Jharkhand High Court Orders Separate Registers For SARFAESI Applications, Makes Records Accessible Under RTI

The Jharkhand High Court has directed all District Magistrates and Chief Judicial Magistrates in the State to maintain separate registers for applications filed by banks and financial institutions under Section 14 of the SARFAESI Act.

Section 14 empowers District Magistrates and Chief Judicial Magistrates to assist secured creditors in taking physical possession of secured assets when such assistance is sought under the Act.

The court further directed that the registers be treated as public documents and that information contained in them be made available under the Right to Information Act. The directions came after the court found alarming delays in the disposal of such applications across several districts.

Justice Ananda Sen issued the directions while deciding a batch of petitions filed by banks and financial institutions complaining of prolonged delays in obtaining assistance for taking physical possession of secured assets.

While holding that the statutory timelines prescribed for deciding such applications are directory and not mandatory, the court made it clear that authorities cannot allow them to remain pending indefinitely.

"If the same is kept pending, it will only frustrate the purpose of the Act and not only that, it will also give undue benefit and advantage to the defaulters, which is not the intent of the Act.", the court noted.

The financial institutions informed the court that borrowers had defaulted on their loan obligations. They submitted that applications seeking assistance from District Magistrates and Chief Judicial Magistrates for taking physical possession of secured assets had remained pending for months. In some cases, symbolic possession had already been taken. Delays in securing physical possession, however, had stalled recovery proceedings.

Reports called for by the court showed 308 pending applications in Dhanbad, 203 in East Singhbhum (Jamshedpur), 146 in Ranchi, 65 in Bokaro and 64 in Hazaribagh.

The report also showed that 59 applications were pending before the Chief Judicial Magistrate at Jamshedpur. Describing the pendency in these districts as "really alarming", the court noted that all these applications had remained pending beyond the statutory period.

To improve oversight, the court directed every District Magistrate or Deputy Commissioner and every Chief Judicial Magistrate in Jharkhand to maintain a separate register for applications under Section 14. The register must record the date of filing, the date of consideration, the date of disposal and the date of execution of each application. District Magistrates were directed to designate a specific officer or senior clerk to maintain the register.

They must review it every fortnight and countersign it after inspection. Registers maintained by Chief Judicial Magistrates must be placed before the concerned Principal District Judge or Judicial Commissioner every month for review. The court also directed that extracts from the registers be furnished under the Right to Information Act whenever sought.

The court further held that applications under Section 14 should not be registered or dealt with as Criminal Miscellaneous cases because the function performed under the provision is ministerial and not adjudicatory. If numbering is required, the matters should instead be registered as "SARFAESI Applications".

Referring to the Supreme Court's decision in C. Bright v. District Collector, the court held that the timelines prescribed under Section 14 are directory. It observed that a District Magistrate does not become functus officio merely because the prescribed period has expired.

The court nevertheless emphasised that applications must be disposed of as expeditiously as possible so that the object of the SARFAESI Act is not defeated.

The court also rejected the State's submission that District Magistrates could examine questions relating to title, the legality of transfers or restrictions under the Chota Nagpur Tenancy Act while dealing with applications under Section 14.

It held that the powers exercised under the provision are ministerial in nature and do not permit any adjudication or roving enquiry into title or the validity of transfers.

Finally, the court directed the Chief Judicial Magistrate at Jamshedpur to dispose of the pending applications within 60 days and the Chief Judicial Magistrate at Dhanbad within 30 days.

Chief Judicial Magistrates in the remaining districts, where pendency was in single digits, were directed to clear all pending applications within 15 days.

District Magistrates across the State were also directed to clear their pending applications within the timelines recorded in the order, with the remaining districts required to complete the exercise within three weeks.