Block listing of a contractor - “debarment” is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor.

 Block listing of a contractor - “debarment” is never permanent and   the   period   of   debarment   would   invariably   depend upon the nature of the offence committed by the erring contractor. 

In the instant case, it might be true that the offence was   the   first   offence   committed   by   the   contractor. However, considering the seriousness of the matter that due to the omission and commission on the part of the contractor a serious incident had occurred as there was a collapse of a ten meter slab while constructing a flyover in which one person died and eleven others injured, as such   the   contractor   does   not   deserve   any   leniency. 

However, to debar him permanently can be said to be too harsh   a   punishment.   But   considering   the   subsequent O.M. dated 26.11.2021 reproduced hereinabove (to which as such we do not agree as observed hereinabove), we are of the opinion that if the blacklisting is restricted to five years, it may be in the fitness of things.    

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1083 OF 2022

State of Odisha & Ors.             ..Appellant (S)

VERSUS

M/s Panda Infraproject Limited                     ..Respondent (S)

With 

CIVIL APPEAL NO.1084 OF 2022

State of Odisha & Ors.             ..Appellant (S)

VERSUS

M/s Panda Infra Projects (India) Pvt. Ltd.            ..Respondent (S)

J U D G M E N T 

M. R. Shah, J.

1. Feeling   aggrieved   and   dissatisfied   with   the   impugned

judgment and order dated 23.03.2021 passed by the High

Court of Orissa at Cuttack in W.P. (C) No.26408 of 2017,

by which the High Court has allowed the said writ petition

and has quashed and set aside the order passed by the

State, banning the respondent herein from participating or

1

bidding for any work to be undertaken by Government of

Odisha and transacting any business with Government of

Odisha, either directly in the name of propriety bidder or

indirectly under any different name or title, the State of

Odisha has preferred the present C.A. No.1083 of 2022.  

2. Feeling   aggrieved   and   dissatisfied   with   the   subsequent

consequential order passed by the High Court vide order

dated 04.06.2021 in W.P. (C) No.16723 of 2021 by which

the High Court, in consequence of the earlier order dated

23.03.2021 passed in W.P. (C) No.26408 of 2017, directed

the State of Odisha to remove the name of the contractor –

respondent herein from the list of blacklisted contractors,

the State of Odisha has preferred the present C.A. No.1084

of 2022. 

3. That the respondent – contractor was awarded a contract

for construction of a flyover over the railway level crossing

at Bomikhal Junction in Bhubaneswar. That in pursuance

of   the   said   contract   the   respondent   –   contractor

constructed the said flyover. In the year 2017, a ten meter

slab   of   the   flyover   collapsed   during   concreting   of   the

2

railway over bridge at the level crossing, which resulted in

loss   of   life   and   property.   One   person   died   and   eleven

others were injured. A high­level inquiry was conducted by

the Chief Engineer (Design) and Chief Engineer (DPI and

Roads). The committee submitted a comprehensive report

after   a   detailed   inquiry   and   found   the   contractor   –

respondent herein guilty. It was found that the contractor

did not submit the formwork design and adopted his own

arrangement leading to collapse of such a huge structure

during construction. It was also found that the contractor

had   not   ensured   adequate   safety   measures   during   the

period of construction; otherwise such an unfortunate fatal

accident could have been avoided. It was found that the

quality assurance had not been maintained as stipulated

in the codes and manuals and as per the agreement. It

was   found   that   there   were   a   lot   many   deficiencies   in

workmanship   that   could   affect   the   quality   of   work,   as

found   in   other   formwork   assemblies.   Therefore,   the

committee   found   the   contractor   responsible   for   such   a

serious accident. 

3

3.1 On the basis of such report the State Government took the

matter   very   seriously   and   directed   that   immediate

necessary action be taken for blacklisting the contractor

following the procedure as per the Orissa Public Works

Department (OPWD) Code. Thereafter, a show cause notice

was issued to the contractor and the contractor was asked

to   show   cause   as   to   why   it   be   not   blacklisted   for

intentionally   violating   the   relevant   clauses   of   the

Agreement   No.15­P1/2011­12.   The   respondent   filed   a

detailed reply. That on considering the allegations in the

said   show   cause   notice   and   reply   thereto,   the   Chief

Engineer   (DPI   &   Roads)   Odisha   issued   an   order   dated

12.12.2017,   whereby   the   respondent   –   contractor   was

blacklisted with immediate effect, for intentional violation

of condition of the contract leading to injuries and loss of

life.   The   respondent   –   contractor   was   banned   from

participating or bidding for any work to be undertaken by

the Government of Odisha and the contractor was also

banned   from   transacting   business   with   Government   of

Odisha, either directly or indirectly. 

