whether it is open to the District Magistrate or the Chief Metropolitan Magistrate2 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 ? yes
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.
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO……………OF 2022
(@ S.L.P. (CIVIL) NO.30240 OF 2019)
NKGSB COOPERATIVE BANK LIMITED …APPELLANT
VERSUS
SUBIR CHAKRAVARTY & ORS. …RESPONDENTS
WITH
CIVIL APPEAL NO……………OF 2022
(@ S.L.P. (CIVIL) NO.2055 OF 2020)
CIVIL APPEAL NO……………OF 2022
(@ S.L.P. (CIVIL) NO…………OF 2022)
(@ DIARY NO.17059 OF 2020)
CIVIL APPEAL NO……………OF 2022
(@ S.L.P. (CIVIL) NO…………OF 2022)
(@ DIARY NO.23733 OF 2020)
AND
S.L.P. (CIVIL) NO.12011 OF 2020
J U D G M E N T
A.M. KHANWILKAR, J.
1. The seminal question involved in these cases is: whether it is
open to the District Magistrate1
or the Chief Metropolitan
Magistrate2
to appoint an advocate and authorise him/her to take
1 for short, “DM”
2 for short, “CMM”
2
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, 20023
?
2. The High Court of Judicature at Bombay4
vide judgment and order dated 6.11.2019 in Writ Petition (L) No.28480 of 2019 opined that the advocate, not being a subordinate officer to the CMM or DM,such appointment would be illegal. Against this decision, four separate appeals 5 have been filed by the concerned parties. On the other hand, the High Court of Judicature at Madras6 vide judgment and order dated 18.3.2020 in C.R.P. No.790 of 2020 has taken a contrary view while following earlier decision of the same High Court on the reasoning that the advocate is regarded as an officer of the court and, thus, subordinate to the CMM or the DM. Having so held, it allowed the civil revision petition filed by the secured creditor
3 for short, “2002 Act” 4 for short, “Bombay High Court”5 Civil Appeal No….. of 2022 @ SLP (Civil) No.30240 of 2019; Civil Appeal No….. of 2022 @ SLP(Civil) No.2055 of 2020; Civil Appeal No…..of 2022 @ SLP (Civil) No……of 2022 @ Diary No.17059 of 2020; and Civil Appeal No…..of 2022 @ SLP (Civil) No……of 2022 @ Diary No.23733 of 2020 6 for short, “Madras High Court”
3
(Canara Bank). Against this decision, a special leave petition7 has
been filed by the borrowers.
3. The High Courts of Kerala (in Muhammed Ashraf & Anr. vs.
Union of India & Ors.8; The Federal Bank Ltd., Ernakulam vs.
A.V. Punnus9; and V.S. Sunitha vs. Federal Bank Ltd.10), Madras
(in S. Chandramohan & Anr. vs. The Chief Metropolitan
Magistrate, Egmore, Chennai & Ors.11) and Delhi (in Rahul
Chaudhary vs. Andhra Bank & Ors.12), have taken the same view
as in the case of Canara Bank impugned in the special leave
petition13 arising from the decision of the Madras High Court.
4. Additionally relying on the dictum in M/s. J. Marks Exim
(India) Pvt. Ltd. vs. Punjab National Bank14 decided by the
Division Bench of the Bombay High Court, it was urged that the
coordinate Bench of the Bombay High Court had answered the issue
under consideration in favour of the secured creditors and against
7 SLP (Civil) No.12011 of 2020
8 AIR 2009 Kerala 14
9 AIR 2014 Kerala 7
10 2018 SCC OnLine Ker 12866
11 2014-5-L.W. 620: 2014 SCC OnLine Mad 7869
12 2020 SCC OnLine Del 284
13 see Footnote No.7
14 2017 SCC OnLine Bom 2246
4
the borrowers on the same lines as the view taken by other three
High Courts, namely, High Courts of Kerela, Madras and Delhi.
However, in the judgment of the Bombay High Court of coordinate
Bench impugned before this Court, it has been observed that the
dictum in the said decision had not considered the precise question
that has been dealt with in the impugned judgment.
5. Briefly stated, in each of the cases under consideration, the
CMM/DM appointed an advocate purportedly in exercise of powers
under Section 14(1A) of the 2002 Act. In the cases arising from the
judgment of the Bombay High Court, the borrowers had urged before
the High Court that the Additional Chief Metropolitan Magistrate15
,
3rd Court, Esplanade, Mumbai on application filed by the secured
creditor (Bank) under Section 14 of the 2002 Act passed an order
dated 26.7.2019, appointing an advocate to take possession of the
secured assets and documents relating thereto and to forward the
same to the secured creditor. The order passed by the ACMM
records that the Bank had advanced a loan in the sum of Rs.4.44
crore on 31.1.2015 to the borrowers, who had mortgaged Flat
No.262, 26th Floor, Building No.02 with two basement car spaces in
15 for short, “ACMM”
5
a building known as ‘Kalpataru Pinnacle’ in Goregaon (West),
Mumbai. Further, the borrowers had defaulted on 30.10.2017.
Their account was declared Non-Performing Asset16. As a sequel, on
13.11.2017, a notice under Section 13(2) of the 2002 Act was issued
to them and posted by Registered Post A.D. The docket was returned
with ‘intimation posted’ meaning thereby, the noticees were not
available at the given address. The order further records that the
Bank served the notice upon the borrowers by publication on
31.12.2017 calling upon them to pay the outstanding dues within
sixty days. However, loan amount remained unpaid. As a result,
the secured creditor approached the ACMM to pass appropriate
directions, on which application the stated order dated 26.7.2019
came to be passed appointing an advocate. The same was
communicated to the borrowers by the advocate on 11.10.2019.
That order was challenged before the Bombay High Court by the
borrowers by way of writ petition17 under Article 226 of the
Constitution of India, which has been decided by the High Court vide
impugned judgment and order holding that Section 14(1A) of the
2002 Act does not permit the CMM/DM to authorise an advocate.
16 for short, “NPA”
17 Writ Petition (L) No.28480 of 2019
6
The language used in the provision is amply clear. Such delegation
could be done only to an officer subordinate and none else. The High
Court rejected the argument that the overburdened CMM/DM had
inadequate subordinate staff and it would be difficult, if not virtually
impossible for the secured creditor to take possession of and realise
the outstanding dues by disposing the secured asset. The High
Court was not impressed with that argument and preferred to
strictly construe the stated provision. The secured creditors have
assailed this decision by way of appeals18 before this Court.
6. Reverting to the special leave petition19 arising from the
decision of the Madras High Court. The Bank had given loan to the
borrowers upon mortgage of their property. Despite the demand to
clear the outstanding dues, the loan amount remained unpaid.
Resultantly, the Bank classified the account as NPA followed by
notice under Section 13(2) of the 2002 Act dated 21.7.2017 to the
borrowers. Eventually, the Bank took symbolic possession of the
property through its authorised officer after issuing possession
notice. That was published in two leading newspapers. The
18 see Footnote No.5
19 see Footnote No.7
7
borrowers challenged the notice issued to them under Section 13(4)
of the 2002 Act. That challenge was unsuccessful. Whereafter, the
Bank invoked action under Section 14 of the 2002 Act by filing
application before the CMM for taking possession of the secured
assets. The borrowers challenged the sale notice by filing application
being S.A. No.59 of 2019. No injunction was granted in favour of the
borrowers and to restrain the Bank from proceeding with the sale of
the secured property. Hence, the Bank pursued the application
under Section 14 of the 2002 Act before the CMM, which came to be
disposed of on 6.8.2019 by appointing an Advocate Commissioner to
take possession of the secured property. Thereafter, the application
filed by the borrowers, being S.A. No.59 of 2019, came to be
dismissed. In the interregnum, the borrowers filed another
application in S.A. No.399 of 2019, challenging the order dated
6.8.2019 passed by the CMM, appointing an Advocate
Commissioner, in Crl. M.P. No.2995 of 2019. The Debts Recovery
Tribunal II20, Chennai was pleased to allow S.A.No.399 of 2019, inter
alia, holding that the procedure mandated under clauses (i) to (ix) of
the proviso to Section 14(1) of the 2002 Act had not been complied
20 for short, “Tribunal”
8
with by the secured creditor (Bank) and in any case, the
appointment of the Advocate Commissioner was illegal. The
Tribunal allowed the challenge vide order dated 4.2.2020. That
decision came to be assailed by the Bank before the Madras High
Court by way of civil revision petition21 under Article 227 of the
Constitution of India. The High Court noted two issues arising for
its consideration, in paragraph 9 of the impugned judgment. The
first issue was regarding the correctness of the conclusion recorded
by the Tribunal on the plea of non-compliance of clauses (i) to (ix) of
Section 14 of the 2002 Act. That came to be set aside being
manifestly erroneous (see paragraphs 10 and 11 of the impugned
judgment). However, on the second issue about power of the
CMM/DM to appoint an Advocate Commissioner, the High Court,
amongst other, relied upon its earlier decision as well as of the High
Courts of Delhi and Kerala, to conclude that the Tribunal committed
manifest error, including not to take notice of the decision of the
same High Court referred to in the impugned judgment. In short,
the Madras High Court accepted the argument of the secured
creditor (Bank) that it was open to the CMM/DM to appoint an
21 C.R.P. No.790 of 2020
9
Advocate Commissioner for taking possession of the secured assets
and documents relating thereto for being forwarded to the secured
creditor in terms of Section 14(1A) of the 2002 Act. This decision
has been challenged by the borrowers by way of a special leave
petition22 before this Court.
