Madras HC issues directives for prompt disposal of possession applications under Section 14 SARFAESI Act

The Madras High Court has issued State-wide directions to ensure that applications filed by banks and financial institutions before judicial magistrates under Section 14 of the SARFAESI Act are registered immediately and decided within the statutory time limit [Vijayanand Srinivasan Vs PNB].

A Bench of Chief Justice Sushrut Arvind Dharmadhikari and Justice G Arul Murugan added that this timeline can be extended only in exceptional cases for reasons to be recorded in writing.

However, even in such cases, the Section 14 application must be decided within 60 days from the date of filing the application.

The Court further underscored that authorities exercising powers under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) perform only a ministerial function and cannot conduct adjudicatory proceedings while dealing with such applications.

Section 14 of the SARFAESI Act enables secured creditors to seek the assistance of the concerned chief metropolitan magistrate or district magistrate (designated authority) in taking possession of a defaulting borrower's property.

"The nature of the inquiry under Section 14 of the SARFAESI Act is ministerial and not adjudicatory. The Designated Authority is not required and is indeed prohibited from adjudicating upon any dispute between the secured creditor and the borrower, or between the secured creditor and any third party," the Court said.

Such disputes, the Court explained, must be raised before the Debts Recovery Tribunal under Section 17 of the Act.

The order was passed on a petition filed by Vijayanand Srinivasan, an auction purchaser who had bought secured assets sold by Punjab National Bank under the SARFAESI Act.

The petitioner told the Court that though he had paid the full sale consideration and a sale certificate had been issued in his favour on June 3, 2025, possession of the property had not been handed over to him.

The bank informed the Court that it had filed an application under Section 14 before the Chief Judicial Magistrate, Chengalpattu in August 2025. However, the application had not been numbered till date. It was also submitted that around 200 cases were pending before the said court for registration and disposal.

The High Court observed that Tamil Nadu was witnessing a large number of writ petitions by banks, financial institutions and asset reconstruction companies due to inaction by authorities expected to assist in taking possession of properties under Section 14, or because such authorities had acted in excess of their jurisdiction.

"Such avoidable litigation not only burdens this Court, but also defeats the very purpose of the SARFAESI Act," the Court added.

The Court proceeded to direct that every Section 14 application must be registered immediately and cannot be listed for arguments on registration. It also said that no pre-registration hearing is required.

The designated authority will only have to verify whether the secured asset falls within its territorial jurisdiction, whether notice under Section 13(2) of SARFAESI Act was served on the borrower, whether the mandated affidavit has been filed and whether the case falls within exceptions under Section 31 of the Act.

The Court further held that no notice is required to be issued to the borrower, mortgagor, guarantor or third party before passing an order under Section 14, except in cases involving genuine claims of prior tenancy or lease.

In the present case, the Bench directed the Chengalpattu Chief Judicial Magistrate to decide the bank’s application within 30 days and not adjourn it except when absolutely necessary.

The Registry was directed to circulate the order to all Principal District and Sessions Judges in Tamil Nadu and to the Chief Secretary for circulation among District Magistrates and Additional District Magistrates.

Advocate ML Ramesh appeared for the petitioner.

Standing Counsel ML Ganesh appeared for the Punjab National Bank.

[Read Judgment]