Allahabad High Court
M/S Husain Stone Crusher And Another vs State Of U.P. And 2 Others on 22 January, 2020
Equivalent citations: AIRONLINE 2020 ALL 446
Bench: Pankaj Mithal, Saral Srivastava
HIGH COURT OF JUDICATURE AT ALLAHABAD RESERVED A.F.R. Court No. - 29 Case :- WRIT - C No. - 30320 of 2019 Petitioner :- M/S Husain Stone Crusher And Another Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Satyendra Narayan Singh,Subhash Chandra Pandey Counsel for Respondent :- C.S.C.,Habib Ahmad and Case :- WRIT - C No. - 30681 of 2019 Petitioner :- Parvez Khan Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Arvind Srivastava Counsel for Respondent :- C.S.C.,Dharmendra Vaish Hon'ble Pankaj Mithal,J.
Hon'ble Saral Srivastava,J.
Under challenge in this writ petition is the order dated 26.08.2019 passed by the Additional District Magistrate (Finance and Revenue), District Rampur.
The aforesaid order has been passed by him in exercise of powers under Section 14 of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter referred to as "Securitisation Act") directing Up Zila Magistrate (Sadar) and the Circle Officer to take possession of the secured assets of the petitioners.
The principle argument of Sri Prateek Kumar, learned counsel for the petitioners is that the aforesaid order is without jurisdiction and as such a nullity. The Additional District Magistrate has no authority in law to pass any order under Section 14 of the Securitisation Act. The power to pass an order under the aforesaid provisions is vested solely in the District Magistrate or the Chief Metropolitan Magistrate. The aforesaid power is a quasi-judicial power and it cannot be delegated to any other person, officer or authority. The Additional District Magistrate would not be included in the definition of the District Magistrate for the purposes of the Securitisation Act.
In defence of the above order, learned Standing Counsel and Sri Habib Ahmad, learned counsel appearing for Allahabad Bank submits that the powers exercised by the District Magistrate under Section 14 of the Act are not adjudicatory in nature rather administrative and same can be delegated, if necessary, to any other person, officer or authority by the District Magistrate. In fact, in view of the provisions of Section 20 and 23 of the Criminal Procedure Code (hereinafter referred to as "Code"), the Additional District Magistrate have all the powers of a District Magistrate and is entitle to exercise all his powers in his absence.
In view of the respective submissions of counsel for the parties, we are seized with the following three questions :-
(i) Whether the power exercisable under Section 14 of the Act are in the nature of persona designeta and can be exercised only by the District Magistrate/Chief Metropolitan Magistrate and not by any other officer much less the Additional District Magistrate; and
(ii) Whether the Additional District Magistrate is a District Magistrate for the purposes of exercising the said power; and
(iii) Whether the District Magistrate/ Chief Metropolitan Magistrate can delegate the power to pass an order under Section 14 of the Securitisation Act to any subordinate authority/officer such as Additional District Magistrate.
In context with all the above issues, it is pertinent to refer to Section 14 of the Securitisation Act. The aforesaid provision stipulates that where any secured creditor is desirous of taking possession of the secured assets, he may move an application in writing to the Chief Metropolitan Magistrate or the District Magistrate (for our purpose only "District Magistrate" hereinafter) of the area concerned for taking its possession and the application has to be accompanied by an affidavit declaring as many as 9 things as enumerated in the provision whereupon the District Magistrate on being satisfied as to the contents of the affidavit, order for the possession of the secured assets.
The aforesaid provision further lays down that the District Magistrate after passing of such an order may authorize any officer subordinate to him to take possession of such assets and documents relating thereto and forward them to the secured creditor.
The aforesaid Section 14 in its entirety as it stands today is reproduced hereinbelow for the purposes of convenience-:
14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset. - (1) 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 asset 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 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 secl1red 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 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.] [Provided further that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate within the said period of thirty days for reasons beyond his control, he may, after recording reasons in writing for the same, pass the order within such further period but not exceeding in aggregate sixty days.] [(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.] (2) For the purpose of securing compliance with the provisions of sub-section (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.
(3) 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.
The aforesaid provision contemplates the following steps -:
(i) Moving of an application accompanied by an affidavit containing certain essentials by the secured creditor before the District Magistrate for the purpose of obtaining possession of the secured assets ;
(ii) Passing of a suitable order by the District Magistrate on satisfaction of the contents of the affidavit for taking possession of the secured assets;
(iii) Authorization by the District Magistrate to any subordinate officer to take possession of assets and documents and to forward them to the secured creditor.
