Bombay High Court
Hdfc Bank Limited vs State Of Maharashtra on 9 February, 2023
Author: Abhay Ahuja
Bench: Nitin Jamdar, Abhay Ahuja
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY SIDE
APPELLATE SIDE
WRIT PETITION NO. 15285 OF 2022
L and T Finance Limited. ... Petitioner.
V/s.
The State of Maharashtra and another. ... Respondents.
WITH
WRIT PETITION NO. 939 OF 2023
WITH
WRIT PETITION NO. 924 OF 2023
WITH
WRIT PETITION NO. 930 OF 2023
WITH
WRIT PETITION NO. 937 OF 2023
WITH
WRIT PETITION NO. 1249 OF 2023
WITH
WRIT PETITION NO. 1722 OF 2021
WITH
WRIT PETITION NO. 10846 OF 2022
WITH
WRIT PETITION NO. 10848 OF 2022
WITH
WRIT PETITION NO. 15718 OF 2022
WITH
WRIT PETITION NO. 11312 OF 2022
WITH
WRIT PETITION NO. 409 OF 2023
WITH
WRIT PETITION NO. 666 OF 2023
WITH
WRIT PETITION NO. 339 OF 2023
WITH
WRIT PETITION NO. 15713 OF 2022
WITH
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WRIT PETITION NO. 306 OF 2023
WITH
WRIT PETITION NO. 14922 OF 2022
WITH
WRIT PETITION NO. 907 OF 2023
WITH
WRIT PETITION NO. 970 OF 2023
WITH
WRIT PETITION NO. 922 OF 2023
WITH
WRIT PETITION NO. 1460 OF 2023
WITH
WRIT PETITION NO. 140 OF 2023
WITH
WRIT PETITION NO. 138 OF 2023
WITH
WRIT PETITION NO. 278 OF 2023
WITH
WRIT PETITION NO. 279 OF 2023
WITH
WRIT PETITION NO. 647 OF 2023
WITH
WRIT PETITION NO. 973 OF 2023
WITH
WRIT PETITION NO. 1425 OF 2023
WITH
O.S.WRIT PETITION (L) NO. 37207 OF 2022
WITH
O.S.WRIT PETITION (L) NO. 2802 OF 2023
Mr.Shashank Fudia with Priyanka Fudia for the Petitioners in WP
Nos.15285/22, 924/23, 922/23, 970/23 and 647/23.
Mr.Prathamesh Kamat with Mr.Nikhil Rajani and Snepy A. i/b.
M/s.V.Deshpande & Co. for the Petitioners in WP Nos.973/23,
10848/22, 10846/22, 15713/22, 1460/23, and 11312/22.
Mr.Mandar A. Lalsare for the Petitioners in WP Nos.1425/23,
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306/23, 339/23.
Mr.S.S.Panchpor for the Petitioners in WP Nos.278/23 and 279/23.
Mr.Sanjay Anbhawane for the Petitioners in WP Nos.138/23,
140/23, 1249/23, 939/23.
Mr.Archit Virmani with Mr.Atul Gupta for the Petitioner in WP
No.15718/22.
Ms.Priya Nigwekar i/b. Mr.O.A.Das for Petitioner in WP-409/23.
Ms.Machima Shah i/b. Intra Legal for the Petitioner in WP-907/23.
Mr.Charles D'Souza with Nikhil Rajani for Petitioner in WP
No.11312/22.
Ms.Kamini Pansare i/b. VM Legal for the Petitioner in WP-907/23.
Dr.Birendra Saraf, Advocate General with Mr.P.P.Kakade, GP and
Ms.Shruti D. Vyas, 'B' Panel Counsel for the Respondent- State.
Mr.S.R.Nargolkar with Mr.Arjun Kadam for Respondent Nos.2 and
3 in WP No.15285/22.
Mr.Shriram Choudhari for Respondent No.3 in WP No.66/23.
Mr.Siddharth Samantray with Mr.Alok Mishra for the Petitioner in
WPL No.37207/22.
Mr.Ajay Desai with Sharath Rai, Sushmita Gandhi and Nasrin
Shaikh i/b. Indus Law for the Petitioner in WPL No.2802/23.
Dr.Birendra Saraf with Mr.Sukanta Karmarkar, AGP for the State.
Ms.P.V.Sawant, Registrar, CMM Court is present.
CORAM : NITIN JAMDAR AND
ABHAY AHUJA, JJ.
DATE : 9 February 2023.
P.C. :
Heard the learned counsel for the parties.
2. This is a group of petitions filed by the secured creditors having a common grievance that despite proceeding under section ::: Uploaded on - 15/02/2023 ::: Downloaded on - 03/06/2023 15:37:11 ::: skn 4 WP-15285.2022.doc 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act), the proceeding thereunder are not concluded in time, or there are difficulties for the same at the end of the authority, i.e. Chief Judicial Magistrate or District Magistrate.
