Calcutta High Court: A petition was filed by UCO Bank (petitioner) challenging the order dated 04-12-2024 passed by the District Magistrate, Cooch Behar, whereby the application filed by the petitioner under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) seeking assistance in taking physical possession of a mortgaged property was rejected. Gaurang Kanth, J., held that there is no infirmity in the impugned order dated 04.12.2024 and granted the petitioner to file a fresh application under Section 14 of the SARFAESI Act before the District Magistrate, duly supported by an appropriate affidavit strictly in compliance with the first proviso to Section 14(1) of the Act, read with the relevant Rules and Notifications.
It is the case of the petitioner that respondent 2, the borrower had availed a loan facility from the petitioner-bank and failed to repay the same. To secure the said credit facilities, respondent 2 mortgaged certain immovable properties in favour of the petitioner. The loan account was classified as Non-Performing Asset (NPA) on 30-06-2019. The Bank contended that it had duly followed the statutory procedure after classifying the borrower’s account as a Non-Performing Asset (NPA) on 30-06-2019 and had proceeded to initiate recovery measures under the SARFAESI Act. These included the issuance of a demand notice under Section 13(2), symbolic possession under Section 13(4), and a subsequent application filed before the District Magistrate on 6-07-2021 under Section 14 for physical possession of the secured assets.
The borrower, i.e., respondent 2, meanwhile, had approached the Debt Recovery Tribunal under Section 17 of the Act, which was still pending. When the District Magistrate failed to dispose of the Section 14 application within a reasonable time, the petitioner filed an appeal before the Court, which directed the District Magistrate on 07-03-2024 to dispose of the application within thirty days. Despite the Court’s direction, the District Magistrate delayed action, prompting the Bank to initiate contempt proceedings. However, just before the contempt notice was issued, the District Magistrate passed the impugned order on 04-12-2024, rejecting Section 14 application on several substantive grounds.
The Court observed that the District Magistrate had rightly identified serious deficiencies and non-compliance with the statutory requirements. The impugned order highlighted five major flaws in the affidavit filed by the Bank’s Authorised Officer. First, there was an inexplicable discrepancy in the timeline, ie., while the loan was allegedly sanctioned on 24-12-2019, the loan account was declared an NPA on 30-06-2019, a date preceding the sanction itself, suggesting either a grave factual error or possible misrepresentation. Second, the affidavit failed to disclose that part of the mortgaged property was agricultural land, although such land is exempt from the SARFAESI Act under Section 31(i). This mischaracterization was material, as the affidavit had incorrectly claimed that no agricultural land was involved.
Third, the Bank failed to substantiate that it had duly considered and communicated the reasons for rejecting the borrower representation made under Section 13(3A), as mandated by clause (vii) of the first proviso to Section 14(1). Fourth, the affidavit claimed that a possession notice under Section 13(4) had been issued, but no such document or even the date of such notice was provided. Fifth, the affidavit did not include a mandatory declaration under clause (ix) of the first proviso to Section 14(1), affirming that the provisions of the Act and applicable Rules had been complied with. Furthermore, the affidavit lacked any reference to registration of the security interest with the Central Registry, which is a prerequisite for enforcement under Section 26D of the Act.
The Court clarified that the role of the District Magistrate under Section 14 is ministerial and not adjudicatory. However, even in a ministerial capacity, the Magistrate must ensure that the affidavit accompanying a Section 14 application strictly adheres to the legal requirements laid down by the statute, the Rules (including Rule 8 of the Security Interest (Enforcement) Rules, 2002), and relevant government notifications (such as the notification dated 17-09-2013). The presence of these essential particulars is a condition of precedent for invoking the Magistrate’s jurisdiction. In this case, the affidavit defects were not merely procedural lapses but fundamental omissions that struck at the very root of the petitioner’s entitlement to relief under Section 14.
Rejecting the petitioner’s argument that all relevant documents had been submitted and that any defect was curable, the Court held that statutory compliance could not be presumed or retroactively regularised. The affidavit’s insufficiency rendered the entire application untenable. Thus, the Court upheld the District Magistrate’s decision, finding no legal infirmity in the rejection order.
Accordingly, the writ petition was dismissed. However, the Court granted the Bank liberty to file a fresh application under Section 14, this time accompanied by a proper affidavit in strict conformity with the statutory and regulatory requirements. The Court directed that if such a corrected application is made, it should be decided by the District Magistrate in accordance with law and within the timeframe prescribed by the statute.
[UCO Bank v. District Magistrate, 2025 SCC OnLine Cal 4993, decided on 19-06-2025]
Advocates who appeared in this case:
Mr. Rahul Mishra, Mr. Deborshi Dhar, Advocates for the Petitioner
Mr. Nabankur Paul, Mr. Bikash Singha, Advocates for the State
Mr. Debabrata Saha Roy, Adv Mr. Neil Basu, Adv Mr. Subhasish Misra, Adv Ms. Shreya Sarkar, Advocates for the added respondent
