The High Court Delhi rejects the plea of ​​SBI to expose the magistrate’s observations that suggest the collusion in the default loan case

Justice Dhamesh Sharma has commented, “This is a luxury dispute that is followed by the petitioner’s bank that challenges a harmless order of the CMM, which in no case does not cause an irreparable loss or loss of face.”

The facts of the case are that the respondent used various loan facilities from the SBI. Subsequently, SBI classified the respondent’s account as a non -performing asset, because his loan account became delayed and irregular. SBI issued an application notice to the respondent under the Sarfaesi law. However, as the respondent was unfavorable in the payment of his taxes, SBI submitted a request in accordance with section 14 of the Sarfaesi Law in front of the magistrate, seeking to hold the mortgage property.

As no appearance was introduced by the SBI, the mentioned request was rejected by the magistrate for non-prosecute on 04.06.2022. In his order, the magistrate noticed that SBI was looking for three delays to produce the original documents. Recorded this around Rs. 31.41 Crore of public money was involved and that SBI was not serious in taking possession of the guaranteed asset against which they paid a huge loan that involved public money, and the bank was manual with glove with the respondent.

SBI then submitted a new application in accordance with section 14 of the Sarfaesi Law, which was allowed by the magistrate. The magistrate has guided a recipient appointed to court to take possession of the guaranteed asset.

SBI’s dissatisfaction is that, despite the favorable order, the “adverse observations” of the magistrate in his order of 04.06.2024 continues to cause irreparable injury to his reputation and interests. Thus, SBI submitted the current petition that sought to remove the observations made by the magistrate. SBI argued that the exercise of powers under Section 14 of Sarfaesi Law is a ministerial function, rather than a quasi-judicial or awarded role and, therefore, the magistrate’s observations are without jurisdiction.

The High Court mentioned that the magistrate rebuked the bank’s officials, while the magistrate was worried that a huge sum of public money was involved and unnecessary delays were asked.

He mentioned that while the exercise of jurisdiction under Section 14 of the Sarfaesi Law is of a ministerial nature, reference is made RD Jain & Co. v. Capital First LTD (2022 Livelaw (SC) 634)If the Supreme Court has noted that the magistrate is obliged to verify the correctness of the information provided in the application and to proceed in terms of the prescribed procedure.

Here, the court stated that there is no will from the SBI to satisfy the magistrate regarding the correctness of the information provided and the measures taken to follow the recovery of the loan amount.

Noting that SBI was not diligent in pursuit of appeal, the court noted “It is not the law that the learned CMM should stand as a silent spectator in court and allow any part of the Sarfaesi law to abuse the law process, given that there is a huge pendant in court. It is obvious that Bank Petitioner did not follow his remedies diligently. “

Noting that the petition was “poorly conceived” and suffered by an unjustified delay, because it was filed two years after the action appeared, the court rejected the petition.

Case title: India State Bank Vs. M/SPP Jewelers Private Limited (M/SPP Jewelers Private Limited)