Statutory Competence of a Chief Judicial Magistrate to Act under the Provisions of Section 14 of SARFAESI Act [JUDGMENT]

Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 - Statutory competence of a Chief Judicial Magistrate to act under the provisions of Section 14.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN

THURSDAY, THE 15TH DAY OF NOVEMBER 2018 / 24TH KARTHIKA, 1940

WP(C).No. 36918 of 2018

PETITIONERS:

POULY @ THRESSIA AND ANOTHER

BY ADVS.SRI.K.P.DANDAPANI (SR.) SMT.JIJI M. VARKEY SMT.SAVITHA GANAPATHIYATAN SRI.M.M.SHAJAHAN SRI.SHAJI CHIRAYATH

RESPONDENTS:

1 UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES, 3RD FLOOR, JEEVAN DEEP BUILDING, SANSAD MARG, NEW DELHI, PIN-110001, REPRESENTED BY ITS FINANCE SECRETARY.

2 INDIAN OVERSEAS BANK, CENTRAL OFFICE, 763, ANNA SALAI, CHENNAI, TAMIL NADU, PIN- 600 002, REPRESENTED BY ITS MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, MR.R.SUBRAMANIAKUMAR.

3 ASSISTANT GENERAL MANAGER, INDIAN OVERSEAS BANK, ERNAKULAM BRANCH, M.G.ROAD, ERNAKULAM-602035.

4 AUTHORISED OFFICER, INDIAN OVERSEAS BANK, ERNAKULAM BRANCH, M.G.ROAD, ERNAKULAM DISTRICT, PIN- 602035, REPRESENTED BY MR.VASANTHAKUMAR.P., AGED 60 YEARS, SON OF MR.PADAMARAJAN, RESIDING AT CHAMMANIKODATH ROAD, PALARIVATTOM (PO), ERNAKULAM DISTRICT-602 025.

BY ADV.SRI.K.THYAGARAJESWARAN, CGC R2 TO R4 BY ADV. SRI.SUNIL SHANKER SRI.S.EASWARAN- AMICUS CURIAE

J U D G M E N T

The petitioners have filed this writ petition calling into question the statutory competence of a Chief Judicial Magistrate to act under the provisions of Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act ('the SARFAESI Act' for brevity).

2. According to the petitioners, Section 14 vests jurisdiction, to assist the secured creditor in taking possession of a secured asset, only with a Metropolitan Magistrate or a District Magistrate, within whose jurisdiction any such secured asset is situated or found. They contend that since the Government of Kerala has not declared Ernakulam District as a Metropolitan area under the provisions of the Code of Criminal Procedure, the Chief Judicial Magistrate would obtain no jurisdiction to act under the mandate of Section 14 of the SARFAESI Act, because the word 'Magistrate' in Section 14 can be construed only in relation to a Metropolitan area, as being a Metropolitan Magistrate.

3. After predicating as afore, the petitioners submits that these issues are now under the seizin of the Hon'ble Supreme Court of India in SLP No.4665/2016, in a matter arising from a judgment of this Court in P.M.Kelukutty & Ors. v. Young Mens Christian Association & Ors. (W.A.No.135/2016 dated 11.02.2016). The petitioners, therefore, pray that the impugned order, issued by the Chief Judicial Magistrate acting under Section 14 of the SARFAESI Act, be set aside as having been issued without jurisdiction.

4. I have heard Sri.K.P.Dandapani, learned Senior Counsel, assisted by Sri.Shaji Chirayath, learned counsel appearing for the petitioners, Sri.Sunil Sankar, learned Standing Counsel for respondents 2 to 4 and the learned Central Government Counsel appearing for the first respondent as also Sri.S.Easwaran, learned Amicus Curiae.

5. Sri.K.P.Dandapani, the learned Senior Counsel appearing for the petitioners, commenced his submissions by asserting that at least three High Courts other than the Kerala High Court, have extensively considered this issue and have answered conclusively that a Chief Judicial Magistrate cannot exercise the powers under Section 14 of the SARFAESI Act. He refers to the Full Bench judgment of the Madras High Court (Madurai Bench) in K.Arockiyaraj and Ors. v. The Chief Judicial Magistrate, Srivilliputhur and Ors. (AIR 2013 Mad 206) and to the Division Bench judgment of the Bombay High Court (Aurangabad Bench) in IndusInd Bank Ltd. v. The State of Maharashtra (2008 (110) BomLR 2880) in support of his contentions. He says that the Calcutta High Court has also answered this issue in the very same manner. He then proceeds to submit that the judgment of this Court in W.A.No.135/2016, namely P.M.Kelukutty & Ors. v. Young Mens Christian Association & Ors., is now pending in a Special Leave Petition before the Hon'ble Supreme Court and that the Hon'ble Court has issued an interim order in the following manner:

'One of the question which arises for consideration in these special lave petitions is as to the jurisdiction of the Chief Judicial Magistrate to exercise powers under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, as Section 14 of the Act mentions only two officers who can exercise the powers, namely, the Chief Metropolitan Magistrate or the District Magistrate. There are conflicting judgments of the various High Courts.

Calcutta, Bombay and Madras High Courts have taken a view that the Chief Judicial Magistrate has no power to entertain the applications filed under Section 14 of the aforesaid Act whereas Kerala, Andhra Pradesh and Allahabad High Courts have taken a view that the Chief Judicial Magistrate can exercise the powers.

During the course of hearing, we find that against the judgment dated 27th August, 2013 of the High Court of Madras, this Court vide order dated 18th August, 2015 in Civil appeal No.6295 of 2015 (arising out of SLP (Civil) no.3311 of 2015) has granted leave.

