Finance Deptt intervenes after Centre dashes communique
Slackness delays taking possession of defaulters’ properties
Mohinder Verma
JAMMU, Dec 3: Several District Magistrates (DMs) of the Union Territory of Jammu and Kashmir are not extending required cooperation to the banks and Financial Institutions (FIs) in the implementation of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
This has compelled the Department of Financial Services of Union Ministry of Finance to dash a communication to the Finance Department of Jammu and Kashmir Union Territory laying stress on strict compliance to the provisions of the Act by all the District Magistrates.
The Act aimed at regulating securitisation and reconstruction of financial assets and enforcement of security interest and for connected matters was enacted by the Parliament in the year 2002.
The Section 14 of the Act empowers Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset where the possession of any secured assets is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act.
As per this provision, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof.
The Chief Metropolitan Magistrate or the District Magistrate shall, on such request being made to him/her take possession of such asset and documents relating there to and forward such assets and documents to the secured creditor. For the purpose of securing compliance, the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his/her opinion, be necessary.
However, no act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this Section shall be called in question in any court or before any authority, reads Sub-Section 3 of Section 14 of the Act.
The Act clearly states that applications filed by the banks and Financial Institutions (FIs) under this Section with the District Magistrates for taking physical possession of mortgaged properties of defaulting borrowers are required to be disposed off within 60 days.
However, there is no strict compliance to the timeline fixed for the disposal of such applications and this has come to the notice of the Department of Financial Services, Union Ministry of Finance.
Taking serious note of non-cooperation of the District Magistrates, the Union Ministry has intimated the Finance Department of Jammu and Kashmir Union Territory that applications filed under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act by the banks and Financial Institutions often remain pending with the District Magistrates for more than 60 days.
To substantiate this, the Union Finance Ministry has also shared with the Finance Department a district-wise list of the applications from the public sector banks pending for more than 60 days as on September 30, 2020 in the Union Territory of Jammu and Kashmir.
Now, the Finance Department of J&K UT has asked all the District Magistrates to coordinate with relevant banks and Financial Institutions in recovering dues from the defaulters and clear all the pending applications under Section 14 of the Act well within prescribed period of 60 days.
About applications filed by various banks and Financial Institutions where time limit of 60 days has already lapsed, the Finance Department has issued directions for the clearance within a week positively. Moreover, the Finance Department has sought a compliance report so that the same can be forwarded to the Department of Financial Services, Union Ministry of Finance.
According to the official sources, due to non-cooperation of the District Magistrates the banks and Financial Institutions are facing problems in furnishing statements and information to the Reserve Bank of India (RBI) strictly as per the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
The Section 12A of the Act states: “The Reserve Bank may at any time direct a securitisation company or reconstruction company to furnish it within such time as may be specified by the bank, with such statements and information relating to the business or affairs of such securitisation company or reconstruction company (including any business or affairs with which such company is concerned) as the Reserve Bank may consider necessary or expedient to obtain”.
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