Secured Creditor Entitled to Invoke Section 14 SARFAESI Act for Physical Possession Even After Sale: Calcutta HC
- REEDLAW
- Sep 14
- 4 min read
REEDLAW Legal News Network reports: In a significant pronouncement, the Calcutta High Court held that a secured creditor is entitled to invoke Section 14 of the SARFAESI Act even after the sale of the secured asset. The Court clarified that the District Magistrate’s role in such matters is purely executory, confined to ensuring delivery of actual physical possession, and does not extend to adjudicating disputes.
The Calcutta High Court Division Bench comprising Justice Debangsu Basak and Justice Md. Shabbar Rashidi, while adjudicating an appeal and a connected interlocutory application, reaffirmed that the powers of the District Magistrate under Section 14 of the SARFAESI Act are ministerial and limited to facilitating physical possession of the secured asset. A secured creditor can invoke Section 14 of the SARFAESI Act even after sale, with the District Magistrate’s role confined to ensuring delivery of possession without adjudication. The Court categorically held that no adjudicatory authority rests with the District Magistrate in such proceedings.
The appeal was directed against an order dated August 18, 2025, arising out of a writ petition concerning proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The appellant, who had purchased an immovable property in a sale conducted under the said Act, contended that actual physical possession of the property had not been handed over, as the secured creditor had not obtained possession through the jurisdictional District Magistrate.
It was noted that the financial creditor had earlier filed an application under Section 14 of the Act on February 18, 2016, which was rejected by the District Magistrate on March 27, 2025. Subsequently, the secured asset was sold, and the appellant acquired title through a sale certificate issued on March 28, 2025. The financial creditor challenged the rejection order by filing a writ petition, which was dismissed by the learned Single Judge. The appellant contended before the appellate forum that the writ petition ought to have been allowed and directions issued to the District Magistrate for assistance under Section 14 of the Act, relying on the decision of the Supreme Court in ITC Limited v. Blue Coast Hotels Limited and Others, REEDLAW 2018 SC 03201.
The respondents opposed the appeal, raising issues of maintainability and locus, contending that the appellant, being a purchaser, could not seek relief under Section 14. They also referred to an order of injunction passed by the Commercial Court concerning the property. The Tribunal observed, however, that such an order did not restrain the financial creditor from proceeding under the SARFAESI Act, nor did it affect the statutory rights of the secured creditor to seek possession.
The appellate court held that an appeal at the behest of the purchaser was maintainable, as the refusal to grant relief under Section 14 affected the purchaser’s right, title, and interest in the secured asset. It reiterated that the District Magistrate, while exercising powers under Section 14, was not an adjudicatory authority, and the private respondents were not without remedy since proceedings under Section 17 were already pending. Referring to the ratio in ITC Limited v. Blue Coast Hotels Limited and Others, REEDLAW 2018 SC 03201, the court clarified that a secured creditor was entitled to invoke Section 14 even after a sale to a third-party purchaser to ensure that actual physical possession was delivered.
In view of the settled position, the order dated March 27, 2025, of the District Magistrate was set aside. The appellate court directed the District Magistrate to dispose of the application dated February 18, 2016, within two weeks and to ensure delivery of actual physical possession of the secured asset to the financial creditor through its authorised representative within four weeks. The appeal and connected applications were accordingly disposed of without any order as to costs.
Mr. Rishad Medosa, Mr. Deepan Kumar Sarkar, Ms. Deepti Priya, and Mr. Ramendu Agarwal, Advocates, represented the Appellant.
Mr. Debahis Saha, Advocate, appeared for the SBI.
Ms. Rashmi Bothra, Advocate, appeared for Respondent No. 5 to Respondent No. 7.
Mr. Kanishk Kejriwal, Ms. Arushi Rathore and Mr. Pritam Roy, Advocates, appeared for Respondent No. 6 to Respondent No. 9.
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