3. The data placed before us show that there are approximately 7563 applications pending, which does not include all districts in Maharashtra, and the figure could be much more. Apart from the fact that recovery of a large amount of revenue is blocked because of the pendency of the matters under section 14 of the SARFAESI Act, we are also concerned about the number of writ petitions filed in this Court by the secured creditors because applications under section 14 are not being processed in time.
4. Section 14 of the SARFAESI Act is enacted to place an obligation upon the Chief Metropolitan Magistrate or District Magistrate to assist secured creditors in taking possession of the secured asset. Section 14 of the SARFAESI Act enables the secured creditor to approach the District Magistrate/Chief Metropolitan Magistrate with a written application requesting possession of the secured assets and forwarding it to the secured creditor for further action. In the case of NKGSB Co-operative Bank Limited v. Subir Chakravarty and others1, the Hon'ble Supreme Court has laid down that the action to be taken by the District Magistrate/Chief 1 Civil Appeal No..../2022 (@ S.L.P. (CIVIL) No.30240/2019 decided on 25 February 2022.
::: Uploaded on - 15/02/2023 ::: Downloaded on - 03/06/2023 15:37:11 :::skn 5 WP-15285.2022.doc Metropolitan Magistrate is a ministerial act. The Hon'ble Supreme Court reiterated this view in the case of M/s. R.D. Jain and Company v/s. Capital IN2. The Hon'ble Supreme Court, after considering the statement of objects and reasons of the Act, noted that the underlying purpose of the SARFAESI Act is to empower financial institutions in India to have similar powers to counterparts, that is, international banks in other countries. Keeping that objective in mind, Section 14 has been enacted. The Hon'ble Supreme Court has observed that the District Magistrate/Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act is a ministerial step, and no allegation of quasi-judicial function is involved. The Supreme Court has again emphasized this position in the case of Balkrishna Rama Tarle (Dead) through L.R. & Anr. v/s. Phoenix ARC Pvt. Ltd. & Ors. 3 The Hon'ble Supreme Court has reiterated that once all the requirements under Section 14 of the SARFAESI Act are complied with, then it is the duty of the District Magistrate/Chief Metropolitan Magistrate to assist the secured creditor in obtaining possession, and it can be done with the help of any officer subordinating, or an advocate appointed as advocate commissioner; the District Magistrate/Chief Metropolitan Magistrate is not required to adjudicate the dispute between the borrower, secured creditor and/or third party and these parties have a remedy to object to the proceeding under Section 17 of the SARFAESI Act. The Hon'ble Supreme Court has observed that there is a statutory obligation on the District Magistrate/Chief Metropolitan Magistrate to move into 2 Civil Appeal No.175/2022 decided on 27 July 2022. 3 SLP No.16013/2022 decided on 26 September 2022.
::: Uploaded on - 15/02/2023 ::: Downloaded on - 03/06/2023 15:37:11 :::skn 6 WP-15285.2022.doc action immediately, and the action cannot brook delay, time being the essence and spirit of this provision. Despite this legal position, an emphasis on the authorities to act speedily and the objective of the SARFAESI Act brought about to prevent delay such mass pendency of the applications under Section 14 of the SARFAESI Act cannot be countenanced. The resultant position would defeat the legislative intent.
5. We may note that it is almost twelve years back that this Court, in the case of International Asset Reconstruction Company Private Limited v. Union of India4, had taken cognizance of the similar position and had issued various directions, including the directions that applications should be numbered serially in a register and disposed of in a time-bound manner. It is unfortunate that despite detailed guidelines laid down by this Court still, the position has not changed.
6. As regards the State of Maharashtra is concerned, a chart is placed before us by the learned Advocate General, which is annexed to the communication issued by the Deputy Chief Secretary. The chart indicates that 5061 applications under section 14 of the SARFAESI Act are pending before various District Magistrates. The learned Advocate General states that the total number of applications pending in the State of Maharashtra is 5061, out of which 1139 are pending for three months, 1100 for six months and 2822 for more than one year. These do not contain data from all the districts. The 4 Cri.PIL No.24/2011 decided on 20 August 2011.
::: Uploaded on - 15/02/2023 ::: Downloaded on - 03/06/2023 15:37:11 :::skn 7 WP-15285.2022.doc learned counsel representing the High Court Administration has informed us that as far as pendency of the matters in the city of Mumbai under section 14 of the SARFAESI Act before the Judicial Magistrate is concerned, the total number of applications pending is 2502, out of which 446 are pending for three months, 690 are pending since six months, and 1413 are pending for more than one year. Therefore, the total pendency in the State of Maharashtra, including Mumbai, is less than 7563.
