The District Magistrate lacks jurisdiction to review or stay an order under Section 14 of the Act, becoming functus officio post-order issuance.

Hon’ble Ravindra Maithani, J. (Oral)

The challenge in this petition is made the order dated

21.06.2025 passed by the respondent no.1/the District Magistrate, Nainital (“the DM”), by which the operation of order dated 28.02.2025passed under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“the Act”) by the DM has been stayed.

2. Heard learned counsel for the parties and perused the record.

3. Learned counsel for the petitioner submits that in connection with the loan granted by the respondent no.2, (“the Bank”), when default was made, proceedings under the Act were initiated by the Bank. An application under Section 14 of the Act was moved to the DM. Which was allowed on 28.02.2025. The property in question had already been auctioned and the petitioner is the auction purchaser. But, it is argued that by subsequent impugned order dated 21.06.2025, the DM had stayed the operation of the earlier order dated 28.02.2025 passed under Section 14 of the Act. It is argued that once the order under Section 14 of the Act is passed, the DM becomes functus officio.

He cannot release the order. It is also argued that now, it has been told that the DM is hearing the dispute between the parties, which is not permissible. In support of his contention, learned counsel has placed reliance upon the principles of law, as laid down in the case of Kotak Mahindra Bank Ltd. Vs. State of U.P. and others, 2016 SCC OnLine Allahbad 3854.

4. In the case of Kotak Mahindra (supra), the Hon’ble Division Bench of Allahabad High Court observed that the District Magistrate has absolutely no jurisdiction to review order passed under Section 14 of the Act.

5. Learned counsel for the respondent no.2/Bank admits that the DM has passed an order 28.02.2025 under Section 14 of the Act.

Thereafter, the DM has no authority to review and look into the matter.

6. Learned State counsel submits that on the application of the defaulter the operation of the order passed under Section 14 of the Act has been stayed by the DM.

7. The Act is self contained code with regard to the secured assets. The statement, object and reason of the Act is to regulate securitization and reconstruction of financial assets and enforcement of security interest etc. In the process of recovery of loan amount, when secured assets possession is to be taken, application is moved to the DM or Chief Metropolitan Magistrate for taking possession. Once an order is passed on that application, the Act does not provide any power of review, recall to the District Magistrate or Chief Metropolitan Magistrate.

8. In fact, in the case of Kotak Mahindra Bank Limited Vs. Girnar Corrugators Private Limited and others, (2023) 3SCC 210, the Hon’ble Supreme Court has categorically held that the DM is required to assist the secured creditor in getting the possession of the secured assets. It does not empower the District Magistrate to adjudicate and/or decide the dispute even between the secured creditor and the debtor. In para 34 of the judgment, the Hon’ble Supreme Court observed as follows:-

“34. Under Section 14 of the Sarfaesi Act, the District Magistrate or the Chief Metropolitan Magistrate as the case may be is required to assist the secured creditor in getting the possession of the secured assets. Under Section 14 of the SARFAESI Act, neither the District Magistrate nor the Metropolitan Magistrate would have any jurisdiction to adjudicate and/or decide the dispute even between the secured creditor and the debtor. If any person is aggrieved by the steps under Section 13(4)/order passed under Section 14 , then the