7. We have heard Mr. Rana Mukherjee, learned senior counsel,
Mr. Viraj Kadam, Mr. Manish Shanker Srivastava, Mr. Devendra
Kumar Singh and Mr. M.L. Ganesh, learned counsel appearing for
the Banks, Mr. B. Raghunath, learned counsel appearing for the
borrowers and Mr. Rahul Chitnis, learned counsel appearing for the
State of Maharashtra.
8. As aforesaid, the one and only question common to all these
cases is: whether the CMM/DM can appoint an advocate in exercise
of powers under Section 14(1A) of the 2002 Act? This issue arises
because of the expression used in the said provision, “may authorise
any officer subordinate to him”.
9. The earliest decision dealing with the issue under
consideration is that of the High Court of Kerala in Muhammed
22 see Footnote No.7
10
Ashraf23 wherein the Division Bench of the High Court rejected the
argument that mandate of Section 14 obliges the CMM/DM to go
personally and take possession of the secured assets and documents
relating thereto. It noted that Section 14(2) of the 2002 Act enabled
the CMM/DM to pass order even to take Police assistance and use
all necessary powers in taking possession of the secured assets. To
buttress this view, reference has been made to the decision of this
Court in Sakiri Vasu vs. State of Uttar Pradesh & Ors.24 wherein
the Court noted that an express grant of statutory powers carries
with it by necessary implication the authority to use all reasonable
means to make such grant effective. In other words, the authority
had implied powers to grant relief which is not expressly granted to
it by the Act. On that logic, the Division Bench of the High Court of
Kerala opined that it would be open to the Magistrate who has the
power under Section 14 of the 2002 Act to take possession of the
secured assets including to take assistance of Police including an
Advocate Commissioner so as to facilitate the secured creditor to
take over the secured assets. As a result, the Magistrate could also
appoint a commissioner for identification of the secured assets and
23 supra at Footnote No.8
24 (2008) 2 SCC 409
11
taking possession thereof. This decision has attained finality owing
to the dismissal of S.L.P. (Civil) No.1671 of 2009 on 2.2.2009 by this
Court. Notably, this decision was rendered before the amendment
of Section 14 and in particular insertion of sub-Section (1A)25
.
10. The aforementioned decision, however, had been followed by
the learned Single Judge of the High Court of Kerala in the case of
The Federal Bank Ltd., Ernakulam26 which had arisen after the
amendment of Section 14 of the 2002 Act and insertion of subSection (1A) therein. Despite insertion of sub-Section (1A), learned
Single Judge following the judgment in Muhammed Ashraf27,
answered the issue in the following words:
“5. …It may however appear at first blush that such an
Advocate Commissioner is not an officer subordinate to the
District Magistrate or the Chief Judicial Magistrate. But a
reference to Sections 12 and 17 of the Code of Criminal
Procedure, 1973 indicates that the term District Magistrate
or Chief Metropolitan Magistrate denotes the court and not
the officer in person. An Advocate Commissioner is
certainly an officer subordinate to the court and the
words employed in Section 14 (1A) of the SARFAESI
Act are not to be understood as meaning an officer
subordinate in service. Section 284 of the Code of
Criminal Procedure, 1973 in fact empowers an Advocate
Commissioner to record the examination of witnesses
whose personal appearance in court is dispensed with.
Similar provisions can be found in Order XXVI Rule 17 of
the Code of Civil Procedure, 1908 enabling the Advocate
Commissioner to record evidence of witnesses and Section
25 Inserted by Act 1 of 2013, sec.6(b) (w.e.f. 15.1.2013, vide S.O.171(E), dated 15.1.2013)
26 supra at Footnote No.9
27 supra at Footnote No.8
12
75 (g) thereof to perform any ministerial act even. Taking
over possession of the secured asset and handing over the
same to the creditor bank is nothing but a ministerial act
of the Advocate Commissioner on behalf of the court. The
Advocate Commissioner exercising such function
under Section 14 (1A) of the SARFAESI Act is only
discharging his duty as an officer subordinate to the
court presided by the Magistrate. The contention of the
borrower that the Advocate Commissioner is not an
officer subordinate in service to the Chief Judicial
Magistrate and hence incompetent is only to be
rejected.”
(emphasis supplied)
11. Once again, another learned Single Judge of the High Court of
Kerala in V.S. Sunitha28 reiterated the same view and held that the
Magistrate rendering assistance to the secured creditor is competent
to appoint a commissioner to take possession of the secured assets.
12. This very issue had also arisen before the Madras High Court
in S. Chandramohan29. The Division Bench of the Madras High
Court after adverting to Section 14(1A) of the 2002 Act went on to
observe as follows:
“8. ….
The same is an enabling provision conferring power on the
Chief Metropolitan Magistrate or District Magistrate to
authorise any officer subordinate to him to take possession
of the assets and documents relating thereto and forward
the assets and documents to the secured creditors.
9. The Advocate Commissioners appointed by the learned
Chief Metropolitan Magistrate is in tune with Section 14(1-
A) of the SARFAESI Act, 2002. As per Section 14 of the Act,
the secured creditors can approach the Chief Metropolitan
Magistrate/District Magistrate to take possession of the
28 supra at Footnote No.10
29 supra at Footnote No.11
13
assets and documents of the secured creditor. The Chief
Metropolitan Magistrate, instead of personally visiting the
spot to take possession of assets and documents, can very
well appoint the Advocate Commissioner to visit on his
behalf, as in the case of issuing of commissions under the
Civil Procedure Code, as it is not possible for the Chief
Metropolitan Magistrate/District Magistrate to visit
personally to take possession.
10. The amendment inserted by Act 1 of 2013 viz., Section
14(1-A) is permitting the Subordinate Officers to do the
above said acts and nowhere prohibits the Chief
Metropolitan Magistrate from authorising an Advocate
Commissioner to go on his behalf for taking possession of
assets and documents and forwarding the same to the
secured creditor. The amendment gives discretion to the
Chief Metropolitan Magistrate/District Magistrate either to
authorise or take possession of such assets and document
and the word used being 'may', it is not always necessary
on the part of the Chief Metropolitan Magistrate to
authorise any officer subordinate to him. It is a well settled
proposition of law that the observance of the word 'may'
used in the statute is only directory, in the sense, noncompliance with those provisions will not render the
proceedings invalid. Sometimes, the word 'shall' may also
be directory and not mandatory. ….”
