# M/S Hinduja Housing Finance Ltd v. State of U.P. & Ors

- **Citation:** (2026) 1 ILRA 548
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2026-01-12
- **Bench:** Ajit Kumar, Swarupama Chaturvedi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-hinduja-housing-finance-ltd-v-state-of-u-p-ors-54074
- **Pages:** 14

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548 INDIAN LAW REPORTS ALLAHABAD SERIES
(2026) 1 ILRA 548
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 12.01.2026

BEFORE

THE HON'BLE AJIT KUMAR, J.
THE HON'BLE SWARUPAMA CHATURVEDI, J.

Writ C No. 42608 of 2025 & Other connected cases

M/S Hinduja Housing Finance Ltd. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents
ISSUE FOR CONSIDERATION
Common question of law under Section 14 of the SARFAESI Act, 2002 regarding delay in deciding applications
of the financial institution for taking physical possession of secured assets by the competent Magistrates.
HEADNOTE
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -
Sections 14, 26D, 26E - Applications by secured creditor for taking physical possession of secured assets -
Delay in disposal by District Magistrate/Chief Metropolitan Magistrate - Statutory timeline of thirty days
extendable up to sixty days - Legislative intent of expeditious enforcement of security interest - Role of
Magistrate confined to administrative assistance and verification of statutory compliance - Delay defeats the
very purpose of the Act - Statutory priority of secured creditor - Directions issued to ensure timely disposal of
Section 14 applications.
Writ petitions allowed. (E-5)
HELD:
SARFAESI Act, 2002 is a special legislation enacted to enable banks and financial institutions to enforce
security interests in a swift and effective manner, without having inordinate delay. Section 14 was made to
provide an effective tool to protect the interest of the secured creditor. The secured creditor may request the
District Magistrate or the Chief Metropolitan Magistrate for the purpose of taking possession or control of any
secured asset. Section 14 empowers the District Magistrate or the Chief Metropolitan Magistrate to render
administrative assistance for taking possession of the secured asset upon satisfaction of the statutory
conditions prescribed. The function of the Magistrate is confined to verification of factual compliance with
statutory requirements. The Magistrate's role under Section 14 is not adjudicatory but executive and
facilitative.
Section 14 applications are to be decided promptly and not permitted to remain pending for indefinite periods,
and the extension is for meeting certain exigencies only. Prolonged pendency of applications under Section 14
undermines the very purpose of the SARFAESI Act. The bar contained under Section 14(3) makes it clear that
once assistance is rendered under Section 14 in accordance with law, such acts are not amenable to challenge
before any court or authority. This underscores that the Magistrate's role under Section 14 is not adjudicatory
but executive and facilitative.
1 All. M/S Hinduja Housing Finance Ltd. Vs. State of U.P. & Ors.
549
The right to approach the Magistrate under Section 14 is a substantive statutory remedy, and any inordinate
delay in its consideration amounts to denial of such remedy, which cannot be sustained in law. Delay in
deciding Section 14 applications has the potential to expose secured assets to competing claims, attachments
or encumbrances, thereby undermining the statutory priority expressly recognized under Section 26E. Even
where an order under Section 14 has been passed and possession was delivered but was disturbed by
trespass, the secured creditor is entitled to seek further administrative assistance for effective implementation
of the Section 14 order. District Magistrate/Chief Metropolitan Magistrate is directed to decide the petitioner's
applications filed under Section 14 as expeditiously as possible and preferably within a period of thirty days.
(Paras 17-18, 20-21, 26-27, 31-32, 37, 40-43)
CASE LAW CITED
NKGSB Cooperative Bank Ltd. v. Subir Chakravarty and others, (2022) 10 SCC 286;
C. Bright v. District Collector and others, (2021) 2 SCC 392;
State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., (2007) 11 SCC 363;
Salem Advocate Bar Association (2) v. Union of India, (2005) 6 SCC 344;
Kalpana Mehta v. Union of India, (2018) 7 SCC 1;
Indian Bank (Erstwhile Allahabad Bank) v. State of U.P. and others, Writ - C No. 7126 of 2021, decided on
24.08.2021.
List of Acts
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
Constitution of India.
List of Keyword
SARFAESI Act, 2002; Section 14 application; Physical possession; Delay by Magistrate; Statutory timeline;
Secured creditor; Priority under Section 26E; Non-performing asset; Enforcement of security interest.
CASE ARISING FROM
Delay in disposal of applications under Section 14 of the SARFAESI Act, 2002 by the District Magistrate/Chief
Metropolitan Magistrate, Ghaziabad and other concerned authorities.
Appearances for Parties
Advs For Petitioner: Ashutosh Sharma; Nitesh Kumar Jauhari; Ajeet Singh
Advs For Respondents: C.S.C.
(Delivered by Hon'ble Swarupama Chaturvedi, J.)