It will be appropriate and in the interest of justice that these matters be tagged with Civil appeal No.6295 of 2015 and heard together.

We may mention here that the question of competency of the Chief Judicial Magistrate to entertain the application filed under Section 14 of the Act was neither raised before the High Court nor taken in the special leave petitions but as it goes to the root of the matter being purely a question of law and jurisdiction to exercise the powers by the Chief Judicial Magistrate, we have permitted the learned counsel appearing for the parties to address the Court on this issue also. More so when the issue is sub-judice in appeal before this Court. These petitions shall not be treated as part-heard.

Tag with Civil appeal No.6295 of 2015.

Let the papers be placed before Hon'ble the Chief Justice of India for passing appropriate orders.”

6. Pointing particularly to the fourth paragraph afore, the learned Senior Counsel asserts that the Hon'ble Supreme Court has thus found an apparent discord between the view taken by the High Courts of Calcutta, Bombay and Madras vis-a-vis the view taken by this Court and the High Courts of the Andhra Pradesh and Allahabad and it is, therefore, that the Hon'ble Court has placed the matter for further consideration before an appropriate Bench, holding that it goes to the root of the matter being purely a question of law and jurisdiction.

7. The learned Senior Counsel, thereafter, prays that in deference to the views expressed by the Hon'ble Supreme Court in the afore-extracted order, this Court may direct the Bank not to proceed further with the proceedings under the SARFAESI Act and to set aside the orders impugned herein.

8. Even though I hear the learned Senior Counsel as afore, it is uncontested before me that at least two judgments of this Court, both delivered by Division Benches, have answered the question of jurisdiction of the Chief Judicial Magistrate, to act under Section 14 of the SARFAESI Act, in the affirmative. The first of the said judgments is in Muhammed Ashraf & Another v. Union of India and Other (2008 (4) KLT 1) and the other being Radhakrishnan V.N. v. State of Kerala (ILR 2008 (4) Ker. 863).

9. Looking closely at these judgments, as has been rightly submitted by the learned Standing Counsel for the Bank, this issue was elaborately considered in Muhammed Ashraf (supra) with reference to the provisions of the Cr.P.C. as also the SARFAESI Act and it was concluded, leaving no room for doubt, that a Chief Judicial Magistrate is also authorised by law to act under the provisions of Section 14 of the SARFAESI Act. The learned Standing Counsel thereafter points out that in Radhakrishnan V.N. (supra), another Division Bench of this Court affirmed the views and holdings in Muhammed Ashraf (supra) and refused to refer the matter to a Full Bench, even though it was so prayed for by the appellants therein.

10. That said, I must also record that the matter now pending before the Hon'ble Supreme Court in P.M.Kelukutty (supra) is not one in which the power of the Chief Judicial Magistrate to act under Section 14 of the SARFAESI Act was posed as an issue in question. As is ineluctable from the afore-extracted order, the Hon'ble Supreme Court has clearly recorded that the question of competence of the Chief Judicial Magistrate was neither raised before the High Court nor taken in the Special Leave petitions, but that their Lordships are persuaded to consider this question; it being a pure question of law, going to the root of jurisdiction. However, pertinently, after saying so, their Lordships have chosen not to stay any of the judgments of the various High Courts, which sanctions such power to the Chief Judicial Magistrate, clearly indicating that the intention of the Hon'ble Supreme Court was not to stop the proceedings before the Chief Judicial Magistrate, pending the SLP.

11. The constitutive question thus, is whether merely because an SLP is pending against the judgment in W.A.No. 135/2016 and which is not stayed in any manner by the Hon'ble Supreme Court, I would be proscribed from exercising jurisdiction to consider whether the Chief Judicial Magistrate has acted correctly in issuing the impugned orders. I am certain that I am under no such restraint particularly because I do not require to consider this issue ab ovo, it being no longer res integra on account of the above two judgments of this Court. Further, Judicial discipline mandates that I follow the binding judgments of the Division Bench even if I may, for any reason, doubt; it in which event, I can only refer the matter to a Division Bench; but I am certain in my mind that in this case I find absolutely no reason to differ from the views expressed in the aforementioned judgments of the two Division Benches of this Court.

12. When such binding precedents are available, I do not think that I am incapacitated from following them or in considering and disposing of this writ petition in tune with the declaration of law in Muhammed Ashraf (supra) and Radhakrishna V.N. (supra) solely because an SLP is pending against another judgment, particularly when the Hon'ble Court has granted no stay of any judgment of any High Court expressing views on the issue herein either way. In fact, it is my obligation to do so, as has been emphatically declared by another Division Bench of this Court in Abdu Rahiman v. District Collector, Malappuram and Another (2009 (4) KHC 283 (DB)), which inexorably states as follows:

“The learned Single Judge should not have ignored the two Division Bench decisions on the ground that in the appeal filed against one of the said decisions before the Apex Court, there was a stay against it. Even when a decision of Division Bench of this Court is stayed by the Apex Court, the learned Single Judges of this Court are bound to follow the decision of the Division Bench, as it continues to be a binding precedent for them. The interim order of stay only relieves the concerned parties from obeying the judgment under appeal.”

13. Since the afore-extracted view of the Division Bench is that the Single Bench is bound to follow its judgment even if it is stayed by the Hon'ble Supreme Court, it would require no further expatiation to conclude that I am completely bound by the afore Division Bench judgments when they have concededly not been stayed by the Hon'ble Supreme Court.

In the afore circumstances, I dismiss this writ petition following the views and conclusions of the two Division Benches of this Court in Muhammed Ashraf (supra) and Radhakrishnan V.N. (supra) and leave liberty to the petitioners to approach the competent statutory forum for invoking the alternative remedies, if they are so desirous, as per law.