C. BRIGHT Vs. DISTRICT COLLECTOR
LAWS(SC)-2020-11-15
SUPREME COURT OF INDIA (FROM: KERALA)
Decided on November 05,2020

C. Bright Appellant
VERSUS
DISTRICT COLLECTOR Respondents


Referred Judgements :-

GARBARI UNION COOP. AGRICULTURAL CREDIT SOCIETY LTD. VS. SWAPAN KUMAR JANA [REFERRED TO]
MANISH MAKHIJA VS. CENTRAL BANK OF INDIA AND ORS [REFERRED TO]
MONTREAL STREET RAILWAY COMPANY VS. NORMANDIN [REFERRED TO]
NEW INDIA ASSURANCE COMPANY LIMITED VS. HUH MULTIPURPOSE COLD STORAGE PRIVATE LIMITED [REFERRED TO]
DATTATRAYA MORESHWAR VS. STATE OF BOMBAY [REFERRED TO]
HARI VISHNU KAMATH VS. AHMAD ISHAQUE [REFERRED TO]
STATE OF UTTAR PRADESH MANBODHAN LAL SRIVASTAVA VS. MANBODHAN LAL SRIVAITAVA:STATE OF UTTAR PRADESH [REFERRED TO]
STATE OF UTTAR PRADESH VS. BABU RAM UPADHYA [REFERRED TO]
REMINGTON RAND OF INDIA LIMITED VS. WORKMEN [REFERRED TO]
RESERVE BANK OF INDIA UNION OF INDIA PEERLESS GENERAL FINANCE AND INVEST MENT CO LIMITED STATE OF WEST BENGAL VS. MENT COMPANY LIMITED:PEERLESS GENERAL FINANCE AND INVEST MENT COMPANY LIMITED:RESERVE BANK OF INDIA:PEERLESS GENERAL FINANCE AND INVEST MENF COMPANY LIMITED [REFERRED TO]
T V USMAN VS. FOOD INSPECTOR TELLICHERRY MUNICIPALITY TELLICHERRY [REFERRED TO]
NASIRUDDIN VS. SITA RAM AGARWAL [REFERRED TO]
P T RAJAN VS. T P M SAHIR [REFERRED TO]
MARDIA CHEMICALS LIMITED VS. UNION OF INDIA [REFERRED TO]
TRANSCORE VS. UNION OF INDIA [REFERRED TO]
UNION OF INDIA VS. A K PANDEY [REFERRED TO]
UNITED BANK OF INDIA VS. SATYAWATI TONDON [REFERRED TO]
SHIVESHWAR PRASAD SINHA VS. DISTRICT MAGISTRATE OF MONGHYR [REFERRED TO]
DIPAK BABARIA VS. STATE OF GUJARAT [REFERRED TO]
HARSHAD GOVARDHAN SONDAGAR VS. INTERNATIONAL ASSETS RECONSTRUCTION CO LTD [REFERRED TO]
NOMITA CHOWDHURY VS. THE STATE OF WEST BENGAL [REFERRED TO]
HINDON FORGE PVT. LTD. VS. STATE OF UTTAR PRADESH [REFERRED TO]



Cited Judgements :-

ASSET RECONSTRUCTION COMPANY INDIA LTD. VS. STATE OF U.P. [LAWS(ALL)-2022-5-114] [REFERRED TO]
A.PONNUSAMY VS. AUTHORISED OFFICER AND OTHERS [LAWS(MAD)-2021-10-8] [REFERRED TO]
S.JEYAPAL VS. AUTHORISED OFFICER [LAWS(MAD)-2021-11-67] [REFERRED TO]
DREDGING AND DESILTATION COMPANY PVT. LTD. VS. MACKINTOSH BURN AND NORTHERN CONSORTIUM [LAWS(CAL)-2021-4-43] [REFERRED TO]
SHREE BALAJI ENTERPRISES VS. AUTHORIZED OFFICER, BANK OF BARODA [LAWS(RAJ)-2022-2-59] [REFERRED TO]
MANICKAM @ THANDAPANI VS. VASANTHA [LAWS(SC)-2022-4-125] [REFERRED TO]
S. PANDIYAKUMARI VS. LAKSHMI VILAS BANK [LAWS(MAD)-2021-10-39] [REFERRED TO]
SEWA NAND RAVINDER KUMAR AND COMPANY VS. UNION BANK OF INDIA [LAWS(DLH)-2021-11-225] [REFERRED TO]
MANGALAGIRI TEXTILE MILLS PVT LTD VS. STATE BANK OF INDIA [LAWS(APH)-2022-2-15] [REFERRED TO]
STATE BANK OF INDIA VS. CHIEF JUDICIAL MAGISTRATE, KOLLAM [LAWS(KER)-2021-9-59] [REFERRED TO]
MARUTEE AGRO FOODS VS. AUTHORISED OFFICER, CENTRAL BANK OF INDIA [LAWS(MAD)-2021-11-83] [REFERRED TO]
MOHAMED KASIM SHAFEEQ VS. REGIONAL MANAGER [LAWS(MAD)-2021-10-1] [REFERRED TO]


