SARFAESI Act; Abhishek Mishra Vs. State of U.P. [Allahabad High Court, 08-09-2016]

Contents

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Ss. 14 – Nomenclature ‘Chief Metropolitan Magistrate’ used in Section 14 of Act, 2002 is inclusive of ‘Chief Judicial Magistrate’ functioning in a non-metropolitan area and shall have jurisdiction to entertain an application made by a secured creditor under Section 14 of Act, 2002.


HIGH COURT OF JUDICATURE AT ALLAHABAD

Krishna Murari and Prashant Kumar, JJ.

8th September, 2016

Civil Misc. Writ Petition No. 17778 of 2016

Abhishek Mishra ——- Petitioner

Versus

State of U.P. & Ors. ——- Respondents

(Per Krishna Murari, J.)

Heard Shri Neeraj Kumar Pandey, learned counsel for the petitioner, learned Standing Counsel for respondent nos. 1, 2 and 5 and Shri Sandeep Arora for respondent no. 3-Bank.

Admittedly, late father of the petitioner took two loans from respondent no. 3-Bank and mortgaged the property bearing khasra no. 762, area 1128 sq. ft. situated in Rudrapur and another residential plot nos. 820 and 821, area 2128 sq. ft. as security to the said loans. The dispute in the present writ petition is in respect of the khasra no. 762. Late father of the petitioner defaulted in making repayment, as a result, proceedings under

# Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

(hereinafter referred to as the ‘Act, 2002’) was initiated. Notice under Section 13 (2) of the Act, 2002 was issued and subsequently after notice under Section 13 (4) of the Act, 2002, the respondent-Bank made an application under Section 14 of the Act, 2002 before the Chief Judicial Magistrate seeking assistance in taking possession of the secured asset. Chief Judicial Magistrate vide order dated 18.03.2016, impugned in this petition, allowed the application and directed the concerned police station to assist the Bank in taking over possession of the mortgaged property and Sub Divisional Magistrate was directed to make an inventory of the articles in the mortgaged property.

Learned counsel for the petitioner contends that since Section 14 of the Act, 2002 only authorises either the Chief Metropolitan Magistrate or the District Magistrate to entertain and pass orders on the application made under the said Section, as such, the impugned order passed by the Chief Judicial Magistrate is patently without jurisdiction and is not liable to be sustained. It is further submitted that since Act, 2002 is a self contained code and the language of Section 14 is clear and unambiguous, no jurisdiction can be said to vest with the Chief Judicial Magistrate to exercise the power under Section 14 of the Act. He further submits that the power is to be exercised by the Chief Metropolitan Magistrate under the provisions of the Act, the same cannot be delegated to a Chief Judicial Magistrate by giving a wider meaning to the nomenclature to the Chief Metropolitan Magistrate and if the Legislature has omitted the use of word ‘Chief Judicial Magistrate’, the Court cannot supply the omission and it can only interpret the law.

On the other hand, learned counsel for the respondent-Bank submits that the very purpose of the enactment, viz., the expeditious recovery of bad loans classified as Non Performing Asset, would fail, if the Chief Judicial Magistrate is excluded from exercising the power conferred by Section 14of the Act, 2002. He points out that only a few areas in the State of U.P. has been declared to be metropolitan areas where the Chief Metropolitan Magistrate functions and in most of the areas, there are Chief Judicial Magistrate and, in case, if he is excluded from exercising the power conferred by Section 14 of the Act, it would result in endless delay in recovery of debts of the Banks and financial institutions frustrating the very purpose of the Legislature enacting the Act, 2002 for speedy recovery of the loans.

The core issue, which arises for reconsideration is whether the Chief Judicial Magistrate exercising jurisdiction in non metropolitan area in exercise of powers conferred by Section 14 of the Act, 2002 can assist a secured creditor in taking possession of the secured asset and pass an order in favour of the secured creditor for the purpose of taking possession or control of any secured asset.

