Calcutta High Court (Appellete Side)
Central Bank Of India vs Union Of India & Ors on 30 April, 2025
30.04.2025
Sl. No.2
akd
W. P. A. 7445 of 2023
(CAN 1 of 2025)
[Central Bank of India -Vs- Union of India & Ors.]
Mr. Devajyoti Barman
Mr. Sudhir Kumar Senapati
Ms. Sanjukta Basu Mallick
... ... for the petitioner
Mr. Dhiraj Trivedi .. Sr. Advocate
Mr. Subhajit Chatterjee
Mr. Rudra Dev Bagchi
Ms. Swapna Jha
Mr. Bikash Singh
... ... for respondent no.5
Mr. Ayan Kumar Boral
Mr. Debabrati Basu Roy
... for respondent nos.4A to 4D
1. In the present writ petition, the petitioner-Bank challenges
the order dated 02.02.2023 passed by the Debts Recovery
Appellate Tribunal at Kolkata (DRAT) in Appeal No.263 of 2018
whereby the learned DRAT confirmed the order dated
01.10.2018 passed by the learned Debts Recovery Tribunal 1,
Kolkata (DRT) in S.A. 158 of 2015. By the said order, the
learned DRT had quashed the order dated 23.07.2015 passed
by the learned District Magistrate under Section 14 of the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred
to as the 'SARFAESI Act'). Though the learned DRAT found
that the reasoning of the DRT was faulty, it nevertheless
proceeded to confirm the order of the DRT on a different ground.
Facts of the case:-
2. The petitioner-Bank had sanctioned a house building loan
of Rs.6,00,000/- in favour of the respondent no.4 (now
2
deceased), against the mortgage of immovable property situated
at Premises No.56/3/3, Jay Narayan Babu Ananda Dutta Lane,
P.S. Bantra, Dist. Howrah. Thereafter, M/s Howrah Light Steel
Casting, a partnership firm represented by one of its partner
namely Sri Partha Mondal (respondent no. 4) availed the
loan/credit facilities of Rs. 8, 00,000/- under Cash Credit Account
from the petitioner Bank for business and said credit facility was
sanctioned by the petitioner Bank vide letter of Sanction dated
09.03.2009. The said loan accounts were not serviced regularly,
as a result, were classified as Non-performing Assets (NPA) by
the petitioner-Bank.
3. Consequently, a demand notice under Section 13(2) of
the SARFAESI Act was issued on 19.01.2012. No objection to
the said notice was either filed by the borrower or by the
guarantor. Thereafter, possession notice under Section 13(4) of
the SARFAESI Act was issued on 12.07.2012, which was duly
published in newspapers. Subsequently, the petitioner-Bank
obtained a valuation report of the secured assets from their
empanelled valuer. Thereafter, a sale notice was published on
30.03.2014 in two leading newspapers i.e. The Times of India
and Aajkaal involving the auction of the mortgaged property. A
copy of the newspaper notice was also served upon the
borrower. Pursuant thereto, the auction sale was confirmed in
favour of respondent no.5 viz. Smt. Bhagabati Ojha for a total
sale consideration of Rs.25,35,000/- and a sale certificate was
issued in her favour on 30.05.2014. Neither the borrower nor the
guarantor have challenged the possession notice and said e-
3
auction sale notice dated 30.03.2014 within the limitation period.
Accordingly, the loan account was closed.
4. The petitioner-Bank in accordance with the provisions of
Section 14 of the SARFAESI Act, 2002 filed an application
before the District Magistrate, seeking assistance for taking
physical possession of the secured asset. Upon consideration of
the said application, the learned District Magistrate was pleased
to pass order dated 23.07.2015 directing taking of physical
possession of the secured asset in favour of the petitioner-Bank.
The said order reads as follows :-
"The Authorised Officer of the Central Bank of India, South
Regional Office, 33, Netaji Subhas Road, Kolkata - 700001
secured creditor, submitted an application to the undersigned
praying for taking over possession of secured property under
Section 14 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act,
2002 (SARFAESI Act). It appears on scrutiny of documents
submitted with the application that the said Bank sanctioned a
cash credit facility in favour of M/s. Howrah Light Steel
Casting, Prop. Sri Partha Mondal, son of Sri Arun Kumar
Mondal of 56/3/3, Joy Narayan Babu Ananda Dutta Lane, P.S.
Bantra, Dist. Howrah-711101 (borrower) and Sri Arun Kumar
Mondal of 56/3/3, Joy Narayan Babu Ananda Dutta Lane, P.S.