It then adverted to the decisions of this Court in Dattatraya
Moreshwar vs. The State of Bombay & Ors.30, Mahadev Govind
Gharge & Ors. vs. Special Land Acquisition Officer, Upper
Krishna Project, Jamkhandi, Karnataka31 and Sangram Singh
vs. Election Tribunal, Kotah & Anr.32 on the principles of
interpretation of statute and noted thus:
“11. The object of the amendment introduced in Act 1
of 2013 being to give assistance to the Chief
30 AIR 1952 SC 181
31 (2011) 6 SCC 321
32 AIR 1955 SC 425
14
Metropolitan Magistrate/District Magistrate, the Chief
Metropolitan Magistrate is justified in appointing
Advocate Commissioners, instead of authorising
Subordinate Officers to take possession. It is well
settled in law that Advocates are also Officers of the
Court, though not subordinate to Chief Metropolitan
Magistrate. As Officers of the Court, the Advocates can
perform their duty more effectively than the Officers,
subordinate to the Chief Metropolitan Magistrate in taking
possession of assets and documents and in delivering the
same to the Secured Creditor. Thus, in any event, the
contention raised by the learned counsel appearing for the
petitioner is devoid of merits.”
(emphasis supplied)
13. The issue also received attention of the High Court of Delhi in
Rahul Chaudhary33. The High Court answered the issue in the
following words:
“3.1 To be noted, the receiver has been appointed by the
learned CMM vide order dated 05.12.2019.
4. The learned CMM has appointed an advocate to take
possession of the secured asset.
5. Counsel for the petitioner does not dispute that fact that
the receiver appointed by the learned CMM has taken
possession of the subject secured asset on 16.01.2020.
6. It is, however, the say of the counsel for the petitioner
that appointment of an advocate as a receiver was contrary
to the provisions of Section 14 (1A) of the SARFAESI Act
and, therefore, that part of the order passed by the learned
CMM should be set aside as was done by the Bombay High
Court in the aforementioned matter.
7. To my mind, the writ petition, in fact, has been rendered
infructuous, in a sense, that the receiver would have
handed over the possession of the subject asset to the
secured creditor, that is, the Andhra Bank.
8. Nevertheless, according to me, the language of Section
14(1A) of the SARFAESI Act uses the expression “may” and
not “shall”.
8.1 There are two ways of appreciating the provision. First,
that the expression “may” relates to the choice of the
33 supra at Footnote No.12
15
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.
8.2 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.
8.3 It is in the exercise of such power that recourse can be
taken by the District Magistrate/CMM to the provisions of
sub-section (1A) of Section 14. This provision was
introduced via Act 1 of 2013. Before that the District
Magistrate/CMM were perhaps taking recourse to subsection (2) of Section 14 and, thus, appointing advocates
as receiver.
8.4 To my mind, after the insertion of sub-section (1A) in
Section 14, the only change that has been brought about
is that the District Magistrate/CMM has now the discretion
to appoint even their subordinate officers as receivers.
8.5 Pertinently, sub-section (1A) of Section 14 does not
bar the appointment of advocates as receivers. The
same position obtains vis-à-vis Rule 8(3) of The Security
Interest (Enforcement) Rules, 2002, which has been cited
in the aforementioned judgment of the Bombay High
Court.
9. As was noticed in Subir Chakravarty’s case34, the
District Magistrates and the CMMs are overburdened. The
position is no different in Delhi.
10. Thus, in my view, 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.”
(emphasis supplied)
As noticed from the extracted portion of the judgment, the High
Court of Delhi disagreed with the view taken by the Bombay High
Court in the impugned judgment which has been assailed in the
cases under consideration.
34 see Footnote No.17
16
14. Concededly, there is conflict of opinion between the three High
Courts35 on the one side and the Bombay High Court on the other.
In the impugned judgment, the Bombay High Court observed as
follows:
“9 The language of the legislature is clear. The District
Magistrate or the Chief Metropolitan Magistrate may
authorize any officer subordinate to take possession of
such asset and this means that the person authorized to
take possession has to be an officer subordinate to the
District Magistrate or the Chief Metropolitan Magistrate.
10 The decision dated 17th March 201736 passed by the
Division Bench was not premised on a challenge to the
authorization in favour of an Advocate to take possession
of a secured asset. The observations at the end of the order
are probably the result of the facts noted in the impugned
order. The overburdened Metropolitan Magistrates or the
District Magistrates having inadequate subordinate staff
find it a handicap to deal with large number of applications
under Section 14 of the SARFAESI Act, 2002, but this
would be no ground to violate the language of the statute.
The legislature may be requested to intervene. We propose
to do that at the end of the present order.
11 …..
12 A perusal of the sub-rule37 shows that after possession
of immovable property is physically taken over by the
Officer authorized custody thereof can be handed over for
care and protection of the property to any person
authorized or appointed by him. Thus, after possession of
a secured asset is taken over, its custody can be entrusted
to any person who need not be an Officer of the Court or
authorized subordinate staff of the Court. This could
perhaps solve half the problem faced by District
Magistrates and Chief Metropolitan Magistrates.
13 The cry of anguish in paragraph No.7 of the impugned
order is also justified. Each day, atleast two, if not three
petitions, are filed by way of mercy pleading to this Court
that some time be given to the defaulting borrower to clear
35 High Courts of Kerala, Madras and Delhi
36 supra at Footnote No.14
37 Rule 8(3) of the Security Interest (Enforcement) Rules, 2002
17
the defaulting loan so that the property mortgaged can be
saved. Wide and varied facts such as exams of the children
are ensuing, old and aged parents, paternal or maternal
aunt are suffering from an ailment and are under going
treatment at a nearby hospital are pleaded. The borrower
is making attempts to sell another property to clear the
outstanding amounts etc. Equities are pleaded.
14 Courts in India being not only Courts of Justice but
Courts of Equity, the orders passed under Section 14 are
stayed, but ultimately the petitions fail.
15 Howsoever inconvenient it may be to a Court, rights of
parties cannot be curtailed in the manner done in the
impugned order. If law permits, the borrower can always
tender the outstanding amounts to the Bank or the
Financial Institution before a sale of the secured assets
take place.
16 The two troubling parts of the impugned order being
dealt with by us resulting in the hurdle in the way of the
petitioner to seek further reliefs from the Debt Recovery
Tribunal having been clear, we dispose of the petition
expunging the directions in paragraph No.7 of the
impugned order, as also expunging the authorization in
favour of Ms.Priti S. Chavan, Advocate to take possession
of the Security as a Court Commissioner requiring the
learned Metropolitan Magistrate to appoint an officer
subordinate to take possession of the secured asset who,
in turn may give custody thereof to any person.
16 We terminate the proceedings in the instant writ
petition observing that on the merits of the order passed,
the petitioners may approach the Debt Recovery Tribunal.”
The above view taken by the Bombay High Court is one of strict or
literal interpretation of the provision as it exists.
15. At the outset, we must notice that the expression “any officer
subordinate to him” has been used in several legislations38 enacted
38 Section 14 of the Suppression of Immoral Traffic in Women and Girls Act, 1956; Section 5 of
the Orphanages and other Charitable Homes (Supervision and Control) Act, 1960; Section 166
of the Manipur Land Revenue and Land Reforms Act, 1960; Section 10K of the Export (Quality
Control and Inspection) Act, 1963; Section 43A of the Unlawful Activities (Prevention) Act, 1967;
18
by Parliament/State Legislature. Somewhat similar expression has
been used in Articles 53, 154 and 311 of the Constitution of India
and in other legislations39 enacted by Parliament/State Legislature
with little variation to further the intent of the concerned enactment.
Section 5 of the Wild Life (Protection) Act, 1972; Sections 55 and 165 of the Code of Criminal
Procedure, 1973; Sections 64 and 70 of the Delhi Police Act, 1978; Section 41 of the Narcotic
Drugs and Psychotropic Substances Act, 1985; Sections 11 and 16 of the Foreign Trade
(Development and Regulation) Act, 1992; Section 44 of the Delhi Rent Act, 1995 (also in 1958);
Section 22 of the Chemical Weapons Convention Act, 2000; Section 17 of the Prevention of
Money-Laundering Act, 2002; Section 30 of the Food Safety and Standards Act, 2006; Sections
107, 108 and 112 of the Central Goods and Services Tax Act, 2017; Section 8 of the Fugitive
Economic Offenders Act, 2018; and Section 31 of the Banning of Unregulated Deposit Schemes
Act, 2019.
