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HIGH COURT OF DELHI
Date of Decision: 28th February, 2020
8164/2020 TRANS ASIAN INDUSTRIES EXPOSITION PVT
LTD & ORS ..... Petitioners
Through: Mr. Manjit Singh Ahluwalia and Mr. Jasprieet Singh, Advocates.
(M:9999027820)
Through: Mr. T.K. Ganju, Sr. Advocate with Mr. Syed Arsalan Abid, Mr. Prateek Khaitan and Mr. Kamal Goswami, Advocates for R-1 & 2.
JUDGMENT
1. The present petition has been filed challenging the impugned order dated 8th January, 2020 by which the ld. Chief Metropolitan Magistrate (hereinafter „CMM‟) has directed that the order dated 22nd June, 2019 appointing Receivers shall stand extended for another three months. The submission of Mr. Manjit Singh Ahluwalia, ld. counsel for the Petitioner is that under Section 14 of the SARFAESI Act, 2002, the ld. CMM has to appoint the Receiver within a maximum period of 60 days from the date of the filing of the application and beyond the said period, no orders for appointing Receivers or extending their power can be passed. He further urges that a detailed affidavit is also mandatory in terms of Section 14, failing which, no application could have been entertained by the ld. CMM.
2. Mr. T.K. Ganju, ld. Senior counsel for the Respondents on the other 2020:DHC:1439 hand submits that the application for appointment of Receivers was moved on 30th April, 2019 and the first order appointing Receivers was passed on 22nd June, 2019. Though Receivers were appointed to take possession of the properties which were secured with the Respondents, since various proposals were initiated by the Petitioner and there was some discussion for settlement between the parties, the order appointing the Receivers was not given effect to. Accordingly, when the settlement negotiations failed between the parties, the Respondents moved the ld. CMM once again and vide order dated 8th January, 2020, the directions contained in the order dated 22nd June, 2019 have been extended for another three months and the Receivers have to file a report within the said period.
3. Insofar as the interpretation of Section 14 is concerned, Mr. Ganju submits that the said period mentioned in second and the third proviso of Section 14 have to be read as being directory and not mandatory, as no consequence has been provided, if the order is not passed within a period of 30 days.
4. Section 14 of SARFAESI Act reads as under:
5. A perusal of the said provision shows that an application can be filed by the secured creditor before the ld. CMM to take possession of the assets and documents. Along with the said application a detailed affidavit has to be filed as contained in (i) to (ix). The third proviso specifically stipulates that upon perusing the affidavit and recording the satisfaction thereof, the ld. CMM ought to pass orders for taking possession of the secured assets within a period of 30 days from the application. This period of 30 days has been extended by a further period of 30 days in the third proviso. The question that arises is whether after the period of 30 days + 30 days, the ld. CMM is not empowered to pass orders extending the term of the Receiver or appointing a Receiver, upon an application by the secured creditor.
6. A perusal of the provision clearly shows that the said provision has been enacted to safeguard the interest of the secured creditor. The purpose for which the period has been stipulated is to ensure that upon an application being moved by the secured creditor, the ld. CMM takes up the application within a period of 30 days extendable by further 30 days. The intention is not to render the ld. CMM functus officio after the period of 60 days, but rather to ensure that the application is taken up with the utmost urgency and not in a delayed or procrastinated manner. It cannot be interpreted to mean that after the period of 60 days, the ld. CMM loses the power to give effect to orders extending the term of Receivers, or to substitute a Receiver already appointed.
7. The facts of the present case show that the initial application was filed on 30th April, 2019 and the Receivers were appointed on 22nd June, 2019. As per the order dated 22nd June, 2019 three Receivers were appointed by the ld. CMM to take possession of three separate assets and the Receivers were directed to submit their reports within two months. Thereafter, negotiations had taken place between the parties and the order dated 22nd June, 2019 was not even implemented. It was after negotiations failed that the creditor approached the ld. CMM once again for extension of the power of the Receivers to take possession. The order dated 8th January, 2020 is merely a renewal or extension of the earlier order passed within 60 days i.e. on 22nd June, 2019. The same cannot be construed as a fresh order. Be that as it may, the ld. CMM would be entitled to any other order for example, substitution of Court Receivers and any other orders, so as to ensure that the decree in favour of the secured creditor is not set at naught. The debtor cannot, by attempting to resolve the disputes by giving settlement proposals, avoid the process of the possession being taken over.
8. The only issue remains as to whether the affidavit has been filed properly by the secured creditor in terms of the stipulations in Section 14. The said issue does not arise at this stage. The affidavit has to be filed by the secured creditor in terms of the stipulations in Section 14. The said affidavit which would have been filed with the application, was considered by the ld. CMM while passing the order dated 22nd June, 2019, which is not under challenge in this case. The strict compliance of Section 14 and the affidavit thereunder is required to be followed, however, in the present case the question of the affidavit no longer arises as the same was considered only when the order dated 22nd June, 2019 was passed and not in the order dated 8th January, 2020. Mr. Ahluwalia, at this stage submits that Section 362 of the Cr.P.C. ld. CMM has no power to review or modify his order. The said provision reads as under:
9. The order dated 8th January, 2020 is not a review or modification of the earlier order, it is merely an extension of the period for implementing the order dated 22nd June, 2019 along with the enhancement of fee and nothing more. The same cannot be construed as being a review by any stretch of imagination. The petition is dismissed along with all pending applications.
10. Since possession of the property, which is the residence where the family of the Petitioner’s Director/Promoter is stated to be residing, has not yet been taken over, one week’s time is granted to them to make alternate arrangements. Possession shall not be taken over by the bank for a period of one week from today.
11. A copy of this order be given dasti under signatures of the Court Master.
PRATHIBA M. SINGH JUDGE FEBRUARY 28, 2020 Dj/A.S.