The question came
up recently before Delhi HC where it was answered in affirmative:
The appointment
of advocate as receiver by Learned CMM has been challenged on basis of decision of
Bom HC in Subir Chakravarty and Ors. vs.
Kotak Mahindra Bank Ltd. [Writ
Petition No. 28480 of 2019]
Sub-section
(1) of Section 14 of the SARFAESI Act, 2002 reads as under :-
(1)
Where the possession of any secured asset is required to be taken by the
secured creditor or if any of the secured asset is required to be sold or
transferred by the secured creditor under the provisions of this Act, the
secured creditor may, for the purpose of taking possession or control of any
such secured asset, request, in writing, the Chief Metropolitan Magistrate or
the District Magistrate within whose jurisdiction any such secured asset or
other documents relating thereto may be situated or found, to take possession
thereof, and the Chief Metropolitan Magistrate or, as the case may be, the
District Magistrate shall, on such request being made to him.
(a)
take possession of such asset and documents relating thereto; and
(b)
forward such assets and documents to the secured creditor.
The Delhi HC, However
rules that Sec 14 uses the word ‘may’
and not ‘shall’ which would import either of below two interpretations:
1) “that the
expression “may” relates to the choice of the subordinate officer.” ;
2) that District Magistrate/CMM has the discretion
to appoint officers subordinate to him to take possession of secured asset
Once an
application is made on behalf of secured creditor under Sec 14(1) SARFAESI the District
Magistrate/CMM has to take action. Even before when Sec 14(1A) was introduced
advocates were appointed as receivers under sub-section (2) of Sec 14. The position
is also settled by Rule 8(3) of The Security Interest (Enforcement) Rules,
2002.
The reason for
appointing advocates as receivers was that District Magistrates/CMM were over burdened and due to lack of
subordinate staff a handicap arose in dealing large number of applications under
Sec 14
In view of Hon’ble
HC the insertion of sub-section (1A) has only conferred choice on District
Magistrate/CMM to appoint subordinate officers as Receivers.
Thus the
appointment of advocates as Receivers under under section 14 (1A) of the SARFAESI Act is
permissible.
