M/S R. D. JAIN AND CO. versus CAPITAL FIRST LTD. & ORS.

Citation: [2022] 13 S.C.R. 57 · Decided: 27-07-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Dismissed

Cited by 2 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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M/s R. D. JAIN AND CO.
v.
CAPITAL FIRST LTD. & ORS.
(Civil Appeal No. 175 of 2022)
JULY 27, 2022
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement Security Interest Act, 2002 – ss. 13(4), 14 – Chief
Metropolitan Magistrate (CMM) shall deem to mean and include
Additional Chief Metropolitan Magistrate (ACMM) – The respondent
(secured creditor) instituted proceedings under the SARFAESI Act
for recovery of the amount due and payable by the appellant
(borrower) – The borrowers refused to handover the physical
possession of security asset – Secured creditor filed an application
u/s 14 of the SARFAESI Act praying for assistance from the CMM in
taking physical possession of the secured asset – The matter was
adjourned from time to time – Secured Creditor approached the
High Court for an order directing the CMM to dispose of application
u/s 14 in a time bound manner as mandated by second proviso to
s.14(1) of Act – The Division Bench considering the large volume
of pendency and workload of the CMM, has observed that the
ACMM, being invested with all the judicial powers of the CMM,
can be considered at par with the CMM – The High Court further
observed that the CMM and ACMM stand on the same footing and
one cannot be said to be either inferior or subordinate to the other
– On appeal, held: As mandated by s.14 of the SARFAESI Act, the
CMM/DM has to act within the stipulated time limit and pass a
suitable order – Thus, the powers exercised by the CMM/DM is a
ministerial act – While disposing of the application u/s. 14 of the
SARFAESI Act, no element of quasi-judicial function or application
of mind would require – S.14 does not oblige the CMM/DM to go
personally and take possession of the secured assets and documents
relating thereto – The High Court has rightly observed that the power
vested in the CMM/District Magistrate is not by way of persona
designata – The judicial powers and the powers, under the Cr.PC
which may be exercised by the CMM, can be exercised by the ACMM
also – Thus, the ACMM can be said to be at par with the CMM in
[2022] 13 S.C.R. 57
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SUPREME COURT REPORTS
[2022] 13 S.C.R.
so far as the powers to be exercised under the Cr.PC are concerned
– The expression “CMM” as appearing in s.14 of the SARFAESI
Act shall deem to mean and include ACMM for the purposes of s.14
of the SARFAESI Act.
Dismissing the appeal, the Court
HELD: 1.1 Considering the scheme of the SARFAESI Act,
it is explicit and crystal clear that possession of the secured assets
can be taken by the secured creditor before confirmation of sale
of the secured assets as well as post- confirmation of sale. For
taking possession of the secured assets, it could be done by the
“authorised officer” of the Bank as noted in Rule 8 of the Security
Interest (Enforcement) Rules, 2002. [Para 8][73-C-D]
1.2 However, for taking physical possession of the secured
assets in terms of Section 14(1) of the SARFAESI Act, the secured
creditor is obliged to approach the CMM/DM by way of a written
application requesting for taking possession of the secured assets
and documents relating thereto and for being forwarded to it
(secured creditor) for further action. The statutory obligation
enjoined upon the CMM/DM is to immediately move into action
after receipt of a written application under Section 14(1) of the
SARFAESI Act from the secured creditor for that purpose. As
soon as such an application is received, the CMM/DM is
expected to pass an order after verification of compliance of all
formalities by the secured creditor referred to in the proviso in
Section 14(1) of the SARFAESI Act and after being satisfied in
that regard, to take possession of the secured assets and
documents relating thereto and to forward the same to the secured
creditor at the earliest opportunity. As mandated by Section 14
of the SARFAESI Act, the CMM/DM has to act within the
stipulated time limit and pass a suitable order for the purpose of
taking possession of the secured assets within a period of 30
days from the date of application which can be extended for such
further period but not exceeding in the aggregate, sixty days.
Thus, the powers exercised by the CMM/DM is a ministerial
act. He cannot brook delay. Time is of the essence. This is the
spirit of the special enactment. As observed and held by this Court
in the case of NKGSB Cooperative Bank Ltd., the step taken by
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the CMM/D

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