1. Heard Sri Ashutosh Sharma, Sri Nitesh Kumar Jauhari and Sri Ajeet Singh learned counsel
for petitioners and Sri Pradeepta Kumar Shahi, learned Additional Chief Standing Counsel and Sri
Mukul Tripathi, learned Standing Counsel for the State respondents.
550 INDIAN LAW REPORTS ALLAHABAD SERIES

2. By means of the present batch of petitions filed under Article 226 of the Constitution of
India, petitioners have prayed for issuance of an appropriate writ, order or direction in the nature of
mandamus directing the concerned Magistrates to decide the applications filed by them under
Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (hereinafter "SARFAESI Act, 2002") expeditiously, within a timeframe for ensuring the physical possession of the property to petitioners.

3. The petitioner is same in all petitions, which is a registered housing finance company and a
notified financial institution under the SARFAESI Act, 2002. The petitions challenge
administrative delays in the exercise of statutory duties by the concerned Magistrates, which,
according to the petitioner, amount to a violation of the mandatory timelines prescribed under the
SARFAESI Act 2002 and also directions issued by this Court in various writ petitions in order to
ensure the timeline.

4. All the writ petitions in this batch raise a common question of law under the SARFAESI
Act, 2002, they are, therefore, being heard together and decided by this common judgment. For the
sake of convenience, the factual background of each petition is set out separately, and references to
pleadings and documents are confined to the respective petitions unless otherwise indicated.

5. In each case, the borrowers availed loans from the petitioner, creating an equitable
mortgage over the respective properties. Following defaults in repayment, the loan accounts were
declared Non-Performing Assets. In accordance with the statutory procedure, demand notices under
Section 13(2) of the SARFAESI Act 2002 were issued. As debts remained unpaid, the petitioner
took symbolic possession of the assets under Section 13(4). Subsequently, the petitioner filed
applications under Section 14 of the SARFAESI Act before the competent court to obtain actual
physical possession of the secured assets. The grievance in all the petitions is that the applications
have not been decided within the statutory period, and the authorities concerned have allegedly
been mechanically fixing dates without passing substantive orders.

Writ C No. 42608 of 2025

6. Factual background in Writ C No. 42608 of 2025 is that the borrower availed a housing
loan of Rs.10,01,000/- on 13.02.2024, creating an equitable mortgage over scheduled property.
Following a default in repayment, the loan account was declared a Non-Performing Asset on
06.05.2024. Learned counsel for the petitioner submits that in accordance with the statutory
procedure, a demand notice under Section 13(2) of the SARFAESI Act, 2002 was issued by the
petitioner for the amount of Rs. 10,27,581/- due as on 20.02.2025. He further submits that neither
any objection was filed nor the debt was paid, and therefore the petitioner initiated action under
Section 13(4). Thereafter, to obtain actual physical possession, the Petitioner filed Case No. 3239
of 2025 before the Chief Judicial Magistrate, Ghaziabad but the application has not been decided
within the statutory period and the same is still pending as the Respondent No.2 is merely fixing
dates mechanically in the matter.

