DM's Adjudication On Borrowers' Claims In Application U/S 14 SARFAESI Act 'Totally Unwarranted': Rajasthan HC Flags Non-Compliance Of SC Orders

The Rajasthan High Court has expressed displeasure over the order by a District Magistrate, who, while allowing an application under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the “SARFAESI Act”), attached a condition of non-execution in case of any dispute regarding title/possession over the property.

Section 14 of the Act empowers secured creditors to seek the court's assistance in taking possession of secured assets pledged as collateral in case of a loan default.

While terming it “totally unwarranted”, Justice Anoop Kumar Dhand opined that in light of clear orders being issued in earlier cases to all the Chief Metropolitan Magistrates/District Magistrates, it was expected that in future, such orders shall be followed without any adventure in their interpretation.

The Court further directed that the order be sent to the Department of Revenue, Government of Rajasthan, so that the officers may stop interpreting Section 14 of the Act in their own manner.

The petitioner had submitted an application under Section 14, which was allowed by the magistrate, with an additional condition being issued to the police officers to not execute the order in case any dispute regarding the title or possession of the property existed.

After hearing the contentions, the Court referred to the Supreme Court case of M/s R.D. Jain and Co. v Capital First Ltd. & Ors. in relation to powers under Section 14 of the Act, which ruled,

"The powers exercised by the CMM/DM is a ministerial act. He cannot brook delay. Time is of the essence. This is the spirit of the special enactment… While disposing of the application under Section 14 of the SARFAESI Act, no element of quasijudicial function or application of mind would require… Section 14 does not involve an adjudicatory process qua points raised by the borrower against the secured creditor taking possession of secured assets.”

Further reference was also made to a Rajasthan High Court decision in Jammu and Kashmir Bank Limited v M/S Trunks and Roots and Ors. that gave the same ruling and further highlighted that despite multiple reiterations by the Apex Court to this effect, in numbers of cases it was seen that the orders were passed as per the convenience of the officers without following the Apex Court's mandate.

The Court pointed out that in the abovementioned order, direction was passed to all the Chief Metropolitan Magistrates/District Magistrates to follow the Apex Court's mandate in letter and spirit and not make any adventure in interpreting the order in any way.

In this light, the challenged order was opined to be totally unwarranted, and the condition appearing in the order was directed to be deleted.

“This Court expects it again that in future the Chief Metropolitan Magistrates/District Magistrates shall follow the orders passed by this Court as well as the Apex Court in its letter and spirit and shall not adventure in interpreting the order in their own way.”

While directing the order to be shared with the Revenue Department, the petition was disposed of.

Title: Sammaan Capital v District Magistrate & Ors.

Citation: 2025 LiveLaw (Raj) 252

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