Borrower Re-Enters SARFAESI-Seized Property; MP HC Directs Authorities To Restore Lender’s Possession, Preferably Within 15 Days

In brief

The question

1. Whether the authorities could provide further assistance to a secured creditor to repossess property after a borrower allegedly re-entered it following possession taken under Section 14 of the SARFAESI Act.

The court held

The Court allowed the petition and directed the concerned respondent authority to repossess the property that was the subject of the petition and hand it over to the petitioner in accordance with law, as expeditiously as possible and preferably within 15 days of receiving a certified copy of the order.

It also directed

The petition was disposed of accordingly, without costs.

01Facts

The petitioner, a secured creditor, stated that a Tehsildar had taken possession of secured property pursuant to an order under Section 14 of the SARFAESI Act, 2002, but the borrower later re-entered and did not vacate.

¶ 1–2

The petitioner sought assistance from the Tehsildar for repossession, but its representation remained undecided.

¶ 1–2

It petitioned under Article 226 for police and revenue assistance, including repossession in accordance with law.

¶ 1–2

The petitioner relied on a Division Bench decision in W.P. No. 1681 of 2015.

¶ 2, 4

02Issues

i.1. Whether the authorities could provide further assistance to a secured creditor to repossess property after a borrower allegedly re-entered it following possession taken under Section 14 of the SARFAESI Act.

¶ 2, 4

ii.2. Whether the secured creditor’s failure to preserve possession after it was taken warranted any consequence when the Court considered granting repossession relief.

¶ 5

03Law Applied

Section 14 of the SARFAESI Act provides for the assistance of the competent authority in taking possession of secured assets.

The Court relied on the Division Bench decision in W.P. No. 1681 of 2015 for the principle that there is no legal bar to re-executing an order for possession or providing further assistance where a borrower has illegally re-entered the secured property; such re-entry does not preclude the secured creditor from seeking assistance to regain possession.

¶ 4

The Court also stated that a secured creditor must preserve property and possession after possession has been taken, and that the authorities are duty-bound to assist with repossession in accordance with law.

¶ 3, 5

Provisions in the judgment · 2 · Linked ones open on LawLens

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Section 14 Section 3

04Reasoning

The Court accepted that the borrower had allegedly re-entered property after possession was taken under Section 14 and held, following the Division Bench’s reasoning, that the authorities could provide further assistance to restore possession; the earlier execution of the possession order did not bar such assistance.

¶ 2, 4

At the same time, the Court criticised the petitioner’s failure to preserve possession, observing that this had required the authorities to engage again in the repossession process.

¶ 5

Although it considered imposing costs, it refrained from doing so, expecting the petitioner to act more vigilantly in future.

¶ 5