CJM’s Order u/s 14 of SARFAESI Act Is Executing in Nature, No Prescribed Format Required: DRAT sets aside DRT Restraint on Axis Bank [Read Order]

The Debts Recovery Appellate Tribunal (DRAT), Kolkata, has allowed an appeal filed by Axis Bank Limited and its Authorised Officer, setting aside the order passed by the Debts Recovery Tribunal‑III (DRT) holding that the no specific format is prescribed for passing an order by the Chief Judicial Magistrate (CJM) under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) rather, it is an order in the nature of an executing order

The case arose from proceedings under the SARFAESI Act, where the DRT had restrained the bank from taking coercive steps against secured assets despite a prior order of the Chief Judicial Magistrate (CJM), Alipore, under Section 14 of the Act.

The dispute originated when borrowers Raghav Kedia and Sunil Kedia challenged notices issued under Sections 13(2) and 13(4) of SARFAESI, as well as the subsequent order of the CJM dated 4 November 2024.

The respondents argued that the CJM had incorrectly recorded the sanctioned loan amounts, citing discrepancies between the figures in the sanction letters and those noted in the judicial order.

They further contended that the CJM failed to comply with statutory requirements under Section 14, including recording reasons for delay, as the affidavit was filed in February 2024, but the order was passed only in November 2024.

The DRT accepted these arguments, holding that the CJM had not properly recorded the bank’s total claim and had delayed beyond the stipulated 60‑day period, thereby restraining Axis Bank from proceeding further without leave of the Tribunal.

On appeal, Axis Bank argued that the nine‑point affidavit filed before the CJM contained all statutory particulars, including the sanctioned and outstanding amounts, and that the CJM had duly considered the affidavit before passing the order.

The bank further submitted that the statutory timelines under Section 14 are directory, not mandatory, and that minor discrepancies in figures do not invalidate an otherwise lawful order.

Justice Anil Kumar Srivastava, after reviewing the record, agreed with the bank’s submissions. He noted that the CJM had carefully considered the affidavit and documents in detail, and that no specific format is prescribed for orders under Section 14.

Citing precedents from the Calcutta High Court, Jaldhaka Cold Storage Pvt. Ltd. v. UCO Bank, Syndicate Bank v. Kaliji Engineering Works and the Supreme Court C. Bright v. District Collector, the DRAT held that as long as the Magistrate considers the affidavit and satisfies statutory requirements, the order cannot be faulted.

On the issue of delay, the DRAT highlighted that the 30‑day and 60‑day periods under Section 14 are intended to instill confidence in creditors but are not mandatory cut‑offs.

Even if the order is passed beyond 60 days, the Magistrate does not become functus officio, and proceedings remain valid. The Tribunal also observed that the respondents had failed to raise any plea regarding functus officio in their application.

Accordingly, the DRAT concluded that the DRT had erred in law by interfering with the CJM’s order and restraining the bank. The appeal was allowed, and the DRT’s order was set aside, restoring Axis Bank’s right to proceed under SARFAESI.

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