In view of the above provision, two distinct jobs have to be performed by the District Magistrate under Section 14 of the Act. The first is to pass a suitable order for the purpose of taking possession of the secured assets; and second is to take possession of such assets and the documents and to forward them to the secured creditor which job can be authorized by him to be performed by any officer subordinate to him also.
Thus, in a way, the job of passing the order for the purpose of possession has to .be performed by the District Magistrate himself whereas the job of taking possession can be delegated by him to any subordinate officer.
In other words, the actual order for possession has to be passed by the District Magistrate and by no other authority whereas the possession can be taken thereafter by any other officer or authority as may be authorized by the District Magistrate. The Parliament has separated the functions of passing an order on an application made by the secured creditor and the consequential act of taking possession of secured assets and documents thereof for forwarding them to the secured creditor. The consequential act following the order of possession has been permitted to be delegated by the District Magistrate to any officer subordinate to him but not the power to pass the order itself whether it happens to be an administrative order or a quasi-judicial order with no adjudication of any lis between the parties.
It is a well recognized legal maxim "Delegatus Non Potest Delegair" meaning that delegate has no power to delegate i.e. a distinction conferred by Statute on any authority is intended to be exercised by that authority only and not by any other unless the contrary intention is expressed in the Statute itself.
In the present enactment, the District Magistrate is persona designeta, that is a person as an individual upon whom the power to pass an order of possession of the secured assets has been conferred exclusively and it is not intended to be delegated either expressly or impliedly.
In the absence of any intention conferring any authority upon the District Magistrate to delegate the aforesaid power to any other person, officer or authority, the power to pass an order of possession under Section 14 (1) of the Securitisation Act has to be exercised by the District Magistrate and none else.
Now coming to the other aspect of the matter, whether the District Magistrate includes Additional District Magistrate, a reference may be had to Section 20 of the Code which is quoted hereinbelow-:
20. Executive Magistrates. - (1) In every district and in every metropolitan area, the State Government may appoint as many persons as it thinks fit to be Executive Magistrates and shall appoint one of them to be the District Magistrate.
(2) The State Government may appoint any Executive Magistrate to be an Additional District Magistrate, and such Magistrate shall have [such] of the powers of a District Magistrate under this Code or under any other law for the time being in force, [as may be directed by the State Government].
(3) Whenever, in consequence of the office of a District Magistrate becoming vacant, any officer succeeds temporarily to the executive administration of the district, such officer shall, pending the orders of the State Government, exercise all the powers and perform all the duties respectively conferred and imposed by this Code on the District Magistrate.
(4) The State Government may place an Executive Magistrate in charge of a sub-division and may relieve him of the charge as occasion requires; and the Magistrate so placed in charge of a sub-division shall be called the Sub-Divisional Magistrate.
[(4-A) The State Government may, by general or special order and subject to such control and directions as it may deem fit to impose, delegate its powers under sub-section (4) to the District Magistrate.] (5) Nothing in this section shall preclude the State Government from conferring, under any law for the time being in force, on a Commissioner of Police, all or any of the powers of an Executive Magistrate in relation to a metropolitan area.
The aforesaid provision relates to Executive Magistrates and provides that the State Government may appoint as many persons as it thinks fit to be Executive Magistrates for every district and shall appoint one of them to be the District Magistrate.
It further lays down that the State Government may appoint any Executive Magistrate to be the Additional District Magistrate who shall have such powers of the District Magistrate under the Code or any other law for the time being in force as may be directed by the State Government.
In the absence of the District Magistrate, any officer who succeeds him temporarily is entitle to exercise his powers and perform all duties conferred and imposed under the Code upon the District Magistrate.
In other words, State Government is entitle to appoint several Executive Magistrate for every district and one of them to be the District Magistrate. The Executive Magistrate can also be appointed as an Additional District Magistrate and can be conferred with the powers of the District Magistrate under the Code or any other law for the time being in force and is also entitle to perform the functions and duties of the District Magistrate as conferred upon him under the Code.
In view of the above, the District Magistrate and Additional District Magistrate are both executive magistrates and the Additional District Magistrate possesses such of the powers of the District Magistrate under the Code or any other law in force as may be directed by the State. In the absence of the District Magistrate, his functions and duties may also be performed by the Additional District Magistrate but that performance is confined to the Code only.
