The Madhya Pradesh High Court has recently expressed concern over the lack of action by Chief Judicial Magistrates in handling applications under Section 14 of the SARFAESI Act. The court has issued directives on the process that District Magistrates or Chief Judicial Magistrates should follow in deciding such applications. Justices Sushrut Arvind Dharmadikari and Pranay Verma of the Division Bench rebuked the Chief Judicial Magistrate of Khargone for delaying the decision on a Section 14 application by listing it for arguments on registration.
The court emphasized that the power under Section 14 of the SARFAESI Act, vested in the District Magistrate/Additional District Magistrate/Chief Judicial Magistrate, is 'executory and ministerial' and not 'adjudicatory.' Criticizing the CJM for not deciding the application filed in December 2022 within the stipulated time, the court observed that the Chief Judicial Magistrate had assumed an adjudicatory role, becoming functus officio.
Referring to decisions by the apex court, such as R.D. Jain & Company v. Capital First Limited & Others and Kotak Mahindra Bank Limited v. Girnar Corrugators Pvt. & Ors. 2023 LiveLaw (SC) 12, the Division Bench noted that CJMs must make decisions on Section 14 applications within 30 days from the application date, extendable up to 70 days. The court disapproved of cases where DM/ADM/CJM exceeded their jurisdiction in Section 14 applications and delayed the process.
The court reiterated that the role of DM/ADM/CJM is ministerial in nature, emphasizing that orders should not be passed based on the convenience of the officer but in accordance with the court's and apex court's mandates.
In allowing the application by the secured creditor, the court highlighted the two aspects a Chief Judicial Magistrate must consider before issuing an order under Section 14 of the SARFAESI Act. The court also noted the petitioner's disclosure, through an application under the Right to Information Act, about 17 pending Section 14 cases in Khargone, scheduled for arguments on registration.
To take physical possession of secured assets under Section 14(1) of the SARFAESI Act, the secured creditor must submit a written application to the DM/ADM/CJM. The court emphasized the statutory obligation for the DM/ADM/CJM to promptly act by issuing an order after verifying the creditor's compliance with all formalities outlined in the proviso of Section 14(1) of the SARFAESI Act.
Furthermore, the court directed the CJM, Khargone, to dispose of the pending applications within 30 days in adherence to statutory provisions and apex court decisions. Recognizing the surge in secured creditors approaching the High Court due to the inaction of DM/ADM/CJMs, the court found it necessary to issue guidelines on Section 14 applications, aiming to prevent the flood of writ petitions.
In conclusion, the Madhya Pradesh High Court's recent directives underscore the importance of expeditious disposal of Section 14 applications under the SARFAESI Act. The court emphasizes the ministerial nature of the role of DM/ADM/CJM and calls for strict adherence to statutory timelines, seeking to streamline the process and reduce the need for creditors to resort to the High Court for resolution.
TAGS: Stipulated time Ministerial role Functus officio Compliance verification Right to Information Act High Court directives Writ petitions Statutory obligation
