AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2008 (8) TMI 943
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....sation Act'). In some of the writ petitions, constitutional validity of section 14 of the Securitisation Act was also challenged, but, no arguments were raised regarding the same. In two writ petitions, it was also contended that Chief Judicial Magistrate, even if has jurisdiction, cannot depute a Commissioner for taking possession of the secured assets. We note that the Hon'ble Supreme Court has in Mardia Chemicals Ltd. etc. v. Union of India and others (AIR 2004 SC 237) upheld the validity of the provisions of the Securitisation Act except sub section 2 of section 17 which was declared ultra vires Article 14 of the Constitution of India. The said sub-section originally provided deposit of seventy five per W.A.428/2008 & connected cases 2 cent of the amount claimed before entertaining an appeal before the Debts Recovery Tribunal under section 17 of the Securitisation Act. Thereafter, the Act was amended by Amendment Act 30 of 2004 and requirement of deposit of 75% of the amount claimed was deleted. In view of the above, it is not possible for the petitioners to challenge the constitutional validity of the section. Before answering the question whether Chief Judicial Magist....
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.... consider whether secured property is identifiable and whether 60 days' notice was issued under section 13(2) as secured creditor can resort to section 13(4) and take possession of the secured assets only after issuing notice. In this connection, we refer to section 13 of the Securitisation Act which reads as follows: "13. Enforcement of security interest.- (1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. (2) Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercis....
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....ion 17 of the Act to approach the Debt Recovery Tribunal. The above noted provisions are for the purposes of giving some reasonable protection to the borrower. Viewing the matter in the above perspective, we find what emerges from different provisions of the Act, is as follows:- 1. Under sub-section (2) of Section 13 it is incumbent upon the secured creditor to serve 60 days notice before proceeding to take any of the measures as provided under sub-section (4) of Section 13 of the Act. After service of notice, if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower. In connection with this conclusion we have already held a discussion in the earlier part of the judgment. The reasons so communicated shall only be for the purposes of the information/knowledge of the borrower without giving rise to any right to approach the Debt Recovery Tribunal under Section 17 of the Act, at that stage. 2. As already discussed earlier, on measures having been taken under....
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....ction 13 taken by the secured creditor or his authorised officer under this Chapter, (may make an application along with such fee, as may be prescribed) to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken: (Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.) (Explanation.- For the removal of doubts it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of section 17.) (2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder. (3) If, the Debts Recovery Tribunal, after examining the facts and....
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....ation Act, jurisdiction of Civil Courts to entertain any suit or proceeding is barred. Therefore, aggrieved person has to approach the Tribunal or Appellate Tribunal, as the case may be, under sections 17 and 18 and if possession is taken under section 14, other authorities are prohibited from dealing with the subject matter which can be exclusively determined by the Tribunal. Hence, the authority who is called upon to act under section 14 of the Securitisation Act can only assist the secured creditor in taking possession of the secured assets. The disputes raised between the parties before the authority cannot be adjudicated by it, but, the authority can relegate the aggrieved person to seek statutory remedy under the Securitisation Act after taking possession and handing over to the secured creditor. It is for the borrower to move for stay of the sale or confirmation of sale of the property put in possession of the secured creditor. Possession handed over may be symbolic or physical. If physical possession is handed over, the creditor is entitled to put back the borrower in possession if borrower wins before the Tribunal. Before the secured creditor approaching the Magistrate und....
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....n that any of the measures under Section 13(4) taken by the secured creditor are not in accordance with the provisions of the Act, it may by order declare that the recourse taken to any one or more measures is invalid, and consequently, restore possession to the borrower and can also restore management of the business of the borrower. Therefore, the scheme of Section 13(4) read with Section 17(3) shows that if the borrower is dispossessed, not in accordance with the provisions of the Act, then the DRT is entitled to put the clock back by restoring the status quo ante. Therefore, it cannot be said that if possession is taken before confirmation of sale, the rights of the borrower to get the dispute adjudicated upon is defeated by the authorised officer taking possession. As stated above, the NPA Act provides for recovery of possession by non-adjudicatory process, therefore, to say that the rights of the borrower would be defeated without adjudication would be erroneous. Rule 8, undoubtedly, refers to sale of immovable secured asset. However, Rule 8(4) indicates that where possession is taken by the authorised officer before issuance of sale certificate under Rule 9, the authorised o....
