The Madhya Pradesh High Court recently rebuked an Additional District Magistrate (ADM) for interpreting the law according to her own preferences while handling cases related to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act).

A panel of Judges, including Justices Sushrut Arvind Dharmadhikari and Pranay Verma, decided to impose a fine on the ADM in Indore ₹10,000, stating that the Court's resources and time had been squandered due to her actions.

In its October 18 order, the Court expressed a firm belief that the responsible officer had intentionally applied her own interpretation of the law for her convenience. As a consequence, the Additional District Magistrate in Indore was instructed to bear the burden of a fine amounting to Rs. 10,000. This decision was made due to her actions, which were seen as a misuse of the Court's valuable time that could have been better spent on more urgent and important cases.

The Court was handling a case in which a secured creditor had raised concerns about the delay in recovery proceedings under the SARFAESI Act. This delay was attributed to certain actions taken by the ADM, which led to the court's criticism and imposition of a fine.

The Court was informed that the ADM had overstepped her authority under the SARFAESI Act by granting borrowers additional time to submit their responses when the secured creditor had submitted an application for possession under Section 14 of the SARFAESI Act. Furthermore, on June 28, the ADM had also rejected the creditor's Section 14 application. 

The Court censured the actions of the ADM, highlighting that a District Magistrate does not possess adjudicatory powers under the SARFAESI Act. This criticism was a key factor in the Court's decision to impose a fine on the ADM.

The Court noted, "This Court as well as the apex court time and again reiterated that the role of DM/ADM is ministerial in nature so far as Section 14 of the SARFAESI Act is concerned and not that of adjudication." 

The bench also took into account that this was the second time the creditor had to seek the Court's intervention in this matter. The Court was informed that a previous order issued by the High Court in favor of the creditor had been disregarded by the ADM/Collector. Additionally, the Court expressed strong concern about an application filed by the ADM to withdraw the June 28 order she had issued. This led the bench to conclude that the ADM appeared to have a habit of arbitrarily exercising her powers, which was viewed with disapproval.

In response to the circumstances, the Court issued a warning to the ADM, advising her not to engage in such conduct in the future. The Court stated, "As a word of caution, this Court expects that in the future, at least the Additional District Magistrate shall follow the orders passed by the High Court and Apex Court in letter and spirit and shall not venture into interpreting the orders on her own." This warning was meant to ensure that the ADM complies with the directives of higher courts and refrains from taking liberties with her own interpretations of court orders.

The bench proceeded to provide relief to the secured creditor by overturning the ADM's June 28 order. They instructed the ADM to issue a new order in the matter. As a result, the plea was disposed of, and the earlier decision by the ADM was set aside by the Court.

Case: SMFG India Credit Company Limited v ADM Indore & Ors, WRIT PETITION No. 15800 of 2023.

Read/Download Order: SMFG India Credit Company Limited v ADM Indore & Ors.