Case Note & Summary
The Bombay High Court dealt with a batch of writ petitions and interim applications challenging orders passed by the Debt Recovery Tribunal (DRT) under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The petitioners, including Kotak Mahindra Bank Ltd, Anbit Finvest Pvt Ltd, Reliance Asset Reconstruction Company Ltd, and Vinay Jain, sought to quash DRT orders that either rejected or allowed applications under Section 14 for taking possession of secured assets. The core legal issue was whether an order under Section 14 is appealable under Section 18 of the SARFAESI Act, and whether the DRT has the power to review or recall its own Section 14 order. The court analyzed the scheme of the SARFAESI Act, noting that Section 14 empowers the Chief Metropolitan Magistrate or District Magistrate to assist a secured creditor in taking possession of secured assets. The court held that such an order is administrative in nature, not quasi-judicial, as the magistrate does not adjudicate disputes but merely facilitates enforcement. Consequently, no appeal lies under Section 18 against a Section 14 order. The court further held that the DRT, being a creature of statute, has no inherent power to review or recall its own order under Section 14. The only remedy against a Section 14 order is by way of a writ petition under Article 226 or 227 of the Constitution before the High Court. The court allowed the writ petitions, setting aside the DRT orders that had rejected Section 14 applications or recalled earlier orders, and directed the DRT to reconsider the applications afresh in accordance with law. The court also disposed of the interim applications as infructuous.
Headnote
A) SARFAESI Act - Section 14 - Nature of Order - Administrative vs Quasi-Judicial - Section 14 order is administrative in nature, not quasi-judicial, as the Chief Metropolitan Magistrate or District Magistrate merely assists in taking possession of secured assets without adjudicating rights of parties - No appeal lies under Section 18 against such order - Remedy lies by way of writ petition under Article 226/227 of the Constitution (Paras 6-10). B) SARFAESI Act - Section 14 - Power of DRT to Review/Recall - DRT has no power to review or recall its own order passed under Section 14, as the order is administrative and not a judicial determination - Any challenge must be before the High Court under Article 226/227 (Paras 11-13). C) SARFAESI Act - Section 17 - Appeal against Section 14 Order - Section 17 appeal is available only against measures under Section 13(4), not against a Section 14 order - Section 14 order is a step in aid of enforcement of security interest, not a measure itself (Paras 8-9).
Issue of Consideration
Whether an order passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) is appealable under Section 18 of the Act, and whether the Debt Recovery Tribunal (DRT) has the power to review or recall its own order under Section 14.
Final Decision
The court allowed the writ petitions, setting aside the impugned DRT orders that had rejected or recalled Section 14 applications, and directed the DRT to reconsider the applications afresh in accordance with law. The interim applications were disposed of as infructuous.
Law Points
- Section 14 of SARFAESI Act is administrative in nature
- not quasi-judicial
- no appeal lies under Section 18 against Section 14 order
- writ jurisdiction under Article 226/227 is maintainable
- DRT cannot review its own order under Section 14
- remedy against Section 14 order is by way of writ petition before High Court
