Holding

Section 14’s time‑limit is directory, not mandatory, and failure to meet it does not render the District Magistrate’s jurisdiction void.

Summary

The appellant C. Bright challenged a Kerala High Court order that held Section 14 of the SARFAESI Act, which obliges a District Magistrate to deliver possession of a secured asset within 30 days (extendable to 60), is a directory provision. The Supreme Court examined the language of the provision, the purpose of the Act, and the rule that the word “shall” does not always make a provision mandatory. It held that the time‑limit is directory, intended to compel the magistrate to make an earnest effort, not to render the magistrate functus officio if the limit is missed. Consequently, non‑compliance does not invalidate the remedy under Section 14. The Court dismissed the appeal, affirming the High Court’s interpretation.

Issues considered

Whether the time‑limit in Section 14 of the SARFAESI Act is mandatory or directory.
Whether the use of the word ‘shall’ makes the provision mandatory.
Whether a District Magistrate becomes functus officio upon failure to deliver possession within the stipulated period.

Legislation cited

Subjects

SARFAESI ActSection 14Statutory interpretationMandatory vs directoryShall vs mayPossession of secured assetDistrict MagistrateTime limitPublic dutyFunctus officio

Judgment

[2020] 7 S.C.R. 997 997

C. BRIGHT A
v.
THE DISTRICT COLLECTOR & ORS.
(Civil Appeal No. 3441 of 2020)
NOVEMBER 05, 2020 B
[L. NAGESWARA RAO, HEMANT GUPTA
AND AJAY RASTOGI, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002: s.14 – Whether
C
mandatory or directory provision – Held: s.14 mandating the District
Magistrate to deliver possession of a secured asset within 30 days,
extendable to an aggregate of 60 days upon reasons recorded in
writing, is a directory provision – The purpose of enactment of the
2002 Act was to provide a machinery for empowering banks and
financial institutions, so that they may have power to take possession D
of secured assets and to sell them – Keeping the objective of the Act
in mind, the time limit to take action by the District Magistrate was
fixed to impress upon the authority to take possession of the secured
assets – However, inability to take possession within time limit does
not render the District Magistrate functus officio – The time limit is
E
to instill a confidence in creditors that the District Magistrate will
make an attempt to deliver possession as well as to impose a duty
on the District Magistrate to make an earnest effort to comply with
the mandate of the statute to deliver the possession within 30 days
and for reasons to be recorded within 60 days – In this light, the
remedy under s.14 of the Act is not rendered redundant if the District F
Magistrate is unable to handover the possession.
Interpretation of Statutes: Word ‘shall’ – Connotation of –
Held: The use of the word “shall” in a statute, does not necessarily
mean that in every case it is mandatory that unless the words of the
statute are literally followed, the proceeding or the outcome of the G
proceeding, would be invalid – It is also not always correct to say
that if the word “may” has been used, the statute is only permissive
or directory in the sense that non-compliance with those provisions
will not render the proceeding invalid and that when a statute uses
the word “shall”, prima facie, it is mandatory, but the Court may
H
997
998 SUPREME COURT REPORTS [2020] 7 S.C.R.