Writ C No. 42610 of 2025
1 All. M/S Hinduja Housing Finance Ltd. Vs. State of U.P. & Ors.
551

7. The petitioner provided a housing loan of Rs. 9,00,000/- to the borrowers in Writ C No.
42610 of 2025. To secure the loan, the borrowers created an equitable mortgage by depositing the
original title deeds of the property with the petitioner. However, the borrowers failed to adhere to
the repayment schedule, prompting the petitioner to declare the loan account as a Non-Performing
Asset on 06.01.2025, in accordance with the Reserve Bank of India guidelines. Thereafter,
proceedings were initiated under the SARFAESI Act, 2002, and a demand notice was issued on
25.02.2025, requiring the borrowers to discharge their dues amount. The borrowers neither made
the payment nor filed any objections. Consequently, the petitioner took symbolic possession of the
secured property and filed Case No. 3238 of 2025 under Section 14 of the SARFAESI Act, 2002,
before the Chief Judicial Magistrate, Ghaziabad. Despite the statutory mandate to decide Section 14
applications within thirty to sixty days, the matter remained pending, prompting the petitioner to
approach this court. Learned counsel for the petitioner submits that the delay impairs their statutory
right to recover public money and that, in the absence of any challenge to the proceedings in
another forum, there is no legal impediment preventing the Magistrate from passing order in the
case.

Writ C No. 42622 of 2025

8. The petitioner provided a housing loan of Rs. 5,05,000/- to Mr. Mahmood Siddiqui and
Mrs. Ruksana. To secure the loan, the borrowers created an equitable mortgage by depositing the
original title deeds of their property situated at Ghaziabad. Over time, the borrowers defaulted on
their repayment obligations, and consequently, on 05.03.2025, the petitioner declared the loan
account a Non-Performing Asset in accordance with the Reserve Bank of India guidelines.
Following the default, the petitioner, initiated recovery proceedings under the SARFAESI Act,
2002. A demand notice under Section 13(2) was served upon the borrowers on 12.03.2025, but they
neither cleared the dues nor filed any legal objections under Section 13(3A) of the Act. The
petitioner subsequently took symbolic possession of the mortgaged property. As the respondents
failed to discharge their full liability within the prescribed period and did not challenge the
recovery proceedings before the Debt Recovery Tribunal, the petitioner filed case no. 3236 of 2025
under Section 14 of the SARFAESI Act, 2002 before the Chief Judicial Magistrate, Ghaziabad, for
appropriate order on physical possession of the secured asset, but the case remains pending.

WRIT C No 42639 of 2025

9. The fact in Writ C No. 42639 of 2025 is that the respondents 4 and 5 availed a housing loan
of Rs. 17,60,000/- from the petitioner financial institution on 20.11.2023, securing the loan by
creating an equitable mortgage through the deposit of the original title deeds of the property with
the petitioner. Learned counsel for the petitioner submits that the respondents 4 and 5 are willful
defaulters, having deliberately failed to maintain their loan accounts in accordance with the
repayment schedule. As a result of their default, the petitioner was compelled to declare the loan
account as a Non-Performing Asset on 06.05.2024. Thereafter, the petitioner invoked the
provisions of the SARFAESI Act, 2002 and issued a demand notice dated 27.06.2024 under
Section 13(2) read with Rules 3 and 4 of the Security Interest (Enforcement) Rules to the
debtors/respondent nos. 4 and 5. Non-compliance with the notice compelled the petitioner to take
symbolic possession of the mortgaged property, issuing a possession notice dated 19.11.2024 under
552 INDIAN LAW REPORTS ALLAHABAD SERIES
Section 13(4) of the Act, which was duly pasted on the mortgaged property and also published in
two leading newspapers.

10. As the respondents failed to discharge their liability in full within the prescribed period,
the petitioner approached the District Magistrate under Section 14 of the SARFAESI Act, 2002, in
Case No. 513 of 2025, seeking appropriate orders for physical possession of the secured asset. The
District Magistrate transferred the case to the respondent no.2, who passed an order under Section
14 of the SARFAESI Act on 28.02.2025. By the said order, the competent authority directed the
Magistrate to assist the Authorized Officer of the petitioner in taking actual physical possession of
the mortgaged property. The petitioner deposited one day?s salary of the required police force on
29.07.2025, following which physical possession of the secured property was taken on 06.10.2025
in the presence of the District Administration, with the house being sealed peacefully.

11. The core issue in this writ petition is that, on the same day, the petitioner came to know
that the respondents had broken the seal and trespassed into the property. The petitioner
immediately approached the police and lodged a First Information Report dated 06.10.2025, and
also informed the Magistrate, but no action has been taken to date. The Authorized Officer of the
petitioner repeatedly requested compliance with the Section 14 order dated 28.02.2025. Meanwhile,
respondents no.4 and 5 are illegally occupying the property and respondent no. 1, 2 and 3 have not
discharged their liability to get the order dated 28.02.2025 effectively executed. On facts regarding
grievance, this petition is different although the broader issue is same as the effective physical
possession is still not with the petitioner.

