DRAT upheld the District Magistrate's ministerial powers under Section 14 of the SARFAESI Act, affirming the substitution of the authorized officer as valid and within the jurisdiction.
The Debts Recovery Appellate Tribunal (DRAT), Kolkata Bench headed by Justice Anil Kumar Srivastava (Chairperson) addressed an appeal and observed that the District Magistrate’s powers under Section 14 of the SARFAESI Act are ministerial, allowing for administrative adjustments, such as substituting an authorized officer, without requiring a fresh affidavit or rendering the authority functus officio, provided such actions align with statutory compliance to facilitate the secured creditor's possession of assets.
The Debts Recovery Appellate Tribunal (DRAT) adjudicated an appeal against the order of the Debts Recovery Tribunal-III (DRT), Kolkata, in Priyabrata Ghosh v. Indian Bank (S.A. 707 of 2021), focusing on the scope of the District Magistrate’s authority under Section 14 of the SARFAESI Act, 2002. The case revolved around the substitution of an officer initially authorized to take possession of secured assets due to administrative exigencies, following the officer’s transfer. The Respondents (borrower and guarantor) challenged this substitution, contending that the District Magistrate had become functus officio after issuing the original order and lacked authority to modify it.
The DRAT addressed key issues, including whether the District Magistrate's actions under Section 14 were administrative or adjudicatory and whether the substitution required a fresh affidavit or application by the secured creditor. Relying on precedents such as Kotak Mahindra Bank Limited v. A. Balakrishnan and Another, REEDLAW 2022 SC 05561 and State Bank of India v. State of West Bengal (WPA 8006 of 2023), the Tribunal reaffirmed the ministerial nature of the District Magistrate’s powers under Section 14. It emphasized that these powers include issuing orders necessary to facilitate possession and are not rendered functus officio by prior compliance with procedural formalities. The substitution of an officer, as authorized under Section 14(1A), was held to be a mechanical exercise consistent with administrative requirements.
The Tribunal further clarified that the SARFAESI Act’s intent is to ensure the expeditious recovery of secured debts, allowing procedural adjustments to accommodate administrative exigencies without additional affidavits or applications. The Respondent's argument that the District Magistrate exceeded his jurisdiction and violated the statutory mandate of Section 14 was rejected. The DRAT underscored that the substitution order did not alter the substantive rights of the parties or impede the recovery process but instead facilitated the execution of the secured creditor’s rights under the SARFAESI Act.
Ultimately, the DRAT set aside the DRT’s impugned order restraining the Indian Bank from taking coercive steps, upholding the District Magistrate’s order dated 28.11.2023 as lawful and within the jurisdiction. The decision reaffirmed the SARFAESI Act’s framework for enabling secured creditors to enforce their security interests without undue interference, aligning procedural efficiency with statutory compliance. The appeal was allowed without costs, reinforcing the administrative prerogative of the District Magistrate in effectuating possession of secured assets under the Act.
Mr. Shiv Mangal Singh and Ms. Jahan Ara Kulsum, Advocates represented the Appellant.
Mr. Nimish Mishra, Mr. Gaurav Singh and Mr. Debjit Mukherjee, Advocates appeared for the Respondent.
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