Case Note & Summary
The Saraswat Cooperative Bank Limited filed a writ petition under Article 226 of the Constitution of India before the Bombay High Court seeking directions to the Collector and District Magistrate, Sangli, to provide administrative assistance under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for taking possession of secured assets. The Bank had six applications pending before the Collector, some for several years, but the Collector had not taken expeditious steps. The Bank had addressed letters to the Collector and the Divisional Commissioner, and on 23 February 2011, the Divisional Commissioner directed the Collector to take appropriate action, yet no action was taken. The Bank alleged that the Collector orally declined to render assistance, did not follow any procedure, failed to fix dates for attendance of Bank officers, did not communicate the status of applications, allowed defaulters to intervene, and in several cases, proceedings were missing. As a result, recovery of over Rs. 270.75 lacs due to the Bank was held up. The Court, on 20 July 2011, prima facie found the conduct of the Collector to be in clear breach and disregard of the law laid down by the Court. The Court observed that the Collector is duty bound to act in accordance with the letter and spirit of Section 14 of the SARFAESI Act. The Court directed the Collector to decide the pending applications within a period of four weeks from the date of receipt of the order, and to provide reasons for any refusal to grant assistance. The petition was disposed of accordingly.
Headnote
A) Securitisation - Administrative Assistance under Section 14 - Duty of District Magistrate - The District Magistrate is duty bound to act in accordance with the letter and spirit of Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to provide assistance to secured creditors for taking possession of secured assets - Failure to do so expeditiously is a breach of statutory duty - Writ of mandamus can be issued under Article 226 of the Constitution of India to compel performance (Paras 1-3).
Issue of Consideration
Whether the Collector and District Magistrate is bound to provide administrative assistance under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 expeditiously, and whether the failure to do so warrants a writ of mandamus under Article 226 of the Constitution of India
Final Decision
The Bombay High Court disposed of the writ petition directing the Collector and District Magistrate, Sangli, to decide the pending applications under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 within a period of four weeks from the date of receipt of the order. The Collector was directed to provide reasons for any refusal to grant assistance.
Law Points
- Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act
- 2002 imposes a duty on the District Magistrate to provide assistance to secured creditors for taking possession of secured assets
- and failure to do so expeditiously is a breach of statutory duty
- Article 226 of the Constitution of India can be invoked for enforcement of such duty
Case Details
2010 LawText (BOM) (07) 192
WRIT PETITION NO. 4344 OF 2011
DR. D.Y. CHANDRACHUD, ANOOP V. MOHTA
Mr. Bhupesh Samant for the petitioner, Mr. R. P. Behre, Additional Government Pleader for respondents 1 and 2
The Saraswat Cooperative Bank Limited
The State of Maharashtra and anr.
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India seeking directions to the Collector and District Magistrate to provide administrative assistance under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for taking possession of secured assets.
Remedy Sought
The petitioner, The Saraswat Cooperative Bank Limited, sought a writ of mandamus directing the Collector and District Magistrate, Sangli, to provide administrative assistance under Section 14 of the SARFAESI Act on an expeditious basis for taking possession of secured assets.
Filing Reason
The Collector failed to take expeditious steps on six applications pending under Section 14 of the SARFAESI Act, some for several years, despite directions from the Divisional Commissioner, leading to recovery of over Rs. 270.75 lacs being held up.
Previous Decisions
On 23 February 2011, the Divisional Commissioner, Pune directed the Collector to take appropriate action, but no action was taken. On 20 July 2011, the Court prima facie found the Collector's conduct to be in clear breach of law.
Issues
Whether the Collector and District Magistrate is bound to provide administrative assistance under Section 14 of the SARFAESI Act expeditiously?
Whether the failure to provide such assistance warrants a writ of mandamus under Article 226 of the Constitution of India?
Submissions/Arguments
The petitioner argued that six applications under Section 14 were pending before the Collector for several years, and despite letters and directions from the Divisional Commissioner, no action was taken. The Collector orally declined assistance, did not follow any procedure, failed to fix dates, did not communicate status, allowed defaulters to intervene, and proceedings were missing.
The respondents did not file a counter affidavit, and the Court noted that the conduct of the Collector was in clear breach and disregard of the law.
Ratio Decidendi
The District Magistrate is duty bound to act in accordance with the letter and spirit of Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to provide administrative assistance to secured creditors for taking possession of secured assets. Failure to do so expeditiously is a breach of statutory duty, and a writ of mandamus under Article 226 of the Constitution of India can be issued to compel performance.
Judgment Excerpts
The Court observed that the Second Respondent is duty bound to act in accordance with the letter and spirit of the legislation enacted by Parliament under Section 14 of the Securitisation Act, 2002.
The conduct of the Second Respondent was in clear breach and disregard of the law laid down by this Court.
Procedural History
The Saraswat Cooperative Bank Limited filed a writ petition under Article 226 of the Constitution of India on an unspecified date. On 20 July 2011, the Court prima facie found the Collector's conduct to be in breach of law. On 28 July 2011, the Court disposed of the petition with directions.
Acts & Sections
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: 14
- Constitution of India: 226
