The Supreme Court has issued a significant ruling stating that a High Court does not have the authority to quash an order passed by a Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act). The judgment came in response to a challenge against a Madras High Court decision that had quashed an order under Section 14 of the SARFAESI Act using its powers under Section 482 of the Criminal Procedure Code (CrPC).
Brief Facts:
In the case at hand, the Madras High Court had quashed orders issued by the Chief Metropolitan Magistrate Court in Chennai under Section 14 of the SARFAESI Act by invoking its inherent powers under Section 482. The High Court made this decision based on the magistrate's failure to afford the debtor an opportunity to be heard. Consequently, the High Court directed the magistrate to issue a fresh order after giving the debtor a fair hearing.
Observations by the Court:
The division bench comprising Justices AS Bopanna and MM Sundresh considered the contention that filing a petition under Section 482 of the CrPC to quash an order passed under the provisions of the SARFAESI Act was not sustainable. The Supreme Court acknowledged the strength of this argument, emphasizing that any remedy against such an order must be pursued exclusively under the SARFAESI Act itself.
Section 14 of the SARFAESI Act pertains to the power of magistrates to assist creditors in taking possession of secured property from defaulting debtors. On the other hand, Section 482 of the CrPC grants High Courts inherent powers to ensure compliance with the CrPC provisions, prevent abuse of court processes, and uphold the ends of justice.
The decision of the Court:
However, the Supreme Court overturned the High Court's ruling, emphasizing that remedies for such situations are available under the SARFAESI Act. The Supreme Court stated that the aggrieved parties are free to pursue appropriate remedies following the law.
This decision has clarified the jurisdiction of High Courts concerning orders passed by magistrates under the SARFAESI Act. It establishes that the SARFAESI Act itself provides the appropriate avenue for seeking redress, limiting the High Court's power to quash such orders under Section 482 of the CrPC.
Case Name: Phoenix Arc Private Limited vs V. Ganesh Murthy
Coram: Hon’ble Mr. Justice AS Bopanna and Hon’ble Mr. MM Sundresh
Case No.: Special Leave to Appeal (C) No(s). 22093-22094/2022
Advocates of the Petitioners: M/S. Corporate Legal Partners, AOR Mr. Vikas Kumar, Adv. Ms. Parul Manral, Adv. Mr. Sangam Panghal, Adv. Mr. Pranjal Shrivastava, Adv.
Advocates of the Respondent: Mr. K.parameshwar, AOR Mr. Thanu Madan, Adv. Ms. Arti Gupta, Adv. Ms. Kanati, Adv. Mr. Amol Chitale, Adv. Ms. Shweta Singh Parihar, AOR Mrs. Yashvi Sirohi, Adv.
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