HC seeks affidavits from Punjab, Haryana on SARFAESI Act compliance

The Punjab and Haryana High Court has directed the Chief Secretaries of Punjab and Haryana to submit affidavits detailing the number of applications pending before the District Magistrates under Section 14 of the SARFAESI Act.

The direction came as Justice Harkesh Manuja framed charges against Amritsar District Magistrate-cum-Deputy Commissioner Gurpreet Singh Khaira for wilful disobedience of a court order dated January 7, 2020. The directions to the District Magistrate to pass necessary orders under Section 14 of the SARFAESI Act within 30 days came during the hearing of a matter on January 7, 2020. But its compliance was made after by nearly two years in January 18, 2022.

Section 14 allows the secured creditor to sell or lease assets to recover the outstanding loan amount. The matter was brought to Justice Manuja’s notice after a contempt petition was filed against Khaira by Kotak Mahindra Bank through counsel Nitin Thatai, Monika Thatai and Brahmjeet Singh. Among other things, it was alleged that the delay constituted a clear violation of the court's directive.

Responding to the plea, Khaira cited disruptions caused by the COVID-19 pandemic and his involvement in the 2022 Punjab Legislative Assembly elections. But Justice Manuja found the explanation to be “neither reasonable nor plausible”.

The Bench noted there was no mention of whether similar powers under Section 14 of the SARFAESI Act were exercised during the intervening period in any other case by him or even his subordinate – Additional District Magistrate

“In such circumstances, the respondent having not been able to explain the inordinate delay in compliance of the order dated January 7, 2020, the charges are framed against him in terms of Sections 10 & 12 of the Contempt of Courts Act having shown willful disrespect towards the order passed by this court. The respondent may file his explanation by filing any additional affidavit/additional document and shall remain present in Court for further orders,” Justice Manuja observed.

Before parting with the case, Justice Manuja asserted the directions to the chief secretaries were necessitated by the repeated failure of district magistrates in both states to perform their statutory duties under the SARFAESI Act, forcing financial institutions to approach the court unnecessarily. The chief secretaries were asked to join the proceedings via video-conferencing if the required affidavits were not filed by the next hearing.