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2019 (9) TMI 1020

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....sing out of SLP (Crl.) No(s) 8871 of 2019) (Arising out of Diary No(s).15465 of 2019) Criminal Appeal No(s) 1471 of 2019 (Arising out of SLP (Crl.) No(s) 8872 of 2019) (Arising out of Diary No(s).15467 of 2019) Criminal Appeal No(s).900 of 2019 Criminal Appeal No(s) 1472 of 2019 (Arising out of SLP (Crl.) No(s).5058 of 2019) Criminal Appeal No(s) 1473 of 2019 (Arising out of SLP (Crl.) No(s).5368 of 2019) Criminal Appeal No(s) 1475 of 2019 (Arising out of SLP (Crl.) No(s).5268 of 2019) Criminal Appeal No(s).945 of 2019 Civil Appeal No(s) 75607561 of 2019 (Arising out of SLP (C) No(s).1372213723 of 2019) Criminal Appeal No(s) 1476 of 2019 (Arising out of SLP (Crl.) No(s).5346 of 2019) Criminal Appeal No(s) 1477 of 2019 (Arising out of SLP (Crl.) No(s).5351 of 2019) A. M. Khanwilkar And Dinesh Maheshwari, JJ. JUDGMENT A.M. Khanwilkar, J. Delay condoned. Leave granted in Special Leave Petitions. 2. The seminal question involved in these appeals is: whether the Chief Judicial Magistrate (for short, "CJM") is competent to process the request of the secured creditor to take possession of the secured asset under Section 14 of the Securitisation and Reconstruction of Financi....

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....) BOM LR 2880 (decided on 22.04.2008), had taken a diametrically opposite view. It had held that it is not open to substitute the word, "CMM" for "CJM". For, there is no indication in the 2002 Act that the legislature had intended to empower the CJM outside the metropolitan areas, although the judicial officer (CMM) was entrusted with the power to deal with such request in the metropolitan areas. Again in Arjun Urban Cooperative Bank Ltd., Solapur Vs. Chief Judicial Magistrate, Solapur and Ors. 2009 (5) Mh. L.J. 380, another Division Bench of the High Court of Bombay opined that Section 14 of the 2002 Act, in no univocal terms, constricts the exercise of powers only by the CMM or DM, as the case may be. 6. However, in 2013, the High Court of Karnataka in Kaveri Marketing Vs. The Saraswathi Coop. Bank Ltd. 111 (2013) BC 582 took the same view as taken by the High Court of Kerala that the CJM can also exercise powers under Section 14 of the 2002 Act. But the Single Judge of the High Court of Calcutta in Dinesh Kumar Agarwal Vs. State of West Bengal 2013 (1) CHN 671 and the full bench of Madras High Court in K. Arockiyaraj Vs. The Chief Judicial Magistrate, Srivilliputhur Virudhuna....

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....y CMM and DM for the concerned area. 9. If so, contends the learned counsel, it is not open for the Court to take recourse of interpretative process to include another authority such as CJM merely because the functions discharged by the CJM and CMM under the Cr.P.C. and other laws are similar. There is no room for invoking the doctrine of Casus Omissus in light of the unambiguous provision in the form of Section 14 of the 2002 Act. Thus, the similarity of functions discharged by the CMM and CJM under the Cr.P.C. would be of no avail. Rather, the Court must follow the maxim "cum inverbis nulla ambiguitas est, non debet admitti voluntatis quaestio" and prefer the plain language of the statute. To demonstrate the distinction between the hierarchy of the judicial officers, reliance has been placed on a chart which clearly distinguishes them on the basis of their functions as non Judicial Magistrate and Judicial Magistrate in the concerned area. The office of DM essentially discharges executive functions and comes within the non Judicial Magistrate category. On the other hand, the office of CMM or CJM would involve both executive and judicial functions. This distinction is crucial an....

