Allahabad High Court held that the District Magistrate can re-entertain a fresh application under Section 14 of the SARFAESI Act when possession of secured assets is lost due to illegal trespass.
The Division Bench of the Allahabad High Court, comprising Justice Shekhar B. Saraf and Justice Praveen Kumar Giri, while adjudicating a writ petition, recently held that there is no legal bar under the SARFAESI Act, 2002, on the District Magistrate or his delegate from entertaining a fresh application under Section 14 when possession of secured assets is lost due to illegal trespass by the borrower; such authority continues until the entire secured debt is fully recovered.
The High Court heard the writ petition filed under Article 226 of the Constitution of India, wherein the petitioner, represented by learned counsel Sri Aniket Raj, sought restoration of possession of a secured asset under Section 14 of the SARFAESI Act, 2002. The petitioner claimed that despite earlier measures taken under the SARFAESI Act, the borrower had trespassed and illegally re-entered the secured property, necessitating a fresh application before the District Magistrate to regain possession. The petitioner relied on judgments from various High Courts, including those of Bombay, Andhra Pradesh, Kerala, and Madhya Pradesh, to assert that a secured creditor is entitled to file a subsequent application under Section 14 if possession is lost due to unlawful interference by the borrower.
The Bombay High Court’s ruling in The Nashik Merchant Co-operative Bank (Multi State Scheduled Bank) v. The District Collector, Jalna and Others, REEDLAW 2023 Bom 02246 was extensively cited, along with similar rulings affirming that the District Magistrate or his delegate retains jurisdiction to act upon a fresh application for possession where the initial SARFAESI measures are thwarted by unlawful means. These precedents emphasised that such illegal acts—such as forcible re-entry—must not be allowed to undermine the statutory remedy provided to secured creditors under the SARFAESI Act. The petitioner argued that in the absence of any statutory bar, the District Magistrate was empowered to act upon the subsequent application to ensure the enforcement of lawful possession.
The High Court, concurring with the reasoning adopted by the Bombay High Court, accepted the petitioner’s contention and directed the concerned Additional District Magistrate to afford the petitioner an opportunity of hearing and to pass a fresh order on the application under Section 14 in accordance with law. The Court instructed that the entire exercise be completed within a period of two months, thereby disposing of the writ petition with clear procedural direction.