4

3.2 Aggrieved by the order of blacklisting dated 12.12.2017,

the   contractor  filed  Writ  Petition  (C) No.26408  of  2017

seeking quashing of the order of blacklisting and by the

impugned judgment and order, the High Court has set

aside the order of blacklisting mainly on the ground that

the   order   of   blacklisting   is   in   violation  of  principles  of

natural justice. The impugned judgment and order passed

by the High Court quashing and setting aside the order of

blacklisting is the subject matter of Civil Appeal No.1083

of 2022.   

3.3 That thereafter the contractor filed another Writ Petition

(C) No.16723 of 2021, making a grievance that despite the

order of blacklisting set aside by the High Court in Writ

Petition   (C)   No.26408   of   2017,   the   contractor’s   name

continues to be shown as the blacklisted in the official

portal of the Government of Odisha. By the order dated

04.06.2021, the High Court has disposed of the said writ

petition by directing the State to pass appropriate orders to

stop showing on the official portal of the Government of

Odisha the name of the contractor – respondent herein as

5

a blacklisted company to enable the contractor to seek

renewal of its licence as well participate in future tenders.

The order dated 04.06.2021 passed by the High Court in

Writ Petition (C) No.16723 of 2021 is the subject matter of

Civil Appeal No.1084 of 2022.   

4. Shri Ashok Kumar Parija, learned Advocate General has

appeared on behalf of the State of Odisha and Shri Sibo

Sankar Misra, learned Advocate has appeared on behalf of

the respondent – contractor.  

5. Shri   Ashok   Kumar   Parija,   learned   Advocate   General

appearing on behalf of the State of Odisha has vehemently

submitted that in the facts and circumstances of the case,

the   High   Court   has   materially   erred   in   quashing   and

setting   aside   the   order   passed   by   the   State   of   Odisha

blacklisting the respondent – contractor.

5.1 It is contended that the High Court has erred in holding

that   the   order   of   blacklisting   was   in   violation   of   the

principles of natural justice. 

6

5.2 It   is   submitted   that   as   such   before   blacklisting   the

respondent – contractor a show cause notice was issued

and   served   upon   the   respondent.   The   procedure   as

required as far as Appendix­XXXIV of OPWD Code was

followed   and   thereafter,   after   considering   the   reply

submitted by the contractor, the order of blacklisting was

passed. It is submitted that therefore, the High Court has

erred   in   holding   that   the   order   of   blacklisting   was   in

breach of principles of natural justice.

5.3 It is further submitted by Shri Parija, learned Advocate

General appearing on behalf of the State that the High

Court has also erred in concluding that the blacklisting

order was pre­decided as the same was passed on the

basis of the recommendations made in the inquiry report.

It is urged that in fact the findings recorded by the inquiry

committee can be said to be the basis for initiating the

action   of   blacklisting   against   the   contractor.   It   is

submitted   that   therefore,   the   findings   recorded   by   the

inquiry committee can be said to be a prima facie opinion

while   initiating   the   proceedings   for   blacklisting.   It   is

7

submitted   that   merely   because   show   cause   notice   was

issued   and   the   blacklisting   order   was   passed   on

consideration of the inquiry report, that by itself it cannot

be said that the blacklisting order was pre­decided.

5.4 It is further submitted by Shri Parija, learned Advocate

General,   appearing   on   behalf   of   the   State   that   even

otherwise,   while   passing   the   impugned   judgment   and

order quashing and setting aside the blacklisting order,

the High Court has not at all considered the seriousness of

the allegations against the contractor. It is submitted that

it was a case of grave lapse and omission and commission

on the part of the contractor; a serious incident occurred

in which one person died and eleven others were injured. It

is submitted that therefore, the High Court ought not to

have   interfered   with   the   order   passed   by   the   State

Government blacklisting the respondent – contractor  

6. The present appeals are vehemently opposed by Shri Sibo

Sankar Misra, learned counsel appearing on behalf of the

respondent – contractor. 

8

6.1 It is submitted that in the facts and circumstances of the

case the High Court has rightly observed and held that the

order of blacklisting was pre­determined and the same was

in breach of principles of natural justice.

6.2 It is submitted that before a show cause notice was issued

to  the  respondent –  contractor,  a communication/letter

dated 10.10.2017 was written by the Under Secretary in

the Works Department to the Chief Engineer which shows

that the Government had already ordered blacklisting of

the contractor and the Engineer­in­Chief was directed to

take immediate action for blacklisting the contractor. It is

submitted   that   as   rightly   observed   that   the   action   of

blacklisting   the   contractor   was   pre­determined.     It   is

submitted that it is rightly observed by the High Court that

giving a show cause notice was an empty formality which

was not going to change the decision already taken to

blacklist the contractor. 

