The District Magistrate's role under Section 14 of the SARFAESI Act was deemed ministerial and not adjudicatory, leading to the dismissal of the appeal.
The Debts Recovery Appellate Tribunal (DRAT), Kolkata Bench of Justice Anil Kumar Srivastava (Chairperson) reviewed an appeal and observed that the District Magistrate's role under Section 14 of the SARFAESI Act is ministerial, requiring only verification of the factual correctness of the secured creditor's assertions without adjudicating legal disputes, and the validity of the mortgage and the Appellant's ownership share must be determined in the pending SARFAESI proceedings before the DRT.
An appeal was preferred against an order dated 24.05.2024 passed by the Learned DRT-2, Kolkata in I.A. No. 1007 of 2024, arising out of S.A. No. 329 of 2019. The Appellant, who was neither a borrower nor a guarantor, claimed ownership of 50% of the secured property, having received it through a Gift Deed from her husband. The secured assets were originally purchased jointly by the Appellant and her husband in 1998, and the Appellant had transferred her share to her husband through a registered deed in 2000. Subsequently, the husband gifted the property back to her in 2005. Despite these transactions, the Bank issued a Demand Notice to her husband and initiated SARFAESI action, claiming that the husband had mortgaged his share in the property to secure a loan for a teachers' training college. The Appellant filed an application challenging the SARFAESI action, arguing that the Bank had not considered her 50% share in the property.
The Appellant's application was dismissed by the Learned DRT, which found that the District Magistrate had properly followed the provisions of Section 14 of the SARFAESI Act. The DRT held that the Gift Deed executed between the Appellant and her husband was a personal matter, and no fraudulent action by the Bank was alleged. Furthermore, the DRT concluded that the District Magistrate’s order under Section 14 was not an adjudicatory act but a ministerial one. The DRT observed that the District Magistrate had recorded satisfaction on the necessary points and authorized the possession of the secured assets.
The Appellant then filed an appeal, asserting that the District Magistrate's order was invalid due to non-compliance with Section 14 of the SARFAESI Act and that the Bank had suppressed the pending SARFAESI application. However, the Respondent Bank's counsel argued that the District Magistrate’s role was simply ministerial and did not require adjudication of the dispute. The Appellant also relied on judicial precedents, particularly the case of Balkrishna Rama Tarle Dead through LRS. and Another v. Phoenix ARC Private Limited and Others, REEDLAW 2022 SC 09202 to argue that the District Magistrate’s order was improperly issued.
The Tribunal examined relevant case law, including Balkrishna Rama Tarle Dead through LRS. and Another v. Phoenix ARC Private Limited and Others, REEDLAW 2022 SC 09202 and R.D. Jain and Company v. Capital First Limited and Others, REEDLAW 2022 SC 07201, emphasizing that the District Magistrate’s function under Section 14 of the SARFAESI Act was purely ministerial. It concluded that the legal validity of the mortgage and the Appellant’s share in the property could not be adjudicated at this stage, as these were to be decided in the pending SARFAESI application before the DRT. The Tribunal further held that the District Magistrate had complied with the statutory requirements, as the affidavit from the Authorized Officer met the prescribed conditions.
Ultimately, the Tribunal upheld the impugned order, dismissing the appeal and confirming the District Magistrate’s decision. The appeal was found to lack merit, and the order was affirmed without costs. The matter was disposed of, with directions to upload the judgment to the Tribunal’s website and forward copies to the concerned parties.
Mr. Prasenjit Pal, Mr. Dipak Ray Chowdhury and Mr. Sudip Kumar Das, Advocates represented the Appellant.
Mr. Debasish Chakrabarty, Advocates appeared for the Respondent.
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