Hyderabad: The Hyderabad High Court has ruled that the Chief Metropolitan Magistrate Courts have no power to keep pending proceedings in cases under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 citing review petitions pending before the magistrate court.
A division bench comprising Justice P.V. Sanjay Kumar and B. Siva Sankara Rao was allowing a petition by Phoenix Pvt Ltd challenging an order passed by the Chief Metropolitan Magistrate of Hyderabad keeping in abeyance the order of the Debt Recovery Tribunal and consequent appointment of an advocate commissioner to execute warrant of possession in a miscellaneous petition by Somna Entertainment Private Limited.
The petitioner acquired a financial asset — a loan given by the Central Bank of India to Somna — under an assignment agreement dated October 28, 2014. Even before the asset was acquired, the bank classified the loan of Somna as a non-performing asset and issued a demand notice for Rs 37 crore.
After acquisition of the asset, the petitioner initiated steps for enforcement of security interest created by Somna — land of 6,020 sq. yd on SD Road, Secunderabad. When the petitioner tried taking possession, Somna resisted and the petitioner filed a criminal complaint securing assistance of the CMM.
The CMM passed an order in favour of the company but Somna moved a review petition and the magistrate kept the order in abeyance. After hearing the rival contentions, the bench held that when Somna invoked recovery proceedings before the Debt Recovery Tribunal at Hyderabad, the parallel attempt of Somna to thwart an earlier order of the magistrate could be countenanced.
Declaring that the CMM had no power to review the order, the bench ruled that the review petition of Somna is not maintainable.
