The High Court held that although non-adjudicatory, a Chief Judicial Magistrate’s role under Section 14 of the SARFAESI Act mandates due application of mind.
On 18-03-2025, the Kerala High Court delivered a landmark judgment in favour of the borrower. The Single-Judge Bench of Justice Gopinath P. reviewed a petition filed by the petitioner-bank and upheld the Tribunal’s order, emphasizing that while a Chief Judicial Magistrate’s role under Section 14 of the SARFAESI Act is non-adjudicatory, it still requires due application of mind—mere issuance of printed orders with blank spaces filled is impermissible. The Court reaffirmed that the Magistrate must verify the factual correctness of the application before granting assistance to the secured creditor. Consequently, the petition was dismissed, allowing the petitioners to seek a fresh order from the competent authority.
The first petitioner, a banking company registered under the Companies Act, 1913, along with the second petitioner, an authorized officer under the SARFAESI Act, approached the High Court challenging the order of the Debts Recovery Tribunal-I, Ernakulam, in S.A.No.286/2024. The Tribunal had set aside the order of the Chief Judicial Magistrate, Manjeri, in M.C.No.929/2023 on the grounds that it lacked proper application of mind and was issued in a printed format. The Tribunal, however, rejected the contention that the properties in question were agricultural lands.
The petitioners, represented by learned senior counsel, contended that the Chief Judicial Magistrate is not an adjudicating authority under the SARFAESI Act but merely exercises administrative functions under Section 14 of the Act. It was argued that the duty of the Magistrate is only to assist the secured creditor in taking possession of the secured asset. Relying on Supreme Court judgments, including The Authorised Officer, Indian Bank v. D. Visalakshi and Another, REEDLAW 2019 SC 09007; R.D. Jain and Company v. Capital First Limited and Others, REEDLAW 2022 SC 07201, and Balkrishna Rama Tarle Dead through LRS and Another v. Phoenix ARC Private Limited and Others, REEDLAW 2022 SC 09202 as well as the Kerala High Court judgment in Canara Bank Ltd. v. Stephen John and others, the petitioners asserted that the Chief Judicial Magistrate's role is ministerial rather than judicial. They argued that the Tribunal's interference was unsustainable, particularly since the order was set aside merely for being in a printed format.
The respondent, represented by counsel, supported the Tribunal’s order, arguing that no jurisdictional error warranted interference under Article 227 of the Constitution. It was contended that if the petitioners were aggrieved, they should have approached the Debts Recovery Appellate Tribunal instead of invoking the High Court’s jurisdiction. The respondent relied on judgments, including Sama Rubbers v. South Indian Bank Ltd. and Jimmy Thomas v. Indian Bank, REEDLAW 2023 Ker 05255, to emphasize that while a Magistrate is not required to adjudicate a lis, he must ensure that the conditions under Section 14 of the SARFAESI Act are met before passing an order. The respondent also highlighted that a casual approach to exercising power under Section 14 was impermissible, given its drastic consequences.
The High Court, after considering the arguments, upheld the Tribunal’s order. It reiterated that while proceedings under Section 14 of the SARFAESI Act do not involve adjudication, they must reflect due application of mind. Citing Supreme Court precedents, the Court observed that the inquiry under Section 14 is quasi-judicial, though nonjudicial in process, requiring the Magistrate to verify the factual correctness of the application. The Court also noted that merely issuing printed orders with blank spaces filled does not meet the requisite standards under the law. Given the severe implications of Section 14 proceedings, the Court held that Magistrates must apply their minds before issuing such orders. Consequently, the High Court dismissed the Original Petition, allowing the petitioners to seek fresh orders under Section 14 from the competent authority. The Registry was directed to communicate the judgment to the Chief Judicial Magistrate, and the practice of issuing printed orders without due consideration was strongly deprecated.
Mr. K.K. Chandran Pillai and Mr. P.A. Augustine, Advocates, represented the Petitioners.
Mr. V. Philip Mathews and Mr. Athulya Sebastian, Advocates, appeared for the Respondent.
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