The Allahabad High Court has directed the concerned Chief Judicial Magistrates and District Magistrates to decide pending applications under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) expeditiously, holding that prolonged pendency “undermines the very purpose” of the Act.
The Division Bench comprising Justice Ajit Kumar and Justice Swarupama Chaturvedi allowed a batch of writ petitions filed by M/S Hinduja Housing Finance Ltd., emphasizing that the role of the Magistrate under Section 14 is purely administrative and facilitative, intended solely to aid the secured creditor in the enforcement of security interest.
Background of the Case
The Court was hearing a batch of six writ petitions filed by M/S Hinduja Housing Finance Ltd., a registered housing finance company. In five of these petitions (Writ-C Nos. 42608, 42610, 42622, 42645, and 42660 of 2025), the petitioner challenged the administrative delays by concerned Magistrates in deciding applications filed under Section 14 of the SARFAESI Act for taking physical possession of secured assets.
The petitioner had granted housing loans to various borrowers who created equitable mortgages over their respective properties. Following defaults in repayment, the loan accounts were declared Non-Performing Assets (NPAs). The petitioner issued demand notices under Section 13(2) and subsequently took symbolic possession under Section 13(4) of the Act. However, when the petitioner filed applications before the Chief Judicial Magistrate, Ghaziabad, to obtain actual physical possession, the applications remained pending beyond the statutory period of thirty to sixty days.
In one specific case (Writ-C No. 42639 of 2025), although an order under Section 14 was passed on February 28, 2025, and possession was handed over on October 6, 2025, the borrowers allegedly broke the seal and trespassed into the property on the same day. Despite lodging an FIR and informing the Magistrate, no further action was taken to restore possession to the petitioner.
Arguments of the Parties
The counsel for the petitioner, Sri Ashutosh Sharma, Sri Nitesh Kumar Jauhari, and Sri Ajeet Singh, argued that the statute imposes a “mandatory obligation” upon the District Magistrate or Chief Judicial Magistrate to decide Section 14 applications within the prescribed time-frame. They submitted that the role of the Magistrate is purely administrative and that “repeated adjournments, often at the instance of the borrowers, are impermissible.” The petitioner contended that such delays frustrate the secured creditor’s statutory right to enforce security interest and recover public money.
Per contra, Sri Pradeepta Kumar Shahi, learned Additional Chief Standing Counsel, and Sri Mukul Tripathi, learned Standing Counsel for the State respondents, submitted that the delay was not solely attributable to the authorities but was “occasioned by administrative exigencies and the pendency of other matters.” They argued that adequate opportunity is required before passing orders affecting the possession of immovable property and that no mala fides could be attributed to the authorities.
Court’s Analysis and Observations
The Court observed that Section 14 of the SARFAESI Act provides a complete mechanism where the Magistrate’s function is “confined to verification of factual compliance with statutory requirements.” The Bench noted that the legislature incorporated timelines to ensure applications are decided promptly.
Referring to the Joint Committee Report on the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, the Court noted that the extension of time up to sixty days was added “only to meet certain exigencies.”
The Court relied on the Supreme Court’s decision in NKGSB Cooperative Bank Limited Vs Subir Chakravarty and others (2022) 10 SCC 286, which held that the underlying purpose of the Act is to empower financial institutions to take possession of securities and sell them.
Addressing the timeline, the Court cited C. Bright Vs District Collector and others (2021) 2 SCC 392, where the Supreme Court held that while the time-limit is directory, it is intended to “instil a confidence in creditors that the District Magistrate will make an attempt to deliver possession.”
The Bench observed:
“Where a statute not only creates a duty but also prescribes the timeframe for its discharge, the obligation assumes higher degree of responsibility and give it a mandatory colour. Delay in such circumstances amounts to failure to exercise jurisdiction vested by law. Prolonged pendency of applications under Section 14 undermines the very purpose of the SARFAESI Act.”
The Court further stated:
“The nature of the function discharged under Section 14 is very specific. From the reading of the provision it is clear that the function of the Magistrate is confined to verification of factual compliance with statutory requirements. The legislature has consciously ensured that collateral challenges do not impede the enforcement process, reserving such issues for adjudication before the Debts Recovery Tribunal under Section 17 SARFAESI Act 2002.”
On the issue of adjournments, the Court referred to Salem Advocate Bar Assn. (2) Vs Union of India (2005) 6 SCC 344, stating that the grant of adjournment cannot be in routine.
The Court also highlighted the interplay between Section 14 and Sections 26D and 26E of the Act, noting that priority conferred to secured creditors would stand diluted if the enforcement process is stalled.
“Requirement of registration under Section 26D is not a mere procedural formality but a statutory condition precedent for enforcement… Any avoidable delay in granting assistance frustrates not only Section 14 but also the combined operation of Sections 26D and 26E of the Act.”
The Bench expressed concern that despite directions issued in a previous judgment, Indian Bank (Erstwhile Allahabad Bank) vs. State of U.P. (Writ C No. 7126 of 2021), to maintain a register of Section 14 applications, compliance was lacking.
Decision
The High Court allowed all the writ petitions.
For Writ-C Nos. 42608, 42610, 42622, 42645, and 42660 of 2025, the Court directed the learned District Magistrate/Chief Judicial Magistrate to decide the petitioner’s pending applications (Case Nos. 3239 of 2025, 3238 of 2025, 3236 of 2025, 3240 of 2025, and 3237 of 2025) strictly in accordance with law, “as expeditiously as possible and preferably within a period of thirty days from the date of receipt of a copy of this order.”
Regarding Writ-C No. 42639 of 2025, where trespass occurred after possession was taken, the Court allowed the petition and granted liberty to the petitioner to “file an application afresh for necessary action to ensure compliance of order already passed under Section 14 of SARFAESI Act, 2002.”
Case Details:
- Case Title: M/S Hinduja Housing Finance Ltd. Versus State Of U.P. And 3 Others (and connected matters)
- Case Number: Writ-C No. 42608 of 2025
- Coram: Justice Ajit Kumar and Justice Swarupama Chaturvedi
- Counsel for Petitioner: Ashutosh Sharma, Nitesh Kumar Jauhari, Ajeet Singh
- Counsel for Respondent: C.S.C., Pradeepta Kumar Shahi (Additional Chief Standing Counsel), Mukul Tripathi (Standing Counsel)
