2018 (1) TMI 651 - HC - Indian Laws

Court upholds District Magistrate's jurisdiction under SARFAESI Act, dismisses writ petition challenging security interest creation.

The court dismissed the writ petition challenging the District Magistrate's jurisdiction under Section 14 of the SARFAESI Act, 2002, and upheld the ... Writ of prohibition - discharge of duty by statutory authority - Section 14 of the SARFAESI Act - possession of property - Held that: - There is no quarrel that writ petitioner is entitled to enjoy the subject property and the heir apparent under the Will are the daughter-inlaw and Grandson of K.P.Ramakrishna Pillai viz., Mrs. Punithavathi and Ajith Kumar, respectively. Section 14 of the SARFAESI Act, 2002 mandates that on receipt of an affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit, pass suitable orders for the purpose of taking possession of the secured assets, within a period of 30 days from the date of application. Proviso to the said Section states that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate, within the said period of thirty days, for the reasons beyond his control, he may after recording reasons, in writing, for the same, pass the order within such also period but not exceeding in aggregate 60 days - As per Section 14 of the Act, duty is cast on the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, to assist the secured creditor in taking possession of the secured asset. Under the scheme of Act, District Collector cum District Magistrate or the Chief Metropolitan Magistrate, as the case may be, is empowered to pass orders, after considering the parameters, set out in the said section. Statutory authority cannot be restrained from discharging his duties and functions by issuance of a writ of prohibition. In the case on hand, statute empowers the District Magistrate cum District Collector, to pass orders on the application filed under Section 14 of the SARFAESI Act, 2002. He cannot be said to have acted without jurisdiction. Action of the District Magistrate cum District Collector cannot be said to be in excess of jurisdiction. Adhering to the principles of natural justice, the District Magistrate Cum District Collector, has issued notice to the petitioner and others. There is no violation to fundamental right. Request of the petitioner to issue a writ of Prohibition does not satisfy the parameters - Prayer sought for, in the instant writ petition W.P.No.31563 of 2017 to prohibit a statutory authority from discharging his duties under Section 14 of the SARFAESI Act, cannot be granted. Petition dismissed. Issues Involved:1. Jurisdiction of District Collector-cum-District Magistrate under Section 14 of the SARFAESI Act, 2002.2. Validity of the transfer of property and creation of security interest.3. Issuance of writ of prohibition against statutory authority.Detailed Analysis:1. Jurisdiction of District Collector-cum-District Magistrate under Section 14 of the SARFAESI Act, 2002:The petitioner sought a writ of prohibition to prevent the District Collector-cum-District Magistrate, Coimbatore, from proceeding with the enquiry notice issued under Section 14 of the SARFAESI Act, 2002. The court observed that the District Magistrate is empowered to pass orders on the application filed under Section 14 of the SARFAESI Act, 2002. The court emphasized that the District Magistrate had jurisdiction to act on the application and that his actions were not in excess of jurisdiction. The court also noted that the District Magistrate adhered to the principles of natural justice by issuing notices to the concerned parties, including the petitioner.2. Validity of the Transfer of Property and Creation of Security Interest:The petitioner argued that the property in question could not be transferred under Section 6 of the Transfer of Property Act, 1882, as the petitioner was only entitled to enjoy the property for her lifetime, and the absolute beneficiaries were her daughter-in-law and grandson. The court referred to Sections 2(zc), 2(zd), and 2(ze) of the SARFAESI Act, 2002, which define 'secured asset,' 'secured creditor,' and 'secured debt,' respectively. The court concluded that the property mortgaged to Vijaya Bank did create a security interest, and the bank was justified in proceeding under the SARFAESI Act, 2002. The court dismissed the petitioner's contention that there was no transfer of property and that the bank should have filed a suit for recovery instead.3. Issuance of Writ of Prohibition Against Statutory Authority:The court examined whether a writ of prohibition could be issued to restrain the District Magistrate from acting under Section 14 of the SARFAESI Act, 2002. The court cited several precedents, including Smt. Ujjam Bai v. State of Uttar Pradesh, S. Govinda Menon v. Union of India, and Union of India v. Upendra Singh, which outline the conditions under which a writ of prohibition can be issued. The court held that a writ of prohibition is issued only in cases of patent lack of jurisdiction, violation of rules of natural justice, or actions under an unconstitutional law. Since the District Magistrate had jurisdiction and adhered to natural justice principles, the court found no grounds to issue a writ of prohibition.Conclusion:The court dismissed the writ petition, stating that the District Magistrate had jurisdiction under Section 14 of the SARFAESI Act, 2002, and that the property in question did create a security interest. The court also emphasized that the petitioner could not challenge the statutory authority's actions under the SARFAESI Act, 2002, through a writ of prohibition. The court concluded that there were no merits in the writ petition warranting interference and dismissed it, along with the connected writ miscellaneous petitions.