This issue has been subject matter of consideration before various High Courts, who have expressed divergent views, however, no authoritative pronouncement by the Hon’ble Apex Court or by this Court, has been placed before us.

A Full Bench of Madras High Court in

# K. Arockiyaraj Vs. Chief Judicial Magistrate, Srivilliputhur & Anr., 2013 (4) L.W. 485

and two Division Benches judgment of Bombay High Court in the case of

# Arjun Urban Co-operative Bank Limited, Solapur Vs. Chief Judicial Magistrate, Solapur & Anr., 2009 (5) MLJ 380

and

# Ravindrakumar Prakash Bhargodev Vs. State of Maharashtra, 2008 (110) BOMLR 2880

have taken view that in absence of any reference to Chief Judicial Magistrate, in Section 14, it is only the Chief Metropolitan Magistrate in the metropolitan area and the District Magistrate in non-metropolitan area, who can entertain an application under Section 14. Whereas a Division Bench of Kerala High Court in the case of the

# Mohd. Ashraf and Smt. C. Arifa Vs. Union of India, 2008 Law Suit (Ker) 477

and a Full Bench of Andhra Pradesh High Court in the case of

# T.R. Jewellery & Ors. Vs. State Bank of India & Ors., Laws (APH)-2015-11-17

has taken a totally contrary view.

Before answering the question posed before us for adjudication, we find it expedient to notice the statement of object and reasons of Act, 2002 in order to explore the purpose and intention of the Legislature for enacting the said Act. Finding that several hundred crores of public money was blocked in unproductive ventures, the Government of India constituted a committee under Shri P. Tiwari to examine the legal and other difficulties faced by the Banks and financial institutions in the recovery of their dues and suggest remedial measures. The Tiwari Committee noticing that the existing procedure for recovery was very cumbersome, suggested setting up special Tribunals for recovery of the dues of Banks and financial institutions by following a procedure, which was summary in nature. The issue was further considered by the committee on the financial system headed by M. Narsimham. In its first report, the Narsimham committee suggested setting up special Tribunals with special powers for adjudication of cases involving the dues of Banks and financial institutions. On a consideration of the report of the two committees, namely, Tiwari committee and Narsimham committee, the parliament enacted the Recovery of Debts due to Banks and Financial Institutions Act, 1993. By the new enactment, a specialised forum by the name of Debts Recovery Tribunal and Debts Recovery Appellate Tribunals were constituted for expeditious disposal of cases relating to recovery of debts due to Banks and financial institutions. The principles applicable in a civil proceeding before civil court in such matters was barred and all pending matters above a certain valuation were transferred to such newly created Tribunals. For a certain period, the new system worked well and the Tribunals ensured that cases involving recovery of dues of Banks and financial institutions are decided expeditiously. However, with the passage of time, the proceedings before the Tribunal also became sluggish like those before regular civil courts and on account of the various procedural technicalities, there was great impediment in the expeditious adjudication of cases by the Debt Recovery Tribunal. A survey conducted by the Ministry of Finance, Government of India in 2001 revealed that a huge sum of more than Rs.1,20,000 crores of the Banks and financial institutions was blocked in bad loans, which was adversely affecting the economy of the country. The Government again referred the matter to Narsimham committee to suggest ways and means for expediting the recovery of debts of Banks and financial institutions. Narsimham committee submitted its 2nd report. Andhyarujina committee was also constituted by the Central Government for the purpose of examining banking sector reforms and to consider the need for changes in the legal system in respect of these dues. Both the committees, inter alia, suggested enactment of a new Legislation for securitization and empowering the banks and financial institutions to take possession as security and to sell them without the intervention of the Court. Accepting the recommendations made by the two committees, the Parliament proceeded to enact Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which was promulgated on 21st August, 2002, which was later on converted into Act, which came into force w.e.f. 17th December, 2002.

