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2025 Supreme(Online)(MP) 6250
HIGH COURT OF MADHYA PRADESH
VIVEK RUSIA, BINOD KUMAR DWIVEDI, JJ
AU SMALL FINANCE BANK LTD THROUGH AUTHORIZED SIGNATORY MR MADHUR GUPTA – Appellant
Versus
THE STATE OF MADHYA PRADESH – Respondent
WRIT PETITION No. 34845 of 2025
For the Appellants/Petitioners: Shri Rohit Saboo
For the Respondents: Shri Sudeep Bhargava
Secured creditors must be assisted in possessory applications without undue technical dismissals; Magistrates must provide opportunities for compliance.
Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14 - Dismissal of application for recovery of debt due to non-compliance with notice requirements. Court emphasized the ministerial nature of proceedings under Section 14 and the obligation of the Magistrate to assist secured creditors without engaging in adjudication. (Para 9)
(B) Technical approach not permissible - The Court ruled that the Chief Judicial Magistrate should not dismiss applications summarily but provide opportunities for compliance with procedural requirements. (Paras 5 and 9)
Facts of the case:
The petitioner filed an application for possession under Section 14 of the SARFAESI Act, which was dismissed on technical grounds relating to notice under Section 13(2). The Court found that a more cooperative approach was necessary instead of hyper-technical dismissals.
Findings of Court:
The order dated 14.08.2025 was set aside, and the matter was remanded for proper proceedings according to Section 14, affirming the need for compliance and assistance.
Issues: Whether the dismissal for procedural non-compliance was justified, and the role of the Magistrate in such applications.
Ratio Decidendi: The powers exercised under Section 14 do not involve adjudicatory processes, and dismissals shall not occur without giving the opportunity to correct deficiencies. Cooperation between creditors and the Magistrate is essential.
Result: The impugned order was set aside and the matter remanded for further proceedings.
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| 1. mandatory compliance and ministerial powers under sarfaesi. (Para 5) |
HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI th ON THE 4 OF SEPTEMBER, 2025 WRIT PETITION No. 34845 of 2025 AU SMALL FINANCE BANK LTD THROUGH AUTHORIZED SIGNATORY MR MADHUR GUPTA Versus THE STATE OF MADHYA PRADESH AND ANOTHER Appearance:
Petitioner by Shri Rohit Saboo - Advocate.
Respondents - State of Madhya Pradesh by Shri Sudeep Bhargava -
Deputy Advocate General appearing on behalf of the Advocate General.
ORDER Per: Justice Vivek Rusia Heard on the question of admission.
The petitioner has filed the present writ petition under Article 226/227 of the Constitution of India, being aggrieved by the order dated 14.08.2025 (Annexure P/4) whereby the Chief Judicial Magistrate, Mandsaur, District Mandsaur (MP), has dismissed an application under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act , 2002 (hereinafter referred to as the SARFAESI Act), on the technical ground that notice under Section 13 (2) of the SARFAESI Act was not issued in accordance with law.
Signature Not Verified Signed by: RAMESH
2. That the petitioner initiated proceedings against the borrower for recovery of debt under the provisions of the SARFAESI Act by issuing the notice under Section 13 of the SARFAESI Act, and when the debt was not paid, an application was filed before the CJM Mandsaur under Section 14 of the SARFAESI Act. Before passing the aforesaid impugned order, the learned Magistrate heard on the registration of the application. Vide order dated 19.08.2025 (Annexure P/4) learned the Chief Judicial Magistrate, Mandsaur, District Mandsaur (MP) has dismissed an application under Section 14 of the SARFAESI Act on the technical ground that notice under Section 13 (2) of the SARFAESI Act was not issued and served in accordance with law. Hence this writ petition before this Court.
3. We have heard the parties.
4. Relevant provisions of Section 14 of the SARFAESI Act are reproduced, as under: -
"14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.- (1) Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him -
(a) take possession of such asset and documents relating thereto;
and ( b ) forward such asset and documents to the secured creditor.
[Provided that any application by the secured creditor Signature Not Verified Signed by: RAMESH shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that-
( i ) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application;
(ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or Financial Institution is within the limitation period;
( i i i ) the borrower has created security interest over various properties, giving the details of the properties referred to in sub-clause (ii) above.
(iv) the borrower has committed default in repayment of the financial assistance granted, aggregating the specified amount;
(v) consequent upon such default in repayment of the fInancial assistance the account of the borrower has been classified as a nonperfo
