The Allahabad High Court has held that in cases where a borrower unlawfully trespasses and re-occupies secured assets after possession has been taken under the SARFAESI Act, a fresh application under Section 14 of the Act for restoration of possession is maintainable. The Court directed the concerned Additional District Magistrate to hear and decide such a fresh application in accordance with law.
The Division Bench comprising Justice Shekhar B. Saraf and Justice Praveen Kumar Giri delivered the judgment on July 4, 2025, in Writ-C No. 18575 of 2025 filed by DCB Bank Ltd. against the State of Uttar Pradesh and others.
Background
The petitioner bank filed the writ petition under Article 226 of the Constitution, seeking a direction to the respondents, particularly the District and Additional District Magistrate of Ghaziabad, to restore possession of the secured asset—House No. 4, Block H, Sector 02 & 03, Tyagi Market, Village Loni, Ghaziabad—under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
The bank alleged that despite having previously taken possession of the property as per the procedure under the SARFAESI Act, the borrower had illegally re-occupied the same, necessitating a fresh application for recovery of possession.
Petitioner’s Arguments
Counsel for the petitioner placed reliance on multiple judgments including:
- The Nashik Merchant Co-operative Bank v. The District Collector, Jalna (Bombay High Court, 2023),
- Bank of India v. M/s Maharana Electricals Pvt. Ltd. (Bombay High Court, 2024),
- Kotak Mahindra Bank Ltd. v. State of Maharashtra (Bombay High Court, 2023),
to support the contention that authorities like the District Magistrate have power to entertain a second application under Section 14 when the borrower illegally takes back possession.
They also cited a Division Bench ruling of the Andhra Pradesh High Court in M/s Sri Balaji Centrifugal Castings v. M/s ICICI Bank Limited (2018), which held that there is no bar under the SARFAESI Act to filing multiple applications for the same property if circumstances justify such action.
Further, they relied on observations by the Kerala High Court and the Madhya Pradesh High Court emphasizing that such illegal re-occupations undermine the rule of law and must not be tolerated. The judgments underscored that orders under Section 14 remain valid until the outstanding dues are fully recovered and that re-exercise of such orders is not barred under law.
Court’s Findings
Agreeing with the reasoning of the Bombay High Court and other High Courts cited, the Allahabad High Court held:
“Upon considering the issue at hand, we are at consensus ad idem of the view taken by the Bombay High Court…”
Accordingly, the Court directed the Additional District Magistrate to grant a hearing to the petitioner and pass a fresh order on the application under Section 14 of the SARFAESI Act. The entire process is to be concluded within two months.
Decision
The writ petition was disposed of with the direction that the Additional District Magistrate shall hear the petitioner and decide the fresh application in accordance with law within two months.
Case Title: DCB Bank Ltd. v. State of Uttar Pradesh and 7 Others
Case No.: Writ-C No. 18575 of 2025
