UCO Bank vs Asha Oil Industries - 2026 Supreme(MP) 613

Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(4) and 14 - Security Interest (Enforcement) Rules, 2002 - Rule 8 - Taking possession of secured assets - Whether it is mandatory for a secured creditor to obtain assistance from the Chief Metropolitan Magistrate (CMM) or District Magistrate (DM) under Section 14 to take physical possession - A secured creditor can take physical possession of the secured asset independently under Section 13(4) and Rule 8, provided the requisite notices are issued and no resistance is encountered - Section 14 is an enabling provision for assistance and not a mandatory prerequisite in all cases of possession - The absence of the borrower/mortgagor during the process of taking possession does not automatically lead to a presumption that possession was taken forcibly. (Paras 18, 19, 23 and 26)

(B) Interpretation of Section 13 vs Section 14 - Section 13 provides the secured creditor with options to enforce security interest; Section 14 serves as a remedy to obtain assistance from administrative authorities to facilitate taking possession when required. (Para 19)

Facts of the case:
A secured creditor initiated recovery proceedings under the SARFAESI Act after the borrower's account was classified as a Non-Performing Asset. Following the issuance of notices under Section 13(2) and 13(4), the secured creditor took physical possession of the mortgaged properties. The borrower challenged this action before the Debt Recovery Tribunal and subsequently the Debt Recovery Appellate Tribunal, both of which ruled that taking physical possession without resorting to the assistance of the District Magistrate or Chief Metropolitan Magistrate under Section 14 was illegal and ordered the restoration of possession to the borrower.

Findings of Court:
The court found that the findings of the lower tribunals were perverse and contrary to law. It held that the secured creditor has the legal authority to take possession under Section 13(4) and Rule 8 without necessarily invoking Section 14, particularly where the properties were closed or vacant and no resistance was offered.

Issues: Whether the secured creditor must mandatorily resort to proceedings under Section 14 of the SARFAESI Act to take physical possession of secured assets, or whether such possession can be taken directly under Section 13(4) of the Act read with Rule 8 of the 2002 Rules.

Ratio Decidendi: The court reasoned that the SARFAESI Act and the 2002 Rules provide multiple methods for taking possession. If the secured creditor serves the requisite notice under Rule 8(1) and encounters no resistance, they may take possession and proceed toward the sale of assets. Section 14 is intended to provide assistance from the CMM/DM in cases of resistance or when the creditor prefers that route. Mandating Section 14 for all cases would reward defaulting borrowers and defeat the legislative objective of the Act to ensure efficient recovery of debts.

Result: Petition allowed; orders of the Debt Recovery Tribunal and Debt Recovery Appellate Tribunal set aside.

Legal Category Hierarchy

1. Bank initiated SARFAESI proceedings for recovery of loan and took possession of secured assets; DRT/DRAT set aside possession. (Para 2 )

2. Bank argued Section 14 not mandatory; borrower argued possession without Section 14 illegal. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 )

3. Petition allowed; impugned DRT and DRAT orders set aside; Bank may proceed in accordance with law. (Para 28 , 29 , 30 )

4. Whether a secured creditor must necessarily invoke Section 14 of SARFAESI Act before taking physical possession of secured assets?

No, the secured creditor can take possession under Section 13(4) and Rule 8 without Section 14 assistance; Section 14 is only for when assistance is needed. (Para 13 , 18 , 19 , 21 , 23 , 26 )

5. Whether the presence of the borrower is mandatory for taking possession of secured assets?

No, only requirement is notice under Section 13(2) and 13(4); absence of borrower does not make possession forcible. (Para 18 , 20 )

6. Whether there is a distinction between symbolic and actual possession under SARFAESI Act?

No, the Act does not recognize such dichotomy; the authorized officer can take actual possession directly. (Para 22 )

7. What is the object of SARFAESI Act regarding enforcement of security interest?

To enable secured creditors to enforce security interest without court intervention, avoiding procedural delays. (Para 14 , 24 , 25 )

ORDER :

Anand Pathak, J.

1. The instant Writ Petition under Article 226(1) of the Constitution of India is filed seeking following reliefs:-

“I. That the present writ petition may kindly be allowed.

II. That, the impugned orders dated 14.05.2025 and 28.09.2021 passed by the learned Debts Recovery Appellate Tribunal, Allahabad in Regular Appeal No.15/2022 titled as Uco Bank-V-M/s. Asha Oil Mills & Ors. and Debts Recovery Tribunal, Jabalpur in S.A. No.217/2019 titled as M/s. Asha Oil Mills & Ors. V. UCO Bank respectively may kindly be quashed and set aside.

III. That, the directions issued by Learned Tribunal and Appellate Tribunal in the impugned orders to the petitioner bank to return money deposited by auction purchaser may kindly be quashed, being contrary to the rules.

IV. That, the directions issued by learned DRT and thereafter by learned DRAT in the impugned orders to restore physical possession of the subject properties including the movable stock and machineries to the respondents may kindly be quashed, being impracticable to perform.

