Allahabad High Court Rules No Hearing for Borrower During Section 14 SARFAESI Act Proceedings

Allahabad High Court Holds Borrower Has No Right to Hearing Before District Magistrate in SARFAESI Possession Proceedings

The Allahabad High Court has firmly ruled that a borrower cannot demand a hearing before the District Magistrate (DM) when the DM acts under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). A Division Bench of Justices Prakash Padia and Vivek Saran dismissed a writ petition filed by borrowers Sachchidanand Yadav and another, who challenged an order dated February 28, 2026, passed by the Additional District Magistrate (ADM) in proceedings initiated by Adhar Housing Finance Limited.

The Legal Question: Natural Justice vs. Ministerial Function

The core issue was whether a borrower must be heard before the DM passes an order under Section 14, which empowers secured creditors to seek the DM’s assistance in taking possession of secured assets. The petitioners contended that the ADM’s order suffered from a manifest error, as they were not afforded any opportunity of hearing. They relied heavily on the Supreme Court’s decision in Harshad Goverdhan Sondagar v. International Assets Reconstruction Co. Ltd. (2014) 6 SCC 1, arguing that principles of natural justice required a pre-decisional hearing.

Opposing this, counsel for the secured creditor – represented by Ramesh Kumar Shukla – submitted that Section 14 proceedings are not adjudicatory and do not necessitate any hearing for the borrower. They cited a Coordinate Bench ruling in Bank of Baroda (formerly Vijaya Bank) v. State of U.P. and others (2024 SCC OnLine All 8172) to support the position that the DM’s role is purely ministerial.

Court’s Reasoning: Following Supreme Court Precedents

After examining Section 14 in detail, the High Court observed that the provision contains “no requirement to issue any notice to the borrower prior to proceeding against the mortgaged property.” The Bench noted that this view is fortified by two Supreme Court judgments: Balkrishna Rama Tarle (Dead) v. Phoenix ARC Private Limited (2023) 1 SCC 662 and R.D. Jain & Co. v. Capital First Ltd. (2023) 1 SCC 675.

Quoting from R.D. Jain , the Court reiterated: “the step to be taken by the CMM/DM under Section 14 of the SARFAESI Act, is a ministerial step… while disposing of the application under Section 14… no element of quasi-judicial function or application of mind would require. The Magistrate has to adjudicate and decide the correctness of the information given in the application and nothing more.”

Critically, the Bench distinguished Harshad Goverdhan Sondagar , noting that the precedential value of that case was limited to tenants claiming protective rights, not borrowers. The Supreme Court itself, in Balkrishna Rama Tarle , had clarified that Sondagar requires a hearing only for persons claiming to be ‘Class (1) or (2)’ lessees – not for borrowers.

The Final Decision

“In such view of the matter, we are of the considered opinion that the petitioners being borrower himself was not required to be heard while disposing of the application under Section 14 of the SARFAESI Act by the concerned Magistrate since it is not required to adjudicate issues raised by the borrower qua the secured creditors,” the Bench concluded.

The petition was dismissed with no order as to costs, effectively affirming that Section 14 proceedings remain a streamlined, ministerial mechanism for secured creditors to obtain possession, without the encumbrance of a full-fledged hearing for the borrower.

Case Title: Sachchidanand Yadav & Anr. v. State of U.P. & Ors.
Court: High Court of Judicature at Allahabad
Coram: Hon’ble Justice Prakash Padia and Hon’ble Justice Vivek Saran
Case No.: WRIT – C No. 27589 of 2026
Date of Judgment: August 25, 2026
Representation: Petitioner’s Counsel – Umesh Chandra Prajapati; Respondent’s Counsel – C.S.C. & Ramesh Kumar Shukla