Secured creditors are not required to attempt possession before seeking a Magistrate's order under Section 14 of the SARFAESI Act.

JUDGMENT : 18^th March, 2025 THE APPELLATE TRIBUNAL :

Heard the Learned Counsel for the parties and perused the record.

2. Instant appeal has been preferred against an order dated 19.8.2024 passed by Learned DRT-III, Kolkata in I.A. 3110 of 2024 in S.A. 676 of 2024 (Smt. Lavina Murarka & Another -vs- Axis Bank & Others).

3. Respondents in the appeal are SARFAESI Applicants who had availed loan from the Secured Creditor/Appellant. Loan account became irregular and was classified as N.P.A. Notice under Section 13 (2) of the SARFAESI Act, 2002 (hereinafter referred to as the ‘Act’) was issued by the Bank on 18.3.2023. Thereafter, an order dated 19.4.2024 was obtained by the Secured Creditor from the Learned Chief Judicial Magistrate, Alipore which was challenged by the Respondents by filing I.A. 3110 of 2024 on the ground that the said order is obtained without taking symbolic possession, as required under Section 13 (4) of the Act. Consequent thereto, Learned DRT restrained the Bank from taking any coercive action in respect of the secured assets. Feeling aggrieved by this observation and direction, Appellant has preferred the instant appeal.

4. Feeling aggrieved, the Appellant has preferred the instant appeal.

5. At the very outset, Learned Counsel for Appellants would submit that the Appellants have obtained the order of the Learned Chief Judicial Magistrate in accordance with law. Learned Counsel has placed reliance upon paragraph 26 of the judgment of the Hon’ble Apex Court in the case of Standard Chartered Bank -vs- Nobel Kumar & Others [(2013) 9 SCC 620). On the strength of the judgment Learned Counsel submits that the Secured Creditor was well within its powers to seek an order from the Learned Chief Judicial Magistrate under Section 14 of the Act.

6. Per contra, Learned Counsel for Respondents submits that Learned DRT has passed the order in accordance with law. It was incumbent upon the Secured Creditor to issue a notice under Section 13 (4) of the Act which should be in consonance with the provisions of Section 13 (2) of the Act. It is further submitted that where a specific provision in the statue provides to act in a particular manner that act should be done by the concerned authority in that manner. No deviation can be made. It is further submitted that since no notice under Section 13 (4) of the Act was issued by the Secured Creditor and directly an order under Section 14 of the Act was obtained which is against law. Learned Counsel further submits that the impugned order, passed by Learned DRT, is also challenged by the Respondents before the Hon’ble High Court by preferring a Writ Petition.

7. As far the contention of the Learned Counsel for Respondent is concerned, no doubt where a specific provision in the statue provides to act in a particular manner that act should be done in that manner. No deviation can be made. However, Section 13 (2) provides for issuance of notice and thereafter sixty days time is granted to the Borrower to discharge its liability failing which the Secured Creditor will be entitled to exercise all or any other rights under Sub-section (4) of Section 13 of the Act. Section 13 (4) (a) of the Act provides that when the Borrower fails to discharge his liability in full, Secured Creditor may take possession of the secured assets of the Borrower, including the right of transfer by way of lease, assignment or sale for realising the secured assets. The only rider is that the possession can only be taken by the Secured Creditor not before expiry of sixty days of the notice issued under Section 13 (2) of the Act. Where the Secured Creditor can obtain an order from the District Magistrate under Section 14 of the Act is dealt with by the Hon’ble Apex Court in Nobel Kumar (supra) wherein it was held in paragraph 26 that :

“26. It is in the abovementioned background of the legal frame of Sections 13 and 14, we are required to examine the correctness of the conclusions recorded by the High Court. Having regar