Bantra, Dist. Howrah-711101 & Smt. Malati Mondal of 56/3/3,
Joy Narayan Babu Ananda Dutta Lane, P.S. Bantra, Dist.
Howrah-711101 (Guarantors) against secured property.
Property. All the piece and parcel of the equitable mortgage of
a Bastu Land measuring 3 cottahs more or less together with
One Storied Building thereon comprised within Howrah
Municipal, Holding No.56/3/3, Joy Narayan Babu Ananda
Dutta Lane, P.S. Bantra, Dist. Howrah-711101, W.B. H.M.C.
Ward No. 24.
Butted and bounded :-
On the North : By property of Sambhu Charan Singh
& Reba Rani Singh
On the East : By common passage
On the South : By premises No. 56/3/3, Joy Narayan
Babu Ananda Dutta Lane
On the West : By Khurut Investigation Centre.
It also appears that the borrower defaulted in repayment of
loan and interest accrued thereon and so aforesaid secured
creditor issued notice(s) under Section 13(2) of the
SARFAESI Act, 2002 to the borrower for repayment of the
dues. Statutory period of 60 days reportedly had been
covered since the date of service of notice(s) but the borrower
has failed to discharge his liability in full.
In view of the above, the undersigned being the authority u/s.
14 of the SARFAESI Act, 2002 read with Rule 8(1) of Security
4
Interest (Enforcement) Rules, 2002 authorises to take over
possession of the secured property mentioned above making
necessary inventory.
You are requested to render Police assistance as and when
required for the purpose."
5. The borrower challenged the order of the District
Magistrate before this court in W.P. 18626(W) of 2015. This
Court vide order dated 06.08.2015 dismissed the said writ
petition by granting liberty to the borrower to approach the Debts
Recovery Tribunal, Kolkata. The relevant portion of the order is
set out hereinbelow :-
".........I have considered the decisions cited by the learned
advocate for the petitioners. Bearing in mind the nature of
challenge thrown to the impugned order, I have also
ascertained from the learned advocate representing the Bank
(the secured creditor) that it had indeed filed an affidavit of the
nature required by the first proviso to Section 14 of the Act
together with the application that was filed thereunder.
Having heard learned advocates for the parties, I find
no reason to interfere at this stage in view of the alternative
remedy that is available to the petitioners under Section 17 of
the Act. The decisions of the Supreme Court reported in
(2011) 2 SCC 782 (Kanaiyalal Lalchand Sachdev & Ors. vs.
State of Maharashtra & Ors. (2013) 9 SCC 620 (Standard
Chartered Bank vs. V. Noble Kumar) have laid down the law
that an appeal is available under Section 17 of the Act against
an order passed under Section 14 thereof.
In Pratima Roy (supra), this Bench had interfered with
the order passed by the District Magistrate, Burdwan on the
ground that the district magistrate could not have abdicated
his duty by directing the superintendent of the district police
force to provide assistance to the secured creditor for the
purpose of taking over possession of the secured asset. Such
direction, it was held, could not have been issued despite
introduction of Sub-section (1A) in Section 14 of the Act.
In the present case, the Commissioner of Police,
Howrah has been directed as follows:
********************************************************
In view of the above, the undersigned being the
authority U/S 14 of the SARFAESI Act, 2002 read with
Rule 8(1) of Security Interest (Enforcement) Rules,
2002 authorizes to take over possession of the
secured property mentioned above making necessary
inventory.
You are requested to render Police assistance as and
when required for the purpose.”
There is no direction that the possession of the
secured asset shall be taken by the secured creditor; instead
the direction appears to be on the Commissioner to take
possession with police [14:58, 4/30/2025] ARUP DAS:
5
assistance. Therefore, the decision in Pratima Roy (supra) is
distinguishable.
Insofar as M/s. Swastyayan Agro Industries (supra) is
concerned, the learned Judge had interfered on the ground
that the additional district magistrate without having the
necessary authorization to make an order under Section 14 of
the Act had authorized a resolution agent of the secured
creditor to take over possession of the secured asset with the
assistance of the police and an officer of the Land & Land
Reforms Department. That is definitely not the case
here……..”
6. The borrower challenged the order of the District
Magistrate before the learned DRT in S.A. 158 of 2015. The
learned Debts Recovery Tribunal 1, Kolkata vide order dated
23.07.2018 allowed the said appeal whereby setting aside the
order of the learned District Magistrate. The said order reads,
inter alia, as follows :-
“I have heard the Learned Counsel for the parties and
gone through the papers and documents. My observation and
finding are as under:
(i) The Applicants have filed the present SA on
07.08.2015 challenging the District Magistrate’s order dated
23.07.2015. The Respondent Bank has issued possession
notice dated 12.07.2012, copy annexed to the SA. The
Respondent Bank has issued E auction sale notice dated
30.03.2014, copy annexed to the SA. The Applicants have not
challenged the possession notice dated 12.07.2012 and E
auction sale notice dated 30.03.2014 within limitation period.
