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Supreme Court Bench of Hon’ble Justice L. Nageswara Rao, Hon’ble Justice Hemant Gupta and Hon’ble Justice Ajay Rastogi upheld the Kerala High Court decision.
Kerala High Court order which holds Section 14 of SARFAESI Act in which High Court mandates the District Magistrate to deliver possession of a secured asset within a period of 30 days, which is extendable to 60 days is directory provision.
Supreme Court Bench said that the SARFAESI Act was enacted with the intention to empower banks and financial institutions for recovery, so they have the power to take possession of a secured asset and sell them to realise their dues.
If the District Magistrate is unable to take possession of the secured asset within the prescribed time then will it render the District Magistrate Functus Officio?
Apex Court opined that the time limit prescribed in the Act had been fixed to impress upon the authority to take possession of the asset within the prescribed time period.
However, if the District Magistrate is unable to take the possession, then it will not render the District Magistrate Functus Officio.
It was further observed that the time limit was there to instil confidence in the creditors that the DM will attempt to deliver the possession within the time period.
If the DM is unable to take possession, then the reasons should be given in writing.
Limitations of High Courts to pass interim orders:-
On the issue that the aggrieved parties and borrowers approach the High Court under Article 227 or 226 without availing the statutory remedy, the Court opined that the High Courts were well aware of limitations of their jurisdictions when effective alternative remedies were available, and such interim orders should not be passed easily.
