TaxTMI 
TaxTMI 
2019 (7) TMI 1540
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....e order before this Court or orders were not passed within the said time limit and the secured creditor concerned approached this Court for expeditious disposal of such applications. The said outer limit of 60 days comprising an initial period of 30 days and an extended period of a further 30 days was stipulated by an amendment effected through Act 44 of 2016 which came into force on 01.09.2016 and it is the admitted position that the said amendment applies in all these Writ Petitions. Therefore, the primary question that arises for consideration, in these Writ Petitions, is whether the said time limit is mandatory and, if so, whether the District Collector/District Collector is divested of jurisdiction to decide the application on expiry of 60 days. In addition, in certain cases, the borrower concerned challenges the order under Section 14 on the basis that the requirements of the amended Section 14 with regard to the filing of an affidavit with the requisite details was not satisfied by the respective secured creditor therein. 3. For the purposes of adjudicating these Writ Petitions, the relevant facts with regard to: the date of filing of the respective application under Sect....
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....tory language, namely, "shall", and negative language thereby emphasising the mandatory character of the relevant amendment. He also referred to Section 14 (3) wherein it is specified that no act of the District Magistrate can be challenged before a court or authority and that, therefore, there is no statutory appeal against an order passed under Section 14. The said amended section 14 reads as under: "14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset- (1) where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured assets 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 the District Magistrate, as the case may be, shall, on such request being mad....
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.... 30 days from the date of application: provided further that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate within the said period of 30 days for reasons beyond his control, he may, after recording reasons in writing for the same, pass the order within such period not exceeding in the aggregate 60 days.(emphasis added). Provided also that the requirement of filing the affidavit stated in the proviso shall not apply to proceedings pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act." 5. He next referred to section 17 and, in particular, to sub-clause 4-A thereof which provides for an appeal by a lessee in respect of orders passed under section 14. In this regard, he pointed out that only a lessee can maintain an appeal under the aforesaid sub-clause. 6. The learned senior counsel, thereafter, referred to and relied upon the following authorities, which are set out below along with a brief description of the proposition laid down therein: (a) Harshad Govardhan Sondagar vs. International Assets Reconstruction Co. Ltd. 2014 (5) CTC 546 (SC) whe....
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....equences that may follow from non-observance thereof. If the context does not show nor demands otherwise, the text of a statutory provision couched in a negative form ordinarily has to be read in the form of command. When the word " shall" is followed by prohibitive or negative words, the legislative intention of making the provision absolute, peremptory and imperative becomes loud and clear and ordinarily has to be inferred as such...." (g) Vijay Narayan Thatte vs. State of Maharashtra (2009) 9 SCC 92 wherein, at paragraph 4, the principle of construction that statutes that are couched in negative language are ordinarily regarded as peremptory and mandatory was referred to and in paragraph 22, the Supreme Court upheld the proposition that when the language of the statute is plain and clear, literal interpretation should be adopted. (h) Lachmi Narain vs. Union of India (1976) 2 SCC 953 wherein, at paragraph 68, the Supreme Court held that the expression "not less than three months notice" in Section 6(2) of the Bengal Sales Tax Act, which deals with the power to amend the schedule of exempted goods, is mandatory and not directory. (i) Balasinor Nagrik Coo....
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....nd 13, the Supreme Court held that the test to ascertain whether a provision is intended to be directory or mandatory is to examine the consequence of non-compliance. If the consequence of non-compliance affects the substantive right of a party, the provision would be construed as mandatory and, if not, it would be construed as directory. (f) the use of negative language raises a rebuttable presumption that the provision in question is mandatory. However, such presumption is certainly not conclusive. 9. Each of the counsel for the banks that are parties to these Writ Petitions, thereafter, made submissions. The said submissions are summarised herein. Mr.Pala Ramasamy, the learned counsel for the respective Banks in W.P. No. 13654 of 2019 and 15507 of 2019, formulated the following propositions for the consideration of the Court: (a) if a provision in a statute prescribes a procedure for performance and employs the word shall, it would not be held as mandatory. (b) whether a statute is directory or mandatory would not depend on the usage of the words "shall" or "may" but would depend on the object and purpose it seeks to achieve. (c) if the sta....