Hence, the Tribunal is of the opinion that the Applicants are
not entitled to raise irregularities/illegalities in the possession
notice dated 12.07.2012 and E auction sale notice dated
30.03.2014 in the present SA since the purpose of availing the
statutory remedy under Section 17 of the Act has lapsed.
(ii) Hence, the scope of the SA is only with regard to
District Magistrate’s order dated 23.07.2018. On the issue of
irregularities/illegalities of the District Magistrate’s order dated
23.07.2015, the District Magistrate, However, in his said order
Learned District Magistrate has directed that “In view of the
above, the undersigned being the authority U/S 14 of the
SARFAESI Act, 2002 read with Rule 8(1) of Security Interest
(Enforcement) Rules, 2002, authorizes to take over
possession of the secured property mentioned above making
necessary inventory”
The District Magistrate has forwarded the copy of the
order to the Authorized Officer of the Respondent Bank. The
material issue before the Tribunal for scrutiny/examination is
whether the District Magistrate is authorized to give authority
to the Authorized Officer of the Respondent Bank to take
possession of the secured assets under Section 14 of the Act.
In this connection, Hon’ble High Court at Calcutta vide
decision dated 24.07.2014 in W.P. No. 379(W) of 2013 in the
6matter of M/s Swastyayan Agro Industries & another Vs Union
of India & others, in the matter of Pratima Roy & Another Vs
Union of India & Others vide decision dated 24.02.2014 (W.P.
2545(W) of 2014) has held that in terms of Section 14(1) of
the SARFAESI Act, the District Magistrate shall take
possession of the secured assets and hand over the same to
authorized Officer of the Respondent Bank.
(iii) The Tribunal is of the opinion that the order dated
23.07.2015 passed by District Magistrate, Howrah is not in
compliance of the provisions of Section 14 of the Act and also
not in compliance of the decisions of the Hon’ble High Court at
Calcutta as aforesaid. The District Magistrate’s order dated
23.07.2015 suffers from irregularity/illegality and is liable to be
set aside.
(iv) The Tribunal scrutinised/examined the District
Magistrate’s order dated 23.07.2015 and accordingly vide
order dated 26.08.2015 directed the Respondent Bank not to
take physical possession of the property till next date of
hearing.
(v) However, since the issue of E auction sale notice
dated 30.03.2014 has been raised during the pendency of the
SA, the Tribunal is of the opinion that there is judicial
necessity to record its finding on the E auction sale notice
dated 30.03.2014(sale conducted on 07.05.2014) for deciding
the issue of refund of sale amount of Rs. 25,35,000/- to the
auction purchaser/added party in the present SA. The
Applicants filed the present SA on 07.08.2015. Hoh’ble High
Court at Calcutta vide order dated 05.02.2015 in the matter of
Central Bank of India Vs Debasish Nandy & others held that
the security creditor is not entitled to proceed for sale of the
secured assets without physical possession of the secured
assets. In the present matter, the sale was conducted on
07.05.2014 vide sale notice dated 30.03.2014 i.e. prior to the
decision of the Hon’ble High Court at Calcutta in the matter of
Central Bank of India Vs Debasish Nandy(the sale notice
dated 30.03.2014 was issued and sale was conducted on
07.05.2014.) The Applicants have not challenged the sale
notice dated 30.03.2014 within limitation period. The
Applicants are not entitled to raise irregularities/illegalities in
the sale notice dated 30.03.2014 being time barred.
(vi) The Tribunal has already observed herein above
that the District Magistrate’s order dated 23.07.2015 suffers
from irregularities/illegalities and is liable to be set aside. The
Respondent Bank is not entitled to take physical possession
of the property in question in view of the District Magistrate’s
order dated 23.07.2015.
(vii) As regard the prayer of the auction
purchaser/added party for refund of sale amount of Rs.
25,35,000/-, the Tribunal has observed hereinabove that the
property in question was sold vide sale notice dated
30.03.2014(sale conducted on 07.05.2014) and the
Respondent Bank has issued the sale certificate on
30.05.2014. There was no SA filed within limitation period or
pending before the Tribunal raising irregularities/illegalities in
the sale notice dated 30.03.2014. Hence, the Tribunal is not
inclined to scrutinize/examine whether the measure taken for
sale of the secured assets are in accordance with the
provisions of the Act.