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....s under Section 14 of the 2002 Act can be invoked by the secured creditor only for taking possession of the secured assets. The application is required to be filed by the secured creditor supported by an affidavit stating due compliances of the stipulations provided therefor. The inquiry envisaged under Section 14 of the 2002 Act, to be undertaken by the CMM or DM, is minimal and basic in nature. It is only to satisfy itself about the factual position stated by the secured creditor in the concerned application including the appended affidavit filed therewith. It is not an adjudicatory process muchless to decide about the rights and liabilities of the contesting parties. The nature of inquiry is essentially one of exercise of administrative or executive powers. SubSection (1A) enables the DM or CMM to authorise any officer subordinate to him to take possession. 13. The CMM and CJM are clothed with powers as per the scheme of Cr.P.C.. The office of CMM and CJM are interchangeable and they discharge similar functions in their respective jurisdictions namely, metropolitan and nonmetropolitan areas, as the case may be. The recent enunciation of this Court expounds that the inquiry re....

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....CC 705 and Vinay Tyagi Vs. Irshad Ali Alias Deepak and Others (2013) 5 SCC 762, to buttress the submission that Section 14 of the 2002 Act must receive a construction which would advance the cause of justice and legislative object sought to be achieved. A purposive interpretation of Section 14 as including the office of CJM in a nonmetropolitan area would further the legislative intent as it would enable the secured creditor to approach the CJM to take possession of the secured assets thereat. 16. It is urged that the borrowers or the persons claiming through borrowers, cannot be heard to make any grievance, if the application filed under Section 14 is dealt with by a judicial mind; and moreso because the nature of inquiry to be undertaken is circumscribed. In that, it is merely verification of compliances by the secured creditor. In any case, the aggrieved borrower has a statutory remedy of appeal against the order passed by the CJM as would be available against the order passed by CMM/DM. Similarly, all contentious issues available to the borrowers or the persons claiming through them could be raised by them even before the CJM, who would be equally competent to deal with the ....

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....any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him- (a) take possession of such asset and documents relating thereto; and (b) forward such assets and documents to the secured creditor: 1[Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that- (i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application; (ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisti....

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....rate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him, (i) to take possession of such assets and documents relating thereto; and (ii) to forward such assets and documents to the secured creditor.] (2) For the purpose of securing compliance with the provisions of subsection (1), the Chief Metropolitan Magistrate of the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. (3) No act of the Chief Metropolitan Magistrate or the District Magistrate 6[any officer authorised by the Chief Metropolitan Magistrate or District Magistrate] done in pursuance of this section shall be called in question in any court or before any authority. 1. Ins. By Act 1 of 2013, sec. 6(a) (w.e.f. 1512013, vide S.O. 171 (E), dated 1512013). 2. Subs. By Act 44 of 2016, sec. 12(i) (w.e.f. 192016, vide S.O. 2831(E), dated 1st September, 2016). 3. Ins. By Act 44 of 2016, sec. 12(ii) (w.e.f. 192016, vide S.O. 2831(E), dated 1st September, 2016). 4. Corrected by Corrigendum Notification, published in the Gazette of India, Extr....

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....icatory power vested in the authority referred to in Section 14 of the 2002 Act, it had no powers to exercise the powers vested in the Tribunal. Whereas, it can only facilitate the secured creditor in taking possession of the secured assets after verification of the basic facts regarding the entitlement of the secured creditor to get such possession. The Court then adverted to the exposition of this Court in Transcore Vs. Union of India and Another (2008) 1 SCC 125(paragraph No.74), which had analysed the provisions of the 2002 Act. It then adverted to the Gujarat High Court decision in Bank of India Vs. Pankaj Dilipbhai Hemnani and Others AIR 2007 Guj. 201 and agreed with the dictum therein that the authority referred to under Section 14 of the 2002 Act can only verify whether 60 days' notice as prescribed under Section 13(2) was issued or not and whether secured asset is identifiable. It then noted that after such inquiry the authority before taking action is obliged to satisfy itself in that regard. At the same time, it cannot enter upon adjudication or trial of a dispute while exercising power under Section 14 of the 2002 Act. The Parliament has invested power under Section 14 ....

