Gujarat High Court
Shivam Water Treaters P Ltd vs Authorised Officer - State on 17 September, 2013
Author: Chief Justice
Bench: Bhaskar Bhattacharya, J.B.Pardiwala
SHIVAM WATER TREATERS P LTD....Petitioner(s)V/SAUTHORISED OFFICER - STATE BANK OF INDIA C/SCA/12632/2013 CAV JUDGEMNT
SCA126322013Cj4.doc IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 12632 of 2013 FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MR.
BHASKAR BHATTACHARYA Sd/-
HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/-
========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
Yes 2 To be referred to the Reporter or not ?` Yes 3 Whether their Lordships wish to see the fair copy of the judgment ?
No 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
No 5 Whether it is to be circulated to the civil judge ?
No ================================================================ SHIVAM WATER TREATERS P LTD.
Versus AUTHORISED OFFICER - STATE BANK OF INDIA & ORS.
================================================================ Appearance:
MR VISHWAS K SHAH, ADVOCATE for the Petitioner MRS VD NANAVATI, ADVOCATE for the Respondent No. 1 MR VANDAN K BAXI, ASST GOVT. PLEADER for the Respondent Nos. 2, 3 & 4 ================================================================ CORAM:
HONOURABLE THE CHIEF JUSTICE MR.
BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 17/09/2013 CAV JUDGEMNT (PER : HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA) By this Special Civil Application, the writ-petitioner has prayed for annulling, quashing and setting aside the impugned Circular dated 1st February, 2012 issued by the respondent No.2, District Magistrate, Anand, as ultra vires the Constitution of India and the Securitisation of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act) and for declaring the same as null and void and nonest in the eye of law and consequently for quashing of the order dated 5th August, 2013 passed by the Sub Divisional Magistrate, Anand by virtue of the power delegated by the respondent No.2.
2. The petitioner borrowed some amount of money from the respondent No.1, the State Bank of India and the said respondent, in exercise of the power conferred under the Securitisation Act, attached the immovable properties belonging to the petitioner and consequently, approached before the Sub-divisional Magistrate under Section 14 of the Secutirisation Act for taking possession of the immovable properties of the petitioner.
3. It appears that the respondent No.2, the concerned District Magistrate, by order dated 1st February, 2012 delegated his power under Section 14 of the Secutirisation Act to the Sub Divisional Magistrate of the Sub Division as mentioned in Annexure:A of the present application and by virtue of such power delegated to the Sub Divisional Magistrate, the latter, by order dated 5th August, 2013, passed an order for taking possession of the immovable properties of the petitioner.
4. The only question that arises for determination in this Special Civil Application is whether the Sub Divisional Magistrate has the required jurisdiction to entertain an application under Section 14 of the Secutirisation Act and to pass order under the said Act.
5. Mr. Vishwas Shah, the learned advocate appearing on behalf of the petitioner, strenuously contended before us that under Section 14 of the Secutirisation Act, the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, having been vested by the Parliament with the power to exercise jurisdiction conferred under Section 14 of the Secutirisation Act, there was no scope of delegating such power to the Sub Divisional Magistrate and consequently, the order passed by the Sub Divisional Magistrate in exercise of such delegated power is a nullity.
6. In order to appreciate the aforesaid question involved in this application, it will be profitable to refer to the provisions contained in Section 14 of the Secutirisation Act which is quoted below:
14.
Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.
Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset 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, as the case may be, the District Magistrate shall, on such request being made to him--
(a) take possession of such asset and documents relating thereto; and
(b) forward such assets and documents to the secured creditor:
Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that --
[i] the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application;
[ii] the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period;
[iii] the borrower has created security interest over various properties giving the details of properties referred to in sub-clause [ii] above;
[iv] the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount;
[v] consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a non-performing asset;
[vi] affirming that the period of sixty days notice as required by the provisions of sub-section [2] of section 13, demanding payment 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 the 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.
Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.
[1A] the District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,--
[i] to take possession of such assets and documents relating thereto; and [ii] to forward such assets and documents to the secured creditor.
For the purpose of securing compliance with the provisions of subsection (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary.
No act of the Chief Metropolitan Magistrate or the District Magistrate any officer authorised by the Chief Metropolitan Magistrate or District Magistrate done in pursuance of this section shall be called in question in any Court or before any authority.
(Emphasis supplied by us.) In the past, this very Bench had an occasion to consider the question as to whether the power conferred under Section 14 of the Secutirisation Act can be delegated by a Chief Metropolitan Magistrate in favour of the Additional Chief Metropolitan Magistrate. In that context, this bench held that the action of the Chief Metropolitan Magistrate, Ahmedabad in exercise of his powers under Section 19 Clause [3] of the Code of Criminal Procedure, 1974 read with Rule 10 Clause [1] of Chapter XXXII of the Criminal Manual, 1977 regarding the distribution of business amongst the Metropolitan Magistrates, Ahmedabad, thereby empowering the Additional Chief Metropolitan Magistrate, Ahmedabad to accept and decide the cases under the provisions of the Secutirisation Act, arising within the limits of Ahmedabad Municipal Corporation, was without jurisdiction.
In the case before us, the question is a bit different one as to whether a District Magistrate can delegate such power to the Sub Divisional Magistrate.
A plain reading of the provision contained in Section 14 of the Secutirisation Act, as amended, makes it abundantly clear that the Legislature had conferred the power under Section 14 of the Secutirisation Act only upon the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, to be exercised after being satisfied with the affidavit affirmed by the authorized officer of the secured creditor in terms of the first proviso to Section 14(1) of the Secutirisation Act to (a) take possession of such asset and documents relating thereto, and, (b) forward such assets and documents to the secured creditor. By the subsequent amendment of the provision of the Secutirisation Act by introduction of sub-section 1A, the position has been made further clear that the District Magistrate can, after exercising his discretion of satisfaction based on the affidavit of the authorized officer of the secured creditor in terms of the first proviso to Section 14(1) of the Secutirisation Act, authorize a subordinate officer to take possession of the assets and documents relating thereto pursuant to his order and to forward such assets and documents to the secured creditor.