A ascertain the real intention of the legislature by carefully attending
to the whole scope of the statute – Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002
– s.14.
Dismissing the appeal, the Court
B
HELD: 1. A well settled rule of interpretation of the statutes
is that the use of the word “shall” in a statute, does not necessarily
mean that in every case it is mandatory that unless the words of
the statute are literally followed, the proceeding or the outcome
of the proceeding, would be invalid. It is not always correct to
C say that if the word “may” has been used, the statute is only
permissive or directory in the sense that non-compliance with
those provisions will not render the proceeding invalid and that
when a statute uses the word “shall”, prima facie, it is mandatory,
but the Court may ascertain the real intention of the legislature
by carefully attending to the whole scope of the statute. The
D principle of literal construction of the statute alone in all
circumstances without examining the context and scheme of the
statute may not serve the purpose of the statute. [Para 7]
[1004-B-D]
2. The DRT Act was first enacted to streamline the recovery
E of public dues but the proceedings under the said Act have not
given desirous results. Therefore, the Act in question was
enacted. Keeping the objective of the Act in mind, the time limit
to take action by the District Magistrate has been fixed to impress
upon the authority to take possession of the secured assets.
F However, inability to take possession within time limit does not
render the District Magistrate Functus Officio. The secured
creditor has no control over the District Magistrate who is
exercising jurisdiction under Section 14 of the Act for public good
to facilitate recovery of public dues. Therefore, Section 14 of the
Act is not to be interpreted literally without considering the object
G and purpose of the Act. If any other interpretation is placed upon
the language of Section 14, it would be contrary to the purpose of
the Act. The time limit is to instill a confidence in creditors that
the District Magistrate will make an attempt to deliver possession
as well as to impose a duty on the District Magistrate to make an
H
C. BRIGHT v. THE DISTRICT COLLECTOR & ORS. 999

earnest effort to comply with the mandate of the statute to deliver A
the possession within 30 days and for reasons to be recorded
within 60 days. In this light, the remedy under Section 14 of the
Act is not rendered redundant if the District Magistrate is unable
to handover the possession. [Para 20][1008-B-F]
Montreal Street Railway Company v. Normandin AIR B
1917 PC 142; Dattatraya Moreshwar Pangarkar v.
State of Bombay & Ors. AIR 1952 SC 181 : [1952]
SCR 612; Hari Vishnu Kamath v. Ahmad Ishaque &
Ors. AIR 1955 SC 233 : [1955] SCR 1104 – followed.
Mardia Chemicals Ltd. & Ors. v. Union of India & Ors. C
(2004) 4 SCC 311 : [2004] 3 SCR 982; Hindon Forge
Private Limited & Anr. v. State of Uttar Pradesh through
District Magistrate, Ghaziabad & Anr. (2019) 2 SCC
198 : [2018] 11 SCR 1019 – relied on
New India Assurance Company Limited v. Hilli D
Multipurpose Cold Storage Private Limited (2020) 5
SCC 757 – Distinguished.
Dipak Babaria & Anr. v. State of Gujarat & Ors. (2014)
3 SCC 502 : [2014] 2 SCR 71 – held inapplicable.
Manish Makhija v. Central Bank of India & Ors. (2018) E
SCC OnLine MP 553 – approved.
Transcore v. Union of India and Another (2008) 1 SCC
125 : [2006] 9 Suppl. SCR 785; Union of India & Ors.
v. A.K. Pandey (2009) 10 SCC 552 : [2009] 14 SCR
528; Harshad Govardhan Sondagar v. International F
Assets Reconstruction Company Limited & Ors. (2014)
6 SCC 1 : [2014] 11 SCR 605; Remington Rand of
India Ltd. v. Workmen AIR 1968 SC 224 : [1968] SCR
164; T.V. Usman v. Food Inspector, Tellicherry
Municipality, Tellicherry (1994) 1 SCC 754; Nasiruddin
G
& Ors.v. Sita Ram Agarwal, (2003) 2 SCC 577 : [2003]
1 SCR 634; P.T. Rajan v. T.P.M. Sahir & Ors. (2003) 8
SCC 498 : [2003] 4 Suppl. SCR 84; State of U.P. v.
Manbodhan Lal Srivastava AIR 1957 SC 912 : [1958]
SCR 533; State of U.P. & Ors. v. Babu Ram Upadhya
AIR 1961 SC 751 : [1961] SCR 679; Reserve Bank of H
1000 SUPREME COURT REPORTS [2020] 7 S.C.R.

