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Time period prescribed within the Act is a Directory Provision: Supreme Court

The Supreme Court observed that mere literal construction of a statute without examining the context and the scheme will not serve the purpose of the statute. The bench consisting of J. Nageswara Rao, J. Hemant Gupta and J. Ajay Rastogi observed in C. Bright v. the District Collector & Ors [Civil Appeal No. 3441 of 2020] that the 30 days’ time period, extendable to an aggregate of 60 days upon reasons recorded in writing, prescribed in Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) was a directory provision.

Before the matter was appealed to the SC, the Kerala HC held that “the secured creditor is adversely affected if the provision is construed as mandatory and not directory in as much as it would delay the process of taking physical possession of assets instead of expediting such process by entailing the filing of another application for such purpose”, and hence, it was to be considered as a directory and not a mandatory provision.

The learned counsel for the appellant, relying on Union of India & Ors. v. A.K. Pandey [(2009) 10 SCC 552], Harshad Govardhan Sondagar v. International Assets Reconstruction Company Limited & Ors. [(2014) 6 SCC 1] and Dipak Babaria & Anr. v. State of Gujarat & Ors [(2014) 3 SCC 502] argued that “the proviso mandating the District Magistrate to record reasons, if the order is not passed within 30 days, in order to avail an extended period of a total 60 days, shows that the provision is mandatory. If the District Magistrate is not able to take decision within 60 days, the secured creditor has to find its remedy elsewhere and not in terms of Section 14 of the Act. It is contended that the proviso mandates the District Magistrate to pass an order within 30 days as the word “shall” is used in first part of the proviso. Thus, the time limit provided is unambiguous and by corollary the provision is mandatory”.

The SC held that the question of time limit fixed for a public officer to perform his duty being directory or mandatory had been examined by many Courts earlier, and placing reliance of various cases, stated that until and unless the neglect of a public officer towards the performance of her/his duty causes serious inconvenience or injustice to the general public, the courts should not adjudge the provision as mandatory.

The SC placed reliance on Remington Rand of India Ltd. v. Workmen [AIR 1968 SC 224], where the court held that the time limit of 30 days for publication of awards was directory since the non-publication within the prescribed time limit did not entail any penalty. Further, in P. T. Rajan v. T. P. M. Sahir & Ors [(2003) 8 SCC 498], the court, examining the non-publication of final electoral rolls before the time of acceptance of nomination of papers, stated that “It is a well settled principle of law that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefor, the same would be directory and not mandatory”. Hence, the SC upheld the order of the HC and dismissed the appeal, and furthered the interpretation of such statutory provisions.

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