39 Article 53 (“officers subordinate to him”), Article 154 (“officers subordinate to him” and “any
authority subordinate to the Governor”) and Article 311 (“an authority subordinate to that”) of
the Constitution of India;
Section 376 (“police officer subordinate to such police officer”) of the Indian Penal Code, 1860;
Section 2 (“members of the subordinate ranks of any police-force”) and Section 7 (“any policeofficer of the subordinate ranks”) of the Police Act, 1861;
Section 4A (“any such officer subordinate to him”) of the Guardians and Wards Act, 1890;
Section 3(5) (“Officer subordinate to the Governor General of India”) of the General Clauses Act,
1897;
Sections 8 and 22 (“officers subordinate to the Jailer”) and Section 48 (“officer subordinate to
the Superintendent”) of the Prisons Act, 1894;
Section 195 (“any officer subordinate to the Collector”) of the Indian Succession Act, 1925;
Section 34H (“any subordinate officer of his”), and Sections 110A and 110B (“any personsubordinate to him”) of the Insurance Act, 1938;
Section 2(a) (“any officer subordinate to that officer”) of the Indian Coconut Committee Act,
1944;
Section 14A (“such officer or authority subordinate to the Central Government” and “such officer or authority subordinate to the State Government”) of the Industrial Employment (Standing
Orders) Act, 1946;
Section 39 (“authority subordinate to the Central Government” and “authority subordinate to
the State Government”) of the Industrial Disputes Act, 1947;
Section 2(g) (“subordinate officer”) of the Central Reserve Police Force Act, 1949;
Section 47 (“his subordinate in rank”) of the Army Act, 1950;
Section 17 (“by an officer subordinate to that Government” and “by an officer subordinate to the State Government”) and Section 23 (“by an officer or authority subordinate to that Government”)
of the Requisitioning and Acquisition of Immovable Property Act, 1952;
19
Sections 24A and 24B (“any such officer subordinate to the Central Government or a State Government”) and Section 43 (“such officer or authority subordinate to the Central Government”and “such officer or authority subordinate to the State Government”) of the Arms Act, 1959;
Section 56 (“an officer subordinate to the Administrator”) of the Children Act, 1960;
Section 5 (“the officers subordinate to him”), Section 7 (“subordinate to the Administrator and subordinate to the deputy commissioner or the sub-divisional officer”), Section 68 (“subordinate
to such officer”), Section 84 (“any revenue officer subordinate to him”), Section 93 (“an officer subordinate to the sub-divisional officer”), Section 95 (“any revenue officer subordinate to him”),
Section 96 (“revenue officer subordinate to the deputy commissioner” and “any officer subordinate to the appellate or revisional authority”) and Section 166 (“any officer or authority subordinate to him”) of the Manipur Land Revenue and Land Reforms Act, 1960;
Section 5 (“any other officer of customs who is subordinate to him”), Section 28J (“the customs authorities subordinate to him”), Section 129D (“adjudicating authority subordinate to him” and
“any officer of Customs subordinate to him”) and Section 129DA (“adjudicating authority subordinate to him”) of the Customs Act, 1962;
Section 10M (“any officer subordinate to the Director of Inspection and Quality Control”) and
Section 13 (“authority subordinate to the Central Government”) of the Export (Quality Control
and Inspection) Act, 1963;
Section 79 (“any officer subordinate to the Board”) of the Punjab Reorganisation Act, 1966;
Section 42 (“any person subordinate to the State Government”) of the Unlawful Activities (Prevention) Act, 1967;
Section 21 (“authority subordinate to the Central Government” and “authority subordinate to such Government”) of the Passports Act, 1967;
Section 34 (“any officer subordinate to it”) and Section 154 (“any police officer subordinate to him”) of the Code of Criminal Procedure, 1973;
Section 12 (“an officer subordinate to that Government” and “an officer subordinate to a State Government”) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities
Act, 1974;
Section 3 (“subordinate ranks of the police force”), Section 12 (“other officers of subordinate rank”), Section 20 (“his subordinates”), Sections 21 and 25 (“any police officer of subordinate
rank”), Section 58 (“officers subordinate to him”), Section 70 (“any officer subordinate to the Commissioner of Police”), Section 122 (“police officer of subordinate rank”) and Section 147
(“any police officer of subordinate rank”) of the Delhi Police Act, 1978;
Section 14 (“to which that officer is subordinate”) of the National Security Act, 1980;
Section 23 (“an Income-tax Officer subordinate to him”) of the Hotel-Receipts Tax Act, 1980;
Section 17A (“the officer, subordinate to him”) of the Child and Adolescent Labour (Prohibition and Regulation) Act, 1986;
Section 13 (“an officer subordinate to that Government”) of the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988;
Section 93 (“by an officer or authority subordinate to the Central Government”) of the Railways Act, 1989;
Section 6 (“such other officer subordinate to the Director General”) and Section 15 (“an officer subordinate to the Director General”) of the Foreign Trade (Development and Regulation) Act,1992;
Sections 46 and 328 (“an officer subordinate to him”) of the New Delhi Municipal Council Act,1994;
20
16. The construct of the provision, however, must depend on the
context of the legislative intent and the purpose for which such
dispensation has been envisaged. The setting in which the
expression has been used in the concerned section of the Act would
assume significance.
17. This Court has had occasion to deal with identical provision in
the Motor Vehicles Act, 193940, in the case of A. St. Arunachalam
Pillai vs. M/s. Southern Roadways Ltd. & Anr.41. Even in that
case, the Court had to resolve the conflicting views of the Full Bench
Sections 23 and 24 (“any such subordinate officer to the enforcement officer”) and Section 37(“any subordinate officer”) of the Chemical Weapons Convention Act, 2000;
Section 80 (“any officer subordinate to the Board”) of the Bihar Reorganisation Act, 2000;
Section 81 (“any officer subordinate to the Board”) of the Uttar Pradesh Reorganisation Act,2000;
Section 26 (“such officer subordinate to the Central Government or the State Government”) of the Mahatma Gandhi National Rural Employment Guarantee Act, 2005;
Section 22 (“the officer, subordinate to him”) of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007;
Section 54 (“such officer subordinate to it”) of the Legal Metrology Act, 2009;
Section 43 (“employees who shall be subordinate to him”) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013;
Section 86 (“any officer subordinate to the Board”) of the Andhra Pradesh Reorganisation Act,2014;
Section 5 (“any other officer who is subordinate to him”) of the Central Goods and Services Tax Act, 2017;
Section 45 (“an officer subordinate to that Government or the local authority”) of the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control)
Act, 2017;
Section 100 (“authority subordinate to the Central Government” and “authority subordinate to the State Government”) of the Industrial Relations Code, 2020.
40 for short, “1939 Act”
41 AIR 1960 SC 1191 (5-Judge Bench)
21
of the Madras High Court and of the High Court of Andhra Pradesh.
The Full Bench of the Madras High Court in S. Krishnaswamy
Mudaliar & Anr. vs. P.S. Palani Pillai & Anr.42 had occasion to
consider the question as to whether Regional Transport Officer was
subordinate to the State Transport Commissioner. While examining
that question, the Full Bench of the Madras High Court dealt with
three views pressed into service before it. The first view was founded
on “administrative subordination”, the second on “functional
subordination” and the third on “statutory subordination”. The Full
Bench accepted the third view, namely, “statutory subordination”,
being a safer and logical approach. In the context of the provisions
of that Act, it was held that the Regional Transport Officer was not
subordinate to the State Transport Commissioner.
18. Analysing the same provision, being Section 44-A of the 1939
Act, the Full Bench of the High Court of Andhra Pradesh, however,
opined to the contrary in B. Veeraswamy & Ors. vs. State of
Andhra Pradesh & Ors.43. It followed the root of “administrative
subordination”. The matter reached this Court where the
Constitution Bench by majority upheld the view taken by the Full
42 AIR 1957 Mad 599
43 AIR 1959 AP 413
22
Bench of the High Court of Andhra Pradesh and, thus, invoked the
“administrative subordination” logic. This Court in the context of
the statutory provisions and the Government Orders issued by the
concerned department concluded that the Regional Transport
Officers were subordinate to the Transport Commissioner. It was
also observed that in the matter of interpretation, the words of
provisions must be looked at; and if they are expansive enough to
mean any officer subordinate to the Transport Commissioner, that
must be given effect to.