V. That, the respondents may kindly be directed to pay the expenses of present proceedings and other legal proceedings and VI. Any other relief/ direction/ order which this Hon'ble Court deems fit in the interest of justice.”

2. Precisely stated facts of the case are that petitioner/ UCO Bank is a Government of India undertaking which is established under Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. Respondent No.1 is a proprietorship concern acting through its proprietor Shri Pradeep Shivhare and respondent No.2- Smt. Poonam Shivhare. They availed the Cash Credit (Hypothecation) Limit to the extent of Rs.05 crores from the petitioner/ Bank from time to time. As a security of loan, respondents mortgaged their immovable properties comprising of Plot No.63 Malanpur Industrial Area, Bhind Road, District Bhind, M.P. (Mortgage property no.1) and plot no.58, Laxmibail Colony, Gwalior (M.P.) (Mortgaged property no.2). Respondents failed to comply with various terms of loan agreements and defaulted. Therefore, Loan Account of respondents was classified by the petitioner/ Bank as Non-Performing Assets (NPA) w.e.f. 31/10/2018 in accordance with the guidelines issued by the Reserve Bank of India from time to time. Chain of events precipitated filing of this petition.

3. Following list of dates and events are worth consideration and the same are as under:-

4. It is the submission of learned counsel for the petitioner/ Bank that learned Debt Recovery Tribunal, Jabalpur (DRT) as well as learned Debt Recovery Appellate Tribunal (DRAT), Allahabad caused illegality in passing the impugned orders. According to learned counsel, Tribunals below erred in giving conclusion that once notice under Rule 8 (1) of the (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) (hereinafter referred as “SARFAESI Act”) is issued, affixed and delivered then there is obligation on part of the Bank either to resort Section 14 proceedings of the SARFAESI Act before taking physical possession or the borrower/ mortgagor/ guarantor should be present there for handing over peaceful possession.

5. According to learned counsel, said approach is erroneous. As submitted, it is not required that secured creditor has to approach Chief Metropolitan Magistrate (CMM)/ District Magistrate (DM) for taking possession from the borrower necessarily. Scheme of SARFAESI Act specially Section 13(4) provides that in case of failure of borrower to discharge his liability in full within the period specified in sub-section (2) of the SARFAESI Act, the secured creditor may take recourse to take possession of the secured assets of the borrowers.

6. Similarly, Section 14 of the SARFAESI Act contemplates that if possession of any secured asset is required to be taken by the secured creditor then secured creditor may approach CMM/ DM. Role of these authorities is to assist secured creditor in

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2026 Supreme(MP) 613

IN THE HIGH COURT OF MADHYA PRADESH AT GWALIOR
ANAND PATHAK, PUSHPENDRA YADAV, JJ.

UCO Bank – Petitioner
Versus
M/S Asha Oil Industries And Others – Respondents
Writ Petition No.31051 of 2025
Decided On : 28-01-2026

A secured creditor can take physical possession of secured assets directly under Section 13(4) of the SARFAESI Act and Rule 8 of the 2002 Rules without mandatory recourse to Section 14, provided requisite notices are served and no resistance is encountered.

Legal Category Hierarchy

Table of Contents

4. Whether a secured creditor must necessarily invoke Section 14 of SARFAESI Act before taking physical possession of secured assets?

5. Whether the presence of the borrower is mandatory for taking possession of secured assets?

6. Whether there is a distinction between symbolic and actual possession under SARFAESI Act?

7. What is the object of SARFAESI Act regarding enforcement of security interest?

Judicial Analysis

2026 Supreme(MP) 613

IN THE HIGH COURT OF MADHYA PRADESH AT GWALIORANAND PATHAK, PUSHPENDRA YADAV, JJ. UCO Bank – Petitioner VersusM/S Asha Oil Industries And Others – RespondentsWrit Petition No.31051 of 2025 Decided On : 28-01-2026

A secured creditor can take physical possession of secured assets directly under Section 13(4) of the SARFAESI Act and Rule 8 of the 2002 Rules without mandatory recourse to Section 14, provided requisite notices are served and no resistance is encountered.

Legal Category Hierarchy

Table of Contents

4. Whether a secured creditor must necessarily invoke Section 14 of SARFAESI Act before taking physical possession of secured assets?

5. Whether the presence of the borrower is mandatory for taking possession of secured assets?

6. Whether there is a distinction between symbolic and actual possession under SARFAESI Act?

7. What is the object of SARFAESI Act regarding enforcement of security interest?

Cases Referred (3)

Judicial Analysis

IN THE HIGH COURT OF MADHYA PRADESH AT GWALIOR
ANAND PATHAK, PUSHPENDRA YADAV, JJ.

UCO Bank – Petitioner
Versus
M/S Asha Oil Industries And Others – Respondents
Writ Petition No.31051 of 2025
Decided On : 28-01-2026