DRAT validated the substitution of the authorized officer by the District Magistrate under the SARFAESI Act.
The Debts Recovery Appellate Tribunal (DRAT), Kolkata Bench headed by Justice Anil Kumar Srivastava (Chairperson) addressed an appeal and observed that the substitution of an authorized officer by the District Magistrate under Section 14 of the SARFAESI Act, due to the officer's transfer, is within the permissible scope of the Act and does not exceed the DM's ministerial powers, as the role is to facilitate possession, not adjudicate.
The present appeal was filed against the order dated 27th February 2024, passed by the Learned DRT-III, Kolkata, in S.A. 102 of 2021, where the Appellant Bank was restrained from proceeding with the secured assets following an order of the Learned District Magistrate (DM) of South 24 Parganas on 4th January 2024. The Appellant Bank had previously filed an appeal against the DM's order dated 4th January 2024. The appeal arose from a loan of Rs. 1.44 crore granted by the erstwhile Andhra Bank (now Union Bank of India), which became irregular and classified as a Non-Performing Asset (NPA). Despite efforts to settle the matter through a One-Time Settlement, the case proceeded under the provisions of the SARFAESI Act, with a Section 14 order for possession of the secured assets passed in November 2020. Following the transfer of the authorized officer, a new order was passed in January 2024 authorizing Shri Prasun Kumar Dhara to take possession, which was challenged by the Respondents.
The DRAT considered whether the District Magistrate exceeded his powers under Section 14 of the SARFAESI Act by substituting the authorized officer. The DRAT upheld that the substitution was within the permissible scope of Section 14. Citing the judgment in Balkrishna Rama Tarle v. Phoenix ARC Private Limited and Others, REEDLAW 2022 SC 09202, the DRAT reinforced that the District Magistrate's powers under Section 14 are ministerial in nature and do not require adjudication. The District Magistrate is tasked with facilitating the process of possession and may authorize a new officer if the previous one is transferred, as was the case in this instance. The DRAT also referred to previous cases, including State Bank of India vs. State of West Bengal and Tata Capital Financial Services Ltd. vs. State of West Bengal, where similar substitutions were upheld as not exceeding the DM's jurisdiction.
The DRAT concluded that the District Magistrate's role is ministerial, and the substitution of the officer due to transfer was within the scope of the SARFAESI Act. The Court emphasized that the legislative intent behind the SARFAESI Act is to streamline the process of recovery, and any procedural adjustments, such as substituting an officer, align with this intent. Consequently, the DRAT upheld the impugned order and rejected the appeal, affirming that the actions taken by the District Magistrate were not beyond his legal powers.
Ms. Poetry Dutta, Advocate, represented the Appellant. No one appeared for the Respondent.
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