Magistrate must exercise discretion reasonably when fixing Court Commissioner remuneration under Section 14 of SARFAESI Act.

The petitioner, HDFC Bank, filed an application under Section 14 of the SARFAESI Act to take possession of three secured assets.

On 04.10.2024, the learned Additional Chief Judicial Magistrate (ACJM), Gandhidham, allowed the application but directed the Bank to deposit ₹5,00,000 as remuneration for three appointed Court Commissioners.

The Bank challenged this specific direction via a writ petition under Articles 226 and 227 of the Constitution, arguing that the amount was exorbitant, arbitrary, and lacked cogent reasoning.

The Bank noted that the standard practice in the same court for similar tasks was approximately ₹30,000 per Commissioner.

1. Whether the fixation of ₹5,00,000 as remuneration for Court Commissioners under Section 14 of the SARFAESI Act was an arbitrary and improper exercise of discretionary power.

2. Whether the High Court, under Article 227, should modify the remuneration to align with established judicial practice.

Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, which empowers Magistrates to assist secured creditors in taking possession of assets.

The principle that discretionary powers must be exercised in a "reasonable manner" and in "consonance with established practice".

The Court exercised its supervisory jurisdiction under Article 227 of the Constitution of India to ensure that judicial orders are not "oppressive" or "unduly harsh".

The High Court found that while the Magistrate has the discretion to appoint Commissioners and fix fees, such fees must be compensatory and reasonable rather than a financial burden.

The Court observed that the learned ACJM failed to provide "cogent or convincing reasons" for deviating from the prevailing practice of awarding roughly ₹30,000 per Commissioner.

Although the Respondent argued that the substantial size of the properties made the task "onerous and complex," the Court held that the nature of taking and handing over possession remains substantially similar across such proceedings.

Consequently, the aggregate fee of ₹5,00,000 was deemed unreasonable and justified interference under Article 227 to prevent an "unwarranted financial burden" on a public financial institution.

The Petitioner was directed to deposit this amount within 30 days. All other aspects of the Magistrate's order remained unaltered, and the connected civil application was disposed of as infructuous.