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....asus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself...". Lastly, the Court adverted to the decision in National Insurance Co. Ltd. Vs. Laxmi Narain Dhut 2007 (2) KLT 470 (SC) (paragraph Nos.34 and 35) which had considered the dictum in Reserve Bank of India and Others Vs. Peerless General Finance and Investment Company Ltd. and Another (1996) 1 SCC 642; and Kehar Singh and Others Vs. State (Delhi Admn.) (1988) 3 SCC 609 to hold that if the statutory provision is open to more than one interpretation, then the Court must adopt the one which represents the true intent of the legislature. However, the function of the Court is only to expound and not to legislate. At the same time, the process of construction combines both literal and purposive approaches. Finally, the Court went on to observe that in the present case there was no casus omissus. In that, CJM in metropolitan areas are designated as CMM and vice versa mutatismutandis by implication and reference by the areas of jurisdiction both stand on the same footing to denote the authority depending upon where he is situated. On t....

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....ovisions of 2002 Act and the provisions of the Code cannot be excluded from consideration while dealing with the 2002 Act. It disagreed with the Full Bench of the Madras High Court that Section 35 of the 2002 Act would override the provisions of Cr.P.C.. After analysing the other decisions, it went on to hold that in terms of Section 14 of the 2002 Act, the CJM can authorise any officer subordinate to him to take possession of such assets after examining the correctness of the assertion made in the affidavit. Thus, it is only a procedural step without any adjudication of any dispute whatsoever. The action is therefore, only an administrative order made for taking possession of the secured assets, if all other conditions are fulfilled. Having already noted that the powers exercised by the CMM and DM in terms of Section 14 of the 2002 Act are synonymous to each other and that they are not adjudicatory in nature, it answered the question under consideration in the affirmative. The Court then noted that there was no casus omissus nor it was reading something into the provision which the legislature never intended nor trying to interpret the provision so as to defeat the intention of th....

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....sive interpretation to advance the true intention of the legislature for enacting the Act, viz. speedy recovery of bad debts of the banks and financial institutions declared as NPAs. On the contrary, adopting the principles of literal construction in interpretation of the word 'Chief Metropolitan Magistrate' would not only defeat the object and purpose of legislation but would lead to manifestly anomalous result which could not have been intended by the legislature. As per Lord Reid in the case of Luke Vs. IRC, 1966 AC 557, where to apply words would literally defeat the obvious intention of the legislation and produce a wholly unreasonable result, we must do some violence to the words and so achieve that obvious intention and produce a rational construction. 35. The view taken by us finds support from the Full Bench decision of Andhra Pradesh High Court in the case of T.R. Jewellery & Ors. Vs. State Bank of India & Ors. (supra) and a Division Bench of High Court of Kerala in the case of Muhammed Ashraf, C. Arifa Vs. Union of India, we are unable to agree with contrary view taken by Bombay High Court in the case of Indusind Bank Ltd. Vs. State of Maharashtra and Hi....

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....r Section 14 of Act, 2002." 25. We shall now turn to the other decisions taking the view that only DM in a nonmetropolitan area is competent to deal with the application filed by the secured creditor under Section 14 of the 2002 Act. The Division Bench of the High Court of Bombay in IndusInd Bank Ltd. (supra) after adverting to the statement of objects and reasons of the 2002 Act, opined that the secured creditor is not required to obtain a decree from a competent Court/DRT before being entitled to take steps for the purpose of enforcement of recovery in relation to the secured assets. While dealing with the specific issue as to whether, the CJM is competent to deal with the application filed by the secured creditor under Section 14 of the 2002 Act, the Court went by the plain text of Section 14 of the 2002 Act to hold that the CJM was not competent to do so; and that only the CMM in metropolitan areas and DM in nonmetropolitan areas is competent to assist the secured creditor in taking possession of the secured assets, in terms of the 2002 Act. It noted that the reference to expression CJM is conspicuously absent in Section 14 of the 2002 Act and, therefore, the legislature did....

