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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The petition was filed by Kashi Gomti Samyut Gramin Bank through its Regional Manager/Authorized Officer challenging an order of the Chief Judicial Magistrate, Azamgarh in Case No. 3562 of 2019 dated 08.02.2019. The impugned order rejected the bank's application for taking possession of an immovable property charged as security for a loan, the rejection being on the ground that the application was not maintainable. The court heard the petitioner's counsel and considered submissions concerning the scope of Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 and the powers of judicial officers in non-metropolitan areas to assist secured creditors. The petition sought relief from the rejection and a direction that the Chief Judicial Magistrate consider the bank's Section 14 application.

Legal Issues Presented

  1. Whether a Chief Judicial Magistrate exercising jurisdiction in a non-metropolitan area can exercise the powers under Section 14 of the SARFAESI Act, 2002 (powers expressed in the statute as vested in the "Chief Metropolitan Magistrate") to assist a secured creditor in taking possession of secured assets.
  2. Whether the order dated 08.02.2019 of the Chief Judicial Magistrate, Azamgarh rejecting the petitioner's Section 14 application as not maintainable was legally sustainable.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner's counsel submitted that the impugned order of the Chief Judicial Magistrate was illegal and bad because similar powers are vested in a Chief Judicial Magistrate in non-metropolitan areas as are vested in a Chief Metropolitan Magistrate in metropolitan areas.
  • Counsel relied on Section 14 of the SARFAESI Act, 2002, which provides that the Chief Metropolitan Magistrate or the District Magistrate may assist a secured creditor in taking possession of secured assets, and argued that the provision must be read to include the Chief Judicial Magistrate functioning in a non-metropolitan area.
  • The petitioner relied upon a Division Bench decision of the court in Abhishek Mishra v. State of U.P. (2016 AIR (Allahabad) 210) to support the contention that the nomenclature difference does not curtail the power to assist under Section 14.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Abhishek Mishra v. State of U.P., Division Bench (2016 AIR (Allahabad) 210) Held that a Chief Judicial Magistrate functioning in a non-metropolitan area is functionally equivalent to a Chief Metropolitan Magistrate for the purposes of Section 14 of the SARFAESI Act; nomenclature depends on area and powers are the same. The court followed this Division Bench decision and applied its conclusion that Section 14 includes the Chief Judicial Magistrate in non-metropolitan areas, thereby finding no valid reason to sustain the rejection of the petitioner's Section 14 application.
Girdhari Lal & Sons v. Balbir Nath Mathur, (1986) 2 SCC 237 : AIR 1986 SC 1499 Principles of statutory interpretation emphasizing that the paramount task is to ascertain legislative intention and, where necessary, adopt purposive interpretation to give effect to that intention. The court relied on the articulated principles to justify a purposive reading of Section 14 (and related provisions), giving effect to the object of the SARFAESI Act — speedy recovery of bad debts — rather than a narrow literalism that would defeat that object.
Luke v. IRC, 1966 AC 557 (cited via Lord Reid) Authority for departing from literal words where literal application would defeat the obvious legislative intention and produce an unreasonable result; endorses doing "some violence to the words" to achieve a rational construction. The court used this principle to support a purposive construction that treats the term "Chief Metropolitan Magistrate" as including the Chief Judicial Magistrate in non-metropolitan areas to avoid an anomalous result and to further the statutory purpose.

Court's Reasoning and Analysis

The court considered the petitioner's reliance on Section 14 of the SARFAESI Act, 2002 and the Division Bench decision in Abhishek Mishra. The statutory text of Section 14 (including subsections and provisos) was reproduced and examined. The court highlighted that Section 14 authorizes a Chief Metropolitan Magistrate or the District Magistrate to take possession of secured assets on written request by a secured creditor and allows them to use necessary steps and force to secure compliance.

The court analysed the question of nomenclature versus function: the Division Bench in Abhishek Mishra had observed that a Chief Judicial Magistrate in a non-metropolitan area performs the same functions as a Chief Metropolitan Magistrate in a metropolitan area, and that the words are used interchangeably depending on whether the area is metropolitan. The opinion emphasized purposive interpretation as appropriate in this context, relying on authorities and academic formulation cited in the Division Bench judgment (including a quoted passage from Fransis Bennion on purposive construction and the exposition in Girdhari Lal & Sons regarding legislative intention and purposive interpretation).

Applying these principles, the court accepted that treating the term "Chief Metropolitan Magistrate" strictly and excluding Chief Judicial Magistrates in non-metropolitan areas would defeat the legislative purpose of facilitating speedy recovery of bad debts under the SARFAESI Act and produce an anomalous result. The court agreed with the Division Bench conclusion that there was no casus omissus and that a purposive interpretation advancing the statute's object was justified.

