HYDERABAD: A division bench of the High Court has ruled that chief metropolitan magistrate courts have no power to keep pending he proceedings in cases under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 on the ground that review petitions are pending before the magistrate court.
The bench, comprising justices PV Sanjay Kumar and B Siva Sankara Rao, was allowing a petition filed by Phoenix Pvt Ltd challenging an order passed by the chief metropolitan magistrate court of Hyderabad keeping in abeyance the order of Debt Recovery Tribunal and consequential proceedings appointing an advocate commissioner to execute warrant of possession on a miscellaneous petition filed by SOMNA Entertainment Pvt Ltd.
As for the case details, the petitioner company acquired a financial asset, a loan given by Central Bank of India to SOMNA Entertainment under the assignment agreement on October 28, 2014. Even before acquisition of this financial asset by the petitioner company, the bank had classified the loan account of SOMNA as non-performing asset and issued demand notice for about ` 37 crore.
After acquisition of the financial asset, the petitioner company initiated steps for enforcement of security interest created by SOMNA. This security interest was the land of 6020 square yards at SD Road in Secunderabad. When the petitioner company tried to take physical possession of the land, SOMNA resisted it and the petitioner filed a criminal complaint securing assistance of the chief metropolitan magistrate of the city under the Act.
When the chief metropolitan magistrate passed an order in favour of the company, SOMNA filed a review petition and the magistrate kept the earlier order in abeyance.
After hearing the rival contentions, the bench held that when SOMNA invoked the recovery proceedings before the Debt Recovery Tribunal at Hyderabad and it is pending for consideration, the parallel attempt of SOMNA to thwart earlier order of the magistrate cannot be countenanced. The bench ruled that the review petition of SOMNA was not maintainable and allowed the petition by setting aside the order of the magistrate court given in favour of SOMNA. Further, the bench declared that the CMM court had no power to review the order.