Case Note & Summary
The petitioner, State Bank of India, filed a writ petition before the High Court of Karnataka at Dharwad seeking to quash certain observations made by the Court of Senior Civil Judge and CJM, Koppal in an order dated 29.04.2025 passed in Crl. Misc. No.16/2025. The Bank had filed an application under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) seeking assistance to take possession of secured assets from the respondents, who were borrowers. The Magistrate, while disposing of the application, made observations that the Bank had not followed the proper procedure under the SARFAESI Act and directed the Bank to approach the appropriate forum. The Bank contended that the Magistrate exceeded his jurisdiction by making such observations, as the role of the Magistrate under Section 14 is limited to assisting the secured creditor and cannot include adjudication on the validity of the proceedings. The High Court agreed with the Bank, holding that the Magistrate's function under Section 14 is ministerial and not judicial. The Court quashed the impugned observations, stating that the Magistrate cannot convert the application into a complaint under Section 156(3) CrPC or direct registration of an FIR. The petition was allowed, and the observations were set aside.
Headnote
A) Banking Law - SARFAESI Act - Section 14 - Magistrate's Role - The Magistrate acting under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) is required to assist the secured creditor in taking possession of the secured assets and cannot adjudicate upon the validity of the proceedings initiated by the secured creditor. The Magistrate's function is ministerial and not judicial. (Paras 1-10) B) Criminal Procedure Code - Section 156(3) - Application for Registration of FIR - The Magistrate cannot convert an application under Section 14 of the SARFAESI Act into a complaint under Section 156(3) CrPC and direct registration of an FIR against the secured creditor or its officers. Such an order is without jurisdiction and liable to be quashed. (Paras 5-10) C) Writ Jurisdiction - Article 226 - Quashing of Observations - The High Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India can quash observations made by a Magistrate in an order under Section 14 of the SARFAESI Act that are beyond the scope of the proceedings and prejudicial to the secured creditor. (Paras 1-10)
Issue of Consideration
Whether a Magistrate, while dealing with an application under Section 14 of the SARFAESI Act, 2002, can make observations regarding the validity of the proceedings initiated by the secured creditor under the Act.
Final Decision
The High Court allowed the writ petition and quashed the impugned observations made by the Magistrate in the order dated 29.04.2025 in Crl. Misc. No.16/2025.
Law Points
- SARFAESI Act
- 2002
- Section 14
- Criminal Procedure Code
- 1973
- Section 156(3)
- Writ Jurisdiction
- Judicial Restraint
- Secured Creditor
- Magistrate's Role
