Date : 31/01/2017 CAV ORDER While proceeding under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the first respondent-Bank filed an application under Section 14 of the Act before the District Magistrate seeking assistance to recover physical possession of the secured assets in question. The application was decided by the Additional District Magistrate and the order dated 22nd May, 2015 which culminated, is one impugned in this petition.

2. The short but succinct question is whether the Additional District Magistrate was competent authority who could exercise the powers and jurisdiction to act under Section 14 of the Act and Page 1 of 10 HC-NIC Page 1 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER decide the application.

3. Heard learned advocate Mr.Dhaval Vyas for the petitioner and learned advocate Mr.Tejas Satta for learned advocate Mr.Anip Gandhi for the first respondent. Though served with the notice, none appeared for second, third and fourth respondent.

4. Learned advocate for the petitioner submitted that language of the Section is clear and that no other authority except the District Magistrate himself could derive and exercise the power thereunder. He relied on the observations from the decision of the Apex Court in Hari Chand Aggarwal v. The Batala Engineering Co. Ltd. [AIR 1969 SC 483] to submit that District Magistrate and Additional District Magistrate were the distinct authorities. He next relied on decision of the Division Bench in Shivam Water Treaters P. Ltd. v. Authorised Officer, State Bank of India being Special Civil Application No.12632 of 2013 to submit that the power was confided on the District Magistrate 'himself'. On the other hand, learned advocate Mr.Tejas Satta submitted that no illegality was committed if the Additional District Magistrate decided the application and granted assistance to the Bank to physically recover the property. He submitted that large amount is due and the challenge would only prolong the proceedings by which the borrower would be benefited.

5. In order to address the question, at the outset, provision of Section 14 of the Securitisation Page 2 of 10 HC-NIC Page 2 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER and Reconstruction of Financial Assets and Enforcement of security interest act, section provides about Magistrate or the District secured creditor in taking 2002 may be noticed. The the Chief Metropolitan Magistrate to assist the possession of the secured assets. Extracting as relevant, the whole provision, Section 14 reads as under.

14. 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 it 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 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- (a) take possession of such asset and documents relating thereto; and (b) forward such assets and documents to the secured creditor. Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that-

(i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application;

(ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period;

(iii) the borrower has created security interest Page 3 of 10 HC-NIC Page 3 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER over various properties giving the details of properties referred to in sub-clause

(ii) above;

(iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount;

(v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a non- performing asset;

(vi) affirming that the period of sixty days notice as required by the provisions of sub-section (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower;

(vii) the objection or representation in reply to the notice received from the borrower has been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower;

(viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of sub-section (4) of section 13 read with section 14 of the principal Act;

(ix) that the provisions of this Act and the rules made thereunder had been complied with: Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets: Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act. (1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,-

(i) to take possession of such assets and Page 4 of 10 HC-NIC Page 4 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER documents relating thereto; and

(ii) to forward such assets and documents to the secured creditor. (2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief Metropolitan Magistrate or the District Magistrate may taken or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. (3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any court or before any authority. 5.1 A glance on the provision shows that an application under the said Section lies to be made by the secured creditor for the purpose of taking possession for control of secured asset to the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset, etc., may be situated. The authority in which the powers are vested, are as noticed above, the Metropolitan Magistrate or the District Magistrate, as the case may be.

6. Reference to Section 20 of the Code of Criminal Procedure, 1973 would be relevant in the context of the controversy. sub-section (1) of section

20 of the Code provides that in every districts and in every metropolitan area, State Government may appoint Executive Magistrates and shall appoint one of them to be the District Magistrate. Sub-section (2) says that any Executive Magistrate may be appointed as Additional District Magistrate. Such Additional District Magistrate appointed shall have such powers of District Magistrate as may be directed by the State Government. The provision would unmistakably reflect Page 5 of 10 HC-NIC Page 5 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER that the District Magistrate and Additional District Magistrate have to be two different persons to be appointed from amongst the Executive Magistrates. 6.1 Also could be noticed from the decision of the Supreme Court in Hari Chand Aggarwal v. The Batala Engineering Co. Ltd. [AIR 1969 SC 483] the following observations. It is well known that the object of appointing an Additional District Magistrate is to relieve the District Magistrate of some of his duties and that he is subordinate to the District Magistrate to the extent specified in subsection (3) of Section 10. It is equally well known that the District Magistrate occupies a very important position in the district and is the head of the Executive there and he exercises powers of superintendence and control over the other Magistrates in the district. Apart from the powers which have been conferred by the Code of Criminal Procedure on him the District Magistrate is also known as the Collector for purposes of revenue laws. (Para 7) It was further stated, The Additional District Magistrate, as has previously been noticed, can similarly exercise all or any of the powers of a District Magistrate if the State Government makes a direction under S. 10(2) of the Code but even an officer who heads the chief executive administration of the district temporarily under S. 11, exercises all the powers of a District Magistrate. The scheme of Section 10 of the Code leaves no room for doubt that the District Magistrate and the Additional District Magistrate are two different and distinct authorities and even though the latter may be empowered under sub- section (2) to exercise all or any of the powers of a District Magistrate but by no strech of reasoning can an Additional District Magistrate be called the District Magistrate which are the words employed by in sub-section (1) of section 10. (Para 7) (emphasis supplied) 6.2 A question akin to one in this petition arose in Shivam Water Treaters P. Ltd. Vs Authorised Page 6 of 10 HC-NIC Page 6 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER Officer, State Bank of India being Special Civil Application No.12632 of 2013 decided on 17th September, 2013 as to whether Sub-Divisional Magistrate could have been delegated the powers under Section 14 of the Act, 2002. The Division Bench of this Court in the said decision observed and held as under.