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....g possession of the secured assets. 27. The Single Judge of High Court of Calcutta in Dinesh Kumar Agarwal (supra), while dealing with the question under consideration relied on his previous decision in Ronit Nirman Pvt. Ltd. Vs. State Bank of India and Others A.S.T. 1337 of 2011 (dated 18th October, 2011), wherein he had agreed with the principle expounded by the High Court of Bombay in IndusInd Bank Ltd. (supra). The Court opined that once an authority has been named for the purpose of rendering assistance, the Court cannot confer jurisdiction on any other authority, who has not been named in the statutory provision for exercising such powers. That would amount to usurping legislative function. It, thus, disagreed with the view taken by the High Court of Kerala, which had held to the contrary that the CJM is equally competent to entertain application filed by the secured creditor under Section 14 of the 2002 Act. This decision of the Single Judge was carried in appeal before the Division Bench in Andhra Bank (supra), which in turn upheld the view taken by the Single Judge that only CMM in metropolitan areas and DM in nonmetropolitan areas were competent to deal with the applic....

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....erned parties. It then noted Section 34 and 35 of the 2002 Act and went on to observe as follows: "20. From the perusal of the above Section 35, it is evident that the provisions of SARFAESI Act, 2002, shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Thus, the SARFAESI Act will override other laws including the provisions of Crl. P.C. Section 36 of the Act deals with limitation. The limitation question can be raised after passing an order under Section 13(4), if the claim in respect of the financial asset is not made within the period of limitation prescribed under the Limitation Act. Thus, the applicability of Limitation Act, 1963, is permitted under Section 36, however, as per Section 35, the application of Crl. P.C. is not permitted." In this backdrop the Full Bench examined the decision of the Division Bench of the same High Court in Indian Overseas Bank Vs. Sree Aravindh Steels Ltd. 2009 (1) CTC 341, which had relied on Sections 3, 5 and 8 of the Cr.P.C. concerning the jurisdictions of CJM, CMM and Additional Chief Metropolitan Magistrate. It then noticed Section 20 of the Cr.P.C. relating....

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....ed with the decisions of the High Court of Bombay in IndusInd Bank Ltd. (supra), Arjun Urban Cooperative Bank Ltd. (supra). It also relied on the decision of the High Court of Calcutta, which took similar view as commended to the Full Bench. The Full Bench then noted the decisions of this Court in Official Liquidator Uttar Pradesh and Uttarakhand Vs. Allahabad Bank and Others (2013) 4 SCC 381, Sri Nasiruddin (supra), Bhudan Singh and Another (supra), K.P. Varghese (supra), Atma Ram Mittal (supra), Indian Administrative Service (S.C.S.) Association, U.P. and Others Vs. Union of India (1993) Supp. 1 SCC 730, Nasiruddin and Others Vs. Sita Ram Agarwal (2003) 2 SCC 577, High Court of Gujarat and Another Vs. Gujarat Kishan Mazdoor Panchayat and Others (2003) 4 SCC 712, Prakash Kumar Alias Prakash Bhutto Vs. State of Gujarat (2005) 2 SCC 409 and New India Assurance Company Ltd. Vs. Nusli Neville Wadia and Another (2008) 3 SCC 279 and also the dictum in Seaford Court Estates Ltd. (supra), to conclude as follows: "35. From the perusal of the above judgments as well as the statutory provisions contained in Section 14 of the SARFAESI Act, 2002, in its independent existence, we are o....

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....mil Nadu MANU/SC/0020/2004 : (2004) 3 SCC 1, Union of India Vs Pramod Gupta MANU/SC/0549/2005 : (2005) 12 SCC 1, National Institute of Technology Vs Niraj Kumar Singh MANU/SC/0687/2007 : (2007) 2 SCC 481, Hasham Abbas Sayyad Vs Usman Abbas Sayyad MANU/SC/5541/2006 : (2007) 2 SCC 355, Deepak Agro Foods Vs State of Rajasthan MANU/SC/7812/2008 : (2008) 7 SCC 748, Chandrabhai K. Bhoir Vs Krishna Arjun Bhoir MANU/SC/8230/2008 : (2009) 2 SCC 315 and Union of India Vs Association of Unified Telecom Service Providers of India MANU/SC/1252/2011 : (2011) 10 SCC 543. 17. Resultantly, we set aside the impugned order dated 23.07.2012 passed by the CJM, reserving liberty to the respondent bank to take recourse to the appropriate jurisdictional forum under the provisions of law." 30. The Single Judge of the Madras High Court in Shyam Sunder Rohra (supra), adopted the view taken by the Full Bench of High Court of Madras in K. Arockiyaraj (supra) and concluded that Section 14 of the 2002 Act does not permit secured creditors to approach the CJM for assistance to secure their assets but they must approach only CMM in Metropolitan area and DM in nonmetropolitan area. 31. Going by the l....

