Calcutta HC Upholds SARFAESI Section 14 Application Rejection Provision, Dismisses UCO Bank Petition

(MENAFN- KNN India) Kolkata, Sep 19 (KNN) The Calcutta High Court has upheld the December 4, 2024 order of the District Magistrate, Cooch Behar, rejecting UCO Bank's application under Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) seeking physical possession of a mortgaged property.

The petition, filed by UCO Bank, arose after the borrower defaulted on a loan facility, secured by certain immovable properties, and the account was classified as a Non-Performing Asset (NPA) on June 30, 2019.

The Bank had followed statutory recovery measures under the Act, including issuing a demand notice under Section 13(2), symbolic possession under Section 13(4), and filing the Section 14 application before the District Magistrate on July 6, 2021.

Meanwhile, the borrower had approached the Debt Recovery Tribunal under Section 17, which remained pending.

After initial delays by the District Magistrate, the High Court had directed the matter to be disposed of within thirty days in March 2024. Despite this, the order was only passed in December 2024, rejecting the application on substantive grounds.

Justice Gaurang Kanth observed that the rejection was justified due to serious deficiencies in the affidavit submitted by the Bank's Authorised Officer.

These included: a discrepancy in the loan timeline suggesting factual errors, failure to disclose that part of the mortgaged property comprised agricultural land (which is exempt under Section 31(i)), non-compliance with statutory requirements regarding borrower representations under Section 13(3A), absence of evidence of a Section 13(4) possession notice, failure to include a mandatory declaration under the first proviso to Section 14(1), and no reference to registration of the security interest with the Central Registry as required under Section 26D.

The Court clarified that while the District Magistrate's role under Section 14 is ministerial, it requires strict verification that the accompanying affidavit complies with the SARFAESI Act, relevant Rules, and government notifications.

The affidavit's deficiencies were deemed fundamental, striking at the root of the Bank's entitlement to relief, and could not be cured retroactively.

Consequently, the High Court found no infirmity in the Magistrate's order and dismissed the writ petition. However, the Bank was granted liberty to file a fresh Section 14 application, supported by a fully compliant affidavit.

The Court directed that such an application must be decided within the statutory timeframe in accordance with law.

(KNN Bureau)

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