Act, 2002 provides a detail procedure for constitution of Securitisation company or Reconstruction company for regulation of securitisation and reconstruction of financial assets of Banks and financial institutions. The provisions of the Act also provide a procedure for enforcement of the security interest. Under Section 13 of the Act, any security interest created in favour of any secured creditor, is liable to be enforced without the intervention of the Court or Tribunal by the said creditor in accordance with the provisions contained in the Act. This power has been vested notwithstanding anything contained in Section 69 or Section 69 A of the Transfer of Property Act, 1882.

While upholding the constitutional validity of Act, 2002, the Hon’ble Apex Court in the case of

# Mardia Chemicals Ltd. Vs. Union of India, (2004) 4 SCC 311

has observed that though the effect of some of the provisions of the enactment could be a bit harsh for some of the borrowers, but the impugned provisions of the Act cannot be said to be unconsitutonal on that ground because the object of the Act is to achieve speedy recovery of dues declared as NPAs and better availability of capital liquidity and resources to help in growth of the economy of the country and welfare of the people in general which would sub serve the public interest.

From the above observations made by the Hon’ble Apex Court and also the statement of object and reasons, it becomes abundantly clear that the purpose of the Act is to achieve speedier recovery of the bad debts of the Bank and financial institutions declared as NPAs without the intervention of the Tribunal or the Courts and quick resolution of disputes arising out of the action taken for recovery of such dues, which would go a long way in making better availability of capital liquidity and resources to help growth of the economy of the country and welfare of the public at large in order to further sub serve the purpose and object of the Act. The Legislature after enacting Section 13 providing a procedure for enforcement of security interest by the secured creditor enacted Section 14 conferring power upon the Chief Metropolitan Magistrate or the District Magistrate to assist secured creditor in taking the possession of the secured asset. The said Section reads as under.

“14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.-

(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.

Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that –

(i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application;

(ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period;

(iii) the borrower has created security interest over various properties giving the details of properties referred to in sub-clause (ii) above;

(iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount;

(v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a non-performing asset;

(vi) affirming that the period of sixty days notice as required by the provisions of sub-section (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower;

(vii) the objection or representation in reply to the notice received from the borrower has not been considered by the secured creditor and reasons for non-acceptance of such objection or representation had been communicated to the borrower;

(viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of sub-section (4) of section 13 read with section 14 of the principal Act;

(ix) that the provisions of this Act and the rules made thereunder had been complied with;

Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets;

Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.

[(1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,-

(i) to take possession of such assets and documents relating thereto; and

(ii) to forward such assets and documents to the secured creditor.]

(2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief Metropolitan Magistrate of the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary.

(3) No act of the Chief Metropolitan Magistrate or the District Magistrate [any officer authorised by the Chief Metropolitan Magistrate or District Magistrate] done in pursuance of this section shall be called in question in any court or before any authority.”

A plain reading of the above Section shows that it is procedural whereunder the Chief Metropolitan Magistrate or the District Magistrate as the case may be on an application made by the secured creditor shall render assistance to it to take possession of the secured asset or document relating to such assets and forward such assets and documents to the secured creditor. Under sub-section (2) of Section 14, the authority is empowered to take such steps and use such course as may be necessary for taking possession of the secured assets and documents relating thereto. Sub-section (3) of Section 14 further provides that any act done by the authority in exercise of powers conferred by the provision shall not be called any question in any court or before any authority.

The crux of the argument advanced on behalf of the petitioner is that in view of the phraseology of Section 14 of the SARFAESI Act, it is only the Chief Judicial Magistrate who can exercise the powers conferred by said Section. Whereas the counter argument  advanced on behalf of the respondent-bank is that the words ‘Metropolitan Magistrate’ used in Section 14 would include the Chief Judicial Magistrate if the area in question is not a Metropolitan area as the function assigned to both the Magistrate are similar.

Metropolitan area is defined under Section 2(k) of the Code of Criminal Procedure (for short ‘Cr.P.C.’) as under :

“2(k). “Metropolitan area” means the area declared, or deemed to be declared, under Section 8, to be a metropolitan area.”