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....he Hon'ble Supreme Court in P.T. Rajan vs. T.P.M. Sahir (2003) 8 SCC 498, wherein, at paragraph 48, it was held, inter alia, as follows: " It is well-settled principle of law that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefor, the same would be directory http://www.judis.nic.in and not mandatory..." He concluded by referring to the judgment of the High Court of Madhya Pradesh (Jabalpur Bench) in Manish Makhija vs. Central Bank of India (2018) 2 DRTC 289, wherein, the time limit in the proviso to Section 14 of the SARFAESI Act was held to be directory. Paragraph 19 of said judgment reads as under: "19. Thus, in the considered opinion of this Court, the aforesaid proviso was not inserted to give the benefit to a borrower or guarantor, who has not paid the debts. In other words, if the Chief Metropolitan Magistrate or District Magistrate failed to pass the order within stipulated time, the legislature never intended to give free hand to the borrower/guarantor. Putting it differently, the intention of law makers while inserting the said proviso was to compel the said Magistrates to pass orders within a st....
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....eem Transport (2007) 137 Company Cases 428 wherein, at paragraph 8, it was held that the District Magistrate exercises ministerial functions under Section 14. He also referred to the judgment in the Manish Makhija Case (cited supra) in order to contend that where the consequences are not specified, the provision is directory and not mandatory. He concluded his submissions by referring to a Division Bench judgment of this Court in S.V.K.Sahasramam vs. Deputy Registrar of Co-operative Societies, Tiruvannamalai Circle (2008) 8 MLJ 231 on section 81 (4) of the T.N. Cooperative Societies Act, which prescribes a time limit that "shall not exceed six months in the aggregate" for completing an inquiry was interpreted as being directory and not mandatory and it was held, in paragraph 12, that "....the members of general public who have been cheated have no control over those who hold the enquiry in respect of the time limit." 13. Mr C. Jawahar Ravindran, learned counsel for the Bank in W.P. No. 13726 of 2019, thereafter, made submissions. Once again, he submitted that orders passed under Section 14 are ministerial and not judicial. He referred to and relied upon the judgment reported in ....
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....he provision should be construed literally. (d) the statistics regarding pendency of Section 14 applications do not constitute a legal argument but could be the basis for seeking legislative reform. (e) the judgments that were relied upon with regard to the directory nature of provisions that deal with the performance of statutory duties or obligations are distinguishable because Section 14, by contrast, deals with the exercise of jurisdiction under a statute and not the mere performance of statutory duties. (f) the decision of the Madhya Pradesh High Court in the Manish Makhija case is not correct because such interpretation is unwarranted when the language of the provision is unambiguous. (g) Section 17 (5) of the SARFAESI Act is different because the word preferably is used in the context of the time limit. (h) the exercise of jurisdiction under Section 14 is not ministerial but quasi-judicial. (i) the judgments relating to the directory nature of provisions in the CPC are distinguishable because the said provisions deal with obligations imposed on the defendant in a litigation and not with the exercise of jurisdiction by a q....
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.... for taking possession. In other words, it is intended to benefit secured creditors who require the assistance of the district magistrate or chief judicial magistrate concerned in order to take possession of secured assets. When the stipulated time limit is examined in the context of the object and purpose of the amendment to Section 14, it is also evident that it is intended to ensure that the district magistrate or chief metropolitan magistrate, as the case may be, disposes of such applications expeditiously so as to ensure that secured creditors are in a position to take possession of secured assets quickly. It is further evident that the amended Section 14 does not stipulate any consequence if the time limit is not observed. More importantly, it is abundantly clear that the said time limits are not intended to be used as a weapon by borrowers or guarantors, or even lessees in mortgaged properties, to defeat or delay attempts by a secured creditor to take physical possession of assets in which it has security interest. 16. As correctly contended by Mr. Pala Ramasamy, provisions that prescribe a time limit for the performance of statutory duties or obligations are largely cons....
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....mpliance so as to determine whether the provision is directory or mandatory. Such object and purpose should be discerned by examining the statute concerned or its statement of objects and purposes, including amending acts where appropriate. (d) The stipulation of consequences in the event of noncompliance of a provision is a relevant factor to be borne in mind while deciding whether the said provision is directory or mandatory and the non-stipulation thereof is indicative, albeit not conclusive, that the provision is directory. (e) Another dimension of the "consequences of non-compliance" test is that provisions that are intended to protect or further substantive rights of a party, including time limits in that regard, are generally construed as mandatory whereas provisions that do not impact the substantive rights of a party are generally construed as directory and not mandatory. (f) provisions that stipulate a time limit for the performance of statutory duties and obligations, including time limits for exercise of jurisdiction under a statute, are generally construed as directory because it is public interest and not the interest of the officer or autho....