Additional CJM Not Subordinate To CJM In Judicial Functions; Can Pass Orders Under SARFAESI Act: Bombay High Court
Court rejects challenge to possession order, holds remedy lies before Debt Recovery Tribunal
Justice Urmila Joshi-Phalke, Bombay High Court, Nagpur Bench
The Bombay High Court, Nagpur Bench has observed that an Additional Chief Judicial Magistrate (ACJM) is competent to entertain and pass orders on applications filed under Section 14 of the SARFAESI Act, 2002 observing that an ACJM is not subordinate to the Chief Judicial Magistrate (CJM) in the exercise of judicial powers.
The Court rejected a borrower’s challenge to possession proceedings initiated by a bank, holding that the order passed by the ACJM did not suffer from any jurisdictional infirmity.
The Bench also held that the borrowers had an alternative and efficacious statutory remedy before the Debt Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act to challenge measures taken by the secured creditor.
Justice Urmila Joshi-Phalke while placing reliance on M/s. R.D. Jain and Co. v. Capital First Ltd., reported in AIR 2022 SC 4820, observed, “It is pertinent to note that it was further inter alia held that the Additional Chief Metropolitan Magistrate can be said to be at par with the Chief Metropolitan Magistrate in so far as the powers to be exercised under the CrPC are concerned. The Hon’ble Apex Court further stated that the Chief Metropolitan Magistrate in addition, may have administrative powers. However, for all other purposes and more particularly the powers to be exercised under the CrPC both are at par. Therefore, the Additional Chief Metropolitan Magistrate cannot be said to be subordinate to the Chief Metropolitan magistrate insofar as the exercise of judicial powers are concerned”.
“In relation to the administrative functions to be exercised by the Chief Judicial Magistrate under the BNSS, 2023, the same can be exercised by the Additional Chief Judicial Magistrate only to the extent, an order to this effect is passed by the High Court. In this regard reference may again be made to Section 10(2) of the BNSS, 2023 which inter alia provides that an Additional Chief Judicial Magistrate "shall have all or any of the powers of a Chief Judicial Magistrate", "as the High Court may direct". Therefore, an order of the High Court in its administrative side is required to be passed regarding "all or any of the powers" to be exercised by the Additional Chief Judicial Magistrate”, the Bench further noted.
Advocate S.M. Pande appeared for the applicants and A.M. Kadukar, APP appeared for the non-applicants.
In the matter, the applicants had obtained multiple loan facilities from the Indian Bank, including term loans and credit facilities secured by equitable mortgages over several immovable properties. After the borrowers failed to repay the dues, the bank classified the account as a Non-Performing Asset (NPA) and issued a demand notice under Section 13(2) of the SARFAESI Act.
When the borrowers failed to clear the dues, the bank approached the Magistrate under Section 14 of the SARFAESI Act seeking assistance to take possession of the secured assets. The ACJM allowed the application and appointed a court commissioner to take possession of the mortgaged properties.
Challenging the order, the applicants argued that the ACJM lacked jurisdiction to pass such an order because the High Court had not specifically conferred the powers of the CJMa upon ACJMs through a notification, as required under Section 10(2) BNSS and the earlier Section 12(2) of the CrPC.
“The SARFAESI Act is a complete code in itself which provides the procedure to be followed by the secured creditor and also the remedy to the aggrieved parties including the borrower. In such circumstances, as already taken note of if there is any discrepancy in the manner of classifying the account of the appellants as NPA or the action taken under Section 13(2) or Section 14 of the SARFAESI Act, DRT is vested with the power to set aside such auction or the order passed under Section 14 of the SARFAESI Act at the stage after the secured creditor invokes the power under Section 13 of the SARFAESI Act. The Court emphasising that the SARFAESI Act provides a complete mechanism for redressal, ruled that invoking the High Court’s inherent powers under Section 482 of the CrPC was not appropriate”, the Bench noted.
Accordingly, the Court dismissed the criminal application and refused to stay the possession proceedings initiated by the bank.
Cause Title: M/s.Shubham Flour Mill & Anr. v. State of Maharashtra & Ors. [Neutral Citation: 2026:BHC-NAG:3635]
Appearances:
Applicants: S.M. Pande, Advocate.
Non-applicants: A.M. Kadukar, APP, Karan Sachdev, D.A. Sonwane, Sunita Paul, Advocates.