A India v. Peerless General Finance and Investment Co.
Ltd. & Ors. (1987) 1 SCC 424 : [1987] 2 SCR 1; United
Bank of India v. Satyawati Tondon & Ors. (2010) 8
SCC 110 : [2010] 9 SCR 1 – referred to.
Case Law Reference
B [2006] 9 Suppl. SCR 785 referred to Para 3
[2009] 14 SCR 528 referred to Para 6
[2014] 11 SCR 605 referred to Para 6
[2014 ] 2 SCR 71 held inapplicable Para 6
C
[1958] SCR 533 referred to Para 7
[1961] SCR 679 referred to Para 7
[1987] 2 SCR 1 referred to Para 7
AIR 1917 PC 142 followed Para 8
D
[1952] SCR 612 followed Para 9
[1955] SCR 1104 followed Para 9
[1968] SCR 164 referred to Para 10
(1994) 1 SCC 754 referred to Para 11
E
[2003] 1 SCR 634 referred to Para 12
[2003] 4 Suppl. SCR 84 referred to Para 13
(2020) 5 SCC 757 distinguished Para 14
F [2004] 3 SCR 982 relied on Para 20
[2018] 11 SCR 1019 relied on Para 20
[2010] 9 SCR 1 referred to Para 21
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3441
of 2020.
G
From the Judgment and Order dated 19.07.2019 of the Madurai
Bench of Madras High Court in W.P.(MD) No. 11986 of 2019.
Ajmal Khan, Sr. Adv., Mahboob Athiff, R. Vishnu Kumar,
Ms. Surbhi Mehta, Ashish Wad, Sidharth Mahajan, Ms. Tamali Wad,
H
C. BRIGHT v. THE DISTRICT COLLECTOR & ORS. 1001

Ajeyo Sharma, Ms. Sukriti Jaggi, M/s. J S Wad and Co, Advs. for the A
appearing parties.
The Judgment of the Court was delivered by
HEMANT GUPTA, J.
1. The challenge in the present appeal is to an order passed by the B
Division Bench of the Kerala High Court of 19.7.2019, whereby it was
held that Section 14 of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 20021 mandating the
District Magistrate to deliver possession of a secured asset within 30
days, extendable to an aggregate of 60 days upon reasons recorded in
writing, is a directory provision. The High Court held as under: C

“18. The primary question in these Writ Petitions, namely, whether
the time limits in section 14 of the SARFAESI Act are mandatory
or directory should be answered in light of the principles
enumerated above. As stated above, the object and purpose of
the said time limit is to ensure that such applications are decided D
expeditiously so as to enable secured creditors to take physical
possession quickly and realise their dues. Moreover, as stated
earlier, the consequences of non-compliance with the time limit
are not specified and the sequitur thereof would be that the district
collector/district magistrate concerned would not be divested of E
jurisdiction upon expiry of the time limit. In this connection, it is
also pertinent to bear in mind that if the “consequences of non-
compliance” test is applied, the borrower, guarantor or lessee, as
the case may be, is not adversely affected or prejudiced, in any
manner, whether such applications are decided in 60, 70 or 80
days. On the other hand, the secured creditor is adversely affected F
if the provision is construed as mandatory and not directory in as
much as it would delay the process of taking physical possession
of assets instead of expediting such process by entailing the filing
of another application for such purpose. For all these reasons, the
time limit stipulation in the amended Section 14 of the SARFAESI G
Act is directory and not mandatory.”
2. The High Court examined Section 14 of the Act as amended,
which reads thus:

1
For short “the Act” H
1002 SUPREME COURT REPORTS [2020] 7 S.C.R.

A “14. Chief Metropolitan Magistrate or District Magistrate to assist
secured creditor in taking possession of secured asset.- (1)
xx xx xx
Provided, further that on receipt of the affidavit from the
Authorised Officer, the District Magistrate or the Chief
B Metropolitan Magistrate, as the case may be, shall, after satisfying
the contents of the affidavit pass suitable orders for the purpose
of taking possession of the secured asset within a period of thirty
days from the date of application:
Provided also that if no order is passed by the Chief Metropolitan
C Magistrate or District Magistrate within the said period of thirty
days for reasons beyond his control, he may, after recording reasons
in writing for the same, pass the order within such period not
exceeding in the aggregate sixty days.”
3. The Act was enacted in the year 2002 for reasons that the
D legal framework relating to commercial transactions had not kept pace
with the changing commercial practices. Further, financial sector reforms
resulted in a slow pace of recovery of defaulting loans and mounting
level of non-performing assets of banking and financial institutions. The
objectives behind the Act, recognised that unlike international banks,
E banks and financial institutions in India, did not have power to take
possession of securities and sell them. The provisions of the Act were
upheld by this Court except that of sub-section (2) of Section 17 which
provided that the Debt Recovery Tribunal shall not entertain an appeal
preferred by a borrower unless seventy-five per cent of the amount
claimed has been deposited before it2. Thereafter, the question as to
F whether the withdrawal of an application filed under the Recovery of
Debts due to Banks and Financial Institutions Act, 1993 3 is a condition
precedent to take recourse to the Act was examined by this Court4. This
Court observed that when Civil Courts failed to expeditiously decide
suits filed by the banks, the DRT Act was enacted, however it did not
G provide for assignment of debts to Securitisation companies. The Act
which was enacted thereafter in 2002 sought to further empower the
banks and facilitate the recovery of debt. It proceeded on the basis that
once the liability of a borrower to repay crystallises; it becomes due and
2
Mardia Chemicals Ltd. & Ors. v. Union of India & Ors., (2004) 4 SCC 311
3
For short “DRT Act”
4
H Transcore v. Union of India and Another, (2008) 1 SCC 125
C. BRIGHT v. THE DISTRICT COLLECTOR & ORS. 1003
[HEMANT GUPTA, J.]

that on account of delay, the account of such borrower becomes A
substandard and non-performing.
4. Recently, this Court noticed the objects and reasons for
amending the Act in 2014 and held that the Magistrate takes possession
of the asset and “forwards” such asset to the secured creditor under
Section 14(1); the management of the business of a borrower can actually B
be taken over under Section 15 of the Act and that Section 13(4) must
be read in the light of Sections 14 and 15. These are separate and distinct
modes of exercise of powers by a secured creditor under the Act 5.
5. Section 14 of the Act, as originally enacted, empowered the
Chief Metropolitan Magistrate or the District Magistrate to take C
possession of such assets and documents relating to secured assets.
Later, by the Central Act No. 1 of 2013, which came into force on
15.1.2013, a proviso to sub-section (1) of Section 14 of the Act was
inserted contemplating that upon filing of an affidavit, in the format
mentioned therein, by an Authorised Officer of the secured creditor, the
District Magistrate or the Chief Metropolitan Magistrate shall pass D
suitable orders for the purpose of taking possession of the secured assets.
It is, thereafter, the Act was amended vide Central Act 44 of 2016,
which came into force on 1.9.2016.
6. The argument of Mr. Khan, learned counsel for the appellant,
is that the proviso mandating the District Magistrate to record reasons, E
if the order is not passed within 30 days, in order to avail an extended
period of a total 60 days, shows that the provision is mandatory. If the
District Magistrate is not able to take decision within 60 days, the secured
creditor has to find its remedy elsewhere and not in terms of Section 14
of the Act. It is contended that the proviso mandates the District F
Magistrate to pass an order within 30 days as the word “shall” is used in
first part of the proviso. Thus, the time limit provided is unambiguous
and by corollary the provision is mandatory. Reliance is placed on the
judgments of this Court in Union of India & Ors. v. A.K. Pandey6,
Harshad Govardhan Sondagar v. International Assets
Reconstruction Company Limited & Ors.7, Dipak Babaria & Anr. G
v. State of Gujarat & Ors.8, in support of his arguments that the use of
5
Hindon Forge Private Limited & Anr. v. State of Uttar Pradesh through District
Magistrate, Ghaziabad & Anr. (2019) 2 SCC 198
6
(2009) 10 SCC 552
7
(2014) 6 SCC 1
8
(2014) 3 SCC 502 H
1004 SUPREME COURT REPORTS [2020] 7 S.C.R.