Writ C No. 42645 of 2025

12. The background fact in Writ C No. 42645 of 2025 is that a loan of Rs. 10,01,000/- was
granted to Respondent Nos.3 and 4 on 25.02.2023 after creating an equitable mortgage by
depositing the original title deeds of the property with the petitioner on 13.02.2024. Due to
payment default, the loan account was declared as a Non-Performing Asset on 05.03.2025.
Following the default, the petitioner, initiated recovery proceedings under the SARFAESI Act,
2002, issuing a formal demand notice under Section 13(2) on 12.03.2025. Despite service of the
notice, the borrowers neither cleared the dues nor filed any legal objections. Thereafter, the
petitioner took symbolic possession of the mortgaged property and approached the Chief Judicial
Magistrate, Ghaziabad (Respondent No. 2), under Section 14 of the Act in case no.3240 of 2025,
which remains pending.

Writ C No. 42660 of 2025

13. Dispute in Writ C No. 42660 of 2025 is regarding an unpaid housing loan of Rs.
19,00,000/- provided to Ms. Anju and Mr. Vijay after executing an equitable mortgage by
depositing the original title deeds of the property with the petitioner. However, borrowers defaulted
in repayment, prompting the petitioner to classify the loan account as a Non-Performing Asset and
subsequently, taking symbolic possession of the property as per law and thereafter in order to take
actual physical possession and recover the outstanding dues, the petitioner filed case no. 3237 of
1 All. M/S Hinduja Housing Finance Ltd. Vs. State of U.P. & Ors.
553
2025 under Section 14 of the SARFAESI Act, 2002 before the Chief Judicial Magistrate,
Ghaziabad, seeking assistance in taking physical control of the mortgaged property.

14. Learned counsel for the petitioner submits that the statute imposes mandatory obligation
upon the District Magistrate or the Chief Judicial Magistrate, to decide such applications within the
time-frame prescribed therein, and that the role of the Magistrate is purely administrative. Learned
counsel further submits that repeated adjournments, often at the instance of the borrowers, are
impermissible in proceedings under Section 14 and that such delay defeats the very object of the
SARFAESI Act by frustrating the secured creditor?s statutory right to enforce security interest. It
is, therefore, urged that appropriate directions be issued for expeditious disposal of the pending
applications.

15. Per contra, learned counsel appearing for the respondents submits that the delay in disposal
of the applications under Section 14 cannot be attributed solely to the magistrates and authorities
concerned and is stated to be occasioned by administrative exigencies and the pendency of other
matters. It is contended that adequate opportunity is required to be afforded before passing orders
affecting possession of immovable property and that no mala fides can be attributed to the
authorities.

16. Having heard counsel appearing for respective parties and after perusal of the records and
examination of factual background in all the petitions in the present batch, it is apparent that while
the amounts, dates of disbursement, and particulars of the borrowers differ, all the writ petitions
raise a common question of law arising under Section 14 of the SARFAESI Act, 2002. All petitions
except Writ C No. 42639 of 2025, the petitioner challenge the delay in deciding applications for
physical possession filed by the petitioner financial institutions before the competent Magistrates,
despite the statutory mandate prescribing a timeline for disposal. In Writ C No. 42639 of 2025, the
application has got decided although the financial institution is still not in the effective physical
possession due to trespass on the same day when the possession was handed over to the petitioner.
The Court, therefore, proceeds to examine the statutory framework, and relevant judicial principles
applicable to the disposal of Section 14 applications.

