While deciding the scope and meaning of section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 [SARFAESI Act], the Hon’ble High Court of Kerala observed that the power of the Chief Judicial Magistrate is circumscribed to be administrative in nature and hence it does not have jurisdiction to grant time for payment of debt which is due to the secured creditor.
With a plinth of the matter set by various previous judgements like Muhammed Asraf v. Union of India [2008 (4) KLT 1], Ayishumma v. Hassan [2009 (3) KLT 399], South India Bank Ltd. v. Union of India [2010 (4) KLT 657], given by the Hon’ble High Court of Kerala itself before the 2012 amendment of the SARFAESI Act, Hon’ble Justice P. B. Suresh Kumar opined in the present matter of Canara Bank v. Stephen John that even though these abovementioned judgements were passed before the amendment to section 14, yet it elucidates the scope of the power of Chief Judicial Magistrate accurately.
A writ petition was filed in the Hon’ble High Court of Kerala contending that the order passed by the Chief Judicial Magistrate to grant time to the debtor for payment of debt to the secured creditor is beyond jurisdiction. After considering the arguments posed by the learned advocates of both the parties; Hon’ble Justice Kumar held that it is well-settled now that the power of the court can either be administrative or judicial in nature which has to be ascertained by the section which prescribes it, and in furtherance of it said as follows-
“(8). . .Merely for the reason that the power under Section 14 is exercised by the Chief Judicial Magistrate, it cannot be argued that the power is judicial as it is now settled that the fact that the power is entrusted or wielded by a person who functions as a court is not decisive of the question whether the act or decision is administrative or judicial. . . .One of the surest tests would be whether a matter which involves the exercise of discretion is left for the decision of the authority.[emphasis added]”
Therefore, the writ petition was allowed with an observation that the power bestowed upon the Chief Judicial Magistrate is only for regulation of the matter. But, the Hon’ble High Court of Kerala considered it pertinent to mention that firstly, the amendment of 2012 to the SARFAESI Act with respect to section 14 has the capacity to clear the erstwhile confusion regarding the power of the Chief Judicial Magistrate, as it makes it mandatory for the security creditor to file an affidavit according to the requirement of Section 14(1) which the Magistrate will have to ascertain before exercising power under section 14, secondly that the power of the Magistrate is to assist the secured creditor take physical possession of the secured assets and thirdly, correctness of the declaration made by the secured creditor to avail the possession of secured asset under section 14 shall be decided by the Debt Recovery Tribunal under section 17.
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