On the facts before it, the court concluded there were no grounds to sustain the Chief Judicial Magistrate's rejection of the bank's Section 14 application as not maintainable. Consequently, the court set aside the impugned order and directed the Chief Judicial Magistrate, Azamgarh to consider the petitioner's Section 14(1) application afresh and dispose of it in accordance with law.

Holding and Implications

Core Ruling: The impugned order dated 08.02.2019 of the Chief Judicial Magistrate, Azamgarh is SET ASIDE and the Chief Judicial Magistrate is directed to consider the petitioner's application filed under Section 14(1) of the SARFAESI Act, 2002 and dispose of it strictly in accordance with law within one month from the date of production of a certified copy of this order.

Implications:

  • The direct effect for the parties is that the bank's challenge succeeded: the earlier rejection of its Section 14(1) application has been quashed and the Chief Judicial Magistrate must re-consider the application within the specified time-frame.
  • The court's reasoning rests upon and applies existing authorities (including the Division Bench decision in Abhishek Mishra and the principles of purposive statutory interpretation set out in Girdhari Lal & Sons and illustrated by Luke v. IRC). The opinion does not expressly purport to lay down a novel legal doctrine beyond applying those precedents to the facts before the court.

Disposition: With the above directions, the petition was disposed of by the court.

    Kashi Gomti Samyut Gramin Bank And Another v. Chief Judicial Magistrate And Others

    Ashok Kumar, J.:— Heard Sri Gyan Prakash Shrivastava, learned counsel for the petitioners.

    2. The instant petition has been filed by the petitioner Kashi Gomti Samyut Gramin Bank through its Regional Manager/Authorized Officer by which the petitioner has challenged the order passed by the Chief Judicial Magistrate, Azamgarh in Case No. 3562 of 2019 dated 08.02.2019. By the order dated 08.02.2019 the petitioner's application for taking the possession of the immovable property against the loan sanctioned by the petitioner is rejected on the ground that the same is not maintainable.

    3. The submission of the counsel for the petitioner is that the impugned order of the Chief Judicial Magistrate is illegal and bad, as similar power is vested with the Chief Judicial Magistrate as is vested in Metropolitan City with Chief Metropolitan Magistrate.

    4. Learned counsel for the petitioner has submitted that Section 14 of the Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest (SARFAESI) Act, 2002 clearly provides the power with the Chief Metropolitan Magistrate or the District Magistrate to assist secured creditor in taking possession of secured assets.

    5. For the convenience, the provision of Section 14(1) and 14(2) of SARFAESI Act, 2002 are produced herein below:—

    Section 14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.- (1) Whether 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 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 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

    6. 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 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 of the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary.

    7. Learned counsel for the petitioner has placed reliance of a Division Bench Judgment of this Court in the case of Abhishek Mishra v. State of U.P. dated 08.09.2016 reported in 2016 AIR (Allahabad) 210.

    8. In the case of Abhishek Mishra (supra) the controversy came up for consideration before this Court with respect of power of the Chief Judicial Magistrate exercising the jurisdiction in non-metropolitan area in exercise of powers conferred by Section 14 of the SARFAESI Act, 2002.

    9. The question came up for consideration before the Division Bench of this Court was as to whether the Chief Judicial Magistrate exercising jurisdiction in non metropolitan area in exercise of powers conferred by Section 14 of the Act, 2002 can assist a secured creditor in taking possession of the secured asset and pass an order in favour of the secured creditor for the purpose of taking possession or control of any secured asset.

    10. The Division Bench has held that a Chief Judicial Magistrate working, if transferred to a metropolitan area, will discharge the function as Chief Metropolitan Magistrate and similarly, if a Chief Metropolitan Magistrate working in a metropolitan area is transferred in a non-metropolitan area, he will discharge the function and duties as Chief Judicial Magistrate. The function and powers are the same and these words are interchangeably used as per their placement in a metropolitan or non-metropolitan area. One is synonymous for the other dependent upon the area under his transfer.

    11. A reading of the above provisions makes it clear that powers of Chief Judicial Magistrate in non-metropolitan area and powers of Chief Metropolitan Magistrate working in metropolitan area, are one and the same, their functions are same and one is synonymous to other. The only difference is that former one exercises jurisdiction over non-metropolitan areas while the later exercises jurisdiction in metropolitan area only. The nomenclature gets changed depending upon whether the area has been declared as a metropolitan area.

    12. The Division Bench in its judgment has considered the submission of respective parties and the intention of the Legislature. The Division Bench has observed that the intention of the Legislature, depending upon the objects for which enactment has been made, the Courts can resort to historical, contextual and purposive interpretation leaving aside the textual interpretation. Purposive interpretation has been described by Fransis Bennion in his book ‘Statutory Interpretation’ as under.

    “A purposive construction of an enactment is one which gives effect to the legislative purpose by-

    (a) following the literal meaning of the enactment where that meaning is in accordance with the legislative purpose, or

    (b) applying a strained meaning where the literal meaning is not in accordance with legislative purpose.

