Advocates can be preordained as receivers u/s 14(1A) of SARFAESI Act: Delhi HC

0
28
The Delhi court said that there is no bar on the appointment of an advocate as a Receiver under the provisions of SARFAESI Act

Case Name: Rahul Chaudhary vs. Andhra Bank and others

Case No: WP: 657/2020 and CM APPL: 1851/2020

Quorum: Justice Rajiv Shakdher 

The Delhi court said that there is no bar on the appointment of an advocate as a Receiver under the provisions of the Securitisation and the Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act)

Key features:

  • The judgment was passed by a Single Judge Bench of Justice Rajiv Shakdher in a challenge to an order passed by a Chief Metropolitan Magistrate (CMM) appointing an advocate as a receiver to take possession of a secured asset under Section 14(1A) of SARFAESI.
  • The petitioner contended that the appointment of an advocate as a receiver was contrary to the language of Section 14 (1A).
  • The Court noted that the language of Section 14(1A) of the SARFAESI Act used the expression “may and not “shall”.

Hon’ble Justice Rajiv Shakdher was of the view that District Magistrates and the CMM’s are already overburdened and so long as the discretion in appointing advocates as receiver was exercised with due care and caution there is no problem why advocates cannot be appointed.

Facts:

The petitioner had challenged the order stating that the appointment of an advocate as a receiver was contrary to the provisions of Section 14(1A) of the SARFAESI Act. The Petitioner relied on the judgement of Subhir Chakravarty and others vs. Kotak Mahindra Bank (WP No. 28480/2019).

Judgment:

The Hon’ble Judge did not consider the argument and make it cleared that Section 14(1A) conferred discretion on the district magistrate/CMM to appoint their subordinate officers as receivers. Therefore, it did not bar the appointment of advocates as such. The Court noted that the language of Section 14(1A) of the SARFAESI Act used the expression ‘may’ and not ‘shall’. Stating that were two ways of appreciating the provision, the Court added, that the expression “may” relates to the choice of the subordinate officer. The other meaning that can be placed on the provision is that District Magistrate/CMM is vested with discretion to appoint officers subordinate to him to take possession of the secured asset.”

The Court said that in terms of Section 14(1), the District Magistrate/CMM was obliged to take possession once an application in that behalf was preferred by the secured creditor and then recourse is taken to Section 14 (1A) to appoint a ‘receiver’.

The Court concluded that after the insertion of sub-section (1A) to Section 14 in 2013, the District Magistrate/CMM was granted the discretion to appoint even their subordinate officers as receivers stating that were two ways of appreciating the provisions.

Edited by Vartika Gajendra Singh

Approved & Published – Sakshi Raje