Case Note & Summary
The writ petitions, filed under Article 226 of the Constitution of India, challenged orders passed by the In-charge Chief Metropolitan Magistrate, Mumbai, under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The petitioners contended that the In-charge Chief Metropolitan Magistrate lacked jurisdiction to entertain and decide applications under Section 14, asserting that only the Chief Metropolitan Magistrate could do so absent a specific notification authorising the In-charge. The factual matrix involved secured creditors initiating proceedings under the SARFAESI Act after borrowers defaulted, with physical possession of mortgaged properties sought through Section 14 applications. In Writ Petition (L) No. 2634 of 2015, the respondent bank had issued a demand notice under Section 13(2), taken symbolic possession under Section 13(4), and filed an application under Section 14 before the Chief Metropolitan Magistrate’s court, which was allowed by the In-charge. The petitioners, having earlier challenged the bank’s action before the Debts Recovery Tribunal and later the Debts Recovery Appellate Tribunal, argued that the In-charge’s order was a nullity. The respondent banks defended the orders, stating that the In-charge was acting as the Chief Metropolitan Magistrate during the latter’s absence and that the de facto doctrine validated the orders. The legal issue centered on statutory interpretation of Section 14 and the powers of an In-charge judicial officer. The court examined the provisions and precedents, including Arjun Urban Co-operative Bank Ltd v. Chief Judicial Magistrate, K. Arockiyaraj v. Chief Judicial Magistrate, and Manjudevi R. Somani v. Union of India, relied upon by the petitioners, and Gokaraju Rangaraju v. State of Andhra Pradesh, cited by the respondents for the de facto doctrine. The judgment did not record a final decision, as the text is incomplete.
Headnote
A) Banking and Finance - Securitization - Section 14, SARFAESI Act, 2002 - Jurisdiction of In-charge Chief Metropolitan Magistrate - Petitioners contended that only the Chief Metropolitan Magistrate could entertain applications under Section 14 of the SARFAESI Act and that orders passed by the In-charge Chief Metropolitan Magistrate were ultra vires and void - Respondents argued that the In-charge was acting as the Chief Metropolitan Magistrate in his absence, and even if there was a defect, the de facto doctrine saved the orders - (Paras 1-9).
B) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - Challenge to orders passed under Section 14, SARFAESI Act - Petitioners sought quashing of orders of the In-charge Chief Metropolitan Magistrate - Court examined whether the In-charge had authority and whether interference was warranted in equitable jurisdiction - (Paras 1-2).
Issue of Consideration
Whether orders passed by the In-charge Chief Metropolitan Magistrate under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are without jurisdiction and void ab initio on the ground that only the Chief Metropolitan Magistrate (and not any In-charge) is empowered to pass such orders.
Law Points
- Section 14 of the SARFAESI Act confers power on the Chief Metropolitan Magistrate or District Magistrate to assist secured creditors in taking possession of secured assets
- an In-charge Chief Metropolitan Magistrate acts as the Chief Metropolitan Magistrate in his absence
- the de facto doctrine validates acts of officers acting under colour of authority even if their appointment is later found defective
Case Details
2015 LawText (BOM) (10) 120
Writ Petition (L) No. 2634 of 2015 along with Writ Petition No. 640 of 2015, Writ Petition No. 398 of 2015, and Writ Petition No. 1776 of 2015
S. C. Dharmadhikari, B. P. Colabawalla
Rohan Cama, Prathmesh Kamat, Sapna Raichure, T. N. Tripathi, Sandhya Nambidi, A. R. Bamne, V. N. Ajitkumar
Kishan Lal Bishnoi and Another
The Authorised Officer and Others
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Nature of Litigation
Writ petitions under Article 226 of the Constitution of India challenging orders passed by the In-charge Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act.
Remedy Sought
Petitioners sought quashing and setting aside of the orders passed by the In-charge Chief Metropolitan Magistrate on the ground that he lacked jurisdiction.
Filing Reason
Petitioners contended that only the Chief Metropolitan Magistrate has authority under Section 14 of the SARFAESI Act, and the In-charge's orders are a nullity without a specific notification authorizing him.
Previous Decisions
In WP(L) 2634/2015, the DRT-II, Mumbai directed petitioners to deposit amounts; they failed; Securitization Application No.62/2014 was dismissed on 26th August 2015. Petitioners filed Appeal (L) No.302/2015 before DRAT, which denied urgent circulation for ad-interim relief.
Issues
Whether the In-charge Chief Metropolitan Magistrate has jurisdiction to pass orders under Section 14 of the SARFAESI Act?
Submissions/Arguments
Petitioners: Only the Chief Metropolitan Magistrate (or District Magistrate) can entertain applications under Section 14; the In-charge CMM had no authority absent a notification authorising him, making the orders ultra vires and void.
Respondent Banks: Applications were filed in the court of the Chief Metropolitan Magistrate; the In-charge CMM passed orders only because the CMM was absent, thereby acting as the CMM; the orders are valid. Alternatively, even if the In-charge lacked authority, the de facto doctrine applies.
Judgment Excerpts
the issue raised before us is that all these orders passed under section 14 by the In-charge Chief Metropolitan Magistrate, are a nullity on the ground that he had no authority and/or power to pass the impugned orders. In other words, it is the contention of the Petitioners in all these Petitions, that an Application under section 14 of the SARFAESI Act can be made only to the Chief Metropolitan Magistrate, and therefore, the orders passed by the In-charge Chief Metropolitan Magistrate are bad in law and ought to be set aside by us, in our extra ordinary, equitable and discretionary jurisdiction under Article 226 of the Constitution of India.
the In-charge Chief Metropolitan Magistrate was acting as the Chief Metropolitan Magistrate, and therefore, there was nothing incorrect and/or illegal about the orders passed by the In-charge Chief Metropolitan Magistrate under section 14 of the SARFAESI Act.
even assuming that the In-charge Chief Metropolitan Magistrate had no authority to pass the orders impugned in these Writ Petitions, the 'de-facto doctrine' would apply and on this count also the orders passed by the In-charge Chief Metropolitan Magistrate cannot be termed as illegal requiring any interference under Article 226 of the Constitution of India.
Procedural History
In WP(L) 2634/2015: Respondent Bank extended credit to Respondent No.4; default occurred; Demand Notice under Section 13(2) issued on 20.02.2013; possession taken under Section 13(4); Securitization Application No.62/2015 filed challenging measures; Bank filed Section 14 application (Case No.192/SA/2013) before CMM; In-charge CMM allowed it on 15.10.2013; Petitioners challenged before DRT by amending SA; DRT-II Mumbai directed deposit of amounts; failure to comply led to dismissal of SA on 26.08.2015; Petitioners filed Appeal (L) No.302/2015 before DRAT; during pendency, notice to take possession on 09.09.2015 was received; prayer for urgent circulation before DRAT denied; hence writ petitions filed.
Acts & Sections
- Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: 13(2), 13(4), 14
- Constitution of India: 226