JUDGEMENT

HEMANT GUPTA, J. - (1.)The challenge in the present appeal is to an order passed by the Division Bench of the Kerala High Court of 19.7.2019, whereby it was held that Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002[1] mandating the District Magistrate to deliver possession of a secured asset within 30 days, extendable to an aggregate of 60 days upon reasons recorded in writing, is a directory provision. The High Court held as under:
"18. The primary question in these Writ Petitions, namely, whether the time limits in section 14 of the SARFAESI Act are mandatory or directory should be answered in light of the principles enumerated above. As stated above, the object and purpose of the said time limit is to ensure that such applications are decided expeditiously so as to enable secured creditors to take physical possession quickly and realise their dues. Moreover, as stated earlier, the consequences of non-compliance with the time limit are not specified and the sequitur thereof would be that the district collector/district magistrate concerned would not be divested of jurisdiction upon expiry of the time limit. In this connection, it is also pertinent to bear in mind that if the "consequences of non-compliance" test is applied, the borrower, guarantor or lessee, as the case may be, is not adversely affected or prejudiced, in any manner, whether such applications are decided in 60, 70 or 80 days. On the other hand, the secured creditor is adversely affected if the provision is construed as mandatory and not directory in as much as it would delay the process of taking physical possession of assets instead of expediting such process by entailing the filing of another application for such purpose. For all these reasons, the time limit stipulation in the amended Section 14 of the SARFAESI Act is directory and not mandatory."

[1] For short "the Act"

(2.)The High Court examined Section 14 of the Act as amended, which reads thus:
"14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.- (1)

xx xx xx

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 asset within a period of thirty days from the date of application:

Provided also 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 period not exceeding in the aggregate sixty days."

(3.)The Act was enacted in the year 2002 for reasons that the legal framework relating to commercial transactions had not kept pace with the changing commercial practices. Further, financial sector reforms resulted in a slow pace of recovery of defaulting loans and mounting level of non-performing assets of banking and financial institutions. The objectives behind the Act, recognised that unlike international banks, banks and financial institutions in India, did not have power to take possession of securities and sell them. The provisions of the Act were upheld by this Court except that of subsection (2) of Section 17 which provided that the Debt Recovery Tribunal shall not entertain an appeal preferred by a borrower unless seventy-five per cent of the amount claimed has been deposited before it[2]. Thereafter, the question as to whether the withdrawal of an application filed under the Recovery of Debts due to Banks and Financial Institutions Act, 1993[3] is a condition precedent to take recourse to the Act was examined by this Court.[4] This Court observed that when Civil Courts failed to expeditiously decide suits filed by the banks, the DRT Act was enacted, however it did not provide for assignment of debts to Securitisation companies. The Act which was enacted thereafter in 2002 sought to further empower the banks and facilitate the recovery of debt. It proceeded on the basis that once the liability of a borrower to repay crystallises; it becomes due and that on account of delay, the account of such borrower becomes substandard and no n- performing.
[2] Mardia Chemicals Ltd. and Ors. vs. Union of India and Ors., (2004) 4 SCC 311

[3] For short "DRT Act"

[4] Transcore vs. Union of India and Another, (2008) 1 SCC 125

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