7. The learned Advocate General states that the State Government has decided to undertake a particular drive to clear the pending applications by 31 March 2023. As regards the future course of action is concerned, it is stated that if the District Magistrate does not decide on the application under section 14 of the SARFAESI Act within sixty days, the District Magistrate will submit a report to the Divisional Commissioner as to the reasons why it could not be disposed of. The Divisional Commissioner thereafter would take notice of this delay and take suitable action. The learned Advocate General also states that for new applications, an option of e-filing would be explored, and the details, such as filing of the application, pendency and the order passed, would be made available on the online portal.
8. As regards the pendency of the matters before the Judicial Magistrates is concerned, the learned counsel appearing for the High Court Administration submits that initially, the High Court had ::: Uploaded on - 15/02/2023 ::: Downloaded on - 03/06/2023 15:37:11 ::: skn 8 WP-15285.2022.doc decided to take a special drive from August 2023; however, considering the pendency of the matters and gravity of the issue, it has been decided to initiate the special drive from 1 March 2023.
9. The learned counsel for the Petitioners have various suggestions, such as if the District Magistrate instructs the Tahasildar to proceed under section 14 of the SARFAESI Act, there should not be further delegation because it is impermissible as per law. The counsel also suggest the option of appointing an advocate as Commissioner, as is permissible as per the decision of the Hon'ble Supreme Court in the case of NKGSB Co-operative Bank Limited, which is adopted by the Chief Judicial Magistrates, however, not by the District Magistrates. They also suggest that necessary instruction need to be given to the Police Authorities to include adequate lady constables. The learned Advocate General states that the counsel for the Petitioners having suggestions may forward the same to his office within one week so that after considering the same, the State Government may consider the same and incorporate in general guidelines which the State is proposing to issue.
10. The learned counsel for the High Court Administration states that the option to issue necessary instructions to facilitate e-filing and the creation of a portal in the existing Case Information System (CIS) would also be explored.
11. The statement made by the Advocate General that a special drive will be undertaken to clear all applications made by the secured ::: Uploaded on - 15/02/2023 ::: Downloaded on - 03/06/2023 15:37:11 ::: skn 9 WP-15285.2022.doc creditors pending before the District Magistrates in the State of Maharashtra under section 14 of the SARFAESI Act by 31 March 2023 is accepted. The statement made by the High Court Administration that a special drive would be initiated to clear all pending applications before the Metropolitan Magistrates under section 14 of the SARFAESI Act from 1 March 2023 is accepted. All Applications complying with procedural formalities will be taken up serially for necessary action.
12. As regards the pendency of the present matters, a statement is already made on behalf of the State Government that all pending applications would be disposed of by 31 March 2023; therefore, it is not necessary to pass a separate order.
13. In the cases before us today, if the action under section 14 of the SARFAESI Act is not complete, the District Magistrates/ Judicial Magistrates where the applications are pending will proceed to take necessary action at the earliest. We also note the other grievances made by the secured creditors before us regarding not giving of audience and observe that if the representative of the secured creditor seeks an audience with the District Magistrate/ Judicial Magistrate, the audience will be given to the representative of the secured creditor to understand the grievance and after that, steps will be taken as may be warranted under the law.
14. We also direct that till the State Government sets a procedure as above, if any secured creditor has a grievance that the ::: Uploaded on - 15/02/2023 ::: Downloaded on - 03/06/2023 15:37:11 ::: skn 10 WP-15285.2022.doc order passed by the District Magistrate is not being complied with, if so requested, the District Magistrate will give audience to the representative of the secured creditor and proceed to give instructions or pass orders as may be warranted in law and fact. The District Magistrate is expected to take administrative action against the officers who are not following or implementing the order of the District Magistrate without legal reason. If the secured creditor has a grievance that, in spite of all compliances, section 14 of the SARFAESI Act is not decided by the District Magistrate within sixty days, it will be open to the secured creditor to approach the Divisional Commissioner with a representation who will look into the representation and issue necessary instructions.
15. Since, on behalf of the State Government and the High Court Administration, the above statements have been made, we defer the hearing of these petitions to 17 March 2013, to be listed under the caption "For Directions" to oversee the progress.
16. By the next date, we expect the State Government to issue necessary instruction/Government Resolution, not only giving guidelines but also setting a mechanism for the redressal of grievances of the secured creditors in respect of delay in disposal of applications under section 14 of the SARFAESI Act. The mechanism should be effective so that the secured creditors do not need to file petitions in this Court for that purpose.
(ABHAY AHUJA, J.) (NITIN JAMDAR, J.)
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