar B. Patel v. Union of India (UOI), through the District Magistrate and others MANU/MH/1029/2011 : AIR 2011 Bom.163. In Mansa Synthetic Pvt. Ltd. and others v. Union of India and another MANU/GJ/0415/2012 : AIR 2012 Guj 90, a Division Bench of the Gujarat High Court held that the District Magistrate or Chief Metropolitan Magistrate is bound to assist secured creditor in taking possession of secured asset and is not empowered to decide question of legality or propriety of any action taken by the secured creditor under Section 14 of the Act.
30. It may also be necessary to refer to the two judgments of Apex Court to decide as to whether any adjudication is involved while dealing with an application made under Section 14 of the Act, though the point for consideration is different from the one that is before us.
31. In Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd.s case Laws (SC) 2014 (4) 81, 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. Thereafter, the Chief Metropolitan Magistrate or District Magistrate will give notice and after hearing the alleged lessee and the secured creditor, consistent with the principle of natural justice, and take the decision. From the above, it is clear that the authority referred to in Section 14 is only assisting the secured creditor in securing his asset either through himself or through a person subordinate to him after ascertaining that a notice under Section 13(2) was issued and the property to be proceeded with is a secured property.
32. Standard Chartered Bank v. V. Noble Kumar and others MANU/SC/0874/2013 : 2013(10) SCALE 540 was a case where an order passed by the learned Chief Judicial Magistrate at Chengalpattu under Section 14 of the SARFAESI Act was challenged. An Advocate Commissioner was appointed to take possession of the secured asset and was directed to handover the same to the secured creditor. Dealing with the various provisions of the SARFAESI Act, the Apex Court observed as under :
"26. These provisions stipulate that a secured creditor who is seeking the intervention of the Magistrate under Section 14 is required to file an affidavit furnishing the information contemplated under various Sub-clauses (i) to (ix) of the proviso and obligates the Magistrate to pass suitable orders regarding taking of the possession of the secured assets only after being satisfied with the contents of the affidavits. 28. The satisfaction of the Magistrate contemplated under the second proviso to Section 14(1) necessarily requires the Magistrate to examine the factual correctness of the assertions made in such an affidavit but not the legal niceties of the transaction. It is only after recording of his satisfaction the Magistrate can pass appropriate orders regarding taking of possession of the secured asset.
35. On the other hand, a Magistrate whose functioning is structured by the Code of Criminal Procedure is required to act in accordance with the provisions of the said Code unless expressly ordained otherwise by any other law. It is not a case that Code of Criminal Procedure never prescribed for the procedure to be followed by the Magistrate in a case where the Magistrate is required to take possession of property.
37.
(i)
(ii) The second situation will arise where the secured creditor meets with resistance from the borrower after the notice under Rule 8(1) is given. In that case he will take 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."
33. 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 shadow of doubt that any assistance taken by the financial institution/secured creditor for recovery of the asset before the authority referred to in Section 14 is only procedural in nature and no adjudication is involved. Hence, the word order used in proviso to Section 14 is only an administrative order, made for taking possession of the secured asset, if all other conditions are fulfilled. That being so, authorizing or adding an authority to exercise the said power would not amount to delegation of power, thereby violating the mandate of the provision.
34. In view of the above findings namely that the powers exercised by Chief Metropolitan Magistrate and District Magistrate are synonymous to each other and that they are not adjudicatory in nature, the question would be Whether there is any casus omissus if nomenclature Chief Metropolitan Magistrate used in Section 14 is made inclusive of Chief Judicial Magistrate ?
35. In Padmasundara Rao v. State of Tamilnadu MANU/SC/0182/2002 : (2002) 255 ITR 147 (SC) a constitutional Bench of Supreme Court held that a casus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself.
36. In M. Pentaiah v. Muddala Veeramallappa (MANU/SC/0263/1960 : 1961(2) SCR 295) a larger Bench of the Apex Court held as under :
"Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence.......... Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsman's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. Nevertheless, the courts are very reluctant to substitute words in a Statute, or to add words to it, and it has been said that they will only do so where there is a repugnance to good sense."
37. In National Insurance Company Ltd., v. Laxmi Narain Dhut 2007(2) KLT 470 (SC), the Supreme Court while considering as to how a statute has to be interpreted, held as follows :
"34. A statute is an edict of the Legislature and in construing a statute, it is necessary to seek the intention of its maker. A statute has to be 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 present experience. It may also be designed by use of general words to cover similar problems arising in future. But, from the very nature of things, it is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite referents are bound to be in many cases lacking in clarity and precision and thus giving rise to controversial questions of construction. The process of construction combines both literal and purposive approaches. In other words the legislative intention i. e., the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. (See District Mining Officer and Ors. v. Tata Iron and Steel Co. and Anr. (MANU/SC/0412/2001 : JT 2001 (6) SC 183)."
38. According to us, there is no casus omissus. We are not reading something into the provision which the Legislature never intended to nor are we trying to interpret the provision so as to defeat the intention of the Legislature. We are only resorting to a purposive interpretation to arrive at the intention of the Legislature depending on the objects for which the enactment was made. As stated earlier, the intention of the Legislature was to achieve speedier recovery of the dues 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. Ergo, by conferring jurisdiction on an authority to exercise the power of assistance, which, his counterpart in a Metropolitan area, is exercising, the Court is not interpreting the provision in a different manner so as to negate the intent of the Legislature. Giving jurisdiction to Chief Judicial Magistrates in non-metropolitan area, who are exercising the same functions as that of Chief Metropolitan Magistrates in metropolitan areas, would not in anyway abrogate or contradict the words used in Section 14 of the SARFAESI Act, thereby causing prejudice to any of the parties. 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.
39. 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.
40. These Writ Petitions are directed to be placed before appropriate Bench for hearing on merits in the light of the observations made in this judgment.
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