17. The SARFAESI Act, 2002 was brought to regulate the securitization and reconstruction of
financial assets and enforcement of security interest and to provide for a central data base of
security interest created on property rights, and for matters connected therewith an incidental
thereof. The object and reasons to bring the SARFASI Act 2022 are as under:-

"The financial sector has been one of the key drivers in India's efforts to achieve success
in rapidly developing its economy. While the banking industry in India is progressively complying
with international prudential norms and accounting practices there are certain areas in which the
banking and financial sector do not have a level playing field as compared to other participants in
the financial markets in the world. There is no legal provision for facilitating securitisation of
financial assets of banks and financial institutions. Further, unlike international banks, the banks
and financial institutions in India do not have power to take possession of securities and sell them.
Our existing legal framework relating to commercial transactions has not kept pace with the
changing commercial practices and financial sector reforms. This has resulted in slow place of
554 INDIAN LAW REPORTS ALLAHABAD SERIES
recovery of defaulting loans and mounting levels of non-performing assets of banks and financial
institutions. Narasimham Committee I and II and Andhyarujina Committee constituted by the
Central Government for the purpose of examining banking sector reforms have considered the need
for changes in the legal system in respect of these areas. These Committees, inter alia, have
suggested enactment of a new legislation for securitisation and empowering banks and financial
institutions to take possession of the securities and to sell them without the intervention of the
court. Acting on these suggestions, the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Ordinance, 2002 was promulgated on the 21st June, 2002 to
regulate securitisation and reconstruction of financial assets and enforcement of security interest
and for matters connected therewith or incidental thereto. ..."

18. The SARFAESI Act 2002 is a special legislation enacted to enable banks and financial
institutions to enforce security interests in a swift and effective manner, without having inordinate
delay. The statute reflects a conscious legislative departure from traditional recovery mechanisms,
premised on speed, certainty and minimal court intervention. The legislative scheme strikes a
calibrated balance between the rights of secured creditors and the safeguards available to
borrowers. While enforcement measures under Section 13 are enabled without prior judicial
intervention, borrowers are conferred a substantive post-measure remedy under Section 17 before
the Debts Recovery Tribunal.

19. The Supreme Court while interpreting Section 14 of the SARFAESI Act 2002 in NKGSB
Cooperative Bank Limited Vs Subir Chakravarty and others (2022) 10 SCC 286, discussed the
object of the Act and emphasized that the intention of law makers is to empower financial
institution. Relevant paragraph of the judgement is reproduced below for ready reference:

"29. The underlying purpose of the 2002 Act is to empower the financial institutions in
India to have similar powers as enjoyed by their counterparts, namely, international banks in other
countries. One such feature is to empower the financial institutions to take possession of securities
and sell them. The same has been translated into provisions falling under Chapter III of the 2002
Act. Section 13 deals with enforcement of security interest. Sub-Section (4) thereof envisages that
in the event a default is committed by the borrower in discharging his liability in full within the
period specified in sub-Section (2), the secured creditor may take recourse to one or more of the
measures provided in sub-Section (4). One of the measures is to take possession of the secured
assets of the borrower including the right to transfer by way of lease, assignment or sale for
realising the secured asset. That, they could do through their "authorised officer" as defined in
Rule 2(a)47 of the 2002 Rules."

20. To achieve the object and reasons of bringing the SARFAESI Act, 2002, Section 14 was
made to provide an effective tool to protect the interest of secured creditor. The secured creditor
may for the purpose of taking possession or control of any 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 security are found to be taken possession
thereof.
1 All. M/S Hinduja Housing Finance Ltd. Vs. State of U.P. & Ors.
555

21. Section 14 of the SARFAESI Act, 2002 provides a complete mechanism under which the
Chief Metropolitan Magistrate or the District Magistrate, as the case may be, shall perform his
duties. Providing the clear timeline to pass suitable orders for the purpose of taking possession of
the secured asset, demonstrate the intention of the law makers to ensure the physical possession in
favour of financial institution, who are secured creditors.

22. Since the controversy in the present batch of petitions turns upon the interpretation and
implementation of Section 14 of the SARFAESI Act, 2002, therefore the said provision is extracted
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 assets is required to be
taken by the secured creditor or if any of the secured assets 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 assets, 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 asset 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;

(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 subsection (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
556 INDIAN LAW REPORTS ALLAHABAD SERIES
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 or 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 pursuance of this
section shall be called in question in any court or before any authority."