9

6.3 It is further submitted that even in the show cause notice

there   was   no   reference   to   the   letter   dated   10.10.2017

and/or to the report of the committee. 

6.4 It is further submitted that even  after the  show cause

notice containing serious allegations of violations by the

contractor,   the   contractor   was   asked   to   execute   the

balance work, on a revised design, which the contractor –

respondent admittedly completed to the satisfaction of the

Department by 31.03.2018. It is submitted that therefore,

the   High   Court   has   rightly   quashed   the   order   of

blacklisting the respondent – contractor. 

6.5 In   the   alternative,   it   is   contended   by   learned   counsel

appearing on behalf of the respondent – contractor that in

the   facts   and   circumstances   of   the   case,   the   order   of

blacklisting the respondent – contractor permanently can

be said to be too harsh and/or disproportionate to the

charge/misconduct   proved   against   the   respondent   –

contractor. 

10

6.6 It is urged that it was the first offence by the respondent –

contractor. That after the impugned order passed by the

Government,   the   Government   of   Odisha,   Works

Department   passed   an   office   memorandum   dated

26.11.2021, which provides that  the blacklisting period

per offence shall be limited to three years subject to an

overall   maximum   cumulative   period   of   ten   years   for

multiple offences. It is submitted that the respondent has

completed a period of 4 ½ years of its blacklisting. It is

submitted   that   therefore   the   order   of   blacklisting

respondent – contractor permanently also deserves to be

quashed and set aside.   

6.7 Making   the   above   submissions   and   relying   on   the

decisions of this Court in the cases of Erusian Equipment

&  Chemicals   Ltd.   Vs.  State   of  West   Bengal   and   Anr.

(1975)   1   SCC   70,   Kulja   Industries   Limited   Vs.   Chief

General   Manager,   Western   Telecom   Project   Bharat

Sanchar   Nigam  Limited   and  Ors.   (2014)  14  SCC  731

and  M/s.   Daffodills   Pharmaceuticals   Ltd.   &   Anr.   Vs.

State of U.P. & Anr. 2019 (17) Scale 758, it is prayed to

11

dismiss the present appeals and/or in the alternative to

reduce the period of blacklisting.  

7. We have heard learned counsel appearing on behalf of the

respective parties at length.   

8. By the impugned judgment and order, the High Court has

set aside the order passed by the Government of Odisha

blacklisting   the   respondent   contractor   mainly   on   the

ground that the same was pre­determined and in breach of

principles of natural justice. 

8.1 However,   it   is   required   to   be   noted   that   the   action   of

blacklisting followed a high­level inquiry conducted by two

members committee, Chief Engineer (Designs) and Chief

Engineer   (DPI   &   Roads).   After   studying   the   contract

provisions and drawings, as also inquiry on the spot and

after a detailed consideration of the general behaviour and

collapse   of   the   formwork,   a   comprehensive   report   was

submitted and the following observations were made in

respect of the respondent – contractor: ­

“(b)  In respect of the Contractor

12

(i) The   Contractor   has   not   submitted   the

formwork design and has adopted his own

arrangement leading to such occurrence of

collapse   of   such   huge   structure   during

construction.   Design   of   the  formwork   is

the   responsibility   of   the   Contractor   and

the   Contractor   shall   also   be   entirely

responsible   for   adequacy   and   safety   of

formwork,   notwithstanding   any   approval

or review of drawing and design by the

Engineer.

(ii) The Contractor has not ensured adequate

safety   measures   during construction

activities   with   which   such   unfortunate

fatal   accident   could   have   been   avoided,

even in case of failure.

(iii) Quality   assurance   has   not   been

emphasized as stipulated in the codes and

manuals and as per the Agreement.

(iv) There   are   lot   many   deficiencies   in

workmanship that may affect the quality

of   work,   as   found   in   other   formwork

assemblies."

8.2 Thereafter,   the   State   Government   studied   the   report

submitted   by   a   high­level   committee   and   having

considered the case of lapse on the part of the contractor,

a serious incident had taken place of collapse of a ten

meter slab and in the said incident, one person died and

eleven others were injured. Hence, a decision was taken to

blacklist the contractor after following the proceedings as

per the OPWD Code. Thereafter, a show cause notice was

13

issued   upon   the   respondent   –   contractor   and   the

respondent – contractor was called upon to show cause as

to why he be not blacklisted. The said show cause notice

was issued in terms of the provisions and the procedures

in the OPWD Code. The respondent – contractor replied to

the same. After considering the allegations in the show

cause notice and the reply submitted by the contractor,

thereafter the Government passed an order of blacklisting.