(viii) The Respondent Bank issued sale notice dated
30.03.2014 (sale conducted on 07.05.2014), issued sale
notice in favour of the auction purchaser accordingly. The
auction purchaser/added party has not been able to get
7
physical possession of the property in question during the last
four years. Hence, pursuant to the sale of the property in
question and issuance of sale certificate as mentioned above,
the Respondent Bank shall consider the legal issue whether
Respondent Bank still holds the status of secured creditor and
holds security interest over the property in question and
accordingly shall decide the issue of refund of the sale amount
to the auction purchaser/added party at their end. The
Tribunal is not inclined to intervene in this issue and pass any
order and leaves the issue to the Respondent Bank to decide
judiciously for deciding the issue of refund of sale amount to
the auction purchaser/added party.
(ix) Now in respect of the prayer of the
auction/purchaser made in the 1A/904/2018 for refund of sale
amount of Rs. 25,35,000/- the Tribunal is of the opinion that
deciding the issue of refund of sale amount gives effect to the
setting aside the sale notice dated 30.03.2014. As observed
hereinabove, since the Tribunal declines to scrutinize/examine
the illegalities/irregularities in the sale notice dated 30.03.2014
being not challenged by the Applicants within limitation period
or the sale notice was not the subject matter of any SA
pending before the Tribunal, the Tribunal is not inclined to
pass any order on refund of sale amount to the auction
purchaser/added party. In these circumstances, the Tribunal
holds the view that the Tribunal is not the proper forum for
adjudication on the issue of refund of sale amount as prayed
for by the auction purchaser/added party in their IA/904/2018.
The auction purchaser/added party may raise the issue in
proper judicial forum for getting remedy.
(x) The Tribunal has observed that the Respondent
Bank has not been diligent in taking steps for giving delivery of
physical possession of the property in question to the auction
purchaser/added party and having received the entire bid
amount, it was the bounden duty of the Respondent Bank to
do so.
In view of the submission made by the auction
purchaser/added party, they deserve either physical
possession of the property in question or refund of the total
bid amount.
In view of above, the following order is passed:
(1) The order dated 23.07.2018 passed by the District
Magistrate, Howrah, is liable to be set aside and
hence, set aside.
(2) The SA being No. 158/2015 is allowed and
accordingly disposed of.
(3) The Tribunal declines to pass any order on the
prayer of the auction purchaser/added party made in
the IA/904/2018 for refund of sale amount of Rs.
25,35,000/- being not the proper forum for adjudication
on this issue and the IA is accordingly disposed of.
(4) The interim order stands vacated and all the IAs
stand disposed of.
Copy of the order be given to the parties.
File be consigned to Record Room.”
8
7. The petitioner-Bank as well as the auction purchaser
preferred separate appeals before the learned Debts Recovery
Appellate Tribunal (DRAT), being Appeal No.263 of 2018 and
Appeal No.32 of 2020 respectively.
8. The learned DRAT by a common judgment dated
02.02.2023 was pleased to allow the appeal preferred by the
auction purchaser, whereas the appeal preferred by the
petitioner-Bank was dismissed. By the said judgment, learned
DRAT upheld the order setting aside the proceedings initiated
under Section 14 of the SARFAESI Act as passed by the learned
District Magistrate.
“If we go to the order passed by the learned district
magistrate dated 23.07.2015 we find that aggregate
amount of financial assistance granted and total claim
amount of the bank as on date of filing the application is
no where mentioned in the order. There is also no
“satisfaction” recorded by the learned district magistrate
that the claim of the bank is within the limitation period as
is required to be recorded under Clause 2 of the proviso.
Clause 5 provides that there should be a declaration that
consequent upon such default in repayment of the
financial assistance the account of the borrower has been
classified as a NPA. It is also not mentioned in the order
by the learned district magistrate. Provisions of the Act of
2002 and Rules made thereunder were complied with or
not also did not find place in the order. Further Rule 1A
provides that District Magistrate may authorize any officer
subordinate to him to take over possession of the asset.
Impugned order shows that It was addressed to the
Commissioner of Police, Howrah wherein it was stated
that “Inview of the above, the undersigned being the
authority u/s 14 of the Act of 2022 authorizes to take over
possession of the secured property mentioned above
making necessary inventory. You are requested to render
Police assistance as and when required for the purpose.”