23. Report of the Joint Committee on the Enforcement of Security Interest and Recovery of
Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 has analysed the situation
under which the amendment was to be brought in SARFAESI Act 2002. The report highlights the
purpose of bringing the amendment in following words:

"3. The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous
Provisions (Amendment) Bill, 2016 is an important legislation which seeks to amend the Recovery
of Debts due to Banks and Financial Institutions Act, 1993 and the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and make
consequential amendments in the Indian Stamp Act, 1899 and the Depositories Act, 1996. The
object of the amendments proposed in the Bill is to improve the ease of doing business and
facilitate investment leading to higher economic growth and development."
(Page No. 2)

24. The above-mentioned report specifies the reason for the addition of the proviso to provide
the extension upto sixty days in Section 14 of the SARFAESI Act 2002, which is added only to
meet certain exigencies and delay beyond even that maximum extended day in routine cannot be
seen in consonance with the intention of law makers. Relevant paragraph of the Report is
reproduced below for the ready reference:

"25. Recording of reasons by CMM or DM - Clause 12 (Insertion of proviso after second
proviso to section 14(1) of the principal Act). The Committee decide to insert the following proviso
after second proviso to section 14(1) of principal Act with a view to provide further extension of
time to meet certain exigencies to CMM/DM to pass an order under section 14 of the principal Act:
1 All. M/S Hinduja Housing Finance Ltd. Vs. State of U.P. & Ors.
557

"Provided further that where the Chief Metropolitan Magistrate or District Magistrate is
of the opinion that an order under this sub-section can not be passed within thirty days, he may
after recording reasons for the same pass the order within such further period not exceeding in
aggregate sixty days."
(Page No. 13)

25. Report of the Joint Parliamentary Committee can be used to understand the intention of the
law makers, and it has been consistently accepted by the Supreme Court in a catena of judgements.
Supreme Court in Kalpana Mehta v. Union of India, (2018) 7 SCC 1 has discussed the issue of
reliance on different parliamentary proceedings as external aids and observed as follows:

"123. A Constitution Bench in R.S. Nayak v. A.R. Antulay [R.S. Nayak v. A.R. Antulay,
(1984) 2 SCC 183 : 1984 SCC (Cri) 172] , after referring to various decisions of this Court and
development in the law, opined that the exclusionary rule is flickering in its dying embers in its
native land of birth and has been given a decent burial by this Court. The Constitution Bench
further observed that the basic purpose of all canons of the Constitution is to ascertain with
reasonable certainty the intention of Parliament and for the said purpose, external aids such as
reports of Special Committee preceding the enactment, the existing state of law, the environment
necessitating enactment of a legislation and the object sought to be achieved, etc. which
Parliament held the luxury of availing should not be denied to the court whose primary function is
to give effect to the real intention of the legislature in enacting a statute. The Court was of the view
that such a denial would deprive the Court of a substantial and illuminating aid to construction
and, therefore, the Court decided to depart from the earlier decisions and held that reports of
committees which preceded the enactment of a law, reports of Joint Parliamentary Committees and
a report of a commission set up for collecting information can be referred to as external aids of
construction."

(Emphasis added)

26. In the light of above, we are of the considered view that Section 14 empowers the District
Magistrate or the Chief Metropolitan Magistrate to render administrative assistance for taking
possession of the secured asset upon satisfaction of the statutory conditions prescribed under the
provisos to sub-section (1). 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.

27. Recognizing the need for expeditious action, the legislature has prescribed timelines for
disposal of applications under Section 14. The incorporation of time limits is a clear reflection of
legislative intent that such applications are to be decided promptly and not permitted to remain
pending for indefinite periods because the extension is for meeting certain exigencies only.
Supreme Court has interpreted the timeline provided in Section 14 of the SARFAESI Act 2002 and
it has held that the time frame is of directory nature in C. Bright Vs District Collector and others
558 INDIAN LAW REPORTS ALLAHABAD SERIES
(2021) 2 SCC 392 while dealing with the maximum limit provided under Section 14 of SARFAESI
Act 2002.