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....whether 60 days' notice as prescribed under section 13(2) was issued or not and whether secured asset is identifiable. A similar view was expressed by Gujarat High Court in Bank of India v. Pankaj Dilipbhai Hemnani & others (AIR 2007 Gujarat 201). But, even as an executing or administering authority, before taking action, he must himself be satisfied that notice under section 13(2) was issued and the property to be proceeded is the secured property. Even though there is no scope of adjudication or trial of a dispute under section 14, the Chief Metropolitan Magistrate or District Magistrate is not like an Amin of the court executing a court order. The fact that authority is entrusted with a senior functionary shows that Magistrate must satisfy himself that petition is maintainable. Arbitrary and high handed action at the instance of secured creditor also has to be avoided as taking possession of the property may some times affect substantial rights which may not always be curable by subsequent restoration of possession. If the application is in order, the Magistrate has no option but to take possession of the secured property. 4. The contention raised by the petitioners is that....
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.... also permits that executive powers can be exercised by an Executive Magistrate. Adjudication like sifting of evidence, trial etc. shall be exercisable by a Judicial Magistrate. Contention of the petitioners is that since a trial is not contemplated in a proceeding under section 14, the power under that section can be exercised by an Executive Magistrate. Learned single Judge held that power of Chief Judicial Magistrates in non-metropolitan areas and Chief Metropolitan Magistrates in metropolitan areas are equal and those terms are used only to indicate the same meaning. But, according to the petitioners, even though it is mentioned in the Cr. P.C. that Chief Judicial Magistrate, wherever mentioned in the Code with respect to metropolitan areas will be the Chief Metropolitan Magistrate, the converse is not mentioned and, therefore, as Chief Metropolitan Magistrate is referred to in the section, it will not include Chief Judicial Magistrate in non- metropolitan areas. In other words, only Chief Metropolitan Magistrates in metropolitan areas, apart from the District Magistrates, are the empowered authorities under section 14 of the Securitisation Act. Therefore, in non-metropolitan a....
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....very of dues under the RDBI Act or under the Financial Corporation Act, but, not under the U.P. Act, 1972 as it was not enacted in addition to the U.P. Act, 1972. Here, the position is entirely different. The question is whether the term "Chief Metropolitan Magistrate" in metropolitan areas will include Chief Judicial Magistrate in non-metropolitan areas. We are of the view that legislation has to be understood in a reasonable manner. In the context of the definition in the Cr. P.C., it can be gathered that a Chief Judicial Magistrate in non-metropolitan area and Chief Metropolitan Magistrate in metropolitan area are used in legal parlance similarly. As held in Holmes v. Bradfield Rural District Council (1949(1) All ER 381 (page 384) and Nasiruddin v. State Transport Appellate Tribunal (AIR 1976 SC 331 (page 338)) this court has to adopt ` just reasonable and sensible' interpretation. In this connection, we refer to the following observations of the Denning, L.J. in Seaford Court Estates Ltd. v. Asher (1949) 2 All ER 155, p.164(CA)): "When a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the....
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....as the words used may not be scientific symbols having any precise or definite meaning and the language may be an imperfect medium to convey one's thought or that the assembly of Legislatures consisting of persons of various shades of opinion purport to convey a meaning which may be obscure. It is impossible even for the most imaginative Legislature to foresee all situations exhaustively and circumstances that may emerge after enacting a statute where its application may be called for. Nonetheless, the function of the Courts is only to expound and not to legislate. Legislation in a modern State is actuated with some policy to curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the Legislature based on information derived from past and present experience. It may also be designed by use of general words to cover similar problems arising in future. But, from the very nature of things, it is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite referents are bound to be in many c....
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....hat a Commissioner cannot be appointed by the Chief Judicial Magistrate as part of giving assistance in taking possession of the secured assets while rendering assistance to the secured creditor to get possession of the secured assets, we are of the view that it is not necessary that the District Magistrate or the Chief Judicial Magistrate should go personally and take possession. Section 14(2) of the Securitisation Act provides that the Magistrate can order even police assistance and use all necessary powers in taking possession of the secured assets. In Sakiri Vasu v. State of Uttar Pradesh and others ((2008) 2 SCC 409, 2008(1) ILR Kerala 813) the Hon'ble Supreme Court held as follows: "18. It is well settled that when a power is given to a authority to do something it includes such incidental or implied powers which would ensure the proper doing of that thing. In other words, when any power is expressly granted by the stature, there is impliedly included in the grant, even without special mention, every power and every control the denial of which would render the grant itself ineffective. Thus where an Act confers jurisdiction it impliedly also grants the power of doing al....