19. As aforesaid, while considering the purport of the expression in
Section 14(1A) of the 2002 Act, it must be noticed that the said
provision was inserted vide Act 1 of 2013 with effect from 15.1.2013.
In absence of express provision, such as sub-Section (1A) under the
unamended Act, the CMM/DM could take possession of secured
assets on a written application made by the secured creditor under
Section 14(1); and while doing so in terms of Section 14(2) of the
2002 Act, it was open to the CMM/DM to take or cause to be taken
such steps and use, or cause to be used, such force, as may, in his
opinion be necessary. This would include taking assistance of the
local Police to obviate any untoward situation or law and order
23
problem at the site while taking over possession. While construing
that provision as early as in 2008, the High Court of Kerala in the
case of Muhammed Ashraf44 gave expansive meaning to the rule
that it was open to the CMM/DM to take assistance of an advocate
to be appointed as a commissioner for taking possession of the
secured assets and documents relating thereto for being handed
over or forwarded to the secured creditor. It was an inherent or
implicit power vested in the stated authority and more particularly
because advocates were no less than officers of the court of the
CMM/DM. This view has been consistently followed not only by the
High Court of Kerala, but also by other High Courts such as High
Courts of Madras and Delhi. Most of the CMMs/DMs across the
country have been following that dispensation. The only discordant
note can be discerned from the decision of the Bombay High Court
which is impugned before us. The Bombay High Court has followed
the strict and literal interpretation rule and, thus, preferred
“statutory subordination” logic. The view so taken can be sustained
only if we were to hold that legislative intent in using the expression
“any officer subordinate to him” completely rules out the other
44 supra at Footnote No.8
24
option which is being followed since commencement of the Act in
2002.
20. Indeed, in the case of advocate, the logic of “administrative
subordination” or “statutory subordination” cannot be extended.
Inasmuch as, for being a case of “statutory subordination”, the
provisions of the 2002 Act and the Security Interest (Enforcement)
Rules, 200245 made thereunder, must expressly provide for such
mechanism. This cannot be said about the provisions of the 2002
Act and the Rules made thereunder. Even the logic of
“administrative subordination” as considered by this Court in A. St.
Arunachalam Pillai46 cannot be invoked. For, the advocate by no
stretch of imagination can fit into the administrative set up of the
Office of the CMM/DM.
21. That leaves us with the third possibility of “functional
subordination”. For invoking that logic, we must necessarily
conclude that the provisions under consideration are wide enough
and expansive to encompass engaging services of Advocate
Commissioner. For that purpose, we must first advert to the
45 for short, “2002 Rules”
46 supra at Footnote No.41
25
Statement of Objects and Reasons for which the 2002 Act has been
enacted. The same reads thus:
“STATEMENT OF OBJECTS AND REASONS
The financial sector has been one of the key drivers in
India's efforts to achieve success in rapidly developing its
economy. While the banking industry in India is
progressively complying with the international prudential
norms and accounting practices there are certain areas in
which the banking and financial sector do not have a level
playing field as compared to other participants in the
financial markets in the world. There is no legal provision
for facilitating securitisation of financial assets of
banks and financial institutions. Further, unlike
international banks, the banks and financial
institutions in India do not have power to take
possession of securities and sell them. Our existing
legal framework relating to commercial transactions
has not kept pace with the changing commercial
practices and financial sector reforms. This has
resulted in slow pace of recovery of defaulting loans
and mounting levels of non-performing assets of banks
and financial institutions. Narasimham Committee I and
II and Andhyarujina Committee constituted by the Central
Government for the purpose of examining banking sector
reforms have considered the need for changes in the legal
system in respect of these areas. These Committees, inter
alia, have suggested enactment of a new legislation for
securitisation and empowering banks and financial
institutions to take possession of the securities and to sell
them without the intervention of the court. Acting on these
suggestions, the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest
Ordinance, 2002 was promulgated on the 21st June, 2002
to regulate securitisation and reconstruction of financial
assets and enforcement of security interest and for matters
connected therewith or incidental thereto. The provisions
of the Ordinance would enable banks and financial
institutions to realise long-term assets, manage
problem of liquidity, asset liability mismatches and
improve recovery by exercising powers to take
possession of securities, sell them and reduce nonperforming assets by adopting measures for recovery
or reconstruction.”
(emphasis supplied)
26
22. The underlying purpose of the 2002 Act is to empower the
financial institutions in India to have similar powers as enjoyed by
their counterparts, namely, international banks in other countries.
One such feature is to empower the financial institutions to take
possession of securities and sell them. The same has been
translated into provisions falling under Chapter III of the 2002 Act.
Section 13 deals with enforcement of security interest. Sub-Section
(4) thereof envisages that in the event a default is committed by the
borrower in discharging his liability in full within the period specified
in sub-Section (2), the secured creditor may take recourse to one or
more of the measures provided in sub-Section (4). One of the
measures is to take possession of the secured assets of the borrower
including the right to transfer by way of lease, assignment or sale for
realising the secured asset. That, they could do through their
“authorised officer” as defined in Rule 2(a)47 of the 2002 Rules.
47 2. Definitions.—In these rules, unless the context otherwise requires,—
(a) “authorised officer” means an officer not less than a chief manager of a public sector bank
or equivalent, as specified by the Board of Directors or Board of Trustees of the secured creditor
or any other person or authority exercising powers of superintendence, direction and control of
the business or affairs of the secured creditor, as the case may be, to exercise the rights of a
secured creditor under the Act;
27
23. After taking over possession of the secured assets, further
steps to lease, assign or sale the same could also be taken by the
secured creditor. However, Section 14 of the 2002 Act predicates
that if the secured creditor intends to take possession of the secured
assets, must approach the CMM/DM by way of an application, in
writing, and on receipt of such request, the CMM/DM must move
into action in right earnest. After passing an order thereon, he/she
(CMM/DM) must proceed to take possession of the secured assets
and documents relating thereto for being forwarded to the secured
creditor in terms of Section 14(1) read with Section 14(2) of the 2002
Act. As noted earlier, Section 14(2) is an enabling provision and
permits the CMM/DM to take such steps and use force, as may, in
his opinion, be necessary. This position obtained even before the
amendment of 2013 i.e., insertion of sub-Section (1A) and continues
to this date.
24. Incidentally, it needs to be noted that along with insertion of
sub-Section (1A), a proviso has also been inserted in sub-Section (1)
of Section 14 of the 2002 Act whereby the secured creditor
(Bank/Financial Institution) is now required to comply certain
conditions and to disclose that by way of an application
28
accompanied by affidavit duly affirmed by its authorised officer in
that regard. Sub-Section (1A) is in the nature of an explanatory
provision and it merely restates the implicit power of the CMM/DM
in taking services of any officer subordinate to him. The insertion of
sub-Section (1A) is not to invest a new power for the first time in the
CMM/DM as such.
25. Thus understood, the question is: whether the past practice
followed by most of the courts across the country in recognising the
power of the CMM/DM to appoint an advocate as a commissioner to
assist him in merely taking possession of the secured assets and
documents relating thereto and to forward the same to the secured
creditor, needs to be discontinued as being prohibited owing to
insertion of sub-Section (1A)? Section 14 of the 2002 Act, as
amended and applicable to the cases on hand, reads thus:
“14. Chief Metropolitan Magistrate or District
Magistrate to assist secured creditor in taking
possession of secured asset.—(1) Where the possession
of any secured assets is required to be taken by the secured
creditor or if any of the secured assets 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 assets, 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
29
(b) forward such asset 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 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
30
for the purpose of taking possession of the secured assets
within a period of thirty days from the date of application:
Provided also that if no order is passed by the Chief
Metropolitan Magistrate or District Magistrate within the
said period of thirty days for reasons beyond his control,
he may, after recording reasons in writing for the same,
pass the order within such further period but not
exceeding in aggregate sixty days.
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 or 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.”