28. In C. Bright (supra) the Court was dealing with the situation where the power of the
Magistrate after the maximum sixty days was under consideration and while observing the timeline
being directory in nature, the Supreme Court has held that:

"21. The Act was enacted to provide a machinery for empowering banks and financial
institutions, so that they may have the power to take possession of secured assets and to sell them.
The DRT Act was first enacted to streamline the recovery of public dues but the proceedings under
the said Act have not given desirous results. Therefore, the Act in question was enacted. This Court
in Mardia Chemicals@, Transcore@ and Hindon Forge (P) Lid. has held that the purpose of the
Act pertains to the speedy recovery of dues, by banks and financial institutions. The true intention
of the legislature is a determining factor herein. Keeping the objective of the Act in mind, the timelimit to take action by the District Magistrate has been fixed to impress upon the authority to take
possession of the secured assets. However, inability to take possession within time-limit does not
render the District Magistrate functus officio. The secured creditor has no control over the District
Magistrate who is exercising jurisdiction under Section 14 of the Act for public good to facilitate
recovery of public dues. Therefore, Section 14 of the Actis not to be interpreted literally without
considering the object and purpose of the Act. If any other interpretation is placed upon the
language of Section 14, it would be contrary to the purpose of the Act. The time-limit is to instil a
confidence in creditors that the District Magistrate will make an attempt to deliver possession as
well as to impose a duty on the District Magistrate to make an earnest effort to and for reasons to
be recorded within 60 days. In this light, the remedy under Section 14 of the Act is not rendered
redundant if the District Magistrate is unable to handover the possession. The District Magistrate
will still be enjoined upon, the duty to facilitate delivery of possession at the earliest."

29. Supreme Court in State of Punjab v. Bhatinda District Coop. Milk Producers Union
Ltd., (2007) 11 SCC 363 has held that:

"18. It is trite that if no period of limitation has been prescribed, statutory authority must
exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period
would depend upon the nature of the statute, rights and liabilities thereunder and other relevant
factors."

Applying the aforesaid rationale, the expression "certain contingencies" must be construed
strictly and purposively, so as to exclude situations that give rise to unwarranted adjournments and
thereby cause avoidable and impermissible delay in the passing of orders, which would otherwise
defeat the object of the provision.

30. Supreme Court in Salem Advocate Bar Assn. (2) Vs Union of India, (2005) 6 SCC 344,
has taken up the issue of adjournments and its effect and there it is observed by the Supreme Court
that:
1 All. M/S Hinduja Housing Finance Ltd. Vs. State of U.P. & Ors.
559

"31. ...We may, however, add that grant of any adjournment, let alone the first, second
or third adjournment, is not a right of a party. The grant of adjournment by a court has to be on a
party showing special and extraordinary circumstances. It cannot be in routine. While considering
the prayer for grant of adjournment, it is necessary to keep in mind the legislative intent to restrict
the grant of adjournments."

31. 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. Secured
assets are time-sensitive in nature and are susceptible to deterioration and erosion of value. Delay
in enforcement directly impacts recoverability and adversely affects the financial system.

32. Sub-section (3) of Section 14 reinforces the legislative intent by granting statutory
protection to the acts performed by the Chief Metropolitan Magistrate or the District Magistrate, or
any officer authorised by them, in pursuance of the powers exercised under the said provision. The
bar contained therein makes it clear that once assistance is rendered under Section 14 in accordance
with law, such acts are not amenable to challenge before any court or authority. The object of this
provision is to ensure that the process of taking possession of secured assets is not obstructed by
collateral proceedings and that the recovery mechanism under the SARFAESI Act operates in a
swift, effective, and uninterrupted manner. This statutory immunity also underscores that the
Magistrate's role under Section 14 is not adjudicatory but executive and facilitative, intended solely
to aid the secured creditor in enforcement of security interest.

33. This Court cannot overlook the broader public interest involved. Inefficiencies in statutory
recovery mechanisms ultimately burden the public exchequer and erode confidence in institutional
lending. Sections 26B to 26E of SARFAESI Act 2002, aim to bring certainty, transparency and
priority in the enforcement of security interests. Once the secured creditor has complied with the
provisions of Section 26D, there is no reason for denying the creditor the benefit of statutory
provisions enacted to protect the secured creditor.

34. Section 26D mandates registration of the security interest with the Central Registry as a
condition precedent for enforcement under the Act. The requirement of registration ensures public
notice and obviates uncertainty regarding competing claims. Upon such registration, Section 26E
accords priority to the secured creditor over all other debts, subject to the provisions of the Act. The
conferment of statutory priority reflects a deliberate legislative choice to strengthen secured lending
and ensure effective recovery.