TaxTMI 
TaxTMI 
2023 (4) TMI 1364
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....manshu Takke, AGP for Respondent Nos.1 and 2 in OSWPL No.3731/22. Mr. Graham Francis i/b. Samarth Moray for Respondent No.4 in OSWPL No.3731/22 JUDGMENT : (Per Nitin Jamdar, J) Rule. Rule made returnable forthwith. Respondents waive service. Taken up for disposal by consent of parties. 2. These petitions are filed by the secured creditors who had applied under section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Since the applications have not been disposed of, the Petitioners have filed these petitions for directions for early disposal of these Petitions. 3. The Petitioner in Writ Petition No.15285/2022- L & T Finance Limited is a non-banking finance company that has made an application to the Chief Metropolitan Magistrate, Mumbai, on 22 December 2021. Writ Petition Nos. 278 and 279/2023 are filed by the Petitioner- TJSB Sahakari Bank Ltd., and Writ Petition (L) No.3731/2021 is filed by the Petitioner- The National Co-operative Bank Ltd., the secured creditors since their applications filed under section 14 of the SARFAESI Act are still pending. In Writ Petition (L) No.3731/2021, the a....
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.... and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of non-performing assets of banks and financial institutions. Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These Committees, inter alia, have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the court. Acting on these suggestions, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 was promulgated on 21-6-2002 to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. The provisions of the Ordinance would enable banks and financial institutions to realise long-term assets, manage problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of....
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....ent of the defaulted financial assistance has been served on the borrower; (vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower; (viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of sub-section (4) of section 13 read with section 14 of the principal Act; (ix) that the provisions of this Act and the rules made thereunder had been complied with: Provided further that on receipt of the 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 thirty days from the date of application: Provided also that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate wi....
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....o in the proviso in Section 14(1) of the 2002 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. The latter is a ministerial act. It cannot brook delay. Time is of the essence. This is the spirit of the special enactment. However, it is common knowledge that the CMM/ DM are provided with limited resources. That inevitably makes it difficult, if not impossible, for the CMM/DM to fulfil his/her obligations with utmost dispatch to uphold the spirit of the special legislation. (emphasis supplied) This decision was followed in the case of R.D. Jain & Co. v. Capital First Ltd. (2023) 1 SCC 675, wherein the Supreme Court laid down as follows. "20. After taking over possession of the secured assets, further steps to lease, assign or sell the same could also be taken by the secured creditor. However, Section 14 of the Sarfaesi Act predicates that if the secured creditor intends to take possession of the secured assets, it must approach the CMM/DM by way of an application in writing, and on receipt of such request, the CMM/DM must move....
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....ecured 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.: 24. 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. 25. As observed and held by this Court in NKGSB Coop. Bank [NKGSB Coop. Bank Ltd. v. Subir Chakravarty, (2022) 10 SCC 286 : (2023) 1 SCC (Cri) 157] , the step taken by the CMM/DM while taking possession of the secured assets and documents relating thereto is a ministerial step. It could be taken by the CMM/DM himself/herself or through any officer subordinate to him/her, including the Advocate Commissioner who ....
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....plications were pending before Judicial Magistrates under section 14 of the SARFAESI Act. Of these, 446 were pending for three months, 690 for six months, and 1413 for more than one year. Therefore, the total pendency in Maharashtra, including Mumbai, was shown to be not less than 7563. 10. Once all requirements under Section 14 of the SARFAESI Act are met, the District Magistrate/Chief Metropolitan Magistrate has a statutory obligation to promptly assist the secured creditor. Any delay would be unacceptable given the emphasis of this enactment on expediency. Therefore such enormous backlog of applications under Section 14 in Maharashtra is inconsistent with the objectives of the Act and defeats the legislative intent emphasized by the Supreme Court. Almost twelve years ago, in the case of International Asset Reconstruction Company Private Limited v. Union of India AIR 2011 Bom 163: (2012) 3 BCR (Cri.) 167, the Division Bench of this Court in a similar situation issued several directives, including the serial numbering and time-bound disposal of applications. It is regrettable that the situation remains unchanged. 11. During the hearing, the Advocate General assured tha....
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....er than 30 April, 2023. (ii) All the pending implementation of the orders passed prior to 31 March, 2023, should be completed by 30 April, 2023. (iii) Any fresh application filed after 31 March 2023 under Section 14 of SARFAESI Act should be disposed off by the District Collector within 30 days of the application being filed. (iv) Every order passed by the District Collector under Section 14 of SARFAESI Act should be implemented and executed within 4 weeks of the passing of the order. If the officers who are implementing orders are overburdened, in light of the judgment of Supreme Court in the case of NKGSB Co-operative Bank Ltd. Vs. Subir Chakravarty and others dated 25 February 2022, under Section 14 of SARFAESI Act order, an Advocate can be appointed to implement the order passed under Section 14 of SARFAESI Act. However, this appointment should be done in the order under Section 14 itself in accordance with the said judgment. (v) In the first week of each month, a report should be submitted, giving the details of any application which has not been disposed off within 30 days or any order which has not been implemented within 30 days with reas....
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....ll not only assist in expeditious disposal of applications but also in reducing the inflow of petitions by the secured creditors, as the guidelines now provide a time mandate and grievance redressal forum to the secured creditors whose applications have not been disposed of and they need not directly file writ petitions in this Court. 15. The Petitioners submitted that orders under Section 14 of the SARFAESI Act often go unimplemented due to the unavailability of police support. We cannot issue general directions in this regard as there could be various situations, but we do observe that the police authorities should assist in implementation speedily, as far as feasible. The implementation of an e-system, as stated in clause 8 of the Circular, will improve transparency and efficiency, and keep all parties informed about pending applications. This initiative be implemented within 16 weeks. 16. The learned counsel for the High Court Administration stated that currently there is no separate category assigned for applications under Section 14 of the SARFAESI Act in the Case Information System (CIS) software. Steps can be taken to create a separate category for these cases so they....