A expression “shall” and the language of the second proviso in fixing the
time limit of 60 days after recording of reasons makes the provision
mandatory. If the District Magistrate has not been able to take possession,
the proceedings before him abates.
7. A well settled rule of interpretation of the statutes isthatthe use
B of the word “shall” in a statute, does not necessarily mean that in every
case it is mandatory that unless the words of the statute are literally
followed, the proceeding or the outcome of the proceeding, would be
invalid. It is not always correct to say that if the word “may” has been
used, the statute is only permissive or directory in the sense that non-
compliance with those provisions will not render the proceeding invalid9
C and that when a statute uses the word “shall”, prima facie, it is mandatory,
but the Court may ascertain the real intention of the legislature by carefully
attending to the whole scope of the statute10.The principle of literal
construction of the statute alone in all circumstances without examining
the context and scheme of the statute may not serve the purpose of the
D statute11.
8. The question as to whether, a time limit fixed for a public officer
to perform a public duty is directory or mandatory has been examined
earlier by the Courts as well. A question arose before the Privy Council
in respect of irregularities in the preliminary proceedings for constituting
E a jury panel. The Municipality was expected to revise the list of qualified
persons but the jury was drawn from the old list as the Sheriff neglected
to revise the same. It was in these circumstances, the decision of the
jury drawn from the old list became the subject matter of consideration
by the Privy Council. It was thus held that it would cause greater public
inconvenience if it were held that neglecting to observe the provisions of
F the statute made the verdicts of all juries taken from the list ipso facto
null and void so that no jury trials could be held until a duly revised list
had been prepared12.
9. The Constitution Bench of this Court held that when the
provisions of a statute relate to the performance of a public duty and the
G case is such that to hold acts done in neglect of this duty as null and void,

9
State of U.P. v. Manbodhan Lal Srivastava, AIR 1957 SC 912
10
State of U.P. & Ors. v. Babu Ram Upadhya, AIR 1961 SC 751
11
Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. & Ors.,
(1987) 1 SCC 424
H 12
Montreal Street Railway Company v. Normandin, AIR 1917 PC 142
C. BRIGHT v. THE DISTRICT COLLECTOR & ORS. 1005
[HEMANT GUPTA, J.]

would cause serious general inconvenience or injustice to persons who A
have no control over those entrusted with the duty, the practice of the
courts should be to hold such provisions as directory13. In a seven Bench
judgment, this Court was considering as to whether the power of the
Returning Officer to reject ballot papers is mandatory or directory. The
Court examined well-recognised rules of construction to observe that a
B
statute should be construed as directory if it relates to the performance
of public duties, or if the conditions prescribed therein have to be
performed by persons other than those on whom the right is conferred14.
10. In a judgment reported as Remington Rand of India Ltd. v.
Workmen15, Section 17 of the Industrial Disputes Act, 1947 came up
for consideration. The argument raised was that the time limit of 30 C
days of publication of award by the labour court is mandatory. This
Court held that though Section 17 is mandatory, the time limit to publish
the award within 30 days is directory inter-alia for the reason that the
non-publication of the award within the period of thirty days does not
entail any penalty. D
11. In T.V. Usman v. Food Inspector, Tellicherry
Municipality, Tellicherry16, the time period during which report of the
analysis of a sample under Rule 7(3) of the Prevention of Food
Adulteration Rules, 1955 was to be given, was held to be directory as
there was no time-limit prescribed within which the prosecution had to E
be instituted. When there was no such limit prescribed then there was
no valid reason for holding the period of 45 days as mandatory. Of course,
that does not mean that the Public Analyst can ignore the time-limit
prescribed under the rules. He must in all cases try to comply with the
time-limit. But if there is some delay, in a given case, there is no reason
to hold that the very report is void and, on that basis, to hold that even F
prosecution cannot be launched.
12. This Court distinguished between failure of an individual to
act in a given time frame and the time frame provided to a public authority,
for the purposes of determining whether a provision was mandatory or
directory, when this Court held that it is a well-settled principle that if an G
act is required to be performed by a private person within a specified
13
Dattatraya Moreshwar Pangarkar v. State of Bombay & Ors., AIR 1952 SC 181
14
Hari Vishnu Kamath v. Ahmad Ishaque & Ors. AIR 1955 SC 233
15
AIR 1968 SC 224
16
(1994) 1 SCC 754 H
1006 SUPREME COURT REPORTS [2020] 7 S.C.R.

