Jahanvi Agarwal
The Madhya Pradesh High Court recently reprimanded an Additional District Magistrate (ADM) for her selective interpretation of the law in handling cases under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act).
A bench comprising Justices Sushrut Arvind Dharmadhikari and Pranay Verma imposed a fine of ₹10,000 on the ADM in Indore for what it considered a deliberate misuse of legal provisions, leading to a waste of the Court’s valuable time.
The Court’s dissatisfaction arose from a situation in which a secured creditor alleged that recovery proceedings under the SARFAESI Act had been obstructed due to actions taken by the ADM. The ADM was said to have overstepped her authority under the Act by granting borrowers additional time to respond when the secured creditor sought possession under Section 14 of the SARFAESI Act. Additionally, she had rejected the creditor’s application under Section 14 through an order issued on June 28.
The Court criticized the ADM for misunderstanding her role, emphasizing that District Magistrates do not possess adjudicatory powers under the SARFAESI Act, which are instead ministerial in nature. This marked the second instance in which the secured creditor had to approach the Court for resolution, as a previous High Court order in favor of the creditor had been disregarded by the ADM/Collector.
The Court further raised concerns about an application filed by the ADM to withdraw her June 28 order, which gave the impression that she was habitually exercising powers arbitrarily. In response, the Court sternly cautioned the ADM against such behavior and stressed the importance of adhering to the orders issued by the High Court and Supreme Court without attempting independent interpretations.
Consequently, the bench ruled in favor of the secured creditor, overturning the ADM’s June 28 order and instructing her to issue a new order in accordance with the Court’s decision. This action effectively resolved the matter.
Case Name: SMFG India Credit Company Limited v. ADM Indore & Ors,
Diary Number: 15800/2023
Bench: Justices Sushrut Arvind Dharmadhikari and Pranay Verma