CJMS not empowered to issue orders in secured creditors' cases

The Madurai bench of the Madras High Court has observed that Chief Judicial Magistrates were not empowered to issue orders in cases of secured creditors as per Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
A Full bench, comprising Acting Chief Justice Rajesh Kumar Agrawal, Justice N Paul Vasanthakumar and Justice P Devadoss said, in metropolitan areas, secured creditors can approach either the Chief Metropolitan Magistrate or District Magistrates.
In non-metropolitan areas, where CMM would not be available, the secured creditors could seek the assistance of District Magistrate alone, since no power was vested or given to CJMs to give assistance to secured creditors, the full bench observed.

It also referred to various judgements of the apex court on the issue and said Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, did not contemplate security creditors to approach the Chief Judicial Magistrates for assistance to secure their assets.
They can approach Chief Metropolitan Magistrates in metropolitan areas and in non-metro areas, they can approach District Magistrates and not CJMs, they said.
The Full bench was constituted pursuant to a reference made by a Division Bench to decide on whether the reference made in the SARFAESI Act to Chief Metropolitan Magistrate under Section 14 would include Chief Judicial Magistrates in the non-metropolitan areas.

Originally, a batch of petitions challenged the orders passed by Chief Judicial Magistrates of Sivaganga and Dindigul districts allowing banks to take possession of certain properties of secured creditors, contending that the CJMs had no jurisdiction to pass such orders.
Taking note of the conflicting judgements given by High Courts of Bombay, its bench at Aurangabad and Madras High Courts, a Division Bench, comprising Acting Chief Justice Rajesh Kumar Agrawal and Justice Chitra Venkataraman thought it would be fitting to refer the matter to a larger bench.