Subsequent purchasers cannot challenge SARFAESI possession proceedings without impleading the mortgagor’s legal heirs.

The petitioners claimed to be owners and occupants of flats/offices in the disputed property, purchased from Ratnamala Vitthalbhai Chaudhary and her legal heirs between 2010 and 2015.

The property had allegedly been equitably mortgaged to Udhna Citizen Co-operative Bank Ltd. on 27 August 2010; the petitioners denied that Ratnamala had created the mortgage.

The District Magistrate allowed the Bank’s application under Section 14 of the SARFAESI Act on 9 December 2019 for physical possession of the property.

The petitioners challenged that order and Section 2(1)(c)(iva) of the Act, but did not implead Ratnamala’s legal heirs.

Whether the petitioners could maintain a challenge to the Section 14 possession order concerning property they acquired after creation of the mortgage, without impleading the legal heirs against whom the SARFAESI proceedings had been brought.

Whether the petitioners’ challenge to the vires of Section 2(1)(c)(iva) of the SARFAESI Act could be entertained.

The Court considered Sections 13(2), 13(4), and 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, concerning enforcement of security interests and the Magistrate’s assistance in taking possession.

It also considered the petitioners’ challenge to Section 2(1)(c)(iva).

The Court applied the procedural principle that a challenge to proceedings directed against particular parties cannot properly be entertained without joining those parties where their interests and the proceedings against them are directly implicated.

The Court noted that the petitioners claimed through purchases made after the alleged 2010 mortgage, while the SARFAESI proceedings were directed against the original owner’s legal heirs.

Those heirs were not joined, and the petition did not adequately disclose whether they had challenged the Section 13(4) notice or otherwise pursued remedies against the SARFAESI action.

The Court therefore considered the petitioners’ independent challenge to the Section 14 order unsustainable.

It also found no foundation in the petition for the constitutional challenge and held that it could not be entertained at the petitioners’ instance.

The proposed amendment was rejected, no costs were ordered, and the request to stay the judgment for one week was refused.