Advocate Commissioners’ fees in SARFAESI cases must be proportionate to the work involved, rules Madras High Court

The Madras High Court has disapproved of the practice of the Chengalpattu Chief Judicial Magistrate (CJM) fixing an uniform fees of ₹80,000 each to all the advocate commissioners appointed by him for taking possession of immovable properties under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan made it clear that the fee determined by judicial magistrates for advocate commissioners must be proportionate to the actual work involved, having regard, among other things, to the amount outstanding, the value and location of the secured asset, the number of properties covered by the warrant and the distance to be travelled.

“While the Magistrate retains the discretion to fix reasonable remuneration for an Advocate Commissioner, such discretion must strictly adhere to the doctrine of proportionality. A blanket, non-discretionary fixation of ₹80,000 across vastly disparate loans operates as an arbitrary levy, rather than a judicial assessment of fees, thereby vitiating the orders,” the Chief Justice’s Bench wrote.

In his explanation to the Bench, the CJM had said his predecessor had been fixing the Advocate Commissioners’ fee at ₹25,000 each but the Bar members had made repeated representations to increase the amount given the nature of the work and prevailing economic circumstances. Hence, to avoid complaints of disparity, the CJM had begun to fix an uniform fee of ₹80,000 to all advocate commissioners.

Not convinced with the explanation, the judges wrote: “We have carefully considered the reasons given in the explanation and none of them justifies treating a claim of a few lakhs and a claim running into crores alike, or ignoring the location, size and character of the property, or the distance the Commissioner has to travel, or whether the assignment is likely to involve one property or several.”

They also said: “A judicial order fixing remuneration payable out of pocket of the litigant must still bear some rational connection to the work it compensates… The law does not permit a single flat figure, fixed once and applied without exception across every case, regardless of the sum in dispute, the value of the property, the distance involved, or the complexity of the exercise.”

After setting aside the orders passed by the CJM in a couple of cases, they remanded the matter to him for fixing the advocate commissioners’ fee in proportion to the work involved. The Bench also impressed upon the need for speedy disposal of applications filed by banks under the SARFAESI Act.