At this stage, it may also be relevant to extract the relevant part of Section 3 of the Cr.P.C., which speaks of construction of references.

“3(1) In this Code – (a)  any reference, without any qualifying words, to a Magistrate shall be construed, unless the context otherwise requires, –

(i)  in relation to an area outside a metropolitan area, as a reference to a Judicial Magistrate;

(ii) in relation to a metropolitan area, as a reference to a Metropolitan Magistrate.”

Section 3(1)(d) reads as under :

“any reference to the Chief Judicial Magistrate shall, in relation to a metropolitan area, be construed as a reference to the Chief Metropolitan Magistrate exercising jurisdiction in that area.”

Section 3(2) – In this Code, unless the context otherwise requires, any reference to the Court of a Judicial Magistrate shall, in relation to a Metropolitan area, be construed as a reference to the Court of the Metropolitan Magistrate for that area.”

Under Section 8 of Cr.P.C., the State Government is empowered to declare by a notification with effect from such date as may be specified therein any area within the State comprising a city or town whose population exceeds one million shall be a metropolitan area.

Under Section 12 of Cr.P.C., the High Court of the State is empowered to appoint in every district, which is not a metropolitan area, a Judicial Magistrate of First Class to be the Chief Judicial Magistrate. Similarly, with respect to every metropolitan area, the High Court is empowered to appoint a Metropolitan Magistrate to be the Chief Metropolitan Magistrate for such metropolitan area.

From a reading of the aforesaid provisions, it is clear that the function and powers of Chief Judicial Magistrate in non-metropolitan area and that of Chief Metropolitan Magistrate in metropolitan area are one and the same.

A Chief Judicial Magistrate working, if transferred to a metropolitan area, will discharge the function as Chief Metropolitan Magistrate and similarly, if a Chief Metropolitan Magistrate working in a metropolitan area is transferred in a non-metropolitan area, he will discharge the function and duties as Chief Judicial Magistrate. The function and powers are the same and these words are interchangeably used as per their placement in a metropolitan or non-metropolitan area. One is synonymous for the other dependent upon the area under his transfer.

A reading of the above provisions makes it clear that powers of Chief Judicial Magistrate in non-metropolitan area and powers of Chief Metropolitan Magistrate working in metropolitan area, are one and the same, their functions are same and one is synonymous to other. The only difference is that former one exercises jurisdiction over non-metropolitan areas while the later exercises jurisdiction in metropolitan area only. The nomenclature gets changed depending upon whether the area has been declared as a metropolitan area.

The main thrust of the argument of learned counsel for the petitioner is that since the Legislature did not use the words Chief Metropolitan Magistrate in Section 14 of the Act, the same cannot be read in the said Section. In effect, the argument is that what has not been provided for in the Statute cannot be supplied by the Court as the same will amount to legislation and not construction.

In view of above, the question for consideration would be whether there is any casus omissus if nomenclature, Chief Metropolitan Magistrate used in Section 14 is interpreted to include Chief Metropolitan Magistrate.

In the case of

# Chief Justice of A.P. & Ors. Vs. L.V.A. Dixitulu & Ors., (1979) 2 SCC 34

Hon’ble Apex Court held as under.

“The primary principle of interpretation is that a constitutional or statutory provision should be construed ‘according to the intent of they that made it’ (Coke). Normally, such intent is gathered from the language of the provision. If the language or the phraseology employed by the legislation is precise and plain and thus by itself proclaims the legislative intent in unequivocal terms, the same must be given effect to, regardless of the consequences that may follow. But if the words used in the provision are imprecise, protean or evocative or can reasonably bear meanings more than one, the rule of strict grammatical construction ceases to be a sure guide to reach at the real legislative intent. In such a case, in order to ascertain the true meaning of the terms and phrases employed, it is legitimate for the Court to go beyond the arid literal confines of the provision and to call in aid other well-recognised rules of construction, such as its legislative history, the basic scheme and framework of the statute as a whole, each portion throwing light on the rest, the purpose of the legislation, the object sought to be achieved, and the consequences that may flow from the adoption of one in preference to the other possible interpretation.”