Section 35 and 37 of the Securitisation Act provides that the Securitisation Act is a special enactment and its provisions shall have effect notwithstanding anything inconsistent therewith contained in any law for the time being in force and that the provisions of the Securitisation Act shall be in addition to, and not in derogation of the certain Acts mentioned therein or any other law for the time being in force. The aforesaid provisions read as under :-
"35. The provisions of this Act to override other laws. - The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
37. Application of other laws not barred. - The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force."
In Irshad Husain1, a Division Bench of this Court was seized with a similar controversy as to whether Additional District Magistrate/ Additional Collector (Finance and Revenue) has the authority to pass an order under Section 14 of the Securitisation Act. The Court simply by referring to provisions of Section 14 of the Securitisation Act and Section 14-A of the Revenue Act held that as the powers of the Additional Collector are similar to those of the Collector, the order passed by Additional Collector is not without jurisdiction.
The aforesaid decision has been rendered on the basis of Section 14-A of the U.P. Land Revenue Act, 1901 (hereinafter referred to as "Revenue Act") wherein appointments and powers of the Additional Collectors have been laid down. The powers of the Collectors or the Additional Collectors are for the purposes of collection of revenue and not for exercising magisterial powers of administration.
Section 14-A of the Revenue Act is reproduced below for the sake of convenience :-
[14-A. Appointment, powers and duties of Additional Collectors.] - (1) The [State Government] may appoint an Additional Collector in a district or in two or more districts combined.
(2) An Additional Collector shall hold his office during the pleasure of the [State Government].
[(3) An Additional Collector shall exercise such powers and discharge such duties of a Collector in such case or classes of cases as the Collector concerned may direct.] (4) This Act and every other law for the time being applicable to a Collector shall apply to every Additional Collector, when exercising any powers or discharging any duties under sub-section (3), as if he were the Collector of the district.
According to the aforesaid provision, Additional Collector has been authorized to exercise powers of the Collector and to discharge his duties, as may be directed. It also provides that law applicable to a Collector shall also be applied to every Additional Collector while exercising powers or discharging duties as a Collector. It thus entrusts him with the powers and functions of the Collector. However, the position of the Collector or the Additional Collector is totally different from that of the District Magistrate/ Additional District Magistrate whose appointment, powers and duties are not governed by the provisions of the Revenue Act but by the Code. Both these officers exercise distinct powers and functions. One acts as a revenue officer of the district whereas the other as the executive magistrate or administrative officer of the district. Therefore, the powers conferred upon Collector/ Additional Collector or the nature of their duties cannot be equated with that of the District Magistrate/Additional District Magistrate. Accordingly, the decision in Irshad Husain (supra) and some other decisions rendered on its basis are not relevant and conclusive insofar as the powers of the Additional District Magistrate viz-a-viz the District Magistrate under Section 14 of the Securitisation Act are concerned as they are not the same as that of Collector/Additional Collector.
The aforesaid decision in Irshad Husain (supra) does not refer to any other provision of law and fails to take into account the ex-facie distinction between the duties of the Collector and the District Magistrate. The provisions relating to Collector/Additional Collector and those relating to District Magistrate/Additional District Magistrate are distinct and operate in altogether a different field and as such the aforesaid decision cannot be treated to be a good precedent for the purposes of resolving the controversy as to whether Additional District Magistrate and District Magistrate are one of the same authority who have been conferred with the same powers for the purposes of passing an order under Section 14 of the Securitisation Act.
The Full Bench decision in Brahm Singh2 is also in context with the powers of the Collector and the Additional Collector. In the said case, the short controversy under consideration was whether the powers and functions of the Collector can be exercised by the Additional Collector under Section 198 (4) of U.P. Z.A. and L.R. Act. It was in context with the said controversy that the Court held that in view of Section 14-A of the Revenue Act, the Additional Collector acts and discharges duties and functions or exercises such powers of the Collector that would be deemed to have been exercised by him under the Act and as such the powers under Section 198(4) of the said Act are exercisable by him also.
The aforesaid decision also does not extend any help to us for deciding the controversy at hand viz-a-viz the powers, duties and functions of District Magistrate/Additional District Magistrate in reference to Section 14 of the Securitisation Act.
In Rich Field3, one another Division Bench of this Court was again seized of the matter regarding the powers of the District Magistrate to pass orders under Section 14 of the Securitisation Act. The Court after referring to Irshad Husain (supra) disagreed with the decision of the Calcutta High Court in S.K. Akbar Ali4 which laid down that an Additional District Magistrate even if conferred with the powers of the District Magistrate does not become District Magistrate and remains to be an officer below the District Magistrate and accordingly held that Additional District Magistrate is competent to decide the application filed under Section 14 of the Securitisation Act.