A time, the same would ordinarily be mandatory but when a public
functionary is required to perform a public function within a time-frame,
the same will be held to be directory unless the consequences therefor
are specified17.
13. In P.T. Rajan v. T.P.M. Sahir & Ors.18, this Court examined
B the affect of non-publication of final electoral rolls before the time of
acceptance of nomination papers. The Court held as under:
“48. Furthermore, even if the statute specifies a time for publication
of the electoral roll, the same by itself could not have been held to
be mandatory. Such a provision would be directory in nature. It is
C a well-settled principle of law that where a statutory functionary
is asked to perform a statutory duty within the time prescribed
therefor, the same would be directory and not mandatory. (See
Shiveshwar Prasad Sinha v. District Magistrate of Monghyr
[AIR 1966 Pat 144 : ILR 45 Pat 436 (FB)], Nomita Chowdhury
v. State of W.B. [(1999) 2 Cal LJ 21] and Garbari Union Coop.
D Agricultural Credit Society Ltd. v. Swapan Kumar Jana [(1997)
1 CHN 189] .)”
14. A recent Constitution Bench held that the provisions of the
Consumer Protection Act granting 30 days’ time to file response by the
opposite party or such extended period not exceeding 15 days is
E mandatory as the object of the statute is for the benefit and protection of
the consumer. It observed that such act had been enacted to provide
expeditious disposal of consumer disputes. In this case, an individual
was called upon to file his written statement in contradiction for a pubic
authority to decide the issue before it19.
F 15. The Full Bench of Patna High Court in Shiveshwar Prasad
Sinha was examining the provisions of the Bihar Buildings (Lease, Rent
and Eviction) Control Act, 1947 which permitted a Government servant
in occupation of a building as a tenant to serve a notice of 15 days on the
landlord and the District Magistrate of his intention to vacate the premises.
G The High Court held that the Government servant to whom the house
was allotted had no control over the District Magistrate, therefore, the
time limit required by the provision was not mandatory.
17
Nasiruddin & Ors. v. Sita Ram Agarwal, (2003) 2 SCC 577
18
(2003) 8 SCC 498
19
New India Assurance Company Limited v. Hilli Multipurpose Cold Storage Private
H Limited, (2020) 5 SCC 757
C. BRIGHT v. THE DISTRICT COLLECTOR & ORS. 1007
[HEMANT GUPTA, J.]

16. A Single Bench of Madhya Pradesh High Court20 examined A
the provisions of Section 14 of the Act as amended. The Court held that
the second proviso to sub-section (1) of Section 14 was inserted in order
to ensure that Chief Metropolitan Magistrate or District Magistrate pass
the order within a stipulated time. The Bank/secured creditor has no
control over the District Magistrate. After filing an application under
B
sub-section (1) of Section 14, the Bank had no authority to compel the
Chief Metropolitan Magistrate or District Magistrate to pass orders within
reasonable time. The legislature, in order to bind the said authorities,
inserted the said proviso. Thus, the basic object and purpose was to fix
a time limit for the concerned Magistrate to pass an order and not to
give a clean chit to an unscrupulous borrower/guarantor, who had not C
repaid the debts.
17. Now, coming to the Judgments referred to by Mr. Khan. In
A.K. Pandey, the respondent was not provided 96 hours of interval time
as contemplated by the relevant rules, before commencing a trial by the
Court Martial. This Court held that such proceedings were vitiated as D
the purpose of the time limit was that before the accused is called upon
for trial, he must be given adequate time to give a cool thought to the
charge or charges for which he is to be tried, decide about his defence
and ask the authorities, if necessary, to take reasonable steps in procuring
the attendance of his witnesses. He may even decide not to defend the
charge(s) but before he decides his line of action, he must be given clear E
ninety-six hours.
18. Harshad Govardhan Sondagar was a case where the person
in possession claimed tenancy rights in the premises as well as a protected
tenancy, being a tenant prior to creation of a mortgage. It was held that
the remedy of an aggrieved person against a decision of Chief Metropolitan F
Magistrate or a District Magistrate lay only before the High Court.
However, after the aforesaid judgment was rendered on 3.4.2014, the
Act had been amended and sub-section 4A was inserted in Section 17
with effect from 1.9.2016. This provided a right to move an application
to the Debts Recovery Tribunal by a person who claimed tenancy or G
leasehold rights.
19. Dipak Babaria was a case wherein agricultural land was
sold by an agriculturist to another person for industrial purposes.
Permission was to be granted by the Collector for the same. In these
20
In Manish Makhija v. Central Bank of India & Ors., 2018 SCC OnLine MP 553 H
1008 SUPREME COURT REPORTS [2020] 7 S.C.R.

