LI Network
Published on: November 26, 2023 at 15:08 IST
The Madhya Pradesh High Court has taken a stern stance against the lack of action by Chief Judicial Magistrates (CJMs) on applications under Section 14 of the SARFAESI Act. Expressing dissatisfaction with the delay in disposal of such applications, the court, in a directive, outlined guidelines for District Magistrates and Chief Judicial Magistrates to ensure expeditious adjudication.
The bench, comprising Justice Sushrut Arvind Dharmadikari and Justice Pranay Verma, reprimanded the CJM of Khargone for unnecessarily listing a Section 14 application for arguments on registration. Emphasizing that the power vested in DM/ADM/CJM under Section 14 is ‘executory and ministerial,‘ the court underscored the need for timely decisions.
The court cited several apex court decisions, including R.D. Jain & Company v. Capital First Limited & Others and Kotak Mahindra Bank Limited v. Girnar Corrugators Pvt. & Ors., to reinforce the non-adjudicatory nature of the role of DM/ADM/CJM in Section 14 proceedings.
Highlighting the statutory obligation to decide Section 14 applications within 30 days (extendable up to 70 days), the court expressed disapproval of instances where officials exceeded their jurisdiction and delayed decisions. It stressed that the role of DM/ADM/CJM is ministerial, not adjudicatory, and orders should adhere to the mandates set by the court and the apex court.
The court, while allowing the secured creditor’s application, outlined two key considerations for CJMs before passing orders under Section 14: determining territorial jurisdiction of secured assets and confirming the issuance of notice under Section 13(2) of the SARFAESI Act.
In response to the surge in writ petitions due to inaction by DM/ADM/CJMs, the court issued comprehensive guidelines for Section 14 applications. These guidelines include:
- Determination of territorial jurisdiction and verification of notice under Section 13(2).
- Exclusion of the need to hear applications for registration purposes.
- Elimination of the requirement to give notice to borrowers or third parties.
- Submission of an affidavit by the secured creditor confirming compliance with Section 14(1) terms.
- Expeditious disposal of Section 14 applications, preferably within 45 days.
- Consideration of the interests of lessees/tenants of borrowers, as per established legal principles.
The court directed the CJM of Khargone to dispose of pending applications within 30 days, aligning with statutory requirements and apex court decisions.
This move aims to streamline the adjudication process and prevent the inundation of writ petitions due to delayed actions by DM/ADM/CJMs.
Case Title: Equitas Small Finance Bank Limited Through Its Authorized Signatory v. The State Of Madhya Pradesh Principal Secretarylaw And Legislature Affairs Vallabh Bhawan Bhopal (Madhya Pradesh)
