Madhya Pradesh High Court: a Magistrate can't adjudicate disputes while handing over SARFAESI possession

The Madhya Pradesh High Court at Indore (Justice Sandeep N. Bhatt) set aside an order of an Additional District Magistrate (ADM) that had refused Canara Bank's application under Section 14 of the SARFAESI Act, 2002 for assistance in taking physical possession of a secured asset. Section 14 lets a secured creditor ask the Chief Metropolitan Magistrate or District Magistrate to take possession of secured property after the borrower defaults and the creditor has complied with the notice requirements under Sections 13(2) and 13(4) of the Act. The ADM had gone beyond this and examined other aspects of the dispute before refusing the Bank's application.

Relying on the Supreme Court's decision in M/s R.D. Jain and Co. v. Capital First Ltd. (Civil Appeal No. 175/2022, decided 27 July 2022), which held that Section 14 does not involve an adjudicatory process on points raised by the borrower against the secured creditor, the High Court held that the Magistrate's role under Section 14 is confined to verifying the mortgage documents and compliance with Sections 13(2) and 13(4) — not to adjudicating the borrower's objections. Since the ADM had exceeded this limited role, the order was quashed, with the Bank permitted to file a fresh application to be decided strictly within the bounds of Section 14, preferably within 30 days.