Ensure Strict Compliance With S. 14 SARFAESI Act For Giving Physical Possession Of Secured Asset To Financial Institutions: Allahabad HC To UP Govt

The Allahabad High Court has directed the Chief Secretary of the State of Uttar Pradesh to issue clear directions to all the concerned authorities in the State of Uttar Pradesh to strictly comply with the provisions of Section 14 of the SARFAESI Act, 2002.According to Section 14 of the SARFAESI Act, the banks/financial institutions and reconstruction companies have the right to take possession of the secured asset and it is the responsibility of the concerned District Magistrate/Chief Metropolitan Magistrate to hand over the possession of such secured asset to the financial institutions with the help of the police.Essentially, the bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji issued this order in a writ plea filed by the Asset Reconstruction Company India Ltd alleging that despite its repeated requests, the State-respondents could not give physical possession of the secured asset in question to the petitioner.The Court noted that the Legislative Mandate of Section 14 of the SARFAESI Act, 2002 is to the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction the secured asset or other documents relating thereto may be situated or found, and the aforesaid two officers are statutorily bound to take possession thereof.The provision states that even the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, on the request being made to him, are statutorily bound to take possession of such asset and documents relating thereto and to forward such asset and documents to the secured creditors provided an application is submitted by the secured creditor accompanied by an affidavit containing averments as provided in Section 14 of the Act."Section 14 of the SARFAESI Act, 2002 itself creates statutory obligation upon the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, for public good to facilitate recovery of public dues, to instil a confidence in creditors that the District Magistrate will make an attempt to deliver possession as well as imposes a duty on the District Magistrate to make an earnest effort to comply with the mandate of the statute to deliver the possession within the prescribed time. Even if the prescribed time limit has passed over and the District Magistrate could not handover possession of the secured asset, still the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, will be enjoined upon the duty to facilitate the delivery of possession at the earliest," the Court further stressed.Against this backdrop, the Court noted that in the instant case, there was a failure on the part of the respondent Nos.1 to 4 to discharge their duty under Section 14 of the SARFAESI Act, 2002 as they failed to take possession of the secured asset and to hand it over to the financial institution (petitioner).In view of this, the writ petition was allowed and the respondent Nos.1 and 4 were directed to give physical possession of the secured asset in question to the petitioner-bank within one month if there is no legal impediment.Case title - Asset Reconstruction Company India Ltd. v. State Of U.P. And 4 Others [WRIT - C No. - 6529 of 2022]Citation: 2022 LiveLaw (AB) 263Click Here To Read/Download Order

Ensure Strict Compliance With S. 14 SARFAESI Act For Giving Physical Possession Of Secured Asset To Financial Institutions: Allahabad HC To UP Govt

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