Again in the case of

# Kehar Singh & Ors. Vs. State (Delhi Admn.), AIR 1988 SC 1883

the Hon’ble Apex Court observed as under.

“But, if the words are ambiguous, uncertain or any doubt arises as to the terms employed, we deem it as our paramount duty to put upon the language of the legislature rational meaning. We then examine every word, every section and every provision. We examine the Act as a whole. We examine the necessity which gave rise to the Act. We look at the mischiefs which the legislature intended to redress. We look at the whole situation and not just one-to-one relation. We will not consider any provision out of the framework of the statute. We will not view the provisions as abstract principles separated from the motive force behind. We will consider the provisions in the circumstances to which they owe their origin. We will consider the provisions to ensure coherence and consistency within the law as a whole and to avoid undesirable consequences.”

In the case of

# District Mining Officer Vs. Tata Iron & Steel Co., (2001) 7 SCC 358

the Hon’ble Apex Court observed as under.

“The legislation is primarily directed to the problems before the legislature based on information derived from past and present experience. It may also be designed by use of general words to cover similar problems arising in future. But, from the very nature of things, it is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for and words chosen to communicate such indefinite referents are bound to be in many cases, lacking in clarity and precision and thus giving rise to controversial questions of construction. The process of construction combines both literal and purposive approaches. In other words, the legislative intention i.e. the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed.”

A Constitution Bench of the Hon’ble Apex Court in the case of

# Padmasundara Rao (Dead) & Ors. Vs. State of Tamilnadu & Ors., AIR 2002 SC 1334

while laying down the principles for interpretation of statutes has held as under.

“Two principles of construction – one relating to casus omissus and the other in regard to reading the statute as a whole – appear to be well settled. Under the first principle a casus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on an particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature. “An intention to produce an unreasonable result.” said Danckwerts, L.J., in

# Artemiou Vs. Procopiou, 1966 1 QB 878

“is not to be imputed to a statute if there is some other construction available.” Where to apply words literally would “defeat the obvious intention of the legislation and produce a wholly unreasonable result” we must “do some violence to the words” and so achieve that obvious intention and produce a rational construction.”

In this connection it may be relevant to refer to the following observations of Lord Denning in the case of

# Seaford Court Estates Ltd. Vs. Asher (1949) 2 All ER 155, P. 164

“When a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament and then he must supplement the written words so as to give force and life to the intention of the Legislature. A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases.”

The above observation of Lord Denning was quoted with approval by the Hon’ble Apex Court in

# Banglore Water Supply and Sewerage Board Vs. A. Rajappa, AIR 1978 SC 548

# State of Karnataka Vs. Hansa Corporation, AIR 1981 SC 463

# Directorate of Enforcement Vs. Deepak Mahajan, AIR 1994 SC 1775

# NEPC Micon Ltd. Vs. Magna Leasing Ltd., AIR 1999 SC 1952

and also in

# Reema Agarwal Vs. Anupam (2004) 3 SCC 199.

In the case of

# Argano Chemical Industries Vs. Union of India, AIR 1979 SC 1803

the Hon’ble Apex Court has observed that

“A bare mechanical interpretation of the words and application of Legislative intent devoid of concept of purpose will reduce most of the remedial and beneficent legislation to futility.

In

# National Insurance Company Ltd. Vs. Laxmi Narain Dhut, AIR 2007 SC 1563

the Hon’ble Apex Court while considering the manner of interpretation of Statues, has held as under.