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.... a nonjudicial process. The inquiry does not result in adjudication of inter se rights of the parties in respect of the subject property or of the fact that the transaction is a fraudulent one or otherwise. 34. Notably, the powers and functions of the CMM and the CJM are equivalent and similar, in relation to matters specified in the Cr.P.C.. These expressions (CMM and CJM) are interchangeable and synonymous to each other. Moreover, Section 14 of the 2002 Act does not explicitly exclude the CJM from dealing with the request of the secured creditor made thereunder. The power to be exercised under Section 14 of the 2002 Act by the concerned authority is, by its very nature, nonjudicial or State's coercive power. Furthermore, the borrower or the persons claiming through borrower or for that matter likely to be affected by the proposed action being in possession of the subject property, have statutory remedy under Section 17 of the 2002 Act and/or judicial review under Article 226 of the Constitution of India. In that sense, no prejudice is likely to be caused to the borrower/lessee; nor is it possible to suggest that they are rendered remediless in law. At the same time, the secure....

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....st proviso therein, the designated authority has to satisfy itself only with regard to the matters mentioned in clauses (i) to (ix). In paragraph 25 of this decision, the Court noted as follows: "25. The satisfaction of the Magistrate contemplated under the second proviso to Section 14(1) necessarily requires the Magistrate to examine the factual correctness of the assertions made in such an affidavit but not the legal niceties of the transaction. It is only after recording of his satisfaction the Magistrate can pass appropriate orders regarding taking of possession of the secured asset." The Court then went on to observe in paragraph Nos.33 and 36 of the reported judgment as follows: "33. We are of the opinion that the High Court clearly erred in recording such a conclusion. The language of Rule 8 does not demand such a construction. On the other hand, a Magistrate whose functioning is structured by the Code of Criminal Procedure is required to act in accordance with the provisions of the said Code unless expressly ordained otherwise by any other law. It is not a case that Cr.P.C. never prescribed for the procedure to be followed by the Magistrate in a case wh....

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.... and documents and forward them to the secured creditor as under clause 36.2.(ii) above. 36.4. In any of the three situations above, after the possession is handed over to the secured creditor, the subsequent specified provisions of Rule 8 concerning the preservation, valuation and sale of the secured assets, and other subsequent rules from the Security Interest (Enforcement) Rules, 2002, shall apply." 37. Concededly, the Court was not called upon to consider the specific issue that arises for our consideration, in this batch of cases. To wit, whether the CJM is competent to deal with the request made by the secured creditor under Section 14 of the 2002 Act in the same manner as can be done by the CMM in metropolitan areas and DM in nonmetropolitan areas. Nevertheless, what is significant to note is that this decision clearly delineates the nature of inquiry required to be conducted by the authority referred to in the Section 14 of the 2002 Act. By its very nature the inquiry, is an administrative or executive measure and to borrow the phrase used in the said judgment, "State's coercive power" for obtaining possession of the secured assets. It is possible to su....

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.... by the Chief Metropolitan Magistrates under the provisions of the Code of Criminal Procedure are required to be heard by the Additional Sessions Judge or the Sessions Judge. If both the Additional Sessions Judge and the Chief Metropolitan Magistrate belong to the same cadre, it will be paradoxical that any appeal from one officer in the cadre should go to another officer in the same cadre. If they belong to the same cadre, as recommended by the Shetty Commission, then it would be possible that the junior officer would be acting as an Additional Sessions Judge while a senior may be holding the post of the Chief Metropolitan Magistrate. It cannot be that against the orders passed by the senior officer it is the junior officer who hears the appeal. There is no reason given by the Shetty Commission as to why the post of the Chief Metropolitan Magistrate be manned by the District Judge, especially when as far as the posts of the Chief Judicial Magistrates are concerned, whose duties are on a par with those of the Chief Metropolitan Magistrate, the Shetty Commission has recommended, and in our opinion rightly, that they should be filled from amongst Civil Judges (Senior Division). Consi....

