IN THE HIGH COURT OF MADRAS
Date: 06 June, 2026
JUDGMENT
The Madras High Court today directed on how Section 14 of the SARFAESI Act can be enforced by issuing a number of directions through a Bench comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan. The Bench had taken up a number of petitions including those pending and yet to be registered.
Background:
This writ petition has been filed by Vijayanand Srinivasan, the highest bidder at an auction sale conducted by Punjab National Bank on 18th April 2025 for a property described as “Villa No. 75” in “Palm Villas” located at Nallambakkam Village. The said auction was contested by two other bidders. This writ petition has been filed by the said highest bidder against the Bank and the two other bidders in terms of the provisions of SARFAESI Act (Secured Assets Recovery and Financial Institution of India Act 2001).
About 200 similar pending applications for registration and hearing are languishing before the Chief Judicial Magistrate (Chengalpattu) who received the application from Punjab National Bank under Section 14 of the SARFAESI Act in August, 2