Calcutta High Court
State Bank Of India & Anr vs The State Of West Bengal & Ors on 3 March, 2025
Author: Amrita Sinha
Bench: Amrita Sinha
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Original Side
Present :- Hon'ble Justice Amrita Sinha
WPO 14 of 2025
State Bank of India & Anr.
Vs.
The State of West Bengal & Ors.
For the writ petitioners :- Mr. Indrajit Bhattacharjee, Adv.
For the State :- Mr. Paritosh Sinha, Adv.
Mr. Debangshu Dinda, Adv.
For the respondent nos. 3 to 6 :- Mr. Kallol Basu, Adv.
Mr. Nimesh Mishra, Adv.
Mr. Shauvik Sarkar, Adv.
Mr. Atreya Chakraborty, Adv.
Ms. Shreejita Sen, Adv.
Heard on :- 16.01.2025 & 12.02.2025 Judgment on :- 03.03.2025 Amrita Sinha, J.:-
1. The writ petition is at the instance of a bank challenging the inaction
on the part of the District Magistrate in taking steps in response to the
request made by the bank under Section 14 of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (herein after referred to as ‘the Act’ for the sake of
brevity).
2. The facts leading to the request made by the bank are as follows:-
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3. The respondent no. 3, borrower availed loan facility from the bank in
November, 2007. As the loan amount was not paid in accordance with
the loan agreement, the account of the said respondent was marked as
non performing asset in July, 2014. A notice was issued by the bank
demanding payment from the borrower. As the borrower failed to
repay the loan amount, notice under Section 13 (4) of the Act was
issued in November, 2014. As the bank intends to take possession of
the secured asset, a request was made before the District Magistrate
under Section 14 (1) of the Act on 14th October, 2022 along with the
required affidavit affirmed by the authorized officer of the bank.
4. The District Magistrate, on receipt of the application from the bank,
issued notice to the bank and the borrower to remain present at a
hearing with all relevant original documents on 22nd March, 2024. The
parties were present in the hearing, but no order has been passed by
the District Magistrate.
5. According to the bank, a sum of Rs. 46,92,59,815.61/- as in June,
2014 with further interest, incidental expenses, costs are due and
payable by the borrower.
6. Learned advocate for the petitioners submit that the District
Magistrate ought to have taken prompt necessary steps on receipt of
the application made under Section 14 (1) of the Act and ought not to
have slept over the matter for such a long period of time.
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7. It has been submitted that the inaction on the part of the District
Magistrate is in violation of the provisions of the Act and the Rules
made thereunder. Non action/ inaction on the part of the District
Magistrate is resulting in wrongful loss to the bank.
8. Prayer has been made to direct the District Magistrate to take steps
strictly in accordance with Section 14 (1) of the Act.
9. Learned advocate representing the borrower strenuously opposes the
prayer of the petitioner. It has been submitted that the second and
third proviso to Section 14 (1) stipulates a time period within which
the District Magistrate ought to have taken steps on receipt of the
application made by the secured creditor under Section 14 (1) of the
Act. On expiry of the prescribed time period, the District Magistrate
become functus officio and, accordingly, no direction can be passed
upon the District Magistrate, at this stage, to proceed with the
application filed by the bank.
10. It has been contended that the Court ought not to revive the
application under Section 14 (1) which has died a natural death due to
efflux of the prescribed time period.
11. In support of the aforesaid submission the borrower relies on the
decisions of the Hon’ble Supreme Court in the matter of Balkrishna
Rama Tarle dead through legal representatives & Anr. Vs.
Phoenix Arc Private Limited & Ors. reported in (2023) 1 SCC 662
and R.D. Jain & Company vs. Capital First Limited & Ors.
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reported in (2023) 1 SCC 675. Reliance has also been placed on the
decision passed by the Hon’ble Division Bench of this Court in the
matter of Birbhum District Central Co-operative Bank Limited &
Ors. vs. Paresh Kumar Mukherjee & Ors. reported in (2025) SCC
Online Cal 816 and the decision delivered by the Hon’ble Division
Bench of the Delhi High Court in the matter of Anita Garge & Ors.
vs. State Bank of India reported in 2021 SCC Online Del 4311.
12. Learned advocate representing the State respondent raises an issue
with regard to the maintainability of the writ petition in the original
side jurisdiction of this Court. It has been submitted that the records
of this case lie with the authorities located outside the original side
jurisdiction and, accordingly, the writ petition in the original side
ought not to be entertained.
