Magistrate's Role Under Section 14 of SARFAESI Act Limited to Ministerial Functions, Rules High Court
In a significant judgment, the Kerala High Court, presided by Justice P.V. Balakrishnan, has quashed an order by the Special Additional Chief Judicial Magistrate, Ernakulam, that referred a SARFAESI Act application to mediation. The case involved Axis Bank Ltd., the petitioner, who sought the court's assistance to take physical possession of a secured asset due to a borrower's default. The High Court clarified that under Section 14 of the SARFAESI Act, the role of the Chief Judicial Magistrate (CJM) or Additional Chief Judicial Magistrate (ACJM) is purely ministerial and does not encompass any quasi-judicial functions or adjudicatory processes.
The court emphasized that a magistrate's powers under Section 14 are limited to verifying the statutory compliance of the application and facilitating the transfer of possession of the secured asset to the secured creditor. The court cited previous rulings by the Supreme Court and the Kerala High Court, which reinforced that referring a matter for mediation under Section 14 is beyond the Magistrate’s scope of authority.
The High Court highlighted that the SARFAESI Act mandates a time-bound procedure, requiring the magistrate to pass orders for possession within 30 days, extendable up to 60 days. The adherence to this timeline is crucial for the enactment's essence and spirit, the court noted.
As a result, the writ petition filed by Axis Bank was allowed, and the order by the Magistrate referring the case to mediation was set aside. The High Court directed the Magistrate to proceed with the application as per the SARFAESI Act’s provisions.
Bottom line:-
The power exercised by the Chief Judicial Magistrate/Additional Chief Judicial Magistrate under Section 14 of the SARFAESI Act is ministerial and does not involve any quasi-judicial function or adjudicatory process. Referring a matter for mediation under such an application is beyond the scope of the Magistrate's powers.
Statutory provision(s): SARFAESI Act, 2002, Section 14
The Authorized Officer, Axis Bank Ltd. v. Reji Paulose, (Kerala) : Law Finder Doc id # 2917910
