Delhi High Court: The petitions filed by SBI (petitioner) arise out of adverse remarks made by the Chief Metropolitan Magistrate (CMM), North-West District, Rohini Courts, Delhi, in the course of proceedings initiated under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) seeking the expungement of these remarks, contending that they were beyond the jurisdictional scope of the proceedings and had caused reputational harm. Dharmesh Sharma, J., dismissed the petition as the present litigation is ill-conceived and palpably suffering from inordinate delay and barred by laches for having been filed after almost two years of arising of the cause of action.
The petitions were filed by SBI after an alleged delay, following the classification of the respondent’s account as a Non-Performing Asset (NPA) and subsequent legal proceedings. The P.P. Jewellers Pvt. Ltd. (respondent), had availed various loan facilities from SBI, secured by multiple sanction letters and security documents, including charges over assets and personal guarantees. Due to defaults in repayment, the respondent’s account was declared NPA on 31-03-2016, leading to the issuance of demand notices under Section 13(2) of the SARFAESI Act. Subsequently, a One-Time Settlement (OTS) was proposed and accepted but was later cancelled due to non-compliance.
Despite repeated efforts to recover the outstanding amounts, including initiating fresh SARFAESI proceedings, the CMM dismissed SBI’s application on 04-06-2022, making observations indicating a lack of diligence by the bank and possible collusion with the respondent. This order became the subject matter of the present writ petitions.
SBI contended that the remarks by the CMM exceeded the scope of a Section 14 proceeding under the SARFAESI Act, which is ministerial in nature. The bank argued that these remarks had caused irreparable harm to its reputation and were being improperly relied upon in other proceedings. Relying on judicial precedents, SBI asserted that the Magistrate’s role under Section 14 is limited to verifying the correctness of information submitted and does not involve adjudication on conduct. SBI also refuted allegations of collusion and maintained that the adverse remarks had no legal basis.
Intervenors, including shareholders and corporate guarantors, alleged that SBI’s actions were collusive and meant to facilitate a settlement with a principal borrower. They argued that the bank had misrepresented facts and failed to implead them in relevant proceedings. The intervenors claimed that SBI had not acted in good faith, given that an OTS had been accepted but not fully honored. They further highlighted ongoing legal disputes, including an FIR against bank officials, suggesting malfeasance in the handling of loan recovery.
The Court noted that the remarks made by the CMM were motivated by concerns over SBI’s lack of diligence in recovering public funds. While the court acknowledged that proceedings under Section 14 of the SARFAESI Act are ministerial, it emphasized that judicial officers are not mere spectators and must ensure that due process is followed. The Court observed that SBI had indeed failed to demonstrate alacrity in pursuing its remedies and had sought multiple adjournments without valid reasons.
Furthermore, the Court refused to delve into the allegations of collusion but observed that SBI’s conduct did not inspire confidence in the recovery process. It dismissed the argument that the adverse remarks had caused irreparable harm, noting that the delay in filing the writ petitions indicated that the petitioner itself did not treat the matter with urgency.
The Court dismissed the writ petitions, holding that the litigation was ill-conceived and barred by laches. It found that SBI’s approach in challenging the adverse remarks after a significant delay was unjustified. The observations of the CMM, while strong, were seen as a reflection of genuine concerns over SBI’s conduct. The Court concluded that no interference was warranted, and all pending applications were disposed of accordingly.
[SBI v. PP Jewellers, W.P.(C) 6991/2024, decided on 11-03-2025]
Judgment by: Justice Dharmesh Sharma
Advocates who appeared in this case :
Mr. Ankur Mittal, Mr. Abhay Gupta and Ms. Muskan Jain, Advocates for SBI
Mr. Sanjeev Bhandari, Mr. Ravi Data, Mr. Rajesh Sharma, Advs.
Ms. Jyoti Taneja, Mr. Shantanu Sharma, Mr. Moksh Tyagi and Ms. Reny Chauhan, Advs. for Intervenors
