In a recent ruling, a Division Bench of Bombay High Court directed the district magistrate to dispose of the applications filed by the secured creditor under section 14 of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 within 30 days.
The district magistrate ought to consider the application without delay if all of the prerequisites stipulated in Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act are met, according to the ruling by the justices Abhay Ahuja and Nitin Jamdar‘s bench.
The secured creditors who had submitted applications in accordance with Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), had submitted their petitions.
The main complaint of the petitioners is that the applications have been placed on hold for a long period, despite the fact that the authority under section 14 of the SARFAESI Act of 2002 is ministerial and intended to be utilised to assist the secured creditors in taking action to quickly collect their debts.
The bench observed that with the similar grievance, several secured creditors kept filing writ petitions in this Court alleging authorities’ lethargy and reluctance to proceed under Section 14 of the SARFAESI Act.
The Section 14 of the SARFAESI Act, thus, places an obligation upon the Chief Metropolitan Magistrate or District Magistrate to assist secured creditors in taking possession of the secured asset.
Further, it enables the secured creditor to approach the District Magistrate/Chief Metropolitan Magistrate with a written application requesting for taking possession of the secured assets and forwarding it to the secured creditor for further action.
During the hearing, the Advocate General assured that the State Government would take efforts to clear all pending applications by 31 March 2023. The High Court Administration informed that they had initially planned to start a special drive in August 2023 but have now decided to initiate it from 1 March 2023, given the gravity of the matter.
As per the guidelines issued by the State Government by way of a Circular dated 10 April 2023, all pending applications under Section 14 of the SARFAESI Act as of 31 March 2023, should be disposed of by 30 April 2023.
The bench ruled that the fresh applications filed after 31 March should be disposed of by the District Magistrates within thirty days of the Application is filed.
The High Court reaffirmed the ruling in the case Asset Reconstruction Company Private Limited v. Union of India; in a similar circumstance, the Division Bench of this Court issued various orders, including the serial numbering and time-bound disposition of applications. It is disappointing that nothing has changed.
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