Jurisdiction under SARFAESI Act can be exercised by two authorities namely CJM and DM: Orissa HC
The Orissa High Court jurisdiction under SARFAESI Act can be exercised by two authorities namely Chief Judicial Magistrate and District Magistrate.
Background
M/s. Ali Agency, a partnership firm, had been sanctioned and disbursed a loan amount of Rs.2,81,25,000/- by the Petitioner. The Opposite Party are the partners of the Opposite Party No.1, and also co borrowers. The loan was secured by mortgaging a residential property owned by Opposite Party No.3. Due to lack of financial discipline, the loan account was declared as Non-Performing Asset (NPA). A demand Notice under Section 13(2) of the SARFAESI Act, 2002 was issued seeking to recall outstanding amounts of Rs.2,85,04,685/- due as on 6th of November, 2017. Symbolic possession of the mortgaged property was assumed vide Possession Notice issued under Section 13 (4) of the SARFAESI Act.
Arguments
Advocate Ramachandra Panigrahy, appearing for the petitioner, contended that the process of consideration of an application submitted by the secured creditor under Section 14 before the Magistrate does not involve any adjudicatory mechanism and is purely administrative in nature.
The Opposite Parties contended that the present petition is not maintainable, as the petitioner has not availed the alternative statutory remedy by filing an application under Section 17 of the SARFAESI Act, 2002 before the DRT to lay challenge to the impugned order passed by Chief Judicial Magistrate.
Decision
The division bench of Justice Jaswant Singh and Justice S.K.Panigrahi stated that a perusal of Section 13(1) of the Act, 2002 reflects the intention of the legislature to enable the creditor to enforce the charged securities without the intervention of the Court or tribunal. Further, the remedy under Section 17 of the Act, 2002 is only available to a person aggrieved of an action initiated by the secured creditor.
The court added that remedy to the secured creditor to approach the Tribunal to lay challenge to an order passed by the Magistrate is conspicuous by its absence.
The court said that the scope of relief which the Tribunal is intended to grant is provided for under Section 17(4) which also does not in any way provide for an order which the secured creditor is looking for in the present petition. The secured creditor therefore would not have a remedy to challenge an order of the Magistrate before the Tribunal in such circumstances.
The court stated that the Supreme Court in Authorised Officer, Indian Bank has held that jurisdiction under Section 14 can be exercised by either of the two authorities namely Chief Judicial Magistrate and District Magistrate. Therefore, both the authorities are equally competent to exercise the jurisdiction.
The court held that the Chief Judicial Magistrate would be equally competent to entertain an application filed by the secured creditor under Section 14 of the Act, 2002 and would be entitled to pass such orders as would be required to provide assistance to the secured creditor to take over physical possession of the secured assets.
The court allowed the petition and set aside the impugned order passed by the Chief Judicial Magistrate, Cuttack and said that since, it has held that both the authorities i.e. District Magistrate as also Chief Judicial Magistrate would have the jurisdiction to entertain an application under Section 14 of the SARFAESI Act, 2002 therefore, the petitioner would be at liberty to approach either of the authorities by filing a fresh application in terms of Section 14 which shall then be decided by the authority concerned, in accordance with law.
Case title: Bajaj Finance Ltd. v/s M/s. Ali Agency and Ors.
Citation: W.P.(C) No.11425 of 2021