(emphasis supplied)
26. Considering the scheme of the 2002 Act, it is explicit and
crystal clear that possession of the secured assets can be taken by
the secured creditor before confirmation of sale of the secured assets
as well as post-confirmation of sale. For taking possession of the
31
secured assets, that could be done by the “authorised officer” of the
Bank as noted in Rule 8 of the 2002 Rules, which reads thus:
“8. Sale of immovable secured assets.—(1) Where the
secured asset is an immovable property, the authorised
officer shall take or cause to be taken possession, by
delivering a possession notice prepared as nearly as
possible in Appendix IV to these rules, to the borrower and
by affixing the possession notice on the outer door or at
such conspicuous place of the property.
(2) The possession notice as referred to in sub-rule (1) shall
also be published, as soon as possible but in any case not
later than seven days from the date of taking possession,
in two leading newspapers, one in vernacular language
having sufficient circulation in that locality, by the
authorised officer.
(2-A) All notices under these rules may also be served upon
the borrower through electronic mode of service, in
addition to the modes prescribed under sub-rule (1) and
sub-rule (2) of rule 8.
(3) In the event of possession of immovable property is
actually taken by the authorised officer, such property
shall be kept in his own custody or in the custody of any
person authorised or appointed by him, who shall take as
much care of the property in his custody as a owner of
ordinary prudence would, under the similar
circumstances, take of such property.
(4) The authorised officer shall take steps for preservation
and protection of secured assets and insure them, if
necessary, till they are sold or otherwise disposed of.
(5) Before effecting sale of the immovable property referred
to in sub-rule (1) of rule 9, the authorised officer shall
obtain valuation of the property from an approved valuer
and in consultation with the secured creditor, fix the
reserve price of the property and may sell the whole or any
part of such immovable secured asset by any of the
following methods:—
(a) by obtaining quotations from the persons dealing
with similar secured assets or otherwise interested in
buying the such assets; or
(b) by inviting tenders from the public;
(c) by holding public auction including through eauction mode; or
32
(d) by private treaty.
Provided that in case of sale of immovable property in
the State of Jammu and Kashmir, the provisions of Jammu
and Kashmir Transfer of Property Act, 1977 shall apply to
the person who acquires such property in the State.
(6) the authorised officer shall serve to the borrower a
notice of thirty days for sale of the immovable secured
assets, under sub-rule (5):
Provided that if the sale of such secured asset is being
effected by either inviting tenders from the public or by
holding public auction, the secured creditor shall cause a
public notice in the Form given in Appendix IV-A to be
published in two leading newspapers including one in
vernacular language having wide circulation in the locality.
(7) every notice of sale shall be affixed on the conspicuous
part of the immovable property and the authorised officer
shall upload the detailed terms and conditions of the sale,
on the web-site of the secured creditor, which shall
include;
(a) the description of the immovable property to be sold,
including the details of the encumbrances known to the
secured creditor;
(b) the secured debt for recovery of which the property
is to be sold;
(c) reserve price of the immovable secured assets below
which the property may not be sold;
(d) time and place of public auction or the time after
which sale by any other mode shall be completed;
(e) deposit of earnest money as may be stipulated by the
secured creditor;
(f) any other terms and conditions, which the authorized
officer considers it necessary for a purchaser to know
the nature and value of the property.
(8) Sale by any methods other than public auction or public
tender, shall be on such terms as may be settled between
the secured creditor and the proposed purchaser in
writing.”
27. However, for taking physical possession of the secured assets
in terms of Section 14(1) of the 2002 Act, as aforementioned, the
33
secured creditor is obliged to approach the CMM/DM by way of a
written application requesting for taking possession of the secured
assets and documents relating thereto and for being forwarded to it
(secured creditor) for further action.
28. The statutory obligation enjoined upon the CMM/DM is to
immediately move into action after receipt of a written application
under Section 14(1) of the 2002 Act from the secured creditor for
that purpose. As soon as such application is received, the CMM/DM
is expected to pass an order after verification of compliance of all
formalities by the secured creditor referred to in the proviso in
Section 14(1) of the 2002 Act and after being satisfied in that regard,
to take possession of the secured assets and documents relating
thereto and to forward the same to the secured creditor at the
earliest opportunity. The latter is a ministerial act. It cannot brook
delay. Time is of the essence. This is the spirit of the special
enactment. However, it is common knowledge that the CMM/DM
are provided with limited resources. That inevitably makes it
difficult, if not impossible, for the CMM/DM to fulfil his/her
obligations with utmost dispatch to uphold the spirit of the special
legislation.
34
29. It is common knowledge that in the respective jurisdictions,
there is only one CMM/DM. If he is expected to reach at every
location himself for taking possession, in some jurisdictions it would
be impracticable, if not impossible, for him to do so owing to large
number of applications in the given jurisdiction being a commercial
city. Accordingly, strict construct would defeat the legislative intent
and purpose for enacting the 2002 Act. Indeed, logistical problems
of the Office of the CMM/DM cannot be the basis to overlook the
statutory provision. However, we are persuaded to take the view that
an advocate is and must be regarded as an officer of the court and
subordinate to the CMM/DM for the purposes of Section 14(1A) of
the 2002 Act.
30. Furthermore, as was the situation obtaining before insertion of
sub-Section (1A) wherein the CMM/DM could avail the services of
an advocate or any officer subordinate to him for discharging the
ministerial work of taking possession of the secured assets and
documents relating thereto, nothing prevents him/her from
continuing to follow the same regime even after the insertion of subSection (1A). At the same time, while entrusting the act of taking
possession of the secured assets consequent to the order passed
35
under Section 14(1) of the 2002 Act to any officer subordinate to
him, the CMM/DM ought to exercise prudence in appointing such
person who will be capable of executing the orders passed by him.
Merely because he has power to appoint “any” officer subordinate to
him, it would not permit him to appoint a peon or clerk, who is
incapable of handling the situation.
31. Be that as it may, the expression “any” in section has not been
defined in the 2002 Act or the 2002 Rules. So also, the expressions
“officer” and “subordinate” are not defined singularly or collectively.
The meaning of expression “any” as given in Black’s Law
Dictionary48 reads thus:
“Any. Some; one out of many; an indefinite number. One
indiscriminately of whatever kind or quantity. Federal
Deposit Ins. Corporation v. Winton, C.C.A. Tenn., 131 F.2d
780, 782. One or some (indefinitely). Slegel v. Slegel, 135
N.J.Eq. 5, 37 A.2d 57, 58. “Any” does not necessarily mean
only one person, but may have reference to more than one
or to many. Doherty v. King, Tex.Civ.App., 183 S.W.2d
1004, 1007.
Word “any” has a diversity of meaning and may be
employed to indicate “all” or “every” as well as “some”
or “one” and its meaning in a given statute depends
upon the context and the subject matter of the statute.
Donohue v. Zoning Bd. of Appeals of Town of Norwalk, 155
Conn. 550, 235 A.2d 643, 646, 647.
It is often synonymous with “either”, “every” or
“all”. Its generality may be restricted by the context;
thus, the giving of a right to do some act “at any time” is
48 6th Edition
36
commonly construed as meaning within a reasonable time;
and the words “any other” following the enumeration of
particular classes are to be read as “other such like,” and
include only others of like kind or character.”
(emphasis supplied)
32. The expression “officer” as defined in the Black’s Law
Dictionary49 reads thus:
“officer. (14c) 1. Someone who holds an office of trust,
authority, or command. • In public affairs, the term refers
esp. to a person holding public office under a national,
state, or local government, and authorized by that
government to exercise some specific function. In
corporate law, the term refers esp. to a person elected or
appointed by the board of directors to manage the daily
operations of a corporation, such as a CEO, president,
secretary, or treasurer. Cf. DIRECTOR (2).
(emphasis supplied)
33. The expression “subordinate” as given in P. Ramanatha Aiyar’s
Advanced Law Lexicon50 reads thus:
“Subordinate” defined. Act 24, 1859, section 1; Mad Act
3, 1909, section 2.
Belonging to an inferior rank, grade, class or order;
dependent upon the authority or power of another [Section
121, Indian Evidence Act (1 of 1872)]; a person or thing
that is ranked lower.
