While setting aside an order of the Magistrate referring the parties to mediation, the Kerala High Court has held that the power exercised by the CJM (Chief Judicial Magistrate)/ACJM under Section 14 of the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) is a ministerial act. The High Court further explained that the CJM does not perform any quasi-judicial function.

The High Court was considering an appeal filed by a secured creditor.

The Single Bench of Justice P. V. Balakrishnan explained, “It cannot be disputed that the power exercised by the CJM/ACJM under Section 14 of the SARFAESI Act is a ministerial act. The CJM does not perform any quasi judicial function and there is no element of application of mind in the process, since it does not involve any adjudicatory process. That apart, it is to be taken note that as mandated under Section 14, the CJM has to act within the stipulated time limit and pass appropriate orders for the purpose of taking possession of the secured asset, within a period of 30 days from the date of application, which can be extended for such further period, not exceeding 60 days and that the time is the essence and spirit of the enactment.”

Factual Background

The petitioner, a secured creditor, approached the Special Additional Chief Judicial Magistrate (for the trial of criminal cases against sitting and former MPs/MLAs of Kerala), Ernakulam, by filing an application under Section 14 of the SARFAESI Act, seeking assistance for taking physical possession of the secured asset, when a default was committed by the borrowers.

The ACJM, after verifying the affidavit filed by the petitioner and after being satisfied that all the statutory requirements had been complied with, ordered taking possession of the secured asset with the aid of an Advocate Commissioner. Thereafter, the matter was posted to March 4, 2026 and on that day, the ACJM passed the order referring the case for mediation. The secured creditor approached the High Court challenging the said order.

Reasoning

Referring to the provisions of the SARFAESI Act, the Bench explained that as mandated under Section 14, the CJM has to act within the stipulated time limit and pass appropriate orders for the purpose of taking possession of the secured asset, within a period of 30 days from the date of application, which can be extended for such further period, not exceeding 60 days. “Further, the Magistrate has no discretion in the matter and he is not expected to pass any order in Section 14 application except to take possession of the same and hand it over to the creditor”, it added.

Reference was made to the judgments in R.D.Jain and Co. v. Capital First Ltd. (2023) and C.R.Sindhu v. State of Kerala and Others (2007).

The Bench thus held that the order passed by the Magistrate referring the parties to mediation could not be sustained. Thus, allowing the writ petition, the Bench set aside the order passed by the Special Additional Chief Judicial Magistrate. “...learned Magistrate is directed to proceed with the application filed by the petitioner under Section 14 of the SARFAESI Act and pass appropriate orders as per law”, the Bench ordered.

Cause Title: The Authorized Officer, Axis Bank Ltd. v. Reji Paulose (Neutral Citation: 2026:KER:37390)

Appearance

Petitioner: Advocates P. Paulochan Antony, Sreejith K., G. Viswanathan

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Kerala High CourtJustice P.V. Balakrishnan

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.