C. Bright Vs. The District Collector & Ors.

Judges name: Hon’ble Judges L. Nageswara Rao J, Hemant Gupta J & Ajay Rastogi J 

Order dated: 05.11.2020 

Facts of the Case:

  • The challenge in the 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, 20021 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 Supreme court discussed the issue whether section 14 of the SARFAESI Act a mandatory provision or directory provision?

Supreme Court held:

  • The Court held that keeping the objective of the SARFAESI Act in mind, the time limit to take action by the District Magistrate has been fixed to impress upon the authority to take possession of the secured assets. However, inability to take possession within time limit does not render the District Magistrate Functus Officio.
  • Further it stated that the time limit is to instill a confidence in creditors that the District Magistrate will make an attempt to deliver possession as well as to impose duty on the District Magistrate to make an earnest effort to comply with the mandate of the statute to deliver the possession within 30 days and for reasons to be recorded within 60 days. The remedy under Section 14 of the SARFAESI Act is not rendered redundant if the District Magistrate is unable to handover the possession. The District Magistrate will still be enjoined upon, the duty to facilitate delivery of possession at the earliest.
  • The Court held that section 14 of the SARFAESI Act is not to be interpreted literally without considering the object and purpose of the Act. If any other interpretation is placed upon the language of Section 14, it would be contrary to the purpose of the Act.
  • The court also held that the interim orders should generally not be passed without hearing the secured creditor as interim orders defeat the very purpose of expeditious recovery of public money. The borrowers and other aggrieved persons invoking the jurisdiction of the High Court under Articles 226 or 227 of the Constitution of India without availing the alternative statutory remedy should first resort to affective alternative remedies. 

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