Case Note & Summary
The petitioner, Vijaya Bank, filed a writ petition before the Bombay High Court challenging the inaction of the Chief Metropolitan Magistrate, Esplanade, Mumbai, in deciding Misc. Application No. CC No.70/MISC/2016 filed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The application sought assistance to take possession of secured assets belonging to respondent No.1, Prithvi Bricks and Mortar Pvt. Ltd. The Magistrate had adjourned the matter to await the order of the Small Causes Court, Mumbai, regarding tenancy/eviction issues concerning the premises. The High Court noted that with effect from 1.9.2016, Section 17(4A) of the SARFAESI Act was amended, which now vests the Debt Recovery Tribunal (DRT) with jurisdiction to examine claims of tenancy or leasehold rights upon secured assets. The court observed that the Magistrate cannot decide tenancy claims and must await the DRT's decision. Accordingly, the High Court disposed of the writ petition with a direction to the Chief Metropolitan Magistrate to decide the pending application under Section 14 in accordance with law, after considering the amended Section 17(4A). The court also permitted the petitioner to delete respondents 6 and 7 and directed filing of an affidavit of service within two days.
Headnote
A) SARFAESI Act - Tenancy Claims - Jurisdiction of DRT - Section 17(4A) - Amendment w.e.f. 1.9.2016 - The amended provision confers exclusive jurisdiction on the Debt Recovery Tribunal to examine claims of tenancy or leasehold rights upon secured assets. The Magistrate under Section 14 cannot adjudicate such claims and must await the DRT's decision. (Paras 3-4)
B) SARFAESI Act - Section 14 - Chief Metropolitan Magistrate - Assistance to Secured Creditor - The Magistrate's role is limited to assisting in taking possession; tenancy disputes are to be resolved by DRT under Section 17(4A). (Para 4)
Issue of Consideration
Whether the Chief Metropolitan Magistrate should decide the tenancy claim in a pending application under Section 14 of SARFAESI Act or await the decision of the Debt Recovery Tribunal under the amended Section 17(4A) of the Act.
Final Decision
The High Court disposed of the writ petition with a direction to the Chief Metropolitan Magistrate, Esplanade, Mumbai, to decide Misc. Application No. CC No.70/MISC/2016 in accordance with law, considering the amended Section 17(4A) of the SARFAESI Act. The petitioner was permitted to delete respondents 6 and 7 and directed to file an affidavit of service within two days.
Law Points
- Amended Section 17(4A) of SARFAESI Act confers jurisdiction on DRT to examine tenancy/lease claims
- Magistrate to await DRT decision
- Section 14 Magistrate cannot decide tenancy claims post-amendment
Case Details
2016 LawText (BOM) (11) 23
WRIT PETITION NO. 12909 OF 2016
Anoop V. Mohta, A. S. Gadkari
Mr. Madhur Rai I/by PRS Legal for the petitioner, Mr. C. P. Yadav, AGP for the respondent/State
Vijaya Bank, through Gen. Manager, Shri Ashish Kalra
Prithvi Bricks and Mortar Pvt. Ltd and ors.
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India seeking direction to the Chief Metropolitan Magistrate to decide a pending application under Section 14 of the SARFAESI Act.
Remedy Sought
The petitioner, Vijaya Bank, sought disposal of Misc. Application No. CC No.70/MISC/2016 pending before the Chief Metropolitan Magistrate, Esplanade, Mumbai, for assistance to take possession of secured assets.
Filing Reason
The Magistrate had adjourned the matter to await the order of the Small Causes Court regarding tenancy/eviction issues, causing delay.
Previous Decisions
The application under Section 14 was pending; the Magistrate had adjourned it to await the Small Causes Court's order.
Issues
Whether the Chief Metropolitan Magistrate should decide the tenancy claim in a pending Section 14 application or await the DRT's decision under amended Section 17(4A).
Submissions/Arguments
The petitioner submitted that the amended Section 17(4A) of the SARFAESI Act, effective from 1.9.2016, vests jurisdiction in the DRT to examine tenancy claims, and the Magistrate should decide the application accordingly.
Ratio Decidendi
The amended Section 17(4A) of the SARFAESI Act confers jurisdiction on the Debt Recovery Tribunal to examine claims of tenancy or leasehold rights upon secured assets. The Chief Metropolitan Magistrate under Section 14 cannot adjudicate such claims and must await the DRT's decision. The Magistrate is required to decide the pending application in light of this amendment.
Judgment Excerpts
In view of the following amended provision of Section 17(4A) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( for short, SARFAESI Act), with effect from 1.9.2016, which is reproduced below, the learned Magistrate is now required to decide the issue in accordance with law.
Where (i) any person, in an application under sub section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy. .......
Procedural History
The petitioner filed a writ petition before the Bombay High Court challenging the delay in deciding Misc. Application No. CC No.70/MISC/2016 under Section 14 of the SARFAESI Act. The High Court heard the matter on 21 November 2016 and disposed it with directions.
Acts & Sections
- The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: 14, 17(4A)
