Case Note & Summary
The petitioner, L & T Housing Finance Ltd., a financial institution registered under the National Housing Bank Act, 1987, and as a Securitization and Reconstruction Company under Section 3 of the SARFAESI Act, 2002, filed a petition under Section 14 of the SARFAESI Act before the II Additional Chief Metropolitan Magistrate, Bangalore, on 10.03.2015. The petition sought assistance to take possession of a secured asset, a house property at Jayanagar Extension, Bangalore, mortgaged by the respondents/borrowers. Despite the petition being pending for nearly six months, the Magistrate had not passed any orders. The petitioner approached the High Court under Articles 226 and 227 of the Constitution seeking a direction to the Magistrate to pass orders under Section 14 and take possession of the mortgaged property. The High Court, noting that no relief was sought against the respondents and that the Magistrate had not acted, held that the Magistrate was duty-bound to pass appropriate orders within a reasonable time. The Court directed the II Additional Chief Metropolitan Magistrate, Bangalore, to dispose of Crl. Misc. No.3305/2015 in accordance with law, as expeditiously as possible, preferably within two weeks from the date of receipt of the order. The writ petition was disposed of accordingly.
Headnote
A) Securitisation - Section 14 SARFAESI Act - Duty of Magistrate - The Chief Metropolitan Magistrate or District Magistrate is duty-bound to pass appropriate orders under Section 14 of the SARFAESI Act, 2002, within a reasonable time to assist a secured creditor in taking possession of secured assets. The High Court can direct the Magistrate to expedite disposal of such applications. (Paras 1-6)
B) Writ Jurisdiction - Articles 226 and 227 of Constitution - Speedy Disposal - The High Court, in exercise of its writ jurisdiction, can issue directions to subordinate courts to dispose of pending applications expeditiously, especially when no relief is sought against the respondents and the delay is causing prejudice to the petitioner. (Paras 1-6)
Issue of Consideration
Whether the II Additional Chief Metropolitan Magistrate, Bangalore, is obligated to pass orders on a petition filed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, within a reasonable time, and whether the High Court can direct the Magistrate to expedite the process.
Final Decision
The High Court disposed of the writ petition directing the II Additional Chief Metropolitan Magistrate, Bangalore, to dispose of Crl. Misc. No.3305/2015 in accordance with law, as expeditiously as possible, preferably within two weeks from the date of receipt of the order.
Law Points
- Section 14 of SARFAESI Act
- 2002 imposes a duty on the Chief Metropolitan Magistrate or District Magistrate to pass appropriate orders within a reasonable time
- expeditious disposal of applications under Section 14
- financial institution's right to take possession of secured assets
Case Details
2015 LawText (KAR) (09) 61
Writ Petition No.35696/2015 (GM-RES)
Sri Amith Bajaj for Sri B.S.Mahendra
L & T Housing Finance Ltd.
Sri. Vasu Krishnamurthy and Smt. Priya Krishnamurthy
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Nature of Litigation
Writ petition under Articles 226 and 227 of the Constitution seeking direction to the Magistrate to pass orders under Section 14 of SARFAESI Act for taking possession of mortgaged property.
Remedy Sought
Petitioner (L & T Housing Finance Ltd.) sought a direction to the II Additional Chief Metropolitan Magistrate, Bangalore, to pass orders in Crl. Misc. No.3305/2015 under Section 14 of SARFAESI Act and take possession of the mortgaged schedule property.
Filing Reason
The Magistrate had not passed any orders on the petitioner's application under Section 14 of SARFAESI Act filed on 10.03.2015, causing delay in taking possession of the secured asset.
Issues
Whether the Magistrate is duty-bound to pass orders under Section 14 of SARFAESI Act within a reasonable time?
Whether the High Court can direct the Magistrate to expedite disposal of such application?
Submissions/Arguments
Petitioner's counsel submitted that the petition under Section 14 was filed on 10.03.2015, but the Magistrate had not granted permission to take possession of the secured assets, causing prejudice.
Ratio Decidendi
The Chief Metropolitan Magistrate or District Magistrate, upon receipt of an application under Section 14 of the SARFAESI Act, is duty-bound to pass appropriate orders within a reasonable time to assist the secured creditor in taking possession of the secured assets. The High Court, in exercise of its writ jurisdiction under Articles 226 and 227 of the Constitution, can direct the Magistrate to expedite the disposal of such applications to prevent prejudice to the financial institution.
Judgment Excerpts
Though the petition is listed for preliminary hearing, it is taken up for final disposal in the given facts and circumstances.
Notice to the respondents is dispensed with since no relief is sought against them.
The petitioner herein is a financial institution registered with the National Housing Bank Act, 1987, and with the Reserve Bank of India as a Securitization and Reconstruction Company under the provisions of Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
The petitioner filed a petition under Section 14 of the SARFAESI Act, in respect of secured asset mortgaged by the respondents / borrowers... seeking assistance from the II Additional C.M.M. Court, Bangalore, for taking possession of the property and also for a direction to the police to access the said possession.
It is the submission of Sri Amith Bajaj, learned Counsel for the petitioner that, though the petition was filed on 10.03.2015, so far the learned Magistrate has not granted permission to take possession of the secured assets of the respondents / borrowers.
In the circumstances, the II Additional Chief Metropolitan Magistrate, Bangalore, is directed to dispose of Crl. Misc. No.3305/2015 in accordance with law, as expeditiously as possible, preferably within two weeks from the date of receipt of this order.
Procedural History
The petitioner filed a petition under Section 14 of SARFAESI Act before the II Additional Chief Metropolitan Magistrate, Bangalore, on 10.03.2015. As the Magistrate did not pass orders, the petitioner filed the present writ petition under Articles 226 and 227 of the Constitution before the High Court of Karnataka on 03.09.2015. The High Court disposed of the writ petition on the same day, directing the Magistrate to dispose of the Section 14 application within two weeks.
Acts & Sections
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: Section 14, Section 3
- Constitution of India: Article 226, Article 227
- National Housing Bank Act, 1987:
