Bank of Maharashtra Vs District Magistrate (Punjab and Haryana High Court)
Summary: Punjab and Haryana High Court disposed of a batch of writ petitions filed by Banks and Financial Institutions seeking expeditious decision and implementation of orders under Section 14 of the SARFAESI Act, 2002. The Court noted persistent delays both in deciding applications and in implementing orders already passed. Taking note of Haryana Government guidelines dated 21.05.2024, the Court directed that applications under Section 14 should be decided by the District Magistrate/Metropolitan Magistrate within the statutory period of 30 days and, where reasons beyond the authority’s control prevent this, within an aggregate period not exceeding 60 days after recording reasons.
Orders passed under Section 14 were directed to be implemented expeditiously and positively within 60 days, subject to orders of a competent court or other legal impediment. Where an application or implementation remains pending beyond 60 days, the affected party may approach the Divisional Commissioner, who must consider the representation within 15 days and issue appropriate directions. Referring to Allahabad Bank Vs. District Magistrate and the Supreme Court decision in Bala Krishna Ram Tarle Vs. Phoenix ARC (P) Ltd., the guidelines recognise that the CMM/DM’s function under Section 14 is administrative or ministerial rather than adjudicatory, and disputes regarding secured creditor action are to be pursued before the DRT.
The Court additionally directed advance notice of at least 15 days before taking physical possession as a desirable measure, appointment of DSP-rank nodal police officers, monthly monitoring, strict compliance with Haryana’s guidelines, and development of a website-based status system. It clarified that these procedural directions did not affect the inter se rights of creditors, borrowers, guarantors or other affected parties. CWP-7018-2022 was separately disposed of as infructuous following settlement. :chatgpt-content-reference{index=”0″}
Cases Discussed
- Allahabad Bank Vs. District Magistrate, CWP No.4916 of 2020 (Punjab and Haryana High Court) — followed in the State guidelines and earlier directions for the principle that the District Magistrate’s role under Section 14 of the SARFAESI Act is administrative, with scrutiny confined to the statutory requirements rather than adjudication of objections that can be raised before the DRT; the present Court also reiterated the earlier direction concerning implementation of Section 14 orders and advance notice before physical possession.
- Bala Krishna Ram Tarle Vs. Phoenix ARC (P) Ltd. (Supreme Court) — relied upon for the principle that the powers exercised by the CMM/DM under Section 14 are ministerial and do not involve adjudication of objections raised by borrowers; once the statutory requirements are satisfied, the CMM/DM has a duty to assist the secured creditor in obtaining possession of the secured assets and related documents. The source states the year as “(2002)”; no corrected citation is supplied because TGCSK does not silently alter source material.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. All the abovesaid writ petitions, details of which are tabulated in the schedule attached at the foot of this order, are taken up for hearing and decision together at request and with consent of learned counsel for parties. Petitioner(s) in these writ petitions i.e. the respective Banks/Financial Institutions(for short FI) seek implementation of orders passed by the District Magistrate/Chief Metropolitan Magistrate of different districts, under Section 14 of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
(hereinafter referred to as the SARFAESI Act).
CWP-7018-2022 (O&M) and other connected matters
2. Facts and circumstances of each writ petition are not being detailed separately for the reason that prayer in all the writ petitions is identical i.e. expeditious implementation of orders passed under Section 14 of SARFAESI Act albeit on different dates in each case. Petitioners complain firstly of delay in decision of application filed under Section 14 of SARFAESI Act as well as subsequent expeditious implementation of such order. The date on which orders under Section 14 of SARFAESI Act were passed in each of the writ petition are tabulated as under:-
Srl. Order under Section No CWP 14 of SARFAESI Act passed on:- 1 7018/2022 22.10.2019 2 11798/2022 04.10.2021 3 4077/2023 25.07.2022 4 18503/2023 04.02.2019 5 2080/2024 18.08.2023 6 2559/2024 14.02.2023 7 2768/2024 20.08.2019 8 3097/2024 19.07.2022 9 4266/2024 19.04.2022 10 4814/2024 21.02.2022 11 5830/2024 18.10.2022 12 6135/2024 21.02.2022 13 6251/2024 22.11.2022 14 6527/2024 05.12.2023 15 9431/2024 02.05.2023 16 9911/2024 27.09.2023 17 10207/2024 25.01.2021 18 10712/2024 07.12.2023
3. It is to be noticed that the question of delay in decision of applications under Section 14 of SARFAESI Act and thereafter the in- action in expeditious implementation of the said orders has continued to vex the Court since long. Co-ordinate Bench on 22.05.2023, passed a common order in the present writ petitions and others directing that a status 2024.06.06 13.19 I attest to the accuracy and integrity of this document CWP-7018-2022 (O&M) and other connected matters -4- report by way of affidavit of competent authority be filed giving the details regarding the number of applications filed and decided besides the applications still pending as well as the number of requests which may have been received for implementation of orders with the number of orders delay implemented. Additional Chief Secretary, Department of Revenue, Haryana, was directed to file as to how many matters after culmination of proceedings under Section 14 of SARFAESI Act are pending in each district of Haryana. As requisite status report was not filed, the Additional Chief Secretary, Department of Revenue, Haryana, vide order dated 28.08.2023, was directed to look into the matter and ensure necessary action. Status report, it is submitted was however filed in CWP-12237- 2023 on 08.11.2023 which was listed alongwith present bunch of cases. In the interregnum some of pending writ petitions were disposed of with possession of the secured assets being delivered. A photocopy of district wise details filed in CWP-28882-2019 furnished in Court today, is taken on record in the present matter as well, as CWP-28882-2019 was disposed of as infructuous on 08.01.2024. The said district wise report reveals that a large number of applications filed under Section 14 of SARFAESI Act remain pending adjudication and a number of orders passed under Section 14 of SARFAESI Act await implementation.
4. Learned counsel for the respondent-State on 14.05.2024 submitted that specific guidelines have been issued to various District Magistrates to ensure implementation of provisions of SARFAESI Act in letter and spirit and specifically the provision of Section 14 thereof. Affidavit dated 28.05.2024 of Deputy Secretary to Government of Haryana, Revenue and Disaster Management, Department furnished in Court today is taken on record, subject to just exceptions. Learned counsel 2024.06.06 13.19 I attest to the accuracy and integrity of this document for the State submits that specific detailed guidelines have been issued to the District Magistrates for strict adherence while passing orders under Section 14 of SARFAESI Act besides steps to be taken for implementation of said orders. Copy of instructions dated 21.05.2024 are attached as Annexure R1/1 with the said affidavit. It is stated in the said guidelines that delay in disposal of applications under Section 14 of SARFAESI Act occurs at two critical levels i.e.
“(i) District Magistrates: At the level of the District Magistrate, there is an undue delay in passing orders on the applications filed under Section 14, despite clear legislative obligation for the District Magistrate to pass suitable orders promptly.
(i1) Enforcement/Implementing Olfficers: Even after the District Magistrate issues order, there is a subsequent delay in the execution or implementation of the same by the Olfficer concerned.”
5. The guidelines so issued to all the Divisional Commissioners, Deputy Commissioners-cum-District Magistrates and District Revenue Officers read as under:-
Part-1 Guidelines for District Magistrates while deciding the applications filed under Section 14 of the SARFAESI Act, 2002
(i) The District Magistrate is required to determine whether secured assets fall within his jurisdiction.
(ii) The application made by a secured creditor under Section 14 of the SARFAESI Act should be disposed of by the District Magistrate preferably within 30 days from the date of filing the application.
(iii) The District Magistrate deciding application under Section 14 is not required to hear borrower or any third party. The act of deciding above said application is purely administrative in I attest to the accuracy and integrity of this document nature. The Hon’ble Punjab and Haryana High Court in CWP No. 4916 of 2020 titled as “Allahabad Bank Vs. District Magistrate” under Section 14 of the SARFAESI Act, 2002 emphasized that the District Magistrate’s role is purely administrative. The District Magistrate’s determination is limited to verifying the factual accuracy of the 9-Point affidavit (statutory requirement) submitted by the bank. Legal validity of the steps taken by the secured creditor, as presented in the affidavit, falls outside the purview of the District. Magistrate’s examination. In case, borrower contests the actions, the appropriate forum is the Debt Recovery Tribunal (DRT). Therefore, the District Magistrate is mandated to promptly decide on the application by confining the assessment of the factual accuracy of the bank’s affidavit
This law point has also been confirmed by the Hon’ble Supreme Court in the matter of ‘Bala Krishna Ram Tarle Vs. Phoenix ARC(P) Ltd.(2002). The relevant portion of order of Hon’ble Supreme Court is as under:-
“… Thus, the powers exercisable by CMM/DM Under Section 14 of the SARFAESI Act are ministerial step and Section 14 does not involve any adjudicatory process qua points raised by the borrowers against the secured creditor taking possession of the secured assets. In that view of the matter once all the requirements Under Section 14 of the SARFAESI Act are complied with/satisfied by the secured creditor, it is the duty cast upon the CMM/DM to assist the secured creditor in obtaining the possession as well as the documents related to the secured assets even with the help of any officer subordinate to him and/or with the help of an advocate appointed as Advocate Commissioner…”
iv) The applications filed under Section 14 shall be prioritized on the basis of ( its date of filing and total claim of bank as on the date of filing the application. Priority shall be given to the cases requiring immediate action.
(v) The District Magistrate shall prepare a comprehensive list of all pending applications within 30 days in the form of Google I attest to the accuracy and integrity of this document sheet. The same shall be uploaded and regularly updated for monitoring at level of Divisional Commissioner. A real time detailed report regarding status of pending applications and reasons for pendency shall be updated in the Google sheet regularly on weekly basis.
(vi) The Divisional Commissioner concerned shall be monitoring authority upon the District Magistrates within the Division concerned in his territorial jurisdiction in matter of deciding applications under Section 14. of SARFAESI Act, 2002.
(vii) Any secured creditor whose application has not been decided within 60 days from the date of application may make a representation to the Divisional Commissioner concerned. The Divisional Commissioner after considering representation and after satisfying that there is no justifiable reason in deciding the matter in time, may pass administrative directions to the
District Magistrate to decide the matter without any delay.
Part-2 Guidelines for expeditious implementation of orders passed by the District Magistrate.
(i) Every order passed by the District Magistrate under Section 14 of the SARFAESI Act shall be endeavored to be implemented not later than 30 days from the date of the passing of the order.
(ii)) To mitigate delays due to unavailability of designated Officer, the District Magistrate shall adopt a system that does not rely on individual Officer for execution task. The District Revenue Officer of the District concerned shall be appointed as Nodal Officer, who shall be responsible for overseeing the execution of orders within the stipulated time frame of 30-days, ensuring a systematic and timely approach to all execution- related activities.
(iii) The District Magistrate shall create an exhaustive, execution mechanism, ensuring timely implementation of his orders.
(iv) The office of the District Magistrate shall maintain a
I attest to the accuracy and integrity of this document meticulous, case- specific execution register for all Section 14 orders. This register is crucial for effective monitoring and management of the execution process, providing a transparent record of all actions taken. The District Magistrate shall regularly review the execution/ implementation proceedings with the Nodal Officer on weekly basis and submit report to the Divisional Commissioner concerned.
The District Magistrate shall compile a detailed monthly report highlighting the status and outcomes of each case, along with specifics of order execution and upload the same for ensuring a consistent review mechanism, promoting accountability and informed oversight of the execution process.
(v) The District Magistrate shall ensure police protection to the Implementing Officers, if required, while implementing the orders made upon application under Section 14 of the SARFAESI Act, 2002.
(vi) The Divisional Commissioner concerned shall be the monitoring authority in the matters of implementation of orders as well. He shall submit a monthly report giving the details of each and every case of his Division to the Additional Chief Secretary to Government of Haryana, Revenue and Disaster Management Department, Haryana.
(vii) The Secretary Revenue/Special Secretary Revenue concerned shall monitor the overall implementation on behalf of the Financial Commissioner Revenue-cum-Additional Chief Secretary, Revenue & Disaster Management Department and submit quarterly report of all Divisional Commissioners for the perusal and appropriate orders of the Government.
(viii) All the Managers (LDMs) in lead banks shall share the data of all the pending cases under SARFAESI Act and shall coordinate with District Magistrate-cum-Deputy Commissioner for speedy disposal.”
6. Learned counsel for the State assures that steps for proper implementation of the SARFAESI Act in letter and spirit shall be taken and and other connected matters that all pending applications under Section 14 of SARFAESI Act will be decided by 30.07.2024 and all orders which stand passed under the said Section shall be implemented by said date. This indulgence, it is submitted, is being sought in view of ongoing General Elections with polling having concluded on 25.05.2024.
7. It is to be noticed that on earlier occasions, the matters pertaining to State of Haryana as well as Punjab had been taken up on the same dates and certain directions were passed in CWP-11499-2019 pertaining to the State of Punjab. Matters pertaining to the State of Punjab stand disposed of on 14.05.2024 (CWP-11499-2019 and connected matters) with certain directions being issued. We further take note of the fact that guidelines/instructions dated 21.05.2024 placed before us are almost identical/akin to instructions dated 21.04.2024 which have been issued by the State of Punjab and as have been reproduced in order dated 14.05.2024 in CWP-11499-2019 and connected matters. In order to further streamline the process of disposal of applications filed under Section 14 of SARFAESI Act and effective implementation of orders passed thereunder, similar directions as under are passed in the present writ petitions as well:-
i. Application filed by the secured creditor under Section 14 of SARFAESI Act should be disposed of by District Magistrate/Metropolitan Magistrate within the stipulated statutory period i.e. 30 days from the date of application and if the order is not passed within the said period for reasons beyond his control, he may after recording reasons in writing for the same pass the order within a period not exceeding an aggregate of 60 days.