By the use of the word ‘subordinate’ without any
qualifying words, the legislature has expressed its
legislative intention of making punishable such
subordinates also who have no connection with the
functions with which the business or transaction is
concerned. An Assistant Controller of Imports in the office
of the Joint Chief Controller of Imports and Exports is a
subordinate of the joint Chief Controller through the
acceptance of the bribe has nothing to do with the appeal
49 11th Edition
50 Volume 4 (6th Edition)
37
pending before the Joint Chief Controller. R.G. Jacob v
Republic of India, AIR 1963 SC 550, 553. [Indian Penal
Code (45 of 1860), section 165 (omitted by Prevention of
Corruption Act, 1988)]
The construction placed on the expression ‘subordinate’
occurring in Rule 14(2) of the Rules is in consonance with
the meaning and import of the word ‘subordinate’
occurring in Article 311(1) of the Constitution. There is
nothing in the Constitution which debars the Government
from exercising the power of appointing authority to
dismiss a Government servant from service. These Rules
cannot be read as implying that dismissal must be by the
very authority who made the appointment or by his
immediate superior. There is a compliance with Article
311(1) if the dismissing authority is not lower in rank or
grade than the appointing authority. [Govt. of A.P. v N.
Ramanaiah, (2009) 7 SCC 165, 172, paras 23, 24]
[Constitution of India, Article 311(1); A.P. Civil Services
(CCA) Rules, 1991, rule 14(2)]
The word ‘subordinate’ in section (2)(f) means subordinate
in law and not in fact. Although a person looking after the
business of another person as manager, may not in fact be
subordinate to the other person and may be acting on his
own initiative, yet if, as an individual manager, he is in law
subordinate to the employer, namely, the other person, he
cannot be regarded as the “managing agent” of employer
as defined in section 2(1)(f), and no order of compensation
can be made against him. Raghunath Sahai v Sarup Singh,
MLJ : QD (1961-1965) Vol V C1952-1953 : 1962 All LJ 104
: 1962 All WR (HC) 91 : (1962) 1 LLJ 19 : (1961) 3 Fac LR
445 : (1962-63) 23 FJR 624 : AIR 1962 All 620 [Workmen’s
Compensation Act (8 of 1923), section 2(1)(f)]
The word ‘subordinate’ also means judicial or quasi judicial
administrative subordination to the Director of
consolidation. Ram Narain v Director of Consolidation, AIR
1965 All 172, 173. [U.P. Consolidation of Holdings Act (5
of 1954), section 48 (as amended in 1963), section 48]
The provisions made in Section 133-A were already there
when Section 44-A was added to the Act by the Madras Act
(XX of 1948). The latter Act does not contain any
separate definition of the word “subordinate”.
Naturally, no definition was necessary in view of the
provision already made in Section 133-A. It must be
assumed that the Madras Legislature was aware of the
existence of Section 133-A when it introduced Section 44-
38
A, and, when it used the word “subordinate” in that
section, it must have intended that the word
“subordinate” should be understood only in the
manner to determine which provision had already been
made in Section 133-A of the Act. Krishna Swamy
Mudaliar v Palani Pillai, MLJ : QD (1956-1960) Vol.IV C151
: (S) AIR 1957 Mad 599 (FB). [Motor Vehicles Act (4 of
1939), section 133-A]
The word ‘subordinate’ occurring in Article 311(1), has
reference to subordination in rank and not subordination
in respect of powers and duties. Article 311(1) cannot be
read as implying that the removal must be by the very same
authority who made the appointment or by his direct
superior. It is enough that the removing authority is of the
same rank of grade. Laxminarayana Sarangi v State of
Orissa, MLJ : QD (1961-1965) Vol. II C1050 : AIR 1963
Orissa 8 : ILR (1962) Cut 492. [Constitution of India, Article
311(1)]
The word ‘subordinate’ in Article 311(1) Constitution of
India, means subordination in rank and not subordination
of function. Mahadev Prasad Roy v. S.N. Chatterjee, AIR
1954 Pat 285.
The word ‘subordinate’ in Article 311(1) of the Constitution
of India means subordinate in rank and not with reference
to the functions exercised. Consequently when no officer
of equal rank to the appointing officer is available then the
order of dismissal or removal will have to be passed by an
officer of superior rank. In no circumstances can such an
order be passed by an officer of lesser rank. Any rule or
statute which permits such an action must be held to be
ultra vires as infringing the provisions of Article 311(1) of
the Constitution. Gurmukh Singh v UOI, New Delhi, MLJ :
QD (1961-1965) Vol.II C1050 : 65 Punj LR 964 : AIR 1963
P&H 370
For the purposes of transfer applications of suits from the
Original Side of the High Court the Judge sitting on the
original side is subordinate to the appellate side of the High
Court. (AIR 1923 Rang. 22)”
(emphasis supplied)
39
34. The expression “officer subordinate” as defined in
Venkataramaiya’s Law Lexicon & Legal Maxims51 reads thus:
““Officer subordinate.”— What is the exact purport of the
component words of the expression “any officer
subordinate” used in the Sec.44-A of the Motor Vehicles
Act, 1939. “Any” is a word which excludes limitation
or qualification. It connotes wide generality. Its use
points to a distributive construction. The word “any”
is used in the sense of “any body”, “any person”. The
individual who is invested with the authority and is
required to perform the duties incidental to an office is an
officer. For determining whether officers are
subordinate or not the test is not whether a review of
such of their determinations as are quasi-judicial may
be had, but whether in the performance of their various
duties they are subject to the direction and control of
a superior officer, or are independent officers subject
only to such directions as the statute gives.— B.
Veeraswamy v. State of Andhra Pradesh, (1959) Andh.
W.R.308 at p.314: A.I.R. 1959 A.P. 413 (F.B.)”
(emphasis supplied)
35. The expressions “officer, subordinate” and “officers
subordinate to him” as given in P. Ramanatha Aiyar’s Advanced Law
Lexicon52 read thus:
“Officer, subordinate. Officer belonging to an inferior
rank, grade, class or order.
Officers subordinate to him. A Minister is an officer
subordinate to the Governor. Shiv Bahadur Singh v State of
Uttar Pradesh, AIR 1953 SC 394.”
51 Vol.III (2nd Edition)
52 Volume 3 (6th Edition)
40
36. As regards the procedure for taking possession of the secured
assets, it can be discerned from Section 13 read with Section 14 of
the 2002 Act. Section 13(4) permits the secured creditor to take
recourse to one or more of the specified measures; and to enable the
secured creditor to do so even at the stage of pre-confirmation of
sale; in terms of Section 14, the CMM/DM has power in that regard
albeit after passing order on a written application given by the
secured creditor for that purpose. Once the order is passed, the
statutory obligation cast upon the CMM/DM stands discharged to
that extent. The next follow-up step is of taking possession of the
secured assets and documents relating thereto. The same is
ministerial step. It could be taken by the CMM/DM himself/herself
or through any officer subordinate to him/her, including the
Advocate Commissioner who is considered as an officer of his/her
court. The Advocate Commissioner is not a new concept. The
advocates are appointed as Court Commissioner to perform diverse
administrative and ministerial work as per the provisions of Code of
Civil Procedure and Code of Criminal Procedure. An advocate is an
41
officer of the court. This has been expounded in Virginia Law
Review53
, in the following words:
“The duties of the lawyer to the Court spring directly
from the relation that he sustains to the Court as an
officer in the administration of justice. The law is not
a mere private calling but is a profession which has the
distinction of being an integral part of the State’s
judicial system. As an officer of the Court the lawyer is,
therefore, bound to uphold the dignity and integrity of the
Court; to exercise at all times respect for the Court in both
words and actions; to present all matters relating to his
client’s case openly, being careful to avoid any attempt to
exert private influence upon either the judge or the jury;
and to be frank and candid in all dealings with the Court,
“using no deceit, imposition or evasion,” as by misreciting
witnesses or misquoting precedents. “It must always be
understood,” says Mr. Christian Doerfler, in an address
before the Milwaukee County Bar Association, in
December, 1911, “that the profession of law is instituted
among men for the purpose of aiding the
administration of justice. A proper administration of
justice does not mean that a lawyer should succeed in
winning a lawsuit. It means that he should properly
bring to the attention of the Court everything by way
of fact and law that is available and legitimate for the
purpose of properly presenting his client’s case. His
duty as far as his client is concerned is simply to
legitimately present his side of the case. His duty as far
as the public is concerned and as far as he is an officer
of the Court is to aid and assist in the administration
of justice.”