Merely because the show cause notice was issued after the

inquiry committee report was considered and thereafter

the   State   Government   took   the   decision   to   initiate

proceedings for blacklisting, that by itself it cannot be said

that   the   order   of   blacklisting   was   pre­determined   as

observed by the  High  Court. The communication  dated

10.10.2017 by the State Government to the Chief Engineer

can   be   said   to   be   a   proposed   decision   to   initiate   the

proceedings for blacklisting. In the communication dated

10.10.2017, it has been specifically mentioned that the

action   be   taken   for   blacklisting   after   following   the

procedure as per the OPWD Code. Before any show cause

notice is issued for any action when a tentative decision is

14

taken, it cannot be said that subsequent decision followed

by a show cause notice and the proceedings as per the

OPWD   Code   can   be   said   to   be   pre­determined.   Before

initiation of any proceedings for blacklisting, there can be

a tentative decision on the basis of the material available

forming   a   tentative/prima   facie   opinion   that   action   is

required.   In   the   instant   case   a   committee   submitted   a

detailed report which was the basis for issuance of the

show cause notice to the respondent. The action initiated

against the respondent was not in a vacuum but after

considering the committee’s report and after following the

due procedure as required. Therefore, the High Court has

erred   in   holding   that   the   blacklisting   order   was   predetermined. 

8.3 So far as the findings recorded by the High Court that the

blacklisting order was in breach of principles of natural

justice is concerned, it is to be noted that the blacklisting

order was passed after issuing a show cause notice to

which the contractor – respondent was called upon to reply

and show cause as to why he be not blacklisted. A detailed

15

show cause notice was issued with specific allegations to

which the respondent – contractor submitted a detailed

reply. After considering the allegations in the show cause

notice, considering the reply and also by considering the

material available on record the order of blacklisting was

passed.  We fail  to  appreciate, how in  such  a case the

blacklisting order can be said to be in breach of principles

of natural justice. 

8.4 In the case of Grosons Pharmaceuticals (P) Ltd. & Anr.

v.   State   of   U.P.,   (2001)   8   SCC   604,  the   order   of

blacklisting   was   challenged   by   the   contractor   on   the

ground that the contractor was not supplied with all the

materials on the basis of which charges against him were

based. It was the case on behalf of the contractor that nonsupply of such material resulted in violation of principles

of natural justice. To that, this Court observed that it was

sufficient requirement of law that an opportunity of show

cause was given to the appellant before it was blacklisted.

This   Court   observed   that   the   contractor   was   given   an

opportunity to show cause and it did reply to the show16

cause   to   the   State   Government   and   therefore   the

procedure adopted by the Government while blacklisting

the contractor was in conformity with the principles of

natural justice. 

8.5 In the present case as observed hereinabove, show cause

notice   was   issued   upon   the   contractor   by   which   the

contractor was called upon to show cause why he be not

blacklisted; the show cause notice was replied to by the

contractor and thereafter, after considering the material

on record and the reply submitted by the contractor and

having found the serious lapses which led to a serious

incident in which one person died and eleven others were

injured, the State Government took a conscious decision to

blacklist the contractor. Therefore, it cannot be said the

order   blacklisting   the   contractor   was   in   violation   of

principles of natural justice. 

8.6 As observed by this Court in the case of Gorkha Security

Services v.  Govt.  (NCT  of Delhi)  &  Ors.,   (2014)  9 SCC

105,  the fundamental purpose behind the serving of a

17

show­cause notice is to make the noticee understand the

precise case set up against him which he has to meet. This

would require the statement of imputations detailing out

the alleged breaches and defaults he has committed, so

that he gets an opportunity to rebut the same. Another

requirement is the nature of action which is proposed to be

taken for such a breach. 

8.7 As per the law laid down by this Court in a catena of

decisions “debarment” is recognised and often used as an

effective   method   for   disciplining   deviant

suppliers/contractors   who   may   have   committed   acts   of

omission and commission. It is for the State or appropriate

authority to pass an order of blacklisting/debarment in the

facts and circumstances of the case. Therefore, the High

Court   has   erred   and   has   exceeded   its   jurisdiction   in

exercise of powers under Article 226 of the Constitution of

India by quashing and setting aside the blacklisting order,

that too, without adverting to the serious allegations and

the act of omission and commission on the part of the

contractor which led to a serious incident of collapse of ten

18

meter slab while concrete work of the deck was going on

and due to which one person died and eleven others were

injured.   It   was   specifically   found   that   the   safety

arrangements   were   lacking   severely  in   the   construction

work zone. It was also found that quality assurance was

not emphasised as stipulated in the codes and manuals

and as per the Agreement. Therefore, the High Court ought

to have considered the seriousness of the incident in which

due   to   omission   and   commission   on   the   part   of   the

contractor in constructing the flyover one person died and

eleven others were injured.

