1. Rule. By consent of learned Counsel for the parties, rule made returnable forthwith and matter is taken up for final disposal. Heard learned Counsel for the petitioner and learned APP for the Respondent.

2. Both matters can be considered and disposed of, by common order, because the issue involved in both the matters, is common.

3. The Petitioner has approached this court, feeling aggrieved by the orders passed by the learned Chief Judicial Magistrate, Aurangabad, ("CJM" for short) on 4.3.2008 in Criminal M.A. Nos. 231 and 232 of 2008. Suffice it to say that the petitioner-bank had approached the CJM with applications under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("NPA Act" for brevitys sake). The applications are rejected by learned CJM with common line of reasons and we quote the observations:

...Therefore, by this application, Petitioner has prayed for assistance in taking possession of secured assets. Heard learned Counsel for the applicant. He relied on 2007 (1) Bom. C.R. (Cri.) 783. On perusal of judgment cited it is seen that there was decree passed by D.R.T. in favour of said Petitioner, who had prayed for such assistance in taking possession of secured assets by filing application before C.M.M. Admittedly, in our case nowhere Petitioner has come with the case that, he has obtained decree in his favour from competent court D.R.T. and in execution of same he is in need of assistance of this criminal Court.

4. Because of the writ petitions filed by the petitioner, we are required to consider the issue;

Whether, a creditor requesting assistance under Section 14(1) of the NPA Act is required to be armed with a decree for recovery of dues from the borrower, from competent court or D.R.T.?

It appears that the judgment rendered by Division Bench at Bombay of this High Court, in the matter of Trade Well and Anr. v. Indian Bank and Anr. 2007 (1) Bom. C.R. (cri.) 783, was placed before the learned CJM and reading the facts from that judgment, the learned CJM has taken a view that in the reported matter, there was a decree passed by DRT in favour of the creditor therein (respondent in that writ petition) and because the present writ petitioner, who is creditor and seeking assistance from the CJM for taking possession of secured assets as under Section 14(1)(a) of the NPA Act, is not armed with a decree against the borrower, from the competent court or DRT, the learned CJM felt that the present petitioner is not entitled to assistance of the CJM for taking possession of the secured assets. At present, we are concerned with these observations of the learned CJM.

5. During the course of his submissions, Advocate Shri S.S. Gangakhedkar, has submitted that on going through the entire judgment in the matter of Trade Well (supra), it appears that the court has not laid down a ratio as understood by the CJM i.e. assistance under Section 14(1) of the NPA Act cannot be availed by a creditor, unless he is armed with a decree of competent court/DRT. Learned APP Shri Dighe, upon going through the judgment, has accepted this position.

Even on going through opening part of the judgment, we can gather as to what question court was dealing with. We quote:

The question which arises in these writ petitions is whether while dealing with written request made by a secured creditor under Section 14 of Financial Assets and Enforcement of Security Interest Act (for short, "the NPA Act"), the Chief Judicial Magistrate or the District Magistrate as the case may be is required to give notice to the borrower or any person who may be in possession of secured asset and give him a hearing?

As the court was seized only of this question and no other issue, the observations of the court on any other issue will have to be treated as "obiter dictum" and not "ratio decidendi".

The court has recorded its ten conclusions in paragraph 90 and first four conclusions (1 to 4) pertain to Section 14, which we reproduce and to which we shall advert little later.

(1). The bank or financial institution shall, before making an application under section 14 of the npa act, verify and confirm that notice under Section 13(2) of the NPA Act is given and that the secured asset falls within the jurisdiction of CMM/DM before whom application under Section 14 is made. The bank and financial institution shall also consider before approaching CMM/DM for an order under Section 14 of the NPA act, whether Section 13 of the NPA Act excludes the application of Sections 13 and 14 thereof to the case on hand.

(2). CMM/DM acting under section 14 of the npa act is not required to give notice either to the borrower or to the 3rd party.

(3). He has to only verify from the bank or financial institution whether notice under Section 13(2) of the NPA Act is given or not and whether the secured assets fall within his jurisdiction. There is no adjudication of any kind at that stage.

(4). It is only if the above conditions are not fulfilled that the CMM/DM can refuse to pass an order under section 14 of the npa act by recording that the above conditions are not fulfilled. If these two conditions are fulfilled, he cannot refuse to pass an order under Section 14.

Even on going through all ten conclusions, we do not find the court laying down ratio as understood by learned CJM, Aurangabad.

In fact, in taking a view as recorded by learned CJM, Aurangabad, he has practically set the provisions of the NPA Act, at knot.