No specific authorization was given to any officer
subordinate to the district magistrate, Howrah for taking
possession of the secured asset, rather the “Subject” of
the letter shows that “Police assistance to the secured
creditor for taking over possession of secured property u/s
14 of the Act of 2002″. It means that district magistrate
wrote the letter to the Police Commissioner Howrah to
provide police assistance, but no officer subordinate to
9
him was authorized subordinate to him to take
possession. It is in violation of Section 14 sub-section (1A)
of the Act of 2002. Accordingly, the order passed by
learned district magistrate, Howrah is in contravention of
specific provision of Section 14 which could not be
sustained in the eye of law. Accordingly, learned DRT has
set aside the order of the district magistrate, but on
different ground. But as far as finding of quashing of the
order of the district magistrate is concerned I do hereby
confirm the finding, but on a different grounds mentioned
in the body of the judgement.
18. Secondly, I am considering the submission made by
learned counsel for the auction purchaser that learned
DRT has failed to exercise its jurisdiction for passing order
for refund of the sale price amount deposited by the
auction Certified True Copy purchaser. Impugned order
shows that learned DRT has not passed any order for
refund of the amount being not appropriate forum for
adjudication. I am not impressed with the finding recorded
by learned DRT declining to pass any order for refund of
the sale price deposited by the auction purchaser. No
doubt SARFAESI proceeding was initiated by the bank
wherein secured asset was put on sale by way of public
auction wherein auction purchaser was the highest bidder
and he deposited the amount to the bank. When the bank
could not deliver possession of the secured asset to the
auction purchaser then auction purchaser has every right
to make a request for refund of the amount so deposited
along with interest from the bank. Learned DRT is the
appropriate authority under Act of 2002 to pass an
appropriate order for refund. Decline to pass an order
amounts to refusal to the relief of refund of the amount.
When possession was not delivered to the auction
purchaser, he is entitled to refund of the amount
deposited by him along with interest.
19. It was held by the Hon’ble Apex Court in the case of
ITC Limited Vs. Blue Coast Hotels Ltd. & Ors. [(2018) 15
SCC 99] in Para 50 the judgement as under:
“50. In this case, the creditor did not have actual
possession of the secured asset but only a
constructive or symbolic possession. The transfer
of the secured asset by the creditor therefore
cannot be construed to be a complete transfer as
contemplated by Section 8 of the Transfer of
Property Act. The creditor nevertheless had a right
to take actual possession of the secured assets
and must therefore be held to be a secured creditor
even after the limited transfer to the auction
purchaser under the agreement 50. Thus, the
entire Interest in the property not having been
passed on to the creditor in the firstplace, the
creditor in turn could not pass on the entire interest
10to the auction purchaser and thus remained a
secured creditor in the Act.”
Cited case law is squarely applies in the present case wherein
refund of the amount deposited by the auction purchaser along
with Interest has not been passed in favour of the auction
purchaser. Accordingly, auction purchaser is entitled for the
refund of the amount deposited by him.
20. On the basis of the discussion made above I am of the
view that quashing of the order of the District Magistrate passed
by learned DRT has to be confirmed although on different
ground as set out in the body of the judgement. Accordingly
appeal filed by the appellant bank is liable to be dismissed.
21. However, the auction purchaser would be entitled for refund
of the amount deposited by him along with interest at the rate of
fixed deposit interest prevalent in the bank. Accordingly, appeal
filed by the appellant auction purchaser is liable to be allowed.
9. Being aggrieved by the same, the petitioner-Bank has
preferred the present writ petition.
Arguments on behalf of the petitioner-Bank :-
10. It is the submission of the petitioner-Bank that there exists
no provision under the SARFAESI Act which permits an auction
purchaser to seek refund of the auction sale consideration after
having voluntarily participated in a completed auction process.
The auction purchaser acquires the secured asset on an „as is
where is‟ basis and is presumed to be fully aware of the
possibility of delay in obtaining actual physical possession of the
property. Learned Advocate for the petitioner-Bank further
submits that there is no infirmity or illegality in the order passed
by the learned District Magistrate under Section 14 of the
SARFAESI Act. The petitioner-Bank has duly submitted the
requisite affidavit as mandated under the Act. Upon due
consideration and satisfaction regarding the requirement of
Section 14 of the SARFAESI Act, learned District Magistrate
passed the order in accordance with law. Learned Advocate for
the petitioner also submits that the orders passed by the learned
11
Debts Recovery Tribunal-1, Kolkata as well as the learned Debts
Recovery Appellate Tribunal are erroneous, contrary to the
settled position of law and therefore liable to be set aside.