    

9. The next question which is posed for consideration of this

Court is, whether, in the facts and circumstances of the

case   the   contractor   was   required   to   be

debarred/blacklisted permanently?

9.1 In   the   case   of  Kulja   Industries   Limited  (supra),   this

Court has observed that “debarment” is never permanent

and   the   period   of   debarment   would   invariably   depend

upon the nature of the offence committed by the erring

contractor. 

19

In   the   said   decision   this   Court   emphasised   on

prescribing guidelines by determining the period for which

the blacklisting should be effective. It is observed and held

by this Court that while determining the period for which

the   blacklisting   should   be   effective,   for   the   sake   of

objectivity and transparency it is required to formulate

broad guidelines to be followed. It is further observed that

different periods of debarment depending upon the gravity

of the offences, violations and breaches may be prescribed

by such guidelines. In the present case, after the order of

blacklisting   was   passed,   the   State   Government   has

formulated guidelines by O.M. dated 26.11.2021 which

provides as under:­ 

“The blacklisting period per offence shall be limited to 03

(Three)   years   subject   to   an   overall   maximum   cumulative

period of 10 (Ten) years for multiple offences” 

However, we may observe that we do not approve of

the guidelines issued by the State Government by O.M.

dated   26.11.2021.   Duration   of   blacklisting   cannot   be

solely   per   offence.   Seriousness   of   the   lapse   and   the

incident and/or gravity of commission and omission on

20

the   part   of   the   contractor   which   led   to   the   incident

should be the relevant considerations. In a given case, it

may happen that the commission and omission is very

grave and because of the serious lapse and/or negligence,

a major incident would have taken place. In such a case,

it may be the contractor’s first offence, in such a case,

the period/duration of the blacklisting/banning can be

more than three years. However, as the said guidelines

are not under challenge, we rest the matter there and

leave   it   to   the   State   Government   to   suitably   amend

and/or  modify  the  said  office  memorandum.  However,

what   we   have   observed   above   can   be   a   guide   while

determining the period of debarment/blacklisting. 

In the instant case, it might be true that the offence

was   the   first   offence   committed   by   the   contractor.

However, considering the seriousness of the matter that

due to the omission and commission on the part of the

contractor a serious incident had occurred as there was a

collapse of a ten meter slab while constructing a flyover

in which one person died and eleven others injured, as

21

such   the   contractor   does   not   deserve   any   leniency.

However, to debar him permanently can be said to be too

harsh   a   punishment.   But   considering   the   subsequent

O.M. dated 26.11.2021 reproduced hereinabove (to which

as such we do not agree as observed hereinabove), we are

of the opinion that if the blacklisting is restricted to five

years, it may be in the fitness of things.      

10. In view of the above discussion and for the reasons stated

above, present appeal, i.e., C. A. No. 1083 of 2022 is

allowed   in   part.   The   impugned   judgment   and   order

passed by the High Court quashing and setting aside the

order   dated   12.12.2017   blacklisting   the   respondent

herein   –   contractor   is   hereby   quashed   and   set   aside.

However,   the   period   of   blacklisting   is   ordered   to   be

restricted to five years from the date of passing of the

order  of  blacklisting.   Civil   Appeal   No.1083   of   2022   is

allowed to the aforesaid extent. 

22

In view of the order passed in Civil Appeal No.1083 of

2022, Civil Appeal No.1084 of 2022 stands dismissed. In

the facts and circumstances of the case, there shall be no

order as to costs. 

…………………………………J.

                (M. R. SHAH)

…………………………………J.

 (B.V. NAGARATHNA)

New Delhi, 

February  24, 2022.

23

whether the condition imposed by the Railway Board circular that compassionate appointment cannot be granted to children born from the second wife of a deceased employee is legally sustainable. - No

 whether the condition imposed by the Railway Board circular that compassionate appointment cannot be granted to children born from the second wife of a deceased employee is legally sustainable.? - No

we hold that the issue arising for consideration, in this case, is covered by the judgment of this Court in Union of India and Ors. v.V.K. Tripathi and consequently the judgment and order dated 18.01.2018 of the High Court of Judicature at Patna passed in CWJC No. 18153 of 2017 is set aside. As we have held that appellant No.1, Shri Manish Kumar, cannot be denied consideration under the scheme of compassionate appointments only because he is the son of the second wife, there shall be a direction to consider his case as per the extant policy. The Authorities shall be entitled to scrutinize whether the application for compassionate appointment fulfils all other requirements in accordance with the law. The process of consideration of the application shall be completed within a period of three months from today

Page 1 of 9

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF /2022

ARISING OUT OF SLP(C) NO. 18571/2018

MUKESH KUMAR & ANR …. APPELLANT(S)

VERSUS

THE UNION OF INDIA & ORS. …RESPONDENT(S)

J U D G M E N T

PAMIDIGHANTAM SRI NARASIMHA, J.

