Rajasthan High Court Directs Police to Restore Bank's Possession Forcibly Taken by Loan Defaulters

In a significant ruling that reaffirms the primacy of law over brute force, the Rajasthan High Court has directed the police to restore possession of a mortgaged property to Indusind Bank Limited after defaulting borrowers used "muscle power" to retake it following lawful proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Justice Anoop Kumar Dhand, presiding over a single bench, warned that failure to act in such situations would breed lawlessness.

When Muscle Power Met the Majesty of Law

The case arose from a loan taken by respondents Sunil Kumar Yadav and Navita from Indusind Bank. When they defaulted, their account was declared a Non-Performing Asset, and the bank initiated proceedings under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate, Kotputli. On 30 August 2025, the magistrate allowed the application and directed the Superintendent of Police to hand over possession of the mortgaged property to the bank.

The order was enforced, and possession was duly taken on 10 December 2025. But within months, the borrowers forcibly re-entered the premises, using physical force to dislodge the bank. The bank lodged an FIR (No. 33/2026) on 6 March 2026 at Police Station Shahjahanpur, District Kotputli-Behror. Despite the passage of over a year, the police took no effective steps to restore possession, compelling the bank to approach the High Court.

A Precedent of Stern Action

Appearing for the bank, Mr. Jitendra Choudhary relied on a coordinate bench decision in Atma Ram Bishnoi & Another v. District Collector & Others , which dealt with an identical situation. In that case, the Jodhpur bench had expressed surprise and alarm that a borrower could use muscle power to overturn a lawful SARFAESI proceeding, and had directed the district authorities to restore possession within four weeks.

Justice Dhand found the present controversy "identical and similar" to Atma Ram Bishnoi , noting that he saw "no valid reason to take a different view."

The Court's Blunt Observations

The judgment pulled no punches. Quoting extensively from the Jodhpur bench, Justice Dhand wrote: "This Court is surprised that on one hand, a person had taken loan and when the same was not repaid, the possession of the mortgaged property was taken over by the petitioner bank as per law but by sheer muscle power , the petitioner bank has been dislodged and possession of the mortgaged property has been forcibly taken over by the respondent No.1 and despite having represented to the law enforcing officer, nothing has been done to uphold majesty of law till date."

The court further warned: "The situation is alarming and the State functionaries are warned that if they do not act in such a situation, it will create lawlessness in the State of Rajasthan which will be viewed very seriously by this Court."

Six Weeks to Restore Order

Disposing of the writ petition , the High Court directed respondents No.1 to 3—the State of Rajasthan , the Superintendent of Police , and the Station House Officer —to "take all possible endeavours to restore the possession of the mortgaged property to the petitioner-Bank in accordance with law." The exercise must be completed within six weeks from the date of receipt of the certified copy of the order.

The ruling sends a clear message: lawful possession obtained under the SARFAESI Act cannot be overturned by physical force, and the police machinery is obligated to act promptly to uphold the rule of law. Failure to do so, the court warned, would invite serious consequences.