SC To Examine CJM’s Power To Entertain Applications Under Sec. 14 Of SARFAESI Act

The Supreme Court will examine the jurisdiction of Chief Judicial Magistrate to entertain the application filed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, in PM Kelukutty & Others vs Young Men’s Christian Association.

While considering the special leave petition against the Kerala High Court order, the bench observed that 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.

The bench noted that the question of competency of the Chief Judicial Magistrate to entertain applications filed under Section 14 of the Act was neither raised before the high court nor taken in special leave petitions. The bench said: “But as it goes to the root of the matter being purely a question of law and jurisdiction to exercise the powers by the Chief Judicial Magistrate, we have permitted the learned counsel appearing for the parties to address the Court on this issue also.”

The Section 14 of the SARFAESI Act mentions only two officers who can exercise the powers, namely, the Chief Metropolitan Magistrate or the District Magistrate.

The court also noted that an appeal is pending before it, against the full bench judgment of the Madras High Court in K Arockiyaraj vs Chief Judicial Magistrate, Srivilliputhur & Anr, which held that Section 14 does not contemplate the secured creditors to approach the chief judicial magistrates for assistance to secure their assets and the secured creditors can approach the Chief Metropolitan Magistrate in the Metropolitan areas and in non-metropolitan areas, the secured creditors has to approach the District Magistrate, and not the Chief Judicial Magistrate.

The bench tagged this SLP with the pending appeal against the Madras High Court judgment.

The Allahabad High Court has taken a contrary view  in Abhishek Mishra vs State Of UP, by holding that the Chief Judicial Magistrate exercising jurisdiction in the non-metropolitan area in exercise of powers conferred on by Section 14 of the SARFAESI Act, can assist a secured creditor in taking possession of the secured asset and pass an order in the creditor’s favour for the purpose.