Leave granted.

2. The short issue arising for consideration, in this case, is whether the

condition imposed by the Railway Board circular that compassionate

appointment cannot be granted to children born from the second wife of a

deceased employee is legally sustainable. Having considered the matter, we

have agreed with the counsel for the appellant that the issue is covered by the

judgment of this Court in Union of India v. V.R. Tripathi.

1

 We have allowed

the appeal on this ground. We have also held that such a denial is

discriminatory, being only on the ground of descent under Article 16(2) of the

1 Union of India v. V.R. Tripathi, (2019) 14 SCC 646.

Page 2 of 9

Constitution of India. We shall first refer to the facts of the case before applying

the law for disposal of this appeal.

Facts:

3. The facts, in brief, are that Jagdish Harijan was an employee of the

Indian Railways appointed on 16.11.1977. In his lifetime, Shri Jagdish Harijan

had two wives, appellant No.2, Gayatri Devi, was his first wife and Konika

Devi, since deceased, was his second wife. The appellant No.1 Mukesh Kumar

is his son through his second wife. Shri Jagdish Harijan died in service on

24.02.2014. Shortly after that, the appellant No.2 made a representation dated

17.05.2014 seeking the appointment of her step-son/appellant No.1 under the

scheme for appointments on compassionate grounds. The Respondent-Union

rejected the representation on 24.06.2014 because appellant No.1, being the

second wife's son, is not entitled to such an appointment. The departmental

appeal came to be dismissed on 30.12.2015. The appellants filed an original

application before the Central Administrative Tribunal, Patna, which was

dismissed on 19.07.2017. A writ petition was filed before the High Court of

Patna questioning the correctness of the decision of the Tribunal by relying on

two decisions of the Madras High Court, which followed the Calcutta High

Court decision in the case of Namita Goldar and Anr. v. Union of India and

Ors. (2010) 1 Cal. LJ 464 under which the very same circular of the railways

dated 02.01.1992 was quashed. The Division Bench of the High Court,

however, by the impugned order, dismissed the writ petition.

Page 3 of 9

Arguments of Counsel:

4. The learned Counsel for the Appellants, Shri Manish Kumar Saran,

submitted that the issue is covered by the decision of this Court in Union of

India v. V.R. Tripathi (supra) wherein, in the context of this very circular and

policy of the railways, it held that a child of a second wife of an employee could

not be denied compassionate appointment on that ground alone. He also relied

on the judgment of the High Court of Calcutta in Namita Goldar (supra), which

has been approved by this Court in V.R. Tripathi.

5. The learned Counsel for the Respondents, Smt. Meera Patel,

representing the Union submitted based on the statement in the counter

affidavit. The counter refers to Circular No. E(NG) II/2018/RC-1/5 dated

21.03.2018 issued in supersession of Circular dated 02.01.1992, which

provides that if a legally wedded surviving widow does not want herself to be

considered, she cannot nominate the illegitimate sons/daughters of her husband

for compassionate appointment. She further submitted that the judgment of this

Court relied on by the appellants does not direct appointment but merely

provides for consideration of the application. Therefore, there cannot be a

direction for appointment as prayed by the appellant.

Analysis:

6. It is true that the matter is no more res integra. This Court in V.R.

Tripathi considered the very same policy and circular that arise for the

Page 4 of 9

consideration in the present case. The judgment covers the issue, as is evident

from the following passages:

“14. The real issue in the present case, however, is

whether the condition which has been imposed by the

circular of the Railway Board under which compassionate

appointment cannot be granted to the children born from

a second marriage of a deceased employee (except where

the marriage was permitted by the administration taking

into account personal law, etc.) accords with basic notions

of fairness and equal treatment, so as to be consistent with

Article 14 of the Constitution….

16. The issue essentially is whether it is open to an

employer, who is amenable to Part III of the Constitution

to deny the benefit of compassionate appointment which is

available to other legitimate children. Undoubtedly, while

designing a policy of compassionate appointment, the

State can prescribe the terms on which it can be granted.