(emphasis supplied)
37. It would be useful to advert to the enunciation in Black’s Law
Dictionary54 in respect of expression “amicus curiae” which reads
thus:
“amicus curiae. [Latin “friend of the court”] (17C) Someone
who is not a party to a lawsuit but who petitions the court
53 Vol. 11, No.4 (Feb 1925) pp. 263-77
54 11th Edition
42
or is requested by the court to file a brief in the action
because that person has a strong interest in the subject
matter.— Often shortened to amicus. — Also termed friend
of the court. Pl. amici curiae”
38. Even this Court had occasion to expound about the role of the
advocate as being an officer of the court in Lalit Mohan Das vs. The
Advocate-General, Orissa & Anr.55. The Constitution Bench
observed thus:
“(11) ….. A member of the Bar undoubtedly owes a duty to
his client and must place before the Court all that can fairly
and reasonably be submitted on behalf of his client. He
may even submit that a particular order is not correct and
may ask for a review of that order. At the same time, a
member of the Bar is an officer of the Court and owes
a duty to the Court in which he is appearing. He must
uphold the dignity and decorum of the Court and must
not do anything to bring the Court itself into disrepute.
….”
(emphasis supplied)
39. 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. In the case of O.P.
55 AIR 1957 SC 250
43
Sharma & Ors. vs. High Court of Punjab & Haryana56, the Court
noted that in all professional functions, an advocate should be
diligent and his conduct should conform to the requirements of the
law by which he plays a vital role in the preservation of society and
justice system. As an officer of the court, he is under a higher
obligation to uphold the rule of law and justice system.
40. Be it noted that Section 38 of the 2002 Act empowers the
Central Government to make rules for carrying out the provisions of
the 2002 Act. Sub-Section (2) thereof does not specifically/expressly
refer to power to make rule in respect of matter provided for in
Section 14 unlike other provisions noted therein. However, it is open
to the Central Government to frame rules in that regard by invoking
clause (g) of sub-Section (2) of Section 38. The same reads thus:
“38. Power of Central Government to make rules.—(1)
….
(2) In particular, and without prejudice to the generality of
the foregoing power, such rules may provide for all or any
of the following matters, namely:—
(a) to (fc) …..
(g) any other matter which is required to be, or may be,
prescribed, in respect of which provision is to be, or may
be, made by rules.”
56 (2011) 6 SCC 86 (para 38)
44
41. Pertinently, no such rule has been framed by the Central
Government in reference to sub-Section (1A) of Section 14 of the
2002 Act much less to expressly or by necessary implication
prohibiting the CMM/DM to engage an Advocate Commissioner for
taking possession of the secured assets. In absence thereof,
exclusion of engagement of an advocate as commissioner cannot be
countenanced.
42. Whereas, applying the “functional subordination” test, we are
persuaded to take the view that sub-Section (1A) of Section 14 of the
2002 Act is no impediment for the CMM/DM to engage services of
an advocate (an officer of the court) — only for taking possession of
secured assets and documents relating thereto and to forward the
same to the secured creditor in furtherance of the orders passed by
the CMM/DM under Section 14(1) of the 2002 Act in that regard. It
does not follow that the advocate so appointed needs to be on the
rolls in the Office of the CMM/DM or in public service. There is
intrinsic de jure functional subordinate relationship between the
CMM/DM and the advocate being an officer of the court. The
apprehension of the borrowers about improper execution of orders
of the CMM/DM passed under Section 14(1) of the 2002 Act by the
45
Advocate Commissioner, is plainly misplaced. Further, 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 2002 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. Rather, going by the institutional faith or trust reposed on
advocates being officers of the court, there must be a presumption
that if an advocate is appointed as commissioner for execution of the
orders passed by the CMM/DM under Section 14(1) of the 2002 Act,
that responsibility and duty will be discharged honestly and in
accordance with rules of law.
43. For the view taken by us hitherto, the exposition in Satheedevi
vs. Prasanna & Anr.57, M/s. Hiralal Rattanlal etc. etc. vs. State
of U.P. & Anr. etc. etc.58, and Dipak Babaria & Anr. vs. State of
Gujarat & Ors.59, will be of no avail to the borrowers. In that, we
have not invoked the principle of casus omissus. In our view, in law,
57 (2010) 5 SCC 622
58 (1973) 1 SCC 216
59 (2014) 3 SCC 502
46
an advocate is an officer of the court and, thus, subordinate to the
CMM/DM. Further, there is no indication in the 2002 Act or the
Rules made thereunder to exclude such interpretation. For the same
reason, the plea regarding applying principle of ejusdem generis or
noscitur a sociis and for that matter, expressio unius est exclusio
alterius, also need not detain us.
44. The secured creditors would rely on the dictum of this Court in
Authorised Officer, Indian Bank vs. D. Visalakshi & Anr.60
wherein this Court upon considering the nature of activities of the
Chief Judicial Magistrate61 on the one hand and that of the
CMM/DM on the other, held that the CJM is competent to process
the request of the secured creditor to take possession of the secured
assets under Section 14 of the 2002 Act. However, it is unnecessary
to dilate on that decision considering the view taken hitherto that
the advocate must be regarded as an officer of the court and, in law,
subordinate to the concerned CMM/DM within their jurisdiction.
This interpretation in applying “functional subordination” test,
would further the legislative intent and the purpose for enacting the
60 (2019) 20 SCC 47
61 for short, “CJM”
47
2002 Act. We hold that it would be open to the CMM/DM to appoint
an advocate commissioner to assist him/her in execution of the
order passed under Section 14(1) of the 2002 Act.
45. A fortiori, the judgment and order of the Bombay High Court
impugned in the present appeals62 is declared as not a good law.
Whereas, we uphold the conclusion of the three High Courts,
namely, High Courts of Kerala, Madras and Delhi on the question
under consideration.
46. Although, we have agreed with the view taken by the Madras
High Court about the power of the CMM/DM to appoint an Advocate
Commissioner, yet S.L.P (Civil) No. 12011 of 2020 filed by the
borrowers needs to be delinked and heard for admission separately,
limited to the first issue about compliance or non-compliance of
clauses (i) to (ix) of Section 14 of the 2002 Act. That issue has been
answered by the High Court in favour of the secured creditor and
against the borrowers, in paragraphs 10 and 11 of the impugned
judgment. The correctness whereof will have to be considered on its
own merits.
62 see Footnote No.5
48
47. In view of the above:
(i) the appeals63 filed by the secured creditors are allowed.
Resultantly, the impugned judgment and order passed by the
Bombay High Court is set aside and the subject writ petition64
stands dismissed.
(ii) The special leave petition65 filed by the borrowers against the
impugned judgment and order of the Madras High Court is delinked
for being heard for admission on 4.3.2022, on the limited issue (first
issue) regarding compliance or non-compliance of clauses (i) to (ix)
of Section 14 of the 2002 Act in the fact situation of the present case.
(iii) No order as to costs.
Pending application(s), if any, stands disposed of.
..……………………………J.
(A.M. Khanwilkar)
………………………………J.
(C.T. Ravikumar)
New Delhi;
February 25, 2022.
63 Civil Appeal No….. of 2022 @ SLP (Civil) No.30240 of 2019; Civil Appeal No….. of 2022 @ SLP
(Civil) No.2055 of 2020; Civil Appeal No…..of 2022 @ SLP (Civil) No……of 2022 @ Diary No.17059
of 2020; and Civil Appeal No…..of 2022 @ SLP (Civil) No……of 2022 @ Diary No.23733 of 2020
[Footnote No.5]
64 Writ Petition (L) No.28480 of 2019 [Footnote No.17]
65 SLP (Civil) No.12011 of 2020 [Footnote No.7]