11. This Court in W.P. 18626(W) of 2015, has already held
that the order passed by the learned District Magistrate does not
suffer from any illegality or procedural impropriety. It is also
submitted that both the DRT and DRAT ought to have followed
the view expressed by the learned single Judge in the aforesaid
matter.
12. In support of the above submissions, learned Advocate
for the petitioner-Bank has placed reliance on the judgments of
the Apex Court in Balkrishna Rama Tarle Dead Thr. LRS & Anr.
Vs. Phoenix ARC Private Limited & Ors.1 and M/s. Hindon Forge
Pvt. Ltd. & Anr. Vs. The State of Uttar Pradesh2.
13. In view of the forgoing submissions, learned Advocate for
the petitioner-Bank prays for setting aside of the impugned
orders passed by the learned DRAT and DRT respectively.
Arguments on behalf of the respondents :-
14. Per contra, learned senior Advocate for the auction
purchaser (respondent no.5) supports the order passed by the
learned DRAT and submits that the auction purchaser acquired
the secured asset vide sale certificate dated 30.05.2014.
However, despite lapse of considerable time, actual physical
possession of the property has not been handed over.
Accordingly, the learned DRAT has rightly directed refund of the
sale consideration to the auction purchaser.
1
(2023) 1 SCC 662
2
(2019) 2 SCC 198
12
15. Learned Advocate for the borrower contends that the
order passed by the learned District Magistrate is not in
consonance with the provisions of Section 14 of the SARFAESI
Act. He further submits that no satisfaction has been recorded by
the learned District Magistrate to demonstrate compliance with
the statutory requirement under the said section. Hence, no error
can be found in the impugned order passed by the learned
DRAT.
Legal analysis :-
16. This court has heard the arguments advanced by the
learned Advocates for the respective parties and has examined
the documents placed on record.
17. Before adverting to the facts of the present case, this
Court deems it appropriate to examine the scope and purport of
Section 14 of the SARFAESI Act.
18. The underlined purpose of the SARFAESI Act is to
empower financial institutions in India with power akin to those
enjoyed by their counterparts, namely, international banks in
other countries. One such power is the authority to take
possession of securities and sell them. This objective has been
codified under Chapter-III of the SARFAESI Act.
19. Section 13 of the Act deals with enforcement of security
interest. Section 13(4) envisages that in the event a borrower
defaults in discharging his liability in full within the period
specified under Section 13(2), the secured creditor may take
recourse to one or more measures outlined in sub-section (4).
One such measure includes a right to take possession of the
secured assets of the borrower, including the right to transfer
13
such assets by way of lease, assignment or sale for purposes of
realising the secured asset. This action can be undertaken
through an „authorised officer‟ as defined under Rule 2(a) of the
Security Interest (Enforcement) Rules, 2002.
20. After taking possession of the secured assets, further
steps such as leasing, assigning or selling the same can be
taken by the secured creditor. However, as per Section 14 of the
SARFAESI Act, if the secured creditor intends to take
possession of the secured assets, they must approach the Chief
Metropolitan Magistrate or the District Magistrate through a
written application.
21. Section 14 of the SARFAESI Act is set out hereinbelow :-
“14. Chief Metropolitan Magistrate or District Magistrate to
assist secured creditor in taking possession of secured asset.-
(1) Where the possession of any secured asset is required to
be taken by the secured creditor or if any of the secured asset
is required to be sold or transferred by the secured creditor
under the provisions of this Act, the secured creditor may, for
the purpose of taking possession or control of any such
secured asset, request, in writing, the Chief Metropolitan
Magistrate or the District Magistrate within whose jurisdiction
any such secured asset or other documents relating thereto
may be situated or found, to take possession thereof, and the
Chief Metropolitan Magistrate or, as the case may be, the
District Magistrate shall, on such request being made to him –
(a) take possession of such asset and documents relating
thereto; and
(b) forward such assets and documents to the secured
creditor:
[Provided that any application by the secured creditor shall be
accompanied by an affidavit duly affirmed by the authorised
officer of the secured creditor, declaring that –
(i) the aggregate amount of financial assistance granted and
the total claim of the Bank as on the date of filing the
application;
(ii) the borrower has created security interest over various
properties and that the Bank or Financial Institution is holding
a valid and subsisting security interest over such properties
and the claim of the Bank or Financial Institution is within the
limitation period;
(iii) the borrower has created security interest over various
properties giving the details of properties referred to in sub-
clause (ii) above;
14
(iv) the borrower has committed default in repayment of the
financial assistance granted aggregating the specified
amount;
(v) consequent upon such default in repayment of the financial
assistance the account of the borrower has been classified as
a non-performing asset;