However, it is not open to the State, while making the

scheme or rules, to lay down a condition which is

inconsistent with Article 14 of the Constitution. The

purpose of compassionate appointment is to prevent

destitution and penury in the family of a deceased

employee. The effect of the circular is that irrespective of

the destitution which a child born from a second marriage

of a deceased employee may face, compassionate

appointment is to be refused unless the second marriage

was contracted with the permission of the administration.

Once Section 16 of the Hindu Marriage Act, 1955 regards

a child born from a marriage entered into while the earlier

marriage is subsisting to be legitimate, it would not be

open to the State, consistent with Article 14 to exclude such

a child from seeking the benefit of compassionate

appointment. Such a condition of exclusion is arbitrary

and ultra vires.

17. Even if the narrow classification test is adopted, the

circular of the Railway Board creates two categories

between one class of legitimate children. Though the law

has regarded a child born from a second marriage as

legitimate, a child born from the first marriage of a

deceased employee is alone made entitled to the benefit of

compassionate appointment. The salutary purpose

underlying the grant of compassionate appointment, which

Page 5 of 9

is to prevent destitution and penury in the family of a

deceased employee requires that any stipulation or

condition which is imposed must have or bear a

reasonable nexus to the object which is sought to be

achieved. The learned Additional Solicitor General has

urged that it is open to the State, as part of its policy of

discouraging bigamy to restrict the benefit of

compassionate appointment, only to the spouse and

children of the first marriage and to deny it to the spouse

of a subsequent marriage and the children. We are here

concerned with the exclusion of children born from a

second marriage. By excluding a class of beneficiaries

who have been deemed legitimate by the operation of law,

the condition imposed is disproportionate to the object

sought to be achieved. Having regard to the purpose and

object of a scheme of compassionate appointment, once the

law has treated such children as legitimate, it would be

impermissible to exclude them from being considered for

compassionate appointment. Children do not choose their

parents. To deny compassionate appointment though the

law treats a child of a void marriage as legitimate is deeply

offensive to their dignity and is offensive to the

constitutional guarantee against discrimination.

18. … The exclusion of one class of legitimate children

from seeking compassionate appointment merely on the

ground that the mother of the applicant was a plural wife

of the deceased employee would fail to meet the test of a

reasonable nexus with the object sought to be achieved. It

would be offensive to and defeat the whole object of

ensuring the dignity of the family of a deceased employee

who has died in harness. It brings about unconstitutional

discrimination between one class of legitimate

beneficiaries — legitimate children.”

7. This Court held that the scheme and the rules of compassionate

appointment cannot violate the mandate of Article 14 of the Constitution. Once

Section 16 of the Hindu Marriage Act regards a child born from a marriage

entered into while the earlier marriage is subsisting to be legitimate, it would

violate Article 14 if the policy or rule excludes such a child from seeking the

Page 6 of 9

benefit of compassionate appointment. The circular creates two categories

between one class, and it has no nexus to the objects sought to be achieved.

Once the law has deemed them legitimate, it would be impermissible to exclude

them from being considered under the policy. Exclusion of one class of

legitimate children would fail to meet the test of nexus with the object, and it

would defeat the purpose of ensuring the dignity of the family of the deceased

employee. This judgment has now been followed by a number of High Courts

as well.2

8. Apart from the discrimination ensuing from treating equals unequally,

which is writ large as demonstrated in the judgment of this Court referred to

above, there is also discrimination on the ground of descent, which is expressly

prohibited under Article 16(2). In V. Sivamurthy v. State of A.P.

3

, this Court

2 See, K. Santhosha v. Karnataka Power Transmission Corp Ltd. 2022(1) Kant LJ 154

(Decided on 24.06.2021 by The High Court of Karnataka); Yuvraj DajeeKhadake v. Union

of India: 2019 SCC OnLine Bom 299 (Decided on 21.02.2019 by The High Court of

Bombay); Union of India v Rohit Chand 2020 SCC OnLine Del 157. (Decided on

24.01.2020 by The High Court of Delhi)

3 V. Sivamurthy v. State of A.P. and Ors., (2008) 13 SCC 730:

“18. The principles relating to compassionate appointments may be summarised thus;

(a) Compassionate appointment based only on descent is impermissible. Appointments

in public service should be made strictly on the basis of open invitation of applications

and comparative merit, having regard to Articles 14 and 16 of the Constitution of India.

Though no other mode of appointment is permissible, appointments on compassionate

grounds are a well-recognised exception to the said general rule, carved out in the

interest of justice to meet certain contingencies.

(b) Two well-recognised contingencies which are carved out as exceptions to the

general rule are:

(i) appointment on compassionate grounds to meet the sudden crisis occurring in

a family on account of the death of the breadwinner while in service.

(ii) appointment on compassionate ground to meet the crisis in a family on account

of medical invalidation of the breadwinner.

