C Bright Vs The District Collector & Ors
Supreme Court of India
Date:05-11-2020
Act -Section 14 of SARFESI Act,2000

The Apex court in the above case was dealing with a question of law as to whether the time limit of 30 days which is further extendable by a further period 30 days for a District Collector to secure the possession of a secured asset is mandatory or directory. The appellant argued that the word used in the provision was shall and therefore the time limit was mandatory. The apex court however, noting catena of judicial decisions held that 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 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 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. Finally the court held that the The SARFESI Act was enacted to provide a machinery for empowering banks and financial institutions, so that they may have the power to take 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. 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 author- ity to take possession of the secured assets. However, inability to take possession within time limit does not render the District Mag- istrate 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. The time limit is to instill a confidence in creditors that the District Magistrate will make an at- tempt to deliver possession as well as to impose a duty on the Dis- trict Magistrate to make an earnest effort to comply with the man- date 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 Section 14 of the Act is not rendered redundant if the Dis- trict 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.

This judgement will be helpful in interpreting the meaning of the word “shall” and “may” in relation to other statutes as well as in addition to be help in SARFESI Act

Ramesh Patodia
05-11-2020