“34. A statute is an edict of the Legislature and in construing a statute, it is necessary to seek the intention of its maker. A statute has to be construed according to the intent of those who make it and the duty of the court is to act upon the true intention of the Legislature. If a statutory provision is open to more than one interpretation the Court has to choose that interpretation which represents the true intention of the Legislature. This task very often raises difficulties because of various reasons, in as much as the words used may not be scientific symbols having any precise or definite meaning an the language may be an imperfect medium to convey one’s though or that the assembly of Legislatures consisting of persons of various shades of opinion purport to convey a meaning which may be obscure. It is impossible even for the most imaginative Legislature to foresee all situations exhaustively and circumstances that may emerge after enacting a statute where its application may be called for. Nonetheless, the function of the Courts is only to expound and not legislate. Legislation in the modern State is actuated with some policy to curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the Legislature based on information derived from past and present experience. It may also be designed by use of general words to cover similar problems arising in future. But, from the very nature of things, it is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite referents are bound to be in many cases lacking in clarity and precision and thus giving rise to controversial questions of construction. The process of constructions combines both literal and purposive approaches. In other words the legislative intention, i.e., the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed.(See

# District Mining Officer and Ors. Vs. Tata Iron and Steel Co. and Anr., JT 2001 (6) SC 183

It is well settled that to decide the true intention of the Legislature, depending upon the objects for which enactment has been made, the Courts can resort to historical, contextual and purposive interpretation leaving aside the textual interpretation. Purposive interpretation has been described by Fransis Bennion in his book ‘Statutory Interpretation’ as under.

“A purposive construction of an enactment is one which gives effect to the legislative purpose by-

(a) following the literal meaning of the enactment where that meaning is in accordance with the legislative purpose, or

(b) applying a strained meaning where the literal meaning is not in accordance with legislative purpose.

Hon’ble Apex Court in the case of

# M/s. Girdhari Lal & Sons Vs. Balbir Nath Mathur & Ors., AIR 1986 SC 1499

while explaining the principles of interpretation of statutes, has held as follows.

“The foremost task of a court, as we conceive it, in the Interpretation of Statutes, is to find out the intention of the legislature. Of course, where words are clear and unambiguous no question of construction may arise. Such words ordinarily speak for themselves. Since the words must have spoken as clearly to legislators as to judges, lt may be safely presumed that the legislature intended what the words plainly say. This is the real basis of the so called golden rule of construction that where the words of statutes are plain and unambiguous effect must be given to them. A court should give effect to plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the Legislature to other as well as judges. Intention of the legislature and not the words is paramount. Even where the words of statutes appear to be prima facie clear and unambiguous it may some times be possible that the plain meaning of the words does not convey and may even defeat the intention of the legislature; in such cases there is no reason why the true intention of the legislature, if it can be determined, clearly by other means, should not be given effect. Words are meant to serve and not to govern and we are not to add the tyranny of words to the other tyrannies of the world.

Parliamentary intention may be gathered from several sources. First, of course, it must be gathered from the statute itself, next from the preamble to the statute, next from the Statement of Objects and Reasons, thereafter from Parliamentary debates, reports of Committees and Commissions which preceded the legislation and finally from all legitimate and admissible sources from where there may be light. Regard must be had to legislative history too.

Once Parliamentary intention is ascertained and the object and purpose of the legislation is known, it then becomes the duty of the court to give the statute a purposeful or a functional interpretation. this is what is meant when, for example, it is said that measures aimed at social amelioration should receive liberal or beneficent construction. Again, the words of a statute may not be designed to meet the several uncontemplated forensic situations that may arise. The draftsman may have designed his words to meet what Lord Simon of Glaisdale calls the ‘primary situation’. It will then become necessary for the court to impute an intention to Parliament in regard to ‘secondary situations’. Such ‘secondary intention’ may be imputed in relation to a secondary situation so as to best serve the same purpose as the primary statutory intention does in relation to a primary situation.

