DM’s jurisdiction u/s 14 of SARFAESI is limited to see if a property is secured or not: HC

Case Details: Adams Marketing (P.) Ltd. v. State Bank of India - [2022] 136 taxmann.com 136 (Calcutta)

Judiciary and Counsel Details

• • Kesang Doma Bhutia, J.
  • Siddhartha Banerjee, Debashiskarmakr and Arya Nandi for the Petitioner. 
  • Jishnusaha and Shiv Mangal Singh for the Respondent.

Facts of the Case

In the instant case, the petitioner had obtained the loan from the respondent bank. The Properties of the Petitioner were mortgaged with a view to securing the said loan. Loan having remained unpaid, the bank thus, approached District Magistrate under section 14 of the SARFAESI Act, 2002 for assistance in taking possession of secured assets, which was allowed by the District Magistrate.

Challenging the order passed by the District Magistrate, the petitioner filed an application on the ground that they were never made aware of proceeding under section 14 by the District Magistrate by serving notice of same, and thus, said order was passed without adhering to the principle of natural justice.

The Petitioners filed a review application and contended that even if the statutory remedy is provided under the statute, it does not take away the power of superintendence enshrined under article 227 of the Constitution of India.

High Court Held

The High Court noted that the jurisdiction of the District Magistrate under section 14 is limited i.e. to see whether the property is a secured asset or not. Further, section 14 nowhere discloses that before passing an order, District Collector needs to put the borrower on notice or had to hear the borrower. Dismissing the application filed against the order of the District Magistrate, the High Court held that question of violation of the principle of natural justice by District Magistrate in a proceeding under section 14 did not arise.