ii. Such order as passed under Section 14 of SARFAESI Act should be implemented expeditiously and positively within a period of 60 days as had been directed vide order dated 06.09.2021 in CM-3178-CWP- 2024.06.06 13.19 I attest to the accuracy and integrity of this document 2021 in CWP-4916-2020 subject to order(s), if any of Court of competent jurisdiction or any legal impediment. In case the order under Section 14 of SARFAESI Act is not implemented within 60 days the officer entrusted with the duty of implementation of the order shall submit a specific report giving reasons for non- implementation of the order and the same should be put up before the District Magistrate within a week of submission of this report who shall immediately pass appropriate orders for implementation of the order under Section 14 of SARFAESI Act.
iii. Any party whose application under Section 14 of SARFAESI Act has not been disposed of within 60 days of its filing or the order passed under Section 14 of SARFAESI Act has not been implemented within 60 days of passing the said order would be entitled to represent before the Divisional Commissioner concerned, who shall within 15 days of receipt of such representation consider the same and issue appropriate directions for decision of the application under Section 14 of SARFAESI Act or implementation of the order passed under Section 14 of SARFAESI Act as the case may be.
iv. As observed in order dated 06.09.2021 in CWP-4916-2020 that though there is no provision for an advance notice to be given to the occupant/owner of the property before taking physical possession, but it would be desirable, that an advance notice of at least 15 days be served on the occupant before taking physical possession by the officer so deputed by the District Magistrate, so that persons to be dispossessed are not caught unawares.
v. Any person aggrieved of any order under Section 14 of SARFAESI Act needless to say is entitled to avail his remedy under Section 17 of SARFAESI Act.
vi. It shall be the duty of the Bank/FI to immediately inform the office of the implementing Authority/District Magistrate about any settlement etc. with the borrower. In case settlement is ultimately not possible, the Bank/FI is at liberty to file appropriate application before District Magistrate, upon which necessary action for securing possession be directed to be resumed.
vii. Guidelines dated 21.05.2024, issued to the Divisional Commissioners/Deputy Commissioners/District Revenue Officers in the State of Haryana as attached with affidavit dated 28.05.2024 of Deputy Secretary to Government of Haryana, Revenue and Disaster Management, Department, Haryana, Chandigarh, should be strictly complied with.
viii. Senior Police official not below the rank of DSP, be appointed as Nodal Officer in all the districts for monitoring the matters in respect to SARFAESI Act.
ix. Regular monitoring of all pending applications under Section 14 of SARFAESI Act/implementation thereof shall be carried out firstly at the level of the District Magistrate and then at the level of Financial Commissioner, Revenue, on a monthly basis to ensure expeditious disposal. In case, it is found that proceedings have been postponed for frivolous grounds, disciplinary action may be taken in accordance with law.
x. The State would take necessary steps to put in place a system whereby the entire information about filing of applications under Section 14 of SARFAESI Act and their status is reflected on the website of the Department itself.
8. It is clarified that by way of this order inter se rights of the creditors, borrowers, guarantors or other effective parties are not to be effected or modified as these directions are being issued purely to streamline disposal of applications under Section 14 of SARFAESI Act and implementation of the provisions in letter and spirit.
9. Learned counsel for respondent-State at this stage submits that CWP-7018-2022 seeking implementation of order dated 22.10.2019, passed by District Magistrate, Hisar, under Section 14 of SARFAESI Act is rendered infructuous as it has been informed that petitioner has amicably settled the matter with borrower. Learned counsel for petitioner affirms and verifies that the matter has indeed been amicably settled with the borrower and this writ petition is rendered infructuous.
10. Accordingly, CWP-7018-2022 is disposed of as infructuous and all the other writ petitions are disposed of in terms of directions as above.
11. Before parting with the order, we direct that a comprehensive status report be filed to indicate decision of pending applications under Section 14 of SARFAESI Act and implementation of orders in question in terms of the statement made before us by learned counsel for the State that necessary steps shall be taken by 30.07.2024. Status report in this regard be submitted on or before 21.08.2024 alongwith the status of other pending applications under Section 14 of SARFAESI Act. The matter be put up on 30.08.2024 only for this purpose.
