A secured creditor retains the right to seek possession of secured assets even after issuing a sale certificate without physical possession, and the relevant authority acts ministerially under Section 14 of the Act.

ORDER :

Sanjeev Sachdeva, J.

1. Petitioner-Punjab National Bank impugns an order dated 27.05.2024 passed by the Collector, Raisen wherein the application filed by the Bank under Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity 'Act') has been dismissed by the Collector.

2. The Collector by the impugned order dated 27.05.2024 has held that during examination of the application, it is found that the Bank has already issued a sale certificate and since the Bank has already issued the sale certificate, it is not entitled to seek physical possession of the secured asset.

3. Learned counsel for the petitioner submits that physical possession of the secured asset had continued with the borrower and; as such, the sale certificate did not transfer full rights to the buyer and the secured creditor i.e. the Bank, continued to retain the right to take measures for taking over possession of the secured assets. He further submits that the Collector under Section 14 of the Act does not have any adjudicatory power and has to exercise only ministerial power of taking over possession of secured asset and handing over the same to the secured creditor.

4. Per contra, learned counsel appearing for respondent No.2 to 4, the debtors, submits that the remedy of the petitioner against the order of the Collector was to approach the Debt Recovery Tribunal under Section 17 of the Act and not approached this Court under Article 226 of the Constitution. He further submits that since the petitioner has already sold the asset and issued a sale certificate, petitioner has ceased to be a secured creditor and has no right to take steps for recovery of possession by applying Section 14 of the Act.

5. The questions that arise for consideration in this petition are:-

(i) as to whether a secured creditor, on issuance of a sale certificate and transfer of title without possession, ceases to have a right to approach the concerned authority to assist the secured creditor in taking possession of the secured asset in terms of Section 14 of the Act ?

(ii) Whether the authority i.e. Chief Metropolitan Magistrate or District Magistrate, as the case may be, has any adjudicatory power under Section 14 of the Act or said authority exercises merely ministerial powers of taking over possession of the secured asset and forwarding the asset to the secured creditor ?

(iii) as to whether a secured creditor can approach the Debt Recovery Tribunal under Section 17 of the Act against an action or inaction of the Chief Metropolitan Magistrate or the District Magistrate ?

6. Reference may be had to the judgment of the Supreme Court in ITC Ltd. vs. Blue Coast Hotels Limited and others , (2018) 15 SCC 99 wherein the Supreme Court has considered the effect of sale of the secured asset by the secured creditor, where the possession of the secured asset continued to remain with the borrower. The Supreme Court has held as under:

“46. The question, however, whether the creditor could maintain an application of possession under Section 14 of the Act even though it had taken over only symbolic possession before the sale of the property to the auction-purchaser, depends on whether it remained a secured creditor after having done so. Section 2(1)(d) of the Act defines “secured creditor” to mean a “banking company” having the meaning assigned to it in clause (c) of Section 5 of the Banking Regulation Act, 1949; Section 2(1)(l) includes debts or receivables and any right or interest in the security whether full or part underlying such debt or receivabl