6. We may simply reproduce the statement of objects and reasons and certain provisions from the NPA Act which clearly indicate that this is a special legislation enabling the creditor to recover his dues by taking measures as provided in the NPA Act and in the manner as prescribed in the said Act, without getting entangled in the legal process and the delay or time consumption that occurs when a party is required to recover its dues through legal proceedings.

Statement of Objects and Reasons:- The financial sector has been one of the key drivers in Indias efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with the international prudential norms and accounting practices, there are certain areas n which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting level of non-performing assets of banks and financial institutions. Narsimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These Committees, inter alia, have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions to take possession of securities and to sell them without the intervention of the Court. Acting on these suggestions, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 was promulgated on the 21st June, 2002 to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. The provisions of the Ordinance would enable banks and financial institutions to realise long term assets, manage problem of liquidity asset liability mismataches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction.

Section 13, whichis regarding enforcement of security interest and more particularly Sub-section (1) of it, reads thus;

13. Enforcement of security interest:

(1). Notwithstanding anything contained in Section 69 or Section 69-A of the Transfer of Property Act, 1882 (4 of 1982), any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or tribunal, by such creditor in accordance with the provisions of this Act.

Sub-section (2) of Section 13 of the Act, requires the creditor to give a notice to borrower whose debt is classified by the secured creditor as NPA, inviting the borrower to discharge, in full; his liabilities to the secured creditor, within sixty days from the date of notice and failing which, the secured creditor is held entitled to exercise all or any of the rights under Sub-section (4).

Sub-section (3) requires the secured creditor to give details regarding amount due from the borrower and the secured assets against which the secured creditor desires to proceed, in case of failure on the part of the borrower to comply with notice under Section 13(2).

Again we may refer to some part of text of Sub-section (4) of Section 13, and the opening part reads;

In case the borrower fails to discharge his liability in full within the period specified in Sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:

(a). take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

(b). take over the management of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realise the secured asset;

(c). appoint any person (hereinafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;

(d). require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.

Sub-section (12) of Section 13 reads:

The rights of a secured creditor under this Act may be exercised by one or more of his officers authorised in this behalf in such manner as may be prescribed.

Sub-section (13) practically operates as injunction against the borrower, either from alienating or transferring or creating encumbrance against the secured assets.

On going through the entire section 13 of the npa act, it is clear that it makes no reference to any judicial forum which the secured creditor is required to approach before taking steps, as permitted by Sub-section (4). The only condition required to be fulfilled by secured creditor, is serving of a notice under Section 13(2). By virtue of insertion of amended Sub-section (3-A), the secured creditor is also required to communicate reasons to the borrower as to why representation of the borrower is not acceptable to the creditor. By reference to text of Sub-section (3-A), it is evident that mere rejection of the representation of the borrower, does not give the borrower a cause of action to approach DRT under Section 17. It is only after the secured creditor takes steps under Section 13(4) that the borrower can approach DRT, by an appeal against such an action by secured creditor. On going through the text of the NPA Act, it is evident that no judicial forum comes into picture till that stage.

7. We feel that the statement of objects and reasons in enacting the NPA Act and the provisions quoted hereinabove, are self-eloquent and clearly indicate that the secured creditor is not required to obtain a decree from a competent court/DRT, before being entitled to take steps as permitted by NPA Act for the purpose of enforcement of recovery, by taking steps against the secured assets. We must, therefore, say that the learned CJM, Aurangabad, was completely on wrong foot in observing that the assistance cannot be sought unless there is a decree in favour the secured creditor.

In fact, we may also usefully reproduce Sub-section (1) of Section 14 and more particularly its opening part, just to confirm that even this Sub-section does not speak of requirement of decree in favour of secured creditor.

Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset:

(1). Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate, within whose jurisdiction any such secured asset....

Later half of Sub-section (1) states that the Chief Metropolitan Magistrate ("CMM") or the District Magistrate ("DM"), on such request being made, may take possession of such assets and documents relating thereto and forward such assets and documents to the secured creditor.

Even Section 14, which can be availed of, by a secured creditor for the purpose of taking possession of secured assets, under the provisions of this Act, which is referable to Section 13(4), does not speak regarding requirement of any decree of a competent court in favour of the secured creditor. The Act is a special enactment, enabling the secured creditors to stand on their own, so far as the purpose of recovery of the loans is concerned.

8. On reading the text of Section 14(1) repeatedly, during the course of submissions of learned Counsel for the petitioner and learned APP, a new question has struck our mind and that is why we had adjourned the matter on the last occasion. We have drawn attention of learned Counsel for the petitioner to the titles of the authorities referred to in Section 14. It refers to Chief Metropolitan Magistrate or District Magistrate. Reference to Chief Judicial Magistrate is conspicuously absent. The terminal portion of Section 14(1) reads:

...the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him...take possession.

