Magistrate order under Section 14 SARFAESI Act cannot be quashed by High Court under Section 482 CrPC: Supreme Court

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The Supreme Court on Thursday held that a magistrate’s order under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) cannot be quashed by High Courts under Section 482 of the Code of Criminal Procedure (CrPC). [MS Phoenix Arc Private Limited v. V Ganesh Murthy and Another]
A division bench of Justices AS Bopanna and MM Sundresh observed that only remedies under the SARFAESI Act can be availed against such orders passed under the said Act.

The Court was hearing an appeal challenging a Madras High Court decision to quash an order under Section 14 of the SARFAESI Act by exercising its inherent powers under Section 482 CrPC.

“The contention put forth in the instant petition is that a petition filed under Section 482 of the Criminal Procedure Code (Cr.P.C.) to quash an order passed under the provisions of the SARFAESI Act was not sustainable. We note that the said contention has sufficient force as any remedy against such order can be availed only under the SARFAESI ACT’, 2002,” the Court held.

Section 14 of the SARFAESI Act deals with the power of magistrates to assist creditors in taking possession of secured property from defaulting debtors.

Section 482 of CrPC clarifies that the High Courts have inherent powers to make any order to carry out the provisions of the CrPC, to prevent an abuse of the court process, or otherwise secure the ends of justice.

In this case, the Madras High Court had quashed orders by the Chief Metropolitan Magistrate Court, Egmore, Chennai under Section 14, SARFAESI Act by invoking its inherent powers under Section 482.

The High Court passed the ruling after noting that the magistrate’s order was passed without affording the debtor an opportunity of hearing. The High Court directed the magistrate to pass a fresh order in the matter after hearing the debtor.

However, the Supreme Court quashed the High Court ruling, upon noting that there were remedies under the SARFAESI Act for such a situation.

The Court added that the aggrieved parties would be at liberty to “avail their appropriate remedies in accordance with law, available to them.”

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