Punjab and Haryana High Court: In the present case, a petition was filed by the bank(‘petitioner’) which was aggrieved by non-execution of the order passed by the Chief Judicial Magistrate (‘CJM’) under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’). A Division Judge Bench of Sheel Nagu CJ.,* and Ramesh Kumari J. held that just because time frame was not prescribed for execution of an order passed under Section 14 of the SARFAESI Act does not mean that the District Magistrate (‘DM’) and the Revenue Authority concerned would sit over the file, thereby frustrating the object of SARFAESI Act, which was inter alia to expeditiously recover the mounting bad debts in shape of Non-Performing Asset (NPA) which were a huge burden on the public exchequer.
The Court found it surprising that the Tehsildar-cum-Duty Magistrate concerned (‘Respondent 3’) failed to discharge their statutory duty of assisting and handing over physical possession of the secured asset to the petitioner. The Court emphasised that NPAs are huge burden on the public exchequer, banking and financial system, and, thus, prompt enforcement of recovery mechanism under the SARFAESI Act needs to be paramount for liquidity in the system.
The Court disposed of the petition and directed Respondent 3 to execute the order concerned passed under Section 14 of the SARFAESI Act by handing over physical possession of the secured asset to the petitioner within 30 days.
Further, the Court stated that it was surprising to note that time and again this Court was coming across cause of actions raised by the Banks aggrieved by the fact that an order passed under Section 14 of the SARFAESI Act was not executed. The scheme of the SARFAESI Act enjoins the DM to pass an order under Section 14 of the SARFAESI Act within the extended period of 60 days, and thereafter, the Tehsildar or the Revenue Authority concerned to execute such order without any unnecessary delay.
The Court opined that just because time frame was not prescribed for execution of an order passed under Section 14 of the SARFAESI Act does not mean that the DM and the Revenue Authority concerned would sit over the file, thereby frustrating the object of SARFAESI Act, which was inter alia to expeditiously recover the mounting bad debts in shape of NPA which were a huge burden on the public exchequer.
Further, the Court observed that even though in Oriental Bank of Commerce v. State of Punjab1, a Coordinate Bench of the Court passed an order laying down not only the procedure to be followed by the DM/CJM to deal with an application under Section 14 of the SARFAESI Act, but had also prescribed the timeline for implementation and execution of such orders, it appeared that the functionaries of the State had either not been made aware of the order concerned or they were intentionally not complying with the same.
The Court, therefore, directed the Chandigarh Judicial Academy to hold an Orientation Course for all DMs and Tehsildars of all the districts in the States of Punjab, Haryana and U.T. Chandigarh, at the earliest with the expectation that after attending the same, they will discharge their statutory duty of passing orders under Section 14 of the SARFAESI Act, within a maximum period of 60 days and ensure execution of the same by themselves or through subordinate Revenue Authorities without unnecessary delay and not later than 30 days of passing the order.
This Court further observed that any failure on the part of DM/Deputy Commissioner in performing statutory duty of passing or executing an order under Section 14 of SARFAESI Act would amount to contempt of the orders passed by the Court.
[AU Small Finance Bank v. State of Punjab, CWP No. 23941 of 2025, decided on 20-8-2025]
*Judgment authored by Chief Justice Sheel Nagu
Advocates who appeared in this case:
For the Petitioner: Deepika Mittal, Advocate (Arguing Counsel) and Bharat Mani Goyal, Advocate
For the Respondents: Vipin Pal Yadav, Addl. Advocate General, Punjab
1. CWP No. 11499 of 2019 (P&H HC)
