NKGSB Cooperative Bank Limited vs. Subir Chakravarty and Ors. - (Supreme Court) (25 Feb 2022)

District Magistrate or Chief Metropolitan Magistrate can appoint an advocate and authorise him/her to take possession of the secured assets under Section 14(1A) SARFAESI Act

MANU/SC/0247/2022

Civil

The seminal question involved in present cases is whether it is open to the District Magistrate or the Chief Metropolitan to appoint an advocate and authorise him/her to take possession of the secured assets and documents relating thereto and to forward the same to the secured creditor within the meaning of Section 14(1A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)? The High Court vide judgment opined that the advocate, not being a subordinate officer to the CMM or DM, such appointment would be illegal.

The District Magistrate/CMM is obliged to take possession once an application in that behalf is preferred under sub-section (1) of Section 14 of the SARFAESI Act by the secured creditor. Since the provision vests discretion in the District Magistrate/CMM and as long the discretion is exercised with due care and caution, the appointment of advocates as receivers cannot be faulted.

It is well established that, an advocate is a guardian of constitutional morality and justice equally with the Judge. He has an important duty as that of a Judge. He bears responsibility towards the society and is expected to act with utmost sincerity and commitment to the cause of justice. He has a duty to the court first. As an officer of the court, he owes allegiance to a higher cause and cannot indulge in consciously misstating the facts or for that matter conceal any material fact within his knowledge.

Being an officer of the court and appointed by the CMM/DM, the acts done by the Advocate Commissioner would receive immunity under Section 14(3) of the SARFAESI Act — as an officer authorised by the CMM/DM. There is no reason to assume that, the advocate so appointed by the CMM/DM would misuse the task entrusted to him/her and that will not be carried out strictly as per law or it would be a case of abuse of power. The impugned judgment and order passed by the High Court is set aside. The appeals filed by the secured creditors are allowed.

Tags : POSSESSION SECURED ASSETS AUTHORIZATION