Court Directs Expeditious Processing of Section 14 Applications, Emphasizing Ministerial Role of Designated Authorities
In a significant ruling, the Madras High Court has directed the Designated Authorities, including Chief Metropolitan Magistrates, Chief Judicial Magistrates, and District Magistrates across Tamil Nadu, to expedite the disposal of applications filed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The court emphasized that the role of these authorities is ministerial, not adjudicatory, and urged them to adhere strictly to statutory timelines to avoid unnecessary litigation and delays.
The division bench, comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan, issued this directive while hearing a writ petition filed by Vijayanand Srinivasan, an auction purchaser seeking possession of a property from Punjab National Bank. Despite the bank receiving full payment and issuing a sale certificate, physical possession of the property had not been transferred due to pending applications under Section 14 of the SARFAESI Act.
The court noted that the delay was due to the application not being numbered, with around 200 similar cases pending before the Chief Judicial Magistrate, Chengalpattu. The bench expressed concern over such delays, highlighting that they contravene the SARFAESI Act's objective of facilitating swift recovery of secured assets to reduce non-performing assets (NPAs) in the banking sector.
Reiterating the Supreme Court's stance, the judgment clarified that the Designated Authorities' role under Section 14 is purely ministerial. They are tasked with verifying limited aspects such as territorial jurisdiction, service of notice under Section 13(2), and compliance with affidavit requirements. The court underscored that these authorities should not engage in adjudicating disputes, which fall under the jurisdiction of the Debts Recovery Tribunal.
The court provided detailed guidelines to ensure compliance, directing that applications under Section 14 should be registered immediately without any pre-registration hearings. It also mandated that any delays beyond the statutory 30-day period, extendable to 60 days with valid reasons, would require a written explanation to be filed with the court.
Furthermore, the court instructed that a notice and opportunity of hearing should be given to tenants or occupants claiming tenancy rights prior to the mortgage, consistent with the principles of natural justice. However, the inquiry should be limited to verifying tenancy claims without adjudicating inter se rights.
The Registrar General has been tasked with circulating the court's directions to all relevant judicial authorities in Tamil Nadu, while the Chief Secretary of the state government will ensure the order reaches all District Magistrates. The court's intervention aims to prevent a flood of writ petitions and ensure the SARFAESI Act's objectives are met efficiently.
Bottom line:-
SARFAESI Act - Directions issued for expeditious disposal of applications under Section 14 by Designated Authorities (CMM/CJM/DM) across Tamil Nadu within prescribed timelines, highlighting their ministerial role and avoiding adjudication of disputes.
Statutory provision(s): SARFAESI Act, 2002 Section 14
Vijayanand Srinivasan v. Punjab National Bank, (Madras)(DB) : Law Finder Doc id # 2917423