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....ly indicates that the provisions of the Act will override any other law for the time being in force. The question is: does the provisions of 2002 Act override the provisions of the Cr. P.C., whereunder the functions to be discharged by the CMM are similar to that of the CJM. Further, the expressions "CMM and CJM" are used interchangeably in Cr.P.C. and are considered as synonymous to each other. Section 14, even if read literally, in no manner denotes that allocation of jurisdictions and powers to CMM and CJM under the Code of Criminal Procedure are modified by the 2002 Act. Thus understood, Section 14 of the 2002 Act, stricto sensu, cannot be construed as being inconsistent with the provisions of the Code of Criminal Procedure or vice-versa in that regard. If so, the stipulation in Section 35 of the 2002 Act will have no impact on the expansive construction of Section 14 of the 2002 Act. Whereas, there is force in the submission canvassed by the secured creditors (Banks), that Section 37 of the 2002 Act answers the issue under consideration. The same reads thus: "37 Application of other laws not barred. The provisions of this Act or the rules made thereunder shall be in a....

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....ion 17 of the Bombay General Clauses Act, 1886, which is pari materia to Section 17 of the General Clauses Act, 1897. The Court opined that though Section 6 of the Gambling Act specified the office of Commissioner of Police as the authorised officer, however, considering the sweep of Section 2(6) of the Bombay Police Act, 1951, which mentions that the term "Commissioner of Police" would include an Assistant Commissioner, went on to hold that the search warrant issued by the Assistant Commissioner was valid. The Court, while dealing with the said challenge observed as follows: "8. Analysing this definition it would appear that any official title of the officer mentioned in any Act made after the General Clauses Act would deem by fiction of law to include any such official title referred to in any Act passed after the General Clauses Act. 9. Furthermore, not only the official title but even the functions executed by the said officer would also be deemed to have been exercised by the officer designated in the subsequent Act. The combined effect, therefore, of Section 6 of the Gambling Act and Section 17(1) of the General Clauses Act would be that the term "Commission....

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....n force in accordance with the general or special orders of the State Government made in this behalf." 10. The High Court has found as a fact that there was a notification by the State Government dated March 10, 1967 by which all the Assistant Commissioners of Police including that of Nagpur were conferred powers and functions of the Commissioner of Police. Thus, in the instant case at the time when the offence was committed two things had happened: (1) that in Nagpur where the offence had taken place there was a Commissioner of Police, and (2) that the Commissioner of Police had been conferred the power by the Government notification to assign his functions, powers and duties to the Assistant Commissioner. In these circumstances, therefore, we do not find any difficulty in accepting the contention of the respondent that having regard to the combined reading of the provisions of Section 17 of the General Clauses Act and the Police Act the term "Commissioner of Police" appearing in Section 6 of the Gambling Act would include even an Assistant Commissioner who was legally and validly assigned the powers, functions and duties of the Commissioner of Police by the State Governm....

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....overnment Order APO3463C2896( III)( E)V, dated March 10, 1967, which empowered all Commissioners of Police to assign to the Assistant Commissioners of Police working under them any of their powers, duties and functions not only under the provisions of the Bombay Police Act, 1951, but also under any other law for the time being in force. The existence of such an order has not in fact been challenged before us. The Assistant Commissioner of Police was therefore the functionary who could, by virtue of Section 17 of the Bombay General Clauses Act, discharge the functions of the Commissioner of Police under Section 6(1) of the Act in the matter of issuing a special warrant like the one issued in the present case. It is also not disputed that the Commissioner of Police issued Order 2036, dated September 19, 1967, authorising all Assistant Commissioners of Police working under him to issue search warrants under Section 6 of the Act to any Police Officer working under them not below the rank of a SubInspector of Police. As has been shown, this was legally permissible, and it is futile to contend that the High Court erred in rejecting the appellant's contention to the contrary. 46. Apply....