(vi) affirming that the period of sixty days notice as required by
the provisions of sub-section (2) of section 13, demanding
payment of the defaulted financial assistance has been served
on the borrower;
(vii) the objection or representation in reply to the notice
received from the borrower has been considered by the
secured creditor and reasons for non-acceptance of such
objection or representation had been communicated to the
borrower;
(viii) the borrower has not made any repayment of the
financial assistance in spite of the above notice and the
Authorised Officer is, therefore, entitled to take possession of
the secured assets under the provisions of sub-section (4) of
section 13 read with section 14 of the principal Act;
(ix) that the provisions of this Act and the rules made
thereunder had been complied with :
Provided further that on receipt of the affidavit from the
Authorised Officer, the District Magistrate or the Chief
Metropolitan Magistrate, as the case may be, shall after
satisfying the contents of the affidavit pass suitable orders for
the purpose of taking possession of the secured assets [within
a period of thirty days from the date of application]:
[Provided [also] that if no order is passed by the Chief
Metropolitan Magistrate or District Magistrate within the said
period of thirty days for reasons beyond his control, he may,
after recording reasons in writing for the same, pass the order
within such further period but not exceeding in aggregate sixty
days.]Provided also that the requirement of filing affidavit stated in
the first proviso shall not apply to proceeding pending before
any District Magistrate or the Chief Metropolitan Magistrate,
as the case may be, on the date of commencement of this
Act.][(1A) The District Magistrate or the Chief Metropolitan
Magistrate may authorise any officer subordinate to him,-
(i) to take possession of such assets and documents
relating thereto; and
(ii) to forward such assets and documents to the
secured creditor.](2) For the purpose of securing compliance with the
provisions of sub-section (1), the Chief Metropolitan
Magistrate of the District Magistrate may take or cause to be
taken such steps and use, or cause to be used, such force, as
may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the
District Magistrate [any officer authorised by the Chief
Metropolitan Magistrate or District Magistrate] done in
15pursuance of this section shall be called in question in any
court or before any authority.”
22. The statutory obligation casts upon the Chief Metropolitan
Magistrate or the District Magistrate under Section 14(1) of the
SARFAESI Act mandates immediate action upon receipt of a
written application from the secured creditor. Upon such receipt
the Chief Metropolitan Magistrate/District Magistrate is required
to ensure that the secured creditor has complied with all
procedural formalities as prescribed under the proviso of Section
14(1) of the SARFAESI Act. Once satisfied with the secured
creditor‟s adherence to the statutory requirement, pass an
appropriate order for taking possession of the secured assets
and all documents relating thereto.
23. It is the duty of the District Magistrate to ensure that
possession of the said secured assets and documents is taken
and handed over to the secured creditor at the earliest possible
opportunity. This process is to be carried out expeditiously, in
consonance with the object and scope of SARFAESI Act which
seeks to enable efficient recovery of defaulted debts by secured
creditors.
24. With the insertion of sub-section (1A), a proviso has also
been added to sub-section (1) of Section 14 of the SARFAESI
Act, whereby the secured creditor is now mandated to comply
with certain conditions. These conditions must be disclosed by
way of an application accompanied by an affidavit, duly affirmed
by its authorized officer. Sub-section (1A) serves as an
explanatory provision, and merely reiterates the inherent power
of Chief Metropolitan Magistrate/District Magistrate that was
already implicit in the statutory scheme.
16
25. The Hon‟ble Supreme Court in Balkrishna Rama Tarle
(Supra) examined the scope of Section 14 of the SARFAESI Act
and held as follows :-
“8.1. However, for taking physical possession of the secured
assets in terms of Section 14(1) of The SARFAESI Act, the
secured creditor is obliged to approach the CMM/DM by way
of a written application requesting for taking possession of the
secured assets and documents relating thereto and for being
forwarded to it (secured creditor) for further action. The
statutory obligation enjoined upon the CMM/DM is to
immediately move into action after receipt of a written
application under Section 14(1) of the SARFAESI Act from the
secured creditor for that purpose. As soon as such an
application is received, the CMM/DM is expected to pass an
order after verification of compliance of all formalities by the
secured creditor referred to in the proviso in Section 14(1) of
the SARFAESI Act and after being satisfied in that regard, to
take possession of the secured assets and documents relating
thereto and to forward the same to the secured creditor at the
earliest opportunity. As mandated by Section 14 of the
SARFAESI Act, the CMM/DM has to act within the stipulated
time limit and pass a suitable order for the purpose of taking
possession of the secured assets within a period of 30 days
from the date of application which can be extended for such
further period but not exceeding in the aggregate, sixty days.
