The Madras High Court has refused to issue a direction to its Registrar General to circulate a notification requiring all subordinate courts in Tamil Nadu to strictly adhere to the prescribed timeframe while assisting banks and financial institutions to take possession of secured assets, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFFEASI) Act, 2002.
A First Division Bench of Acting Chief Justice T. Raja and Justice D. Bharatha Chakravarthy held that no such omnibus direction could be issued since the time frame fixed under the 2002 law was only directory, and not mandatory. They however, made it clear that the banks and financial institutions could approach the High Court seeking expeditious disposal of their pleas if there were undue delays in individual cases.
The verdict was passed while disposing of a writ petition filed by IIFL Home Finance Limited (formerly known as India Infoline Housing Finance Limited) based in Mumbai. The financial institution had sought a direction to the Registrar General to issue a circular with necessary guidelines/instructions asking the subordinate courts within the jurisdiction of the Madras High Court to strictly adhere to the statutory time limits.
The petitioner company brought it to the notice of the Division Bench that two provisos to Section 14(1)(b)(ix) of the SARFEASI Act, require the Chief Metropolitan Magistrate/District Magistrate to take possession of secured assets and forward them to the secured creditor within 30 days of making an application. If this could not be done within a month, due to reasons beyond the control of the Magistrate, then it must be done within a further period of 60 days.
Claiming that Magistrates do not adhere to the time limits on most occasions and that many applications were pending for a long time, the petitioner had insisted on the issuing of a circular from the office of the Registrar General. However, after citing the Supreme Court’s verdict in C. Bright versus District Collector and others (2021), the Division Bench held that no such omnibus direction could be issued since the time limit prescribed under the law was directory and not mandatory.