7. In the past, this very Bench had an occasion to consider the question as to whether the power conferred under section 14 of the secutirisation act can be delegated by a Chief Metropolitan Magistrate in favour of the Additional Chief Metropolitan Magistrate. In that context, this bench held that the action of the Chief Metropolitan Magistrate, Ahmedabad in exercise of his powers under Section 19 Clause [3] of the Code of Criminal Procedure, 1974 read with Rule 10 Clause [1] of Chapter XXXII of the Criminal Manual, 1977 regarding the distribution of business amongst the Metropolitan Magistrates, Ahmedabad, thereby empowering the Additional Chief Metropolitan Magistrate, Ahmedabad to accept and decide the cases under the provisions of the Secutirisation Act, arising within the limits of Ahmedabad Municipal Corporation, was without jurisdiction.

8. In the case before us, the question is a bit different one as to whether a District Magistrate can delegate such power to the Sub Divisional Magistrate.

9. A plain reading of the provision contained in section 14 of the secutirisation act, as amended, makes it abundantly clear that the Legislature had conferred the power under section 14 of the secutirisation act only upon the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, to be exercised after being satisfied with the affidavit affirmed by the authorized officer of the secured creditor in terms of the first proviso to Section 14(1) of the Secutirisation Act to (a) take possession of such asset and documents relating thereto, and, (b) forward such assets and documents to the secured creditor. By the subsequent amendment of the provision of the secutirisation act by introduction of sub- section 1a, the position has been made further clear that the District Magistrate can, after exercising his discretion of satisfaction based on the affidavit of the authorized officer of the secured creditor in terms of the first proviso to Section 14(1) of the Secutirisation Act, authorize a subordinate officer to Page 7 of 10 HC-NIC Page 7 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER take possession of the assets and documents relating thereto pursuant to his order and to forward such assets and documents to the secured creditor. Thus, recording of satisfaction based on materials on record vests only in the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, but the consequent action of taking possession of the assets and documents relating thereto pursuant to his order and of forwarding such assets and documents to the secured creditor can be delegated to his subordinate officer.

10. Such being the position, the delegation of power of entertaining the application under section 14 of the secutirisation act for the purpose of recording even the satisfaction mentioned above passed by the District Magistrate in favour of Sub Divisional Magistrate was in conflict with the provision contained in the principal Act. It is the mandate of the Legislature that the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, himself should take decision under section 14 of the secutirisation act based on his satisfaction and then can invest any of his subordinate officer with the power of taking possession of the assets and documents relating thereto pursuant to his order and of forwarding such assets and documents to the secured creditor. Thus, the jurisdiction to take decision as to whether the secured creditor should get the relief under section 14 of the secutirisation act vests only in the District Magistrate or the Chief Metropolitan Magistrate as the case may be.

11. We, thus, find that the petitioner is justified in contending that the power of authorization given in favour of the Sub Divisional Magistrate to exercise jurisdiction under section 14 of the secutirisation act is in conflict with the provisions of the Secutirisation Act and is thus, ultra vires the principal Act. 6.3 In Shivam Water Treaters P. Ltd. (supra), the Court quoted from Halsbury's Law of England in relation to the principle of relegation which observations are apt to be applied in answering the present question as well. 13."In accordance with the maxim delegatus non potest delegare, a statutory power must be exercised only by the body or officer in whom it has been confided, (H. Lavender and Sons Ltd. v. Minister of Housing and Local Page 8 of 10 HC-NIC Page 8 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER Government, 1970 (3) All ER 871) unless sub-delegation of the power is authorised by express words or necessary implication (Customs and Excise Commrs. v. Cure and Deeley Ltd., 1962 (1) QB 340 K, 1961 (3) All ER 641 and Mungoni v. A. S. G. of Northern Rhodesia, 1960(1) All ER 446 PC etc.).There is a strong presumption against construing a grant of legislative, judicial, or disciplinary power as impliedly authorising sub-delegation; and the same may be said of any power to the exercise of which the designated body should address its own mind. Allam and Co. v. Europa Poster Services Ltd., 1968 (1) All ER 826......." 6.4 The ingredient of powers conferred on the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, under Section 14 are inter alia that the powers are conferred specifically on these authorities. One of the aspects of the power to be exercised is that the District Magistrate or the Chief Metropolitan Magistrate has to satisfy himself about compliance of the requirement of the Section. The satisfaction is personal satisfaction. The District Magistrate or the Chief Metropolitan Magistrate are conferred with the powers in their specific capacity as Chief Metropolitan Magistrate or the District Magistrate. They themselves only are the competent authorities to exercise the powers. The nature of powers under Section 14 would not permit transfer of exercise of powers under the said provision to different person even by way of delegation. 6.5 Therefore it is only the District Magistrate in the present case who could have exercised the powers under Section 14 of the Act to decide Bank's application under Section 14 of the Act. The act of deciding application under Section 14 of the Act by Page 9 of 10 HC-NIC Page 9 of 10 Created On Sat Mar 04 20:36:30 IST 2017 C/SCA/19102/2015 CAV ORDER the Additional District Magistrate was clearly an incompetent exercise as the Additional District Magistrate had no powers or jurisdiction to act and consider the application under Section 14 of the Act.

7. Resultantly, the petition stands allowed. The order dated 22nd May, 2015 passed by the fourth respondent-the Additional District Magistrate stands set aside as the Additional District Magistrate was not the competent authority to exercise powers under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It is clarified that setting aside of this order shall not preclude the respondent Bank from filing fresh application under Section 14 of the Act, to be considered and decided by the competent authority in accordance with law. (N.V.ANJARIA, J.) Anup Page 10 of 10 HC-NIC Page 10 of 10 Created On Sat Mar 04 20:36:30 IST 2017