Thus, the powers exercised by the CMM/DM is ministerial act.
He cannot brook delay. Time is of the essence. This is the
spirit of the special enactment. As observed and held by this
Court in the case of NKGSB Cooperative Bank Ltd. (supra),
the step taken by the CMM/DM while taking possession of the
secured assets and documents relating thereto is a ministerial
step. It could be taken by the CMM/DM himself/herself or
through any officer subordinate to him/her, including the
advocate commissioner who is considered as an officer of
his/her court. Section 14 does not oblige the CMM/DM to go
personally and take possession of the secured assets and
documents relating thereto. Thus, we reiterate that the step to
be taken by the CMM/DM under Section 14 of the SARFAESI
Act, is a ministerial step. While disposing of the application
under Section 14 of the SARFAESI Act, no element of quasi-
judicial function or application of mind would require. The
Magistrate has to adjudicate and decide the correctness of the
information given in the application and nothing more.
Therefore, Section 14 does not involve an adjudicatory
process, qua points raised by the borrower against the
secured creditor taking possession of secured assets.”
26. In view of the detailed discussion herein, it is evident that
the power exercised by the District Magistrate/Chief Metropolitan
Magistrate is of a ministerial nature. Such exercise of power is
not discretionary and cannot suffer delay. Time is of essence
and this reflects the very spirit and intent of the special
enactment.
17
27. Now adverting to the facts of the present case it is evident
that the borrower/guarantor did not raise any objection to the
proceeding initiated by the petitioner-Bank under the provisions
of the SARFAESI Act. The auction sale was duly conducted, the
sale certificate was issued, a symbolic possession was taken
over by the bank and the loan account was closed upon
adjustment of the sale consideration.
28. However, when the bank sought to obtain actual physical
possession of the secured asset under Section 14 of the
SARFAESI Act, and the learned District Magistrate (DM) passed
an order to that effect, then only the borrower/guarantor woke up
from his slumber sleep and preferred an appeal before the DRT
and obtained a stay in their favour.
29. This Court is of the firm view that such a course of action
has been adopted solely to prevent the bank from taking
possession and to frustrate the very object and purpose of the
30. A perusal of the order passed by the District Magistrate
dated 23.07.2015 reveals that the learned Magistrate, duly
examined all the documents submitted along with the
application, including the mandatory affidavit filed by the
petitioner-Bank. Upon being satisfied with the compliance of the
statutory requirement under Section 14 of the SARFAESI Act,
the said order was passed.
31. It must also be borne in mind that the District Magistrate,
in such proceedings, exercises only a ministerial function and is
required to apply its mind only to the extent of ensuring
18
compliance of Section 14 as it has been held by the Hon‟ble
Supreme Court in Balkrishna Rama Tarle (Supra).
32. Therefore, this Court is of the considered view that the
orders passed by the Debts Recovery Tribunal-1 at Kolkata
(DRT) and the Debts Recovery Appellate Tribunal, Kolkata
(DRAT), are suffer from patent illegality and legally
unsustainable and erroneous.
33. Another objection raised by the borrower/guarantor
pertains to the fact that the District Magistrate did not appoint
any authorized officer for taking possession. However, a plain
reading of the order dated 23.07.2015 indicates that it was
addressed to the Commissioner of Police. Accordingly, it can be
reasonably presumed that the District Magistrate authorized the
Commissioner of Police to take possession of the secured asset.
34. The SARFAESI Act permits the District Magistrate to
appoint any subordinate officer for the purpose of taking
possession. There is no statutory prohibition against appointing
the Commissioner of Police as the authorized officer. This Court
does not find any legal infirmity in such authorization.
35. In view of the detailed discussions hereinabove, this Court
is of the considered opinion that the impugned order passed by
the DRAT suffers from patent illegality, as Section 14 of the
SARFAESI Act has been misinterpreted. Accordingly, the
impugned order is set aside.
36. The authorized officer is directed to take possession of
the asset as expeditiously as possible in accordance with law.
37. With the above directions, the present writ petition is
disposed of.
19
38. In view of disposal of the present writ petition, connected
application being CAN 1 of 2025 is also disposed of.
39. Interim orders, if any, shall stand vacated.
40. Since no affidavits have been filed by the respondents,
the allegations made in the writ petition shall not be deemed to
have been admitted.
41. There shall be no order as to costs.
42. Let urgent Photostat certified copy of this order, if applied
for, be supplied to the parties on usual undertaking.
(Gaurang Kanth, J.)
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