So we see that the primary and foremost task of a court in interpreting a statute is to ascertain the intention of the legislature, actual or imputed. Having ascertained the intention, the court must then strive to so interpret the statute as to promote or advance the object and purpose of the enactment. For this purpose, where necessary the court may even depart from the rule that plain words should be interpreted according to their plain meaning. There need be no meek and mute submission to the plainness of the language. To avoid patent injustice, anamoly or absurdity or to avoid invalidation of a law, the court would be well justified in departing from the so-called golden rule of construction so as to give effect to the object and purpose of the enactment by supplementing, the written word if necessary.”

Applying the above well settled principles of interpretation of Statute, the answer to the issue is nomenclature ‘Chief Metropolitan Magistrate’ used by legislature is Section 14 of the Act includes Chief Judicial Magistrate functioning in non-metropolitan area and shall have jurisdiction to entertain an application made under Section 14 of the SARFAESI Act, 2002. In our considered opinion, there is no casus omissus. The interpretation given by us does not amount to reading anything in the provision, which the legislature never intended to, nor the interpretation given by us, in any way, defeats the intention of the Legislature. It is a purposive interpretation to advance the true intention of the legislature for enacting the Act, viz. speedy recovery of bad debts of the banks and financial institutions declared as NPAs. On the contrary, adopting the principles of literal construction in interpretation of the word ‘Chief Metropolitan Magistrate’ would not only defeat the object and purpose of legislation but would lead to manifestly anomalous result which could not have been intended by the legislature. As per Lord Reid in the case of

# Luke Vs. IRC, 1966 AC 557

where to apply words would literally defeat the obvious intention of the legislation and produce a wholly unreasonable result, we must do some violence to the words and so achieve that obvious intention and produce a rational construction.

The view taken by us finds support from the Full Bench decision of Andhra Pradesh High Court in the case of T.R. Jewellery & Ors. Vs. State Bank of India & Ors. (supra) and a Division Bench of High Court of Kerala in the case of Muhammed Ashraf, C Arifa Vs. Union of India, we are unable to agree with contrary view taken by Bombay High Court in the case of Indusind Bank Ltd. Vs. State of Maharastra and High Court of Madras in

# K. Arockiyaraj Vs. The Chief Judicial Magistrate, Srivilliputhur & Anr., 2013 (4) L.W. 485

The Full Bench of Madras High Court in the case of K. Arockiyaraj (supra) was of the view that phraseology used in Section 14 of the Act, 2002 should be given its true meaning without taking any assistance from Code of Criminal Procedure in view of Section 35 of Act, 2002, which provides that provisions of the Act will override all other laws which includes Code of Criminal Procedure. It was also held that when SARFAESI Act is a complete code, there is no need to take resort to Section 3 of Cr.P.C.

With respect to the learned Judges, we have been unable to persuade ourselves to agree to the view taken. The Full Bench failed to take notice of Section 37 of the Act, 2002 which provides that application of other laws is not barred. The said section reads as under.

# 37. Application of other laws not barred

The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force.”

There can be no manner of doubt that words “any other law for time being in force” used in Section 37 would also include Code of Criminal Procedure within its ambit and the application of provisions of Cr.P.C. cannot be excluded from consideration while dealing with the provisions of Act, 2002. Hence, the view taken by Full Bench of Madras High Court that in view of Section 35 of Act, 2002, the provisions of said Act would override the provisions of Cr.P.C. and the words ‘Chief Metropolitan Magistrate’ used in Section 14 should be given literal interpretation without taking any aid or assistance of Cr.P.C. does not, to us, appear to be correct.

Fort the aforesaid facts and discussions, we are of the considered view that nomenclature ‘Chief Metropolitan Magistrate’ used in Section 14 of Act, 2002 is inclusive of ‘Chief Judicial Magistrate’ functioning in a non-metropolitan area and shall have jurisdiction to entertain an application made by a secured creditor under Section 14 of Act, 2002.

In view of above, there is no illegality or error of jurisdiction in the impugned order by Chief Judicial Magistrate, warranting any interference.

Writ petition, accordingly, fails and stands dismissed. However, in the facts and circumstances we do not make any order as to costs.

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