13. It has been submitted by the State that though a time limit is
prescribed under Section 14 (1) of the Act, but the same is only
directory and not a mandatory one. As no consequences has been
prescribed in the Act for not taking steps within the stipulated time
limit, accordingly, the District Magistrate may be permitted to take
steps in response to the application made by the bank.
14. In support of the aforesaid submission learned advocate representing
the State relies on the judgment delivered by the Hon’ble Supreme
Court in the matter of C. Bright vs. District Collector & Ors.
reported in (2021) 2 SCC 392.
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15. In reply to the objection raised by the State respondent in maintaining
the writ petition in the original side, learned advocate for the petitioner
relies on the judgment delivered by the Hon’ble Division Bench of this
Court in the matter of Amala Roy Das alias Amala Das Roy vs.
State of West Bengal reported in AIRONLINE 2022 CAL 1154.
16. The issue which falls for consideration in the instant writ petition is
whether the time limit for taking action by the Chief Metropolitan
Magistrate or the District Magistrate under Section 14 of the Act is
mandatory or not? Whether the Chief Metropolitan Magistrate or the
District Magistrate can proceed to dispose of the application under
Section 14 of the Act after expiry of the statutory time period?
17. According to the Act, the District Magistrate or the Chief Metropolitan
Magistrate, as the case may be, on receipt of the affidavit from the
Authorized Officer, shall after satisfying the contents of the affidavit,
pass suitable orders for the purpose of taking possession of the
secured assets within a period of thirty days from the date of
application. If no order is passed within the aforesaid period of thirty
days for reasons beyond his control, he may, after recording reasons
in writing for the same, pass the order within such further period but
not exceeding in aggregate sixty days.
18. The aforesaid issue has been conclusively decided by the three judge
Bench of the Hon’ble Supreme Court in C. Bright (supra) wherein the
Court held that keeping the objective of the Act in mind, time limit has
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been fixed for taking action by the District Magistrate and the Chief
Metropolitan Magistrate. Inability to take possession within the
stipulated time period does not render the District Magistrate functus
officio. The secured creditor has no control over the District Magistrate
exercising jurisdiction under the Act. Section 14 is not to be
interpreted literally without considering the object and purpose of the
Act. The time limit has been fixed to instil confidence in the creditors
that the District Magistrate will make an attempt to deliver possession
in a time bound manner. The time limit is also to impose a duty on the
District Magistrate to make an earnest effort to comply with the
mandate of the Statute to deliver the possession within thirty days
and on failure to do so within sixty days by recording reasons therefor.
If the District Magistrate is unable to handover the possession within
the stipulated time period, the authority will still be duty bound to
facilitate delivery of possession at the earliest.
19. On the teeth of the order passed by the Hon’ble Supreme Court in C.
Bright (supra) the private respondents places Balkrishna Rama Tarley
(supra) wherein the Hon’ble Supreme Court observed that it is the
statutory obligation of the Chief Metropolitan Magistrate/ District
Magistrate to immediately move into action on receipt of the written
application under Section 14(1) of the SARFAESI Act and to pass order
after verification of compliance of all formalities and after being
satisfied in that regard, to take possession of the secured assets and
documents and forward the same to the secured creditor at the
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earliest. The aforesaid Act is a ministerial act and cannot brook delay.
Time is the essence and spirit of the subject enactment.
20. In R.D. Jain (supra) the Court observed that as per the second proviso
to Section 14 of the Act, suitable order for taking possession of the
secured asset is required to be passed within a maximum period of
sixty days from the date of application. Relying on the aforesaid
observation the private respondents argue that, the time limit so fixed
in the Act is mandatory and on failure to act within the stipulated time
period, the District Magistrate becomes functus officio and cannot
proceed any further to decide the Section 14 application.
21. Reference has also been made to the judgment of Anita Garg (supra) to
impress the Court that the time limit in the Act is mandatory and the
same cannot be extended under any circumstances. Paresh Kumar
Mukherjee (supra) has been cited by the private respondents in
support of the proposition that the Court cannot ignore the statutory
provision, even if, it considers a distress to the result from its
operation.
22. An issue has also been raised with regard to the maintainability of the
writ petition in the original side jurisdiction of this Court as, the
respondent authorities are located outside the original side
jurisdiction of this Court.