One more Division Bench of this Court in M/s Lakshya Concosts5 while dealing with an identical controversy relying upon Irshad Husain and Rich Field Industries (supra) opined that the Additional District Magistrate had not acted illegally or without jurisdiction in deciding the application under Section 14 of the Securitisation Act.
The said Division Bench further referred to Section 20 of the Code and came to the conclusion that the District Magistrate and Additional District Magistrate are Executive Magistrates and since Additional District Magistrate is empowered to exercise the powers of the District Magistrate under the Code or any other law in force, the order passed by him under Section 14 of the Securitisation Act is not without jurisdiction.
The respondents, on the other hand, relied upon the following three decisions-:
(i) Ajaib Singh6
(ii) Hari Chand Aggarwal7
(iii) Nainital Bank Limited8 In Ajaib Singh, it has been observed that unless a person is appointed under the Code as a District Magistrate, he cannot be called a District Magistrate and that an Additional District Magistrate is an officer below the rank of the District Magistrate.
The Three Judges' Bench of the Apex Court in Hari Chand Aggarwal held that Additional District Magistrate and District Magistrate are two different authorities and that Additional District Magistrate is not competent to requisition the property simply because he has been vested with all powers of the District Magistrate under the Code. The Hon'ble Supreme Court therein observed that the object of appointing an Additional District Magistrate is to relieve the District Magistrate of some of his duties and that he is subordinate to the District Magistrate to a limited extent only.
In Nainital Bank Limited where an identical controversy was under consideration as to whether Additional District Magistrate is empowered to pass order under Section 14 of the Securitisation Act, the Court held that the provisions of the Code or the Revenue Act can not be pressed into motion to contend the District Magistrate referred to under Section 14 of the Securitisation Act, would also include an Additional District Magistrate. Notwithstanding that District Magistrate and Additional District Magistrate are two different and distinct authorities and Additional District Magistrate is subordinate to District Magistrate and cannot be called as District Magistrate. Nonetheless, as both are Executive Magistrates and the Additional District Magistrate is entitle to perform functions and duties of the District Magistrate or to exercise his powers in his absence as conferred upon him under the Code or any other law in force, the Additional District Magistrate to some extent virtually acts as a District Magistrate. The use of the phrase "any other law for the time being in force" as used in Section 20 of the Code and Sections 35 and 37 of the Securitisation Act has very wide amplitude to cover the powers of the District Magistrate conferred upon him under the Act which can be exercised by Additional District Magistrate in case of necessity and if so directed. It would not be proper rather unnecessary to narrow down the scope of the above phrase by excluding the Act from it as has been done by the Uttarakhand High Court in the above case. The provisions of none of the above enactments permit such limited use of the above phrase to confine it in relation to the law relating to securities markets only.
In view of the above, we find it difficult to agree and follow the above decision of the Uttarakhand High Court more particularly when there is a good precedent of our own High Court in the shape of M/s Lakshya Concosts Private Limited (supra).
In The Authorised Officer, Indian Bank9, the issue that cropped up before the Apex Court was whether the Chief Judicial Magistrate (C.J.M.) is competent to process the request of the secured creditor for taking possession of secured assets under Section 14 of the Securitisation Act as the aforesaid provision mentions only Chief Metropolitan Magistrate (C.M.M.). The Apex Court after in depth consideration of the entire controversy held that substitution of the functionaries (C.M.M. as C.J.M.) qua the administrative and executive or so to say the non-judicial functions discharged by them in the light of Code, would not be inconsistent with Section 14 of the Securitisation Act. It would be meaningful, purposive and contextual construction of Section 14 of the Securitisation Act to include C.J.M. as competent to assist the secured creditor to take possession of the secured assets. It was thus held that C.J.M. is equally competent to deal with the application moved by the secured creditor under Section 14 of the Securitisation Act.
Similarly, in the light of the provisions of the Code, it would be meaningful to include Additional District Magistrate as District Magistrate and to hold that the application moved under Section 14 of the Securitisation Act can be considered even by the Additional District Magistrate provided he is directed by the State Government to perform the said powers under the Securitisation Act in accordance with sub-section 2 of Section 20 of the Code or if he succeeds District Magistrate temporarily for discharge of the executive, administration of the District Magistrate in accordance with sub-section 3 of Section 20 of the Code.
In view of the above, we find no force in the challenge made to the impugned order and in the argument raised on behalf of the petitioners.
The writ petition is accordingly dismissed with no order as to costs.
Order Date :- 22.01.2020 Nirmal_Sinha