The authorities are referred thrice in Sub-section (1) of Section 14. They are also referred in Sub-section (2) and Sub-section (3) of Section 14, but every time, reference is made to the designations "Chief Metropolitan Magistrate" and "District Magistrate". There is no reference to "Chief Judicial Magistrate". We have, therefore, posed a question to Advocate Shri Gangakhedkar for the Petitioner that Section indicates assistance from CMM and DM, within whose territorial limits the secured assets or documents relating thereto are situated at the time secured creditor desires taking possession of the secured assets. There is no reference to the CJM. We have, therefore, expressed that it would be the CMM, so far as metropolitan area is concerned and where there is a CMM appointed and posted. So far as other area is concerned, there being no post and appointment of CMM, secured creditor desirous of availing benefit of Section 14(1), will have to approach DM.

Advocate Shri Gangakhedkar has not been able to point out any provision in the NPA Act, or Cr.P.C. which will compel us to accept his proposition that, although words used in the section are "CMM/DM", sofar as area beyond metropolitan area is concerned, the words "CMM" can be read as "CJM". The legislature does not seem to have intended to entrust the function to CJM outside the metropolitan area, although the function is entrusted to CMM, a judicial officer, in metropolitan area.

Even on going through Section 3 of the Code of Criminal Procedure, relating to construction of reference and more particularly Sub-sections (2) and (3) of the same, any reference to Judicial Magistrate is required to be read as "Metropolitan Magistrate", insofar as metropolitan area is concerned by virtue of Sub-section (2), but this is only for the purpose of Cr.P.C. and Section 3(2) is not applicable to any other Acts. Sub-section (3) of Section 3 of Cr.P.C. relates to other Acts, but which are passed before commencement of the Cr.P.C. Reference in any such enactment to Presidency Magistrate/Chief Presidency Magistrate is required to be construed as reference to Metropolitan Magistrate/Chief Metropolitan Magistrate. This change is necessitated because under Cr.P.C. 1898, the Magistrates in the metropolitan area, which was then called as "Presidency Town", were designated as Presidency Magistrate/Chief Presidency Magistrate and were so referred in the enactments which were passed before coming into force, the Code of Criminal Procedure, 1973.

9. Our attention could not be drawn by either Counsel to demonstrate that the words "CMM" in section 14 of the npa act, can be read as "CJM", sofar as non metropolitan area is concerned, by any stretch of imagination.

We are, therefore, inclined to confirm the order of CJM, Aurangabad, rejecting assistance to the petitioner to recover possession of secured assets, although for different reasons. We have arrived at a conclusion that, sofar as non metropolitan area is concerned, powers vest in DM and not with CJM, or Judicial Magistrate. Sofar as metropolitan area is concerned, the two authorities are available to the secured creditor, namely, CMM and DM. But, so far as non metropolitan area is concerned, the secured creditor will have to approach the DM only, for assistance under Section 14(1) of the Act.

10. While upholding the order passed by the CJM, Aurangabad, we have recorded our views on merits and we only record that the CJM could not have rejected assistance to the petitioner, if he (CJM) otherwise had jurisdiction to entertain such a request, on the ground that the secured creditor is required to be armed with a decree from the competent court. We may say that assistance cannot be refused either by CMM or DM, on this ground.

What is required to be done by CMM or DM, while considering the request of secured creditor for assistance to take possession of secured assets, is evident from the conclusions at serial Nos. 1 to 4 drawn by the Division Bench at Bombay in the matter of Trade Well (supra) and which we have already reproduced in earlier part of this judgment. To state in brief, CMM or DM acting under Section 14, will not be required to serve a notice upon the borrower or a third party. But, the authority will have to verify from the bank/financial institution/secured creditor that the notice under Section 13(2) of the NPA Act is served; that the secured assets are within territorial jurisdiction of the authority concerned; that the borrower has not discharged liability as indicated in the notice under Section 13(2) and that the secured creditor has communicated reasons for rejection of representation, if any, of the borrower. If all these things are fulfilled by the secured creditor, CMM/DM will not be in a position to refuse assistance under Section 14(1) to the secured creditor.

11. We, therefore, dispose of the writ petitions, by confirming refusal by CJM, Aurangabad, of assistance under Section 14(1), not because the petitioner-creditor was not armed with a decree of a competent court, but because the CJM does not have power to render such assistance. We clarify that it will be open for the petitioner to approach the DM and refusal of assistance under Section 14(1) of the Securitization Act, by CJM, Aurangabad, will not be an impediment in DM providing such assistance to the petitioner/secured creditor upon demonstration by the secured creditor, of fulfilment of requirement as under Section 13(2) and 13(3-A) of the Act.

12. Writ Petitions are disposed of and rule made absolute, in above terms.