    13. Hon'ble Apex Court in the case of Girdhari Lal & Sons v. Balbir Nath Mathur, (1986) 2 SCC 237 : AIR 1986 SC 1499, while explaining the principles of interpretation of statutes, has held as follows:—

    “The foremost task of a court, as we conceive it, in the Interpretation of Statutes, is to find out the intention of the legislature. of course, where words are clear and unambiguous no question of construction may arise. Such words ordinarily speak for themselves. Since the words must have spoken as clearly to legislators as to judges, it may be safely presumed that the legislature intended what the words plainly say. This is the real basis of the so called golden rule of construction that where the words of statutes are plain and unambiguous effect must be given to them. A court should give effect to plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the Legislature to other as well as judges. Intention of the legislature and not the words is paramount. Even where the words of statutes appear to be prima facie clear and unambiguous it may some times be possible that the plain meaning of the words does not convey and may even defeat the intention of the legislature; in such cases there is no reason why the true intention of the legislature, if it can be determined, clearly by other means, should not be given effect. Words are meant to serve and not to govern and we are not to add the tyranny of words to the other tyrannies of the world.

    14. Parliamentary intention may be gathered from several sources. First, of course, it must be gathered from the statute itself, next from the preamble to the statute, next from the Statement of Objects and Reasons, thereafter from Parliamentary debates, reports of Committees and Commissions which preceded the legislation and finally from all legitimate and admissible sources from where there may be light. Regard must be had to legislative history too.

    15. Once Parliamentary intention is ascertained and the object and purpose of the legislation is known, it then becomes the duty of the court to give the statute a purposeful or a functional interpretation. this is what is meant when, for example, it is said that measures aimed at social amelioration should receive liberal or beneficent construction. Again, the words of a statute may not be designed to meet the several uncontemplated forensic situations that may arise. The draftsman may have designed his words to meet what Lord Simon of Glaisdale calls the ‘primary situation’. It will then become necessary for the court to impute an intention to Parliament in regard to ‘secondary situations’. Such ‘secondary intention’ may be imputed in relation to a secondary situation so as to best serve the same purpose as the primary statutory intention does in relation to a primary situation.

    16. So we see that the primary and foremost task of a court in interpreting a statute is to ascertain the intention of the legislature, actual or imputed. Having ascertained the intention, the court must then strive to so interpret the statute as to promote or advance the object and purpose of the enactment. For this purpose, where necessary the court may even depart from the rule that plain words should be interpreted according to their plain meaning. There need be no meek and mute submission to the plainness of the language. To avoid patent injustice, anamoly or absurdity or to avoid invalidation of a law, the court would be well justified in departing from the so-called golden rule of construction so as to give effect to the object and purpose of the enactment by supplementing, the written word if necessary.”

    17. The Division Bench has further considered the settled principles of interpretation of statutes and arrived at a conclusion that the answer to the issue is nomenclature ‘Chief Metropolitan Magistrate’ used by legislature is Section 14 of the Act includes Chief Judicial Magistrate functioning in non-metropolitan area and shall have jurisdiction to entertain an application made under Section 14 of the SARFAESI Act, 2002.

    18. The Division Bench has held as follows:—

    “In our considered opinion, there is no casus omissus. The interpretation given by us does not amount to reading anything in the provision, which the legislature never intended to, nor the interpretation given by us, in any way, defeats the intention of the Legislature. It is a purposive interpretation to advance the true intention of the legislature for enacting the Act, viz. speedy recovery of bad debts of the banks and financial institutions declared as NPAs. On the contrary, adopting the principles of literal construction in interpretation of the word ‘Chief Metropolitan Magistrate’ would not only defeat the object and purpose of legislation but would lead to manifestly anomalous result which could not have been intended by the legislature. As per Lord Reid in the case of Luke v. IRC, 1966 AC 557, where to apply words would literally defeat the obvious intention of the legislation and produce a wholly unreasonable result, we must do some violence to the words and so achieve that obvious intention and produce a rational construction.”

    19. In view of the above decision of this Court, I find no reasons in the impugned order passed by the Chief Judicial Magistrate, Azamgarh rejecting the application filed under Section 14(1) of the SARFAESI Act, 2002 therefore the order dated 08.02.2019 is set aside and the Chief Judicial Magistrate, Azamgarh is hereby directed to consider the petitioner's application filed under Section 14(1) of the SARFAESI Act, 2002 and dispose of the same strictly in accordance with law by considering the claim of the petitioner positively within a period of one month from the date of production of certified copy of this order.

    20. With these observations, the petition is disposed of.

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    Kashi Gomti Samyut Gramin Bank And Another v. Chief Judicial Magistrate And Others
    (Mar 29, 2019)