A circumstances, it was held that when a statute provides for a thing to be
done in a particular manner then it should be done in that manner itself.
Such proposition does not arise for consideration in the present case.
20. The Act was enacted to provide a machinery for empowering
banks and financial institutions, so that they may have the power to take
B possession of secured assets and to sell them. The DRT Act was first
enacted to streamline the recovery of public dues but the proceedings
under the said Act have not given desirous results. Therefore, the Act in
question was enacted. This Court in Mardia Chemical, Transcore and
Hindon Forge Private Limited has held that the purpose of the Act
pertains to the speedy recovery of dues, by banks and financial institutions.
C The true intention of the Legislature is a determining factor herein.
Keeping the objective of the Act in mind, the time limit to take action by
the District Magistrate has been fixed to impress upon the authority to
take possession of the secured assets. However, inability to take
possession within time limit does not render the District Magistrate
D Functus Officio. The secured creditor has no control over the District
Magistrate who is exercising jurisdiction under Section 14 of the Act for
public good to facilitate recovery of public dues. Therefore, Section 14
of the Act is not to be interpreted literally without considering the object
and purpose of the Act. If any other interpretation is placed upon the
language of Section 14, it would be contrary to the purpose of the Act.
E The time limit is to instill a confidence in creditors that the District
Magistrate will make an attempt to deliver possession as well as to impose
a duty on the District Magistrate to make an earnest effort to comply
with the mandate of the statute to deliver the possession within 30 days
and for reasons to be recorded within 60 days. In this light, the remedy
F under Section 14 of the Act is not rendered redundant if the District
Magistrate is unable to handover the possession. The District Magistrate
will still be enjoined upon, the duty to facilitate delivery of possession at
the earliest.
21. Even though, this Court in United Bank of India v. Satyawati
G Tondon & Ors.21 held that in cases relating to recovery of the dues of
banks, financial institutions and secured creditors, stay granted by the
High Court would have serious adverse impact on the financial health of
such bodies/institutions, which will ultimately prove detrimental to the
economy of the nation. Therefore, the High Court should be extremely
21
H (2010) 8 SCC 110
C. BRIGHT v. THE DISTRICT COLLECTOR & ORS. 1009
[HEMANT GUPTA, J.]

careful and circumspect in exercising its discretion to grant stay in such A
matters. Hindon Forge Private Limited has held that the remedy of an
aggrieved person by a secured creditor under the Act is by way of an
application before the Debts Recovery Tribunal, however, borrowers
and other aggrieved persons are invoking the jurisdiction of the High
Court under Articles 226 or 227 of the Constitution of India without
B
availing the alternative statutory remedy. The Hon’ble High Courts are
well aware of the limitations in exercising their jurisdiction when affective
alternative remedies are available, but a word of caution would be still
necessary for the High Courts that interim orders should generally not
be passed without hearing the secured creditor as interim orders defeat
the very purpose of expeditious recovery of public money. C
22. Thus, we do not find any error in the order passed by the High
Court. Consequently, the appeal is dismissed.

Devika Gujral Appeal dismissed.
D

E

F

G

H