Another contingency, though less recognised, is where landholders lose their

entire land for a public project, the scheme provides for compassionate

Page 7 of 9

observed that appointments made only on the basis of descent is impermissible.

However, compassionate appointments are a well-recognized exception to the

general rule if they are carved out in the interest of justice to meet public policy

considerations.

4

It lends justification only that far and no further.

9. While compassionate appointment is an exception to the constitutional

guarantee under Article 16, a policy for compassionate appointment must be

consistent with the mandate of Articles 14 and 16. That is to say, a policy for

compassionate appointment, which has the force of law, must not discriminate

on any of the grounds mentioned in Article 16(2), including that of descent. In

this regard, ‘descent’ must be understood to encompass the familial origins of

a person.5 Familial origins include the validity of the marriage of the parents

of a claimant of compassionate appointment and the claimant’s legitimacy as

their child. The policy cannot discriminate against a person only on the ground

appointment to members of the families of project-affected persons. (Particularly

where the law under which the acquisition is made does not provide for market

value and solatium, as compensation).

(c) Compassionate appointment can neither be claimed, nor be granted, unless the

rules governing the service permit such appointments. Such appointments shall be

strictly in accordance with the scheme governing such appointments and against

existing vacancies.

(d) Compassionate appointments are permissible only in the case of a dependant

member of the family of the employee concerned, that is, spouse, son or daughter and

not other relatives. Such appointments should be only to posts in the lower category,

that is, Classes III and IV posts and the crises cannot be permitted to be converted into

a boon by seeking employment in Class I or II posts.”

4 Director General of Posts v. K. Chandrashekar Rao, (2013) 3 SCC 310 (at para 18);

Further, constitutionality of compassionate appointments was upheld in State of Haryana v.

Ankur Gupta (2003) 7 SCC 704 (at para 6); Yogender Pal Singh v. Union of India (1987) 1

SCC 631 (at para 17).

5 See, Gazula Dasaratha Rama Rao v. State of Andhra Pradesh and Ors. (1961) 2 SCR 931.

Page 8 of 9

of descent by classifying children of the deceased employee as legitimate and

illegitimate and recognizing only the right of legitimate descendant. Apart from

the fact that strict scrutiny would reveal that the classification is suspect, as

demonstrated by this Court in V.R. Tripathi, it will instantly fall foul of the

constitutional prohibition of discrimination on the ground of descent. Such a

policy is violative of Article 16(2).

10. We note with approval the decision of the Delhi High Court in Union

of India v. Pankaj Kumar Sharma,

6

to which one of us (Justice S. Ravindra

Bhat) was a party, which held that descent cannot be a ground for denying

employment under the scheme of compassionate appointments. Speaking

through Sanghi J., the Court held:

“22. The Court is of opinion that - apart from being

textually sound - understanding 'descent' in terms of

prohibiting discrimination against a person on the basis of

legitimacy, or on the basis of his mother's status as a first

or second wife, fits within the principles underlying Article

16(2). Not only is one's descent, in this sense, entirely

beyond one's control (and therefore, ought not to become

a ground of State-sanctioned disadvantage), but it is also

an established fact that children of 'second' wives, whether

counted as illegitimate or legitimate, have often suffered

severe social disadvantage. Another significant

observation here is that at the entry level - "legitimacy" is

and cannot be a ground for denial of public employment.

For these reasons, this Court is of the opinion that the

Petitioner's regulation violates Article 16(2).”

6 Union of India v. Pankaj Kumar Sharma MANU/DE/3959/2014, WP(C) No.9008/2014

dt 19.04.2014

Page 9 of 9

11. Given the above, we hold that the issue arising for consideration, in this

case, is covered by the judgment of this Court in Union of India and Ors. v.

V.K. Tripathi and consequently the judgment and order dated 18.01.2018 of

the High Court of Judicature at Patna passed in CWJC No. 18153 of 2017 is set

aside. As we have held that appellant No.1, Shri Manish Kumar, cannot be

denied consideration under the scheme of compassionate appointments only

because he is the son of the second wife, there shall be a direction to consider

his case as per the extant policy. The Authorities shall be entitled to scrutinize

whether the application for compassionate appointment fulfils all other

requirements in accordance with the law. The process of consideration of the

application shall be completed within a period of three months from today.

12. The appeal is accordingly allowed. Parties shall bear their own costs.

………………………………J.

[UDAY UMESH LALIT]

……………………………J.

[S. RAVINDRA BHAT]

……………………………….J.

[PAMIDIGHANTAM SRI NARASIMHA]

NEW DELHI;

FEBRUARY 24, 2022

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

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]