Borrower’s Subsequent Death Does Not Mandate Fresh Notice to Legal Heirs Under SARFAESI If Section 13(2) Notice Served in Lifetime: High Court
- REEDLAW
- Aug 11
- 3 min read
Updated: Aug 12
REEDLAW Legal News Network reports: The Jammu & Kashmir and Ladakh High Court has ruled that once a valid notice under Section 13(2) of the SARFAESI Act is served on a borrower during his lifetime, the statutory requirement is fulfilled, and the borrower’s subsequent death does not require issuance of a fresh notice to his legal heirs before commencing possession proceedings under Section 14.
The Division Bench of the Jammu & Kashmir and Ladakh High Court, comprising Justice Sanjeev Kumar and Justice Sanjay Parihar, while adjudicating a Writ Petition along with connected cases, held that the service of a valid Section 13(2) SARFAESI Act notice on the borrower during his lifetime satisfies statutory requirements, and the borrower’s subsequent death does not mandate issuance of a fresh notice to legal heirs before initiating possession proceedings under Section 14.
The Petitioners challenged the order dated 22 February 2024 of the Chief Judicial Magistrate, Srinagar, in an application filed by the Respondent-Bank under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The sole grievance was that the Section 14 application had been filed after the death of one of the original borrowers (who died on 24 July 2023), and therefore was, according to the Petitioners, not maintainable when presented on 18 December 2023.
The Respondent-Bank replied that proceedings under Section 14 were directed at taking possession of secured assets and not personally at the borrower, and that no fresh notice to legal heirs was required at the Section 14 stage. The Bank produced a record showing that a notice under Section 13(2) of the SARFAESI Act had been served on the deceased borrower on 7 March 2023 during his lifetime and that the borrower had failed to discharge the liability within the sixty-day period. The Bank therefore exercised its statutory option to proceed under Section 13(4) or Section 14 and filed the requisite affidavit under Section 14, declaring the aggregate claim, existence of a valid security interest, default, NPA classification, service of the Section 13(2) notice, and compliance with applicable rules.
The court examined Sections 13 and 14 and held that the only mandatory notice a borrower was entitled to was that under Section 13(2), which had been duly issued; in the circumstances, the Respondent-Bank was entitled to invoke Section 14 for possession of the secured assets. The Petitioners had not discharged the liability for about two years and had not shown that, had a fresh Section 13(2) notice been issued to legal heirs, they were ready and able to pay the dues within sixty days. The challenge that a fresh notice to heirs was required was found to be misconceived and without merit.
Accordingly, the writ petition was dismissed, and interim directions, if any, were vacated. The court observed that if a One Time Settlement (OTS) scheme was in force, the Petitioners could approach the Respondent-Bank with the prescribed deposits and the Bank would consider such an application strictly in accordance with the OTS terms.
Mr. Shakir Haqani, with Mr. Asif Ahmad Wani, Advocates, represented the Petitioners.
Mr. Adil Asmi, Advocate, appeared for the Respondent No. 1.
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