Additional Chief Judicial Magistrate Can Entertain Application U/s 14 SARFAESI Act: Kerala HC [Read Judgment]

The Kerala High Court has held that Additional Chief judicial Magistrate [ACJM] will have jurisdiction to entertain an application filed under Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI).

In KO Anto vs. State of Kerala, Justice Raja Vijayaraghavan considered a petition filed under Article 227 of the Constitution of India challenging Ernakulam ACJM's order under Section 14 of SARFAESI Act and appointment of an Advocate Commissioner to take delivery of the secured assets.

The bench took note of the contentions advanced by Advocate PV George, who appeared for petitioner, and Senior Advocate K.K.Chandran Pillai, who appeared for the bank [South Indian Bank] and observed that there is a division bench judgment [Muhammed Ashraf and Another v. Union of India and Others [2008 (3) KHC 935]], which has held that the powers of the Chief Judicial Magistrates in non metropolitan areas and the Chief Metropolitan Magistrate in metropolitan area are one and the same. Further, it was noted that in Shiyas v. Union of India [2019 (1) KLT 967] and Pouly @ Thressia and Another v. Union of India and Others [2019 (1) KHC 75], the High Court has repelled a similar challenge passed against order passed by ACJM.

The court further observed that orders passed by ACJM do not suffer from any perversity or jurisdictional error warranting interference in exercise of its supervisory powers under Article 227 of the Constitution of India.

The court said that the petitioner has an alternative remedy of approaching Debts Recovery Tribunal. DRT, after examining the facts come to a conclusion that the action taken by the secured creditor is not in accordance with the provisions of the Act and Rules, then it can require restoration of possession of the property and pass such orders that it may consider appropriate and necessary, the court noted. 

SC Expected To Solve The Confusion

Recently, granting leave to directly appeal against a similar order passed by Additional Chief Judicial Magistrate, Ernakulam, the Supreme Court had noted that there are conflicting views by different High Courts with regard to the jurisdiction of the Chief Judicial Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI).The bench then tagged the SLP with another civil appeal against a Kerala High Court judgment. In these cases, the Supreme Court is expected to address the question whether a Chief Judicial Magistrate Has Jurisdiction To Entertain Applications U/s 14 SARFAESI Act.

Calcutta, Bombay and Madras high courts have taken a view that the Chief Judicial Magistrate has no power to entertain applications filed under Section 14 of the SARFAESI Act, whereas Kerala, Andhra Pradesh and Allahabad high courts have taken a view that the Chief Judicial Magistrate can exercise the powers.

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