P&H HC Upholds District Magistrate’s Denial of SARFAESI S. 14 Possession as Loan Assignment Pending Before DRT [Read Order]
The court held that a District Magistrate can deny SARFAESI Section 14 possession when the loan assignment in favour of an ARC is pending approval before the DRT.
![P&H HC Upholds District Magistrate’s Denial of SARFAESI S. 14 Possession as Loan Assignment Pending Before DRT [Read Order]](https://images.taxscan.in/h-upload/2026/01/05/2117194-ph-hc-upholds-district-magistrates-denial-of-sarfaesi-s-14-possession-as-loan-assignment-pending-before-drt-taxscan.webp "P&H HC Upholds District Magistrate’s Denial of SARFAESI S. 14 Possession as Loan Assignment Pending Before DRT [Read Order]")
In a recent ruling, the Punjab and HaryanaHigh Court upheld the District Magistrate’s refusal to grant possession under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), holding that such relief can be denied when the loan assignment in favour of an Asset Reconstruction Company (ARC) is still...
In a recent ruling, the Punjab and HaryanaHigh Court upheld the District Magistrate’s refusal to grant possession under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), holding that such relief can be denied when the loan assignment in favour of an Asset Reconstruction Company (ARC) is still pending approval before the Debt RecoveryTribunal (DRT).
ASREC (India) Ltd., the petitioner challenged the order passed by the Additional District Magistrate which rejected its application under Section 14 of the SARFAESI Act. The company had sought assistance from the Magistrate for taking physical possession of the secured asset.
The dispute arose from loan facilities about Rs. 7.97 crore granted by Allahabad Bank to a borrower firm, secured by mortgage of immovable property. After default, the account was declared a non-performing asset on 26 June 2013. The bank initiated SARFAESI proceedings and also approached the Debt Recovery Tribunal, which upheld the bank’s security interest and issued a recovery certificate on 12 July 2017. This order was not challenged.
Later, Allahabad Bank executed an assignment agreement in favour of ASREC on 27 February 2018, which was registered on 16 April 2018. The company claimed that it had stepped into the shoes of the bank and was entitled to seek possession of the secured asset but approval or recognition of the assignment was pending before the DRT.
The company’s counsel argued that the role of the Magistrate under Section 14 of the SARFAESI Act is only ministerial and that the Magistrate could not refuse possession by examining the status of the assignment. They argued that once formal requirements were met, possession had to be granted.
The State and other respondents’ counsel argued that the Magistrate must be satisfied about the applicant’s status as a secured creditor. They argued that since the assignment in favour of the company was pending before the DRT, its right to seek possession had not become final.
The Division Bench of Chief Justice Sheel Nagu and Justice Sanjiv Berry observed that although the Magistrate’s function under Section 14 is ministerial, he is still required to verify compliance with the statutory conditions, including whether the applicant is a valid secured creditor. The court observed that the petitioner could not show any final order of the DRT approving the assignment in its favour.
The Bench explained that when the assignment forming the basis of the petitioner’s claim was pending approval, the Magistrate was justified in refusing possession. The court pointed out that the Magistrate had not adjudicated any dispute between the parties but had only ensured compliance with the mandatory requirements of the law.
The court dismissed the writ petition and upheld the Magistrate’s order.
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