23. In Amala Roy Das (supra) the Court observed that the Calcutta High
Court is one High Court and for administrative facility there are two
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sides, the original side and the appellate side. A judge of the Calcutta
High Court is a judge of the Calcutta High Court as a whole. It is only
for the facility of the administration that matters are heard either in
the original or in the appellate side. The matters filed before the Court
are decided on merits and the same cannot be thrown out on the
ground that the same has been filed in the original side and not in the
appellate side or on the ground that the judge lacks jurisdiction to
decide the issue. A litigant cannot be denied justice by holding that
the matter should be heard in the original side and not in the
appellate side. The same tantamount to denial of justice to the litigant.
The Court permitted conversion of the proceeding of the original side
to the proceeding in the appellate side.
24. After careful consideration of the facts and circumstances of the
instant case, I am of the considered opinion that the District
Magistrate / Chief Metropolitan Magistrate does not become functus
officio if steps under Section 14 of the Act cannot be conclusively
taken within the stipulated time period of thirty days or the extended
time period of sixty days. The aforesaid authorities will still have
jurisdiction to take steps under Section 14 and they do not become
functus officio as pleaded by the borrower.
25. The primary object of the Act being recovery of debts owing to banks
and financial institutions in a timely manner, a time limit was inserted
in the Act by way of an amendment with effect from 1st September,
2016. The secured creditor will be left remediless if the District
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Magistrate or the Chief Metropolitan Magistrate, for any reason
whatsoever, fails to act within the aforesaid time period. The secured
creditor will be required to restart the process under Section 14 all
over again which, in turn, will lead to further delay in recovery of the
loan amount.
26. There is no reason as to why a secured creditor will be made to suffer
financially due to inaction or non-action or delayed action on the part
of the statutory authorities. The very purpose and object of the Act will
be frustrated if the recovery process fails. The same will aid in unjust
enrichment of the borrower and financial loss to the secured creditor.
27. If the submission of the borrower is to be accepted, then it will be a
herculean task for the banks and financial institutions to recover the
loan amount from the defaulting borrowers. The secured creditor will
be left running from pillar to post to get the loan amount liquidated
and the borrower may resort to all sorts of antics to delay in paying off
the dues and lastly the banks and financial institutions may be
compelled to write off the dues as bad debt. The entire business of
lending will go for a toss if the procedure for recovery of loan is not a
robust one. The borrower should not harbour the idea that once loan
is obtained there is no way for the secured creditor to recover the
same. At the same time the secured creditor should be assured that if
the borrower fails to repay the loan amount, there is a mechanism in
place to recover the same. Public money cannot be left to be
squandered in such a manner.
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28. The Act prescribes a remedy to the secured creditor to recover the
unpaid loan amount by taking possession of the secured asset. If the
secured creditor is not able to take possession of the mortgaged asset,
then the lender will not be in a position to recover the dues. Merely
holding the documents of the mortgaged asset, will not serve the
purpose. It is only when the mortgaged property is sold, that the
lender will get an opportunity to recover the dues unpaid by the
borrower.
29. There cannot be two opinions that the Section 14 authorities ought to
have taken steps within the stipulated time period, but in the same
breath it has to be held that, failure to take steps within the
prescribed timeline, cannot be said to be a fatal one. The right of the
secured creditor will be severely impacted if any other interpretation is
given to the said provision. A borrower is liable to repay the loan taken
from the financial institution and he does not have any right to object
to any step taken by the lender to recover its dues.
30. It is the borrower who is at fault in not repaying the loan amount; a
wrongdoer cannot be permitted to take advantage of his own wrong.
The lender has been compelled to knock the doors of justice for getting
relief and it is the duty of the Court to protect the right of the lender.
Not allowing the prayer of the bank will result in sheer injustice to the
bank and the borrower may be encouraged to avoid repaying the dues.
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31. To uphold the sanctity and object of the Act, the writ petition is liable
to be allowed and is, accordingly, allowed. The District Magistrate is
directed to dispose of the application of the bank made under Section
14 of the Act in accordance with law, at the earliest, but positively
within four weeks from the date of communication of this order.
32. As, admittedly, the cause of action for filing the instant writ petition
arose outside the original side jurisdiction of this court, accordingly,
the instant writ petition is directed to be converted to the appellate
side and then renumbered. The writ petition in the original side shall
be treated as disposed of. The renumbered writ petition in the
appellate side shall also stand disposed of.
33. Urgent certified photocopy of this judgment, if applied for, be supplied
to the parties or their advocates on record expeditiously on compliance
of usual legal formalities.
(Amrita Sinha, J.)