Rajasthan HC Quashes DM’s Condition Under Section 14 SARFAESI | Says Adjudication on Borrower’s Title Disputes Is Beyond Statutory Scope and Violates SC Orders
Isabella Mariam
The High Court of Rajasthan Single Bench of Justice Anoop Kumar Dhand held that District Magistrates, while acting under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, are to perform ministerial duties and not undertake any adjudicatory role. The Court partly allowed the writ petition by striking down the condition imposed by the District Magistrate of Kota that possession orders should not be executed if disputes regarding title or possession arise. The Court directed that such interpretations fall outside the jurisdictional mandate under Section 14 and reiterated that District Magistrates must strictly comply with the statutory provisions and judicial pronouncements.
Sammaan Capital Limited, formerly known as Indiabulls Housing Finance Limited, through its Authorized Officer, filed a writ petition before the Rajasthan High Court challenging an order dated 21.05.2025 issued by the District Magistrate, Kota. This order, passed under Section 14 of the SARFAESI Act, 2002, had allowed the petitioner's application for assistance in securing possession of mortgaged assets. However, the impugned order included a caveat directing that execution should not proceed in the event of any dispute concerning title or possession.
The petitioner argued that Section 14 of the SARFAESI Act confers purely ministerial responsibilities upon District Magistrates and does not empower them to make determinations concerning disputes. It was submitted that the District Magistrate had exceeded his jurisdiction by appending an adjudicatory condition to what should have been an unconditional order for police assistance.
The writ petition sought modification of the impugned directive, specifically the portion that halted execution in the presence of disputes over title or possession. According to the petitioner, this component of the order was not only ultra vires but also undermined the statutory objective of the SARFAESI Act, which aims to expedite asset recovery proceedings by secured creditors without undue judicial delays.
Section 14 of the SARFAESI Act permits secured creditors to approach the District Magistrate or Chief Metropolitan Magistrate to take possession of secured assets upon satisfaction of certain procedural conditions. The secured creditor is required to file a written application along with an affidavit affirming compliance with legal formalities.
The High Court examined whether the District Magistrate’s insertion of a conditional clause effectively converted a ministerial act into an adjudicatory one, thereby transgressing the limits set by Section 14. During proceedings, reference was made to landmark judgments of the Supreme Court, including NKGSB Cooperative Bank Limited vs. Subir Chakravarty and M/s R.D. Jain and Co. vs. Capital First Ltd., which stated the ministerial and time-bound nature of powers exercised under Section 14.
Citing statutory intent and judicial precedent, the High Court reviewed the object of the SARFAESI Act—to empower financial institutions to take possession and liquidate secured assets without court intervention. The Court scrutinized the legislative history and recommendations of various committees, such as the Narasimham Committee and Andhyarujina Committee, which underscored the need for legal frameworks that enable swift asset recovery.
According to the petitioner, the conditionality imposed by the District Magistrate not only delayed the recovery process but also allowed for third-party interferences at a stage where legal adjudication is statutorily deferred to other forums, notably the Debts Recovery Tribunal under Section 17 of the Act.
In support of this contention, the petitioner stated a prior order of the Rajasthan High Court in Jammu and Kashmir Bank Limited vs. M/s Trunks and Roots, where the same issue had arisen. In that case, the Court had clarified that District Magistrates are to act as executing authorities and not as adjudicators of disputes regarding possession or title.
The Court observed "Section 14 does not involve an adjudicatory process qua points raised by the borrower against the secured creditor taking possession of secured assets." It further recorded, "The powers exercisable by District Magistrate under Section 14 are ministerial and not adjudicatory. The Magistrate has to adjudicate and decide the correctness of the information given in the application and nothing more."
Referring to the Supreme Court judgment in M/s R.D. Jain and Co. vs. Capital First Ltd., the Court quoted, "The statutory obligation enjoined upon the CMM/DM is to immediately move into action after receipt of a written application under Section 14(1)... and to forward the same to the secured creditor at the earliest opportunity."
The High Court found that the District Magistrate had travelled beyond the scope of Section 14 and held that, "the direction issued... in the last para of the impugned order... was totally unwarranted. Hence, that part of the order stands deleted/expunged."
Additionally, the Court reiterated its earlier holding in the Jammu and Kashmir Bank Limited case that adjudication of disputes under Section 14 lies exclusively with the Debts Recovery Tribunal and not the District Magistrate. It stated, "The DM is not required to adjudicate the dispute between the borrower and the secured creditor... the aggrieved party to be relegated to raise objections in the proceedings under Section 17... before Debts Recovery Tribunal."
In expressing its concern over recurring misapplication of Section 14, the Court recorded, "Orders are being passed as per convenience of the officer concerned without following the mandate of the Apex Court."
The Court issued the following final directions:
The direction issued by the District Magistrate, Kota in the last paragraph of the order dated 21.05.2025, stating that the order shall not be executed in case any dispute regarding title or possession arises and then under such circumstances, the matter be remitted to the Court, was held to be unwarranted and has been deleted.
The writ petition was accordingly partly allowed, with all pending applications also disposed of.
The Court directed that in future, Chief Metropolitan Magistrates and District Magistrates must follow the judgments passed by the Rajasthan High Court and the Supreme Court in their letter and spirit and must not attempt to interpret the order in their own manner.
A further direction was issued to the Office to send a copy of the judgment to the Additional Chief Secretary/Principal Secretary, Department of Revenue, Government of Rajasthan, to ensure that officers stop interpreting the provisions of Section 14 of the Act in a manner inconsistent with judicial pronouncements.
Advocates Representing the Parties:
For the Petitioner: Mr. Pramod Kumar, Advocate
Case Title: Sammaan Capital Limited vs. District Magistrate and Others
Case Number: S.B. Civil Writ Petition No. 10824/2025
Bench: Justice Anoop Kumar Dhand
