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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Shri Navaneetha Krishnan T. for the Petitioner.
  • Shri Prakash Shinde i/b MDP & Partners for the Respondent.
Judges
  • A.S Oka
  • Anuja Prabhudessai, JJ.
Acts
  • Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the said Act of 2002).
  • Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (for short the Act No. 44 of 2016)
  • Security Interest (Central Registry) Rules, 2011
  • ARTICLE 226 CONSTITUTION OF INDIA
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Shri Navaneetha Krishnan T. for the Petitioner.
  • Shri Prakash Shinde i/b MDP & Partners for the Respondent.
Judges
  • A.S Oka
  • Anuja Prabhudessai, JJ.
Acts
  • Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the said Act of 2002).
  • Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (for short the Act No. 44 of 2016)
  • Security Interest (Central Registry) Rules, 2011
  • ARTICLE 226 CONSTITUTION OF INDIA
See more information ...
Smart Summary

Factual and Procedural Background

The Petition was listed before the Court pursuant to an administrative order because the regular Bench was unavailable. It challenged an order dated 19 January 2017 passed under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and a subsequent order dated 14 March 2017 rejecting an application to stay execution of the earlier order. [1][2]

Legal Issues Presented

  1. Whether Section 26D of the 2002 Act was in force, so as to prevent enforcement of the security interest without registration with the Central Registry. [2][3]
  2. Whether an Advocate could be appointed as Court Commissioner to execute an order under Section 14(1), particularly where the Advocate was allegedly not empanelled. [2]

Arguments of the Parties

Petitioner's Arguments

  • Section 26D prevented the secured creditor from enforcing the security unless the security interest had been registered with the Central Registry. [2]
  • The Advocate appointed as Court Commissioner ought not to have been appointed because the Advocate was allegedly not empanelled. [2]
  • The existence of the Central Registry and the Security Interest (Central Registry) Rules, 2011 indicated that Section 26D had come into operation. [3]

First Respondent's Argument

  • Section 26D had not come into force because no notification under Section 1(2) of the 2016 Amendment Act had been issued appointing a commencement date for that provision. [3]

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court examined the 2016 Amendment Act, which introduced Chapter IVA, including Section 26D. Section 1(2) expressly required a notification in the official gazette bringing the amendment into force. [3]

The Petitioner could not identify any such notification. The Court therefore rejected the argument that Section 26D had become operative merely because the Central Registry had been established under the 2011 Rules. [3][4]

Regarding the appointment of the Court Commissioner, the Court found no prejudice to the Petitioner from appointing a member of the Bar to take possession of the secured assets. [4]

Holding and Implications

Petition rejected. The Court found no merit in either contention and declined to interfere with the challenged orders. [4][5]

The direct effect was that the challenged enforcement proceedings and the appointment of the Advocate as Court Commissioner were not disturbed. The opinion discusses no broader implications and set no new precedent. [4][5]

Show full summary ...

    M/S. J. Marks Exim (India) Pvt. Ltd. Petitioner v. Punjab National Bank

    1. This Petition was ordered to be listed on board as the Regular Bench presided over by the Hon'ble Shri. Justice R.M Borde is not available in this week. As per the general administrative order of the Hon'ble the Chief Justice, the Petition is listed before this Court.

    2. The challenge in this Petition under Article 226 of the Constitution of India is to the order dated 19th January 2017 passed under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “the said Act of 2002”). Another challenge is to the subsequent order passed by the learned Chief Metropolitan Magistrate dated 14 March 2017 by which the Application for stay of the execution of the order dated 19 January 2017 has been rejected. There are two contentions raised by the learned counsel appearing for the Petitioner. The first contention is that in view of the applicability of the of Section 26-D of the said Act of 2002, the secured creditor cannot exercise the rights of enforcement of securities under Chapter III unless the security interest created in its favour by the borrower has been registered with the Central Registry. The second contention is that for executing an order under Sub-section(1) of Section 14 of the said Act of 2002, appointment of an Advocate as the Court Commissioner ought not to have been made. His submission is that the said Advocate is not an empanelled Advocate.

    3. As far as the first contention is concerned, the learned counsel appearing for the first Respondent has tendered across the bar the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (for short “the Act No. 44 of 2016”) by which Chapter IVA was incorporated in the said Act of 2002 which includes Section 26D. Sub-section(2) of Section 1 of the said Act No. 44 of 2016 clearly provides that the said Act No. 44 of 2016 shall come into force on such date as the Central Government may appoint by a notification in the official gazette. The submission of the learned counsel appearing for the first Respondent is that no such notification in the official gazette has been issued appointing a date for bringing into force Section 26D, though by notifications issued from time to time, certain other Sections have been brought into force. The learned counsel appearing for the Petitioner is unable to point out any such notification under Sub-section(2) of Section 1 of the said Act No. 44 of 2016. However, he relies upon the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules, 2011 and submits that the fact that the Central Registry is already brought into existence shows that Section 26D has come into operation.

    4. Unless a notification under Sub-section(2) of Section 1 of the said Act No. 44 of 2016 is issued, we cannot accept the contention that Section 26D of the said Act of 2002 has come into force. As far as the second contention is concerned, we see no prejudice to the Petitioner if a member of the Bar is appointed as the Court Commissioner to take possession of the secured assets.

    5. We see no merit in the Petition and the Petition is rejected.

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    Comments

    M/S. J. Marks Exim (India) Pvt. Ltd. Petitioner v. Punjab National Bank
    (Mar 17, 2017)