In one of its recent judgement, the Delhi High Court has held that there is no bar on the appointment of an Advocate as a 'Receiver' under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act).

The judgement came out in case titled Rahul Chaudhary v. Andhra Bank & Ors.

CASE DETAILS 

The Court stated that the District Magistrates and the CMMs were overburdened and thus, so long the discretion in appointing Advocates as receivers were exercised with due care and caution, the same couldn't be faulted.

The Court upheld the impugned order passed by the CMM, who had appointed an Advocate to take possession of the secured assets.

The petitioner had besieged the order, stating 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 CMM should be set aside.

He further submitted that the same was done by the Bombay High Court in Subir Chakravarty & Ors. v. Kotak Mahindra Bank Ltd., WP (C) No. 28480/2019.

The Court after hearing the arguement, refuted it and clarified, that Section 14 (1A) in fact conferred discretion on the District Magistrate/CMM to appoint their subordinate officers as receivers. Therefore, it didn't bar the appointment of Advocates as such.

It said, 

"According to me, the language of Section 14(1A) of the SARFAESI Act uses the expression "may" and not "shall". There are two ways of appreciating the provision. First, the expression "may" relates to the choice of the 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."

With the above observation, the Court concluded that while in terms of Section 14(1) the District Magistrate/CMM is obliged to take possession once an application in that behalf is preferred by a secured creditor, nevertheless recourse may be taken to Section 14 (1A) to appoint a 'receiver'.

The Court remarked, 

"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. Pertinently, sub-section (1A) of Section 14 does not bar the appointment of advocates as receivers."

The Court thus dismissed the petition for lack of merit.

The judgement has been passed by a single-judge bench of Justice Rajiv Shakdher on 17-01-2020.

Read judgement Here:

 

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