Thus, recording of satisfaction based on materials on record vests only in the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, but the consequent action of taking possession of the assets and documents relating thereto pursuant to his order and of forwarding such assets and documents to the secured creditor can be delegated to his subordinate officer.
10. Such being the position, the delegation of power of entertaining the application under Section 14 of the Secutirisation Act for the purpose of recording even the satisfaction mentioned above passed by the District Magistrate in favour of Sub Divisional Magistrate was in conflict with the provision contained in the principal Act. It is the mandate of the Legislature that the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, himself should take decision under Section 14 of the Secutirisation Act based on his satisfaction and then can invest any of his subordinate officer with the power of taking possession of the assets and documents relating thereto pursuant to his order and of forwarding such assets and documents to the secured creditor.
Thus, the jurisdiction to take decision as to whether the secured creditor should get the relief under Section 14 of the Secutirisation Act vests only in the District Magistrate or the Chief Metropolitan Magistrate as the case may be.
11. We, thus, find that the petitioner is justified in contending that the power of authorization given in favour of the Sub Divisional Magistrate to exercise jurisdiction under Section 14 of the Secutirisation Act is in conflict with the provisions of the Secutirisation Act and is thus, ultra vires the principal Act.
12. Although the learned advocates for the respondents, by relying upon the decision of a Division Bench of the Aurangabad Bench of the Bombay High Court in the case of M/s.
Puran Maharashtra Automobiles, Aurangabad and Anr. v. Sub-Division Magistrate, Aurangabad and Ors.
reported in AIR 2010 BOMBAY 53 tried to convince us that in the matter of exercising jurisdiction under section 14 of the Secutirisation Act, there is no element of application of mind and as such, the power can be delegated, we are not impressed by such submission. We have already pointed out that the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, is required to be satisfied on the basis of the averments made in the application, and since by virtue of his order, a person will be dispossessed of his immovable property, the Legislature thought it fit to entrust such power with a responsible official like District Magistrate or the Chief Metropolitan Magistrate.
12.1 With great respect to the Division Bench of the Bombay High Court, we are unable to subscribe to the view taken by that Bench.
13. The Supreme Court in the case of M/s.
Sahni Silk Mills (P) Ltd. and another etc. etc. v. Employees' State Insurance Corporation reported in 1994 AIR SCW 3832 made the following observations while dealing with the power of delegation and sub-delegation which are quoted below:
It is said that when Parliament has specifically appointed authority to discharge a function, it cannot be readily presumed that it had intended that its delegate should be free to empower another person or body to act in its place. In Barium Chemicals Ltd. v. Company Law Board, AIR 1967 SC 295: (1966) Supp SCR 311 this Court said in respect of sub-delegation (at p. 306 of AIR):
"Bearing in mind that the maxim delegatus non potest delegare sets out what is merely a rule of construction, sub-delegation can be sustained if permitted by express provision or by necessary implication."
Again in Mangulal Chunilal v. Manilal Maganlal, AIR 1968 SC 822 (1968) 2 SCR 401 while considering the scope of S. 481(1)(a) of the Bombay Provincial Municipal Corporation Act (59 of 1949) this Court said that Commissioner of the Ahmedabad Municipal Corporation had delegated his power and function under the aforesaid section to a Municipal Officer to launch proceedings against a person charged with offences under the Act or the Rules and that officer to whom such functions were delegated could not further delegate the same to another.
8. In Halsbury's Laws of England, 4th Edition, Volume I in respect of sub-delegation of powers it has been said:
13."In accordance with the maxim delegatus non potest delegare, a statutory power must be exercised only by the body or officer in whom it has been confided, (H. Lavender and Sons Ltd. v. Minister of Housing and Local Government, 1970 (3) All ER 871) unless sub-delegation of the power is authorised by express words or necessary implication (Customs and Excise Commrs. v. Cure and Deeley Ltd., 1962 (1) QB 340 K, 1961 (3) All ER 641 and Mungoni v. A. S. G. of Northern Rhodesia, 1960(1) All ER 446 PC etc.).There is a strong presumption against construing a grant of legislative, judicial, or disciplinary power as impliedly authorising sub-delegation; and the same may be said of any power to the exercise of which the designated body should address its own mind. Allam and Co. v. Europa Poster Services Ltd., 1968 (1) All ER
826......."
(Emphasis supplied by us)
14. We, accordingly, by relying upon the above mentioned principle, allow this application and declare that the delegation of the power in favour of the Sub Divisional Magistrate by the respondent No.2 to entertain the application under Section 14 of the Secutirisation Act for taking decision is illegal and consequently, the order passed by the Sub Divisional Magistrate in terms of Section 14 of the Secutirisation Act is also without jurisdiction.
15. We, however, make it clear that this order will not stand in the way of the secured creditor in applying under Section 14 of the Secutirisation Act before the District Magistrate, Anand and if such application is filed, such authority will pass order in accordance with law and only if he decides to allow such application he can delegate the other power in terms of sub-section (1A) of Section 14 of the Secutirisation Act to his subordinate officer.
16. We further make it clear that we have not gone into the merit of the question whether in the facts of the present case, the secured creditor is entitled to get possession under Section 14 of the Secutirisation Act and it is for the appropriate authority to take such decision.
Sd/-
(BHASKAR BHATTACHARYA, CJ.) Sd/-
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