Isabella Mariam

The High Court of Kerala Single Bench of Justice Basant Balaji has disposed of a writ petition by a legal heir of a deceased guarantor seeking to stop a secured creditor bank from taking possession of mortgaged property under the SARFAESI framework. The petitioner contended that, after the guarantor’s death, the bank could not continue magistrate-assisted possession steps unless fresh statutory notices were issued to the legal heirs. Rejecting that contention, the Court held that once the demand notice is duly served during the borrower/guarantor’s lifetime and the mandatory 60-day period expires without the liability being discharged, the bank’s entitlement to proceed becomes absolute, and no second round of notices is required for successors.

The petitioner, a legal heir of a deceased guarantor, approached the High Court after the respondent bank initiated recovery steps under the SARFAESI Act in relation to a loan taken by a borrower firm, for which the deceased stood as guarantor. The secured property covered by the recovery action was stated to have devolved on the petitioner after the guarantor’s death on August 6, 2025.

Also Read: Unnao Rape: Supreme Court Stays Delhi High Court Bail Order Granting Relief To Kuldeep Singh Sengar

According to the petitioner, the bank continued proceedings under Section 14 despite knowledge of the guarantor’s death. A court-appointed Advocate Commissioner issued a possession notice dated August 30, 2025, fixing September 13, 2025 for taking over the property. The petitioner relied on a written request dated September 10, 2025 asking the Commissioner to report the death, and pointed to a subsequent petition seeking to stay possession steps.

The petitioner contended that recovery action was pursued against him without a fresh demand notice under Section 13(2) and challenged the continuation of Section 14 steps after the guarantor’s death, including on the basis that the magistrate’s order could not operate against a deceased person.

The bank’s position was that the Act does not require fresh notices to legal heirs where statutory notices and measures were already taken during the borrower/guarantor’s lifetime, and it referred to the scheme of Sections 13(2), 13(4) and 14, along with the statutory remedy under Section 17.

The Court recorded that: “Question is whether the death of the original borrower occurred at that stage of the proceedings will abate the entire steps taken. Or in other words, whether the secured creditor is at an obligation to initiate fresh steps, right from issuing notice under sub-section (2) of S.13. Considering the object, nature and scheme of the above said provisions of the SARFAESI Act, we can only answer the above question in the negative.” It further stated: “Of course, if the bank or the Authorised Officer proceeds further by approaching the Magistrate's Court under S.14, seeking assistance for taking over physical possession of the property, a legal heir who is stepping into the shoes of the mortgagor / borrower, who has derived an interest in the secured asset, will be entitled to resist such action on any of the grounds available to him.”4

On the statutory scheme, the Court quoted: “Sub-section (2) of S.13 provides that, where any borrower makes default in repayment of the secured debt and if such debt is classified as a 'non performing asset', then the secured creditor shall require the borrower by notice in writing to discharge the liabilities within 60 days from the date of the notice, failing which the secured creditor will be entitled to exercise the rights provided under sub-section (4) of S.13.” It also recorded: “Sub-section (1) of S.17 provides that, any person aggrieved by any of the measures referred to in sub-section (4) of S.13, taken by the secured creditor, will be entitled to make an application to the DRT having jurisdiction in the matter, challenging such proceedings.”

On the facts before it, the Court stated: “Upon perusal of the facts, it is evident that the Advocate Commissioner was appointed by the CJM Court, Kollam, via an order dated 25.04.2025 in M.C. No. 689/2025. This order directed the Commissioner to take physical possession of the secured assets, including the immovable property owned by the fifth respondent. Significantly, as the fifth respondent passed away on 06.08.2025—well after the Commissioner’s appointment—the statutory notices under Sections 13(2) and 13(4) of the Act, as well as the Section 14 order, were all issued and served during the lifetime of the original mortgagor.”

On the effect of service and expiry of time, the Court observed: “Section 14 of the Act provides a statutory remedy for the bank to recover dues from a borrower. Once the demand notice under Section 13(2) is duly served during the borrower’s lifetime and the mandatory 60-day period expires without the liability being discharged, the bank’s right to invoke Section 14 proceedings becomes absolute.”

Also Read: Kerala High Court Recalls Keltron Subsidiaries’ Winding Up Orders, Allows Revival After Fresh Government Approval

It then recorded: “In the present case, as the initial demand notice was duly served during the borrower’s lifetime and the statutory 60-day period expired without repayment, the creditor is legally entitled to proceed with the possession of secured assets without issuing additional notices to the legal heirs.” The Court added: “This Court finds no necessity for issuing a second round of notices under the Act, given that the procedures under Sections 13(2), 13(4), and 14 were validly initiated and served during the lifetime of the deceased fifth respondent.”

The Court directed: “Consequently, while the petitioner remains at liberty to raise any other contentions regarding procedural illegalities before the appropriate statutory forum, the specific challenge regarding the necessity of fresh notice is hereby rejected. Accordingly, the Writ Petition stands disposed of with the aforementioned observations.”

Advocates Representing the Parties

For the Petitioners: Sri. Gigimon Issac
For the Respondents: Sri. T.A. Prakash

Case Title: Abhijith B. v Bank of Maharashtra and Others
Neutral Citation: 2025:KER:91045
Case Number: WP(C) No. 33994 of 2025
Bench: Justice Basant Balaji