Case Note & Summary
The petitioner, DCB Bank Limited, had lent money to one A.C. Santhosh, who defaulted on loan repayments, causing the account to become a non-performing asset. The Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The Deputy Commissioner passed an order under Section 14 of the Act on 05-03-2022 directing the sale of the mortgaged property. Subsequently, on 08-04-2022, the borrower's advocate submitted a representation to the Deputy Commissioner, who then passed an order on 16-04-2022 keeping the earlier Section 14 order in abeyance for three months and issued a consequential memorandum. The Bank challenged these orders by filing a writ petition under Articles 226 and 227 of the Constitution of India. The High Court heard arguments from both sides. The court observed that the SARFAESI Act is a complete code and does not confer any power on the Deputy Commissioner to review or stay an order passed under Section 14. The Deputy Commissioner acted without jurisdiction by entertaining the borrower's representation and staying the order. The court held that the impugned orders dated 16-04-2022 are without authority of law and liable to be quashed. The writ petition was allowed, and the orders were set aside.
Headnote
A) SARFAESI Act - Section 14 - Power of Deputy Commissioner - Review/Stay - The Deputy Commissioner has no jurisdiction to review or stay an order passed under Section 14 of the SARFAESI Act, 2002. The Act is a complete code and does not confer any power of review or stay on the Deputy Commissioner. Any representation against such order must be dealt with in accordance with the Act, and the Deputy Commissioner cannot keep the order in abeyance. (Paras 5-6) B) SARFAESI Act - Section 14 - Representation by Borrower - The borrower's advocate's representation to the Deputy Commissioner to stay the Section 14 order is not maintainable. The Deputy Commissioner cannot entertain such representation and must proceed with the order as per the Act. (Paras 4-6)
Issue of Consideration
Whether the Deputy Commissioner has the power to review or stay an order passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) upon a representation by the borrower.
Final Decision
The writ petition is allowed. The impugned order dated 16-04-2022 passed by the 1st respondent and the consequential memorandum dated 16-04-2022 issued by the 2nd respondent are quashed.
Law Points
- Deputy Commissioner has no power to review or stay an order passed under Section 14 of SARFAESI Act
- 2002
- SARFAESI Act is a complete code
- representation against Section 14 order cannot be entertained by Deputy Commissioner
