Supreme Court Restricts High Court's Authority: SARFAESI Act Section 14 Order by Magistrate Unquashable

The Supreme Court recently ruled that a High Court cannot quash an order passed by a Magistrate under Section 14 of the SARFAESI Act, in exercise of its powers under Section 482 CrPC.

A division bench of Justice AS Bopanna and MM Sundresh was considering a challenge to an order of the Madras High Court that had quashed an order under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) under Section 482 of the Cr.P.C.

The Court stated in its order that any remedy against such order can be availed only under the SARFAESI Act. 

In this case, the Madras High Court had allowed a petition filed under Section 482 CrPC challenging an orders passed by Chief Metropolitan Magistrate Court, Egmore, Chennai under Section 14 SARFAESI Act. The court agreed with the contention of the petitioner that this order was passed by the Magistrate without affording an opportunity of hearing to the Petitioner.

The contention raised before the Apex Court was that against the order passed by the District Magistrate under of the SARFAESI Act, proceedings under Section 482 of Cr.P.C., was not maintainable. 

There are conflicting views expressed by Madras High Court on this issue. For instance, in an order passed in the year 2020, another single bench of the High Court had held that the Chief Metropolitan Magistrate is a persona designata under the SARFAESI Act and his orders cannot be challenged under Section 482 Cr.P.C. Very recently, another single judge observed that order under Section 14 of SARFAESI Act ‘can be very well challenged’ before the High Court under Section 482 CrPC.

The Supreme Court, however, held that an order under Section 14 of the SARFAESI Act cannot be quashed under Section 482 of the Cr.PC when there is a remedy under the SARFAESI Act.

The recent ruling by the Supreme Court establishes that a High Court cannot quash an order passed by a Magistrate under Section 14 of the SARFAESI Act using its powers under Section 482 of the CrPC. The division bench emphasized that any remedy against such an order can only be sought under the SARFAESI Act itself. The case in question involved the Madras High Court quashing an order under Section 14 of the SARFAESI Act, which was challenged through a petition filed under Section 482 of the CrPC. The Supreme Court clarified that proceedings under Section 482 of the CrPC are not maintainable against an order passed by the District Magistrate under the SARFAESI Act. The conflicting views expressed by the Madras High Court on this matter were taken into consideration, but the Supreme Court concluded that an order under Section 14 of the SARFAESI Act cannot be quashed under Section 482 of the CrPC when there exists a specific remedy available under the SARFAESI Act itself.(alert-success)