The Madras High Court has struck down the practice of fixing uniform fees for advocate commissioners in SARFAESI cases, mandating that remuneration be based on the complexity and value of the asset.

  • Madras High Court rejected the uniform fee of ₹80,000 set by the Chengalpattu CJM.
  • The court mandated the 'Doctrine of Proportionality' for determining legal fees.
  • Factors like asset value, location, and distance must now dictate the remuneration.

The Madras High Court has expressed strong disapproval over the practice of the Chengalpattu Chief Judicial Magistrate (CJM) fixing a uniform fee of ₹80,000 for all advocate commissioners appointed to take possession of immovable properties under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

A division bench comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan emphasized that the fee determined by judicial magistrates must be proportionate to the actual work involved. The court listed critical factors for assessment, including the total outstanding amount, the value and location of the secured asset, the number of properties involved, and the travel distance.

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Why This Matters

BozokMedia analysis shows that this ruling serves as a critical check against arbitrary judicial discretion. By enforcing the doctrine of proportionality, the court ensures that litigants are not unfairly burdened with exorbitant fees in low-value cases, while ensuring commissioners are fairly compensated for high-complexity assignments. This creates a standardized yet flexible framework for legal remuneration in recovery proceedings.

"A blanket, non-discretionary fixation of ₹80,000 across vastly disparate loans operates as an arbitrary levy, rather than a judicial assessment of fees."

During the proceedings, the CJM explained that his predecessor had fixed the fee at ₹25,000, but following representations from Bar members citing economic inflation and the nature of the work, the fee was raised to ₹80,000 to avoid complaints of disparity. The High Court, however, found this explanation insufficient.

The bench noted that treating a claim of a few lakhs the same as a claim running into crores is illogical. The court maintained that a judicial order fixing remuneration payable from a litigant's pocket must maintain a rational connection to the work performed.

Consequently, the High Court set aside the orders in several cases and remanded the matter back to the CJM to fix fees proportionately. Furthermore, the court urged the lower judiciary to ensure the speedy disposal of applications filed by banks under the SARFAESI Act to prevent prolonged financial instability.

Did You Know?: The SARFAESI Act of 2002 was designed to allow banks to recover their dues without the time-consuming process of filing a civil suit for foreclosure.

Frequently Asked Questions

Q1: Why did the court reject the uniform fee of ₹80,000?
A: Because it ignored the variance in loan amounts and property values, making it an arbitrary levy rather than a judicial assessment.

Q2: What criteria will now be used to fix the fees?
A: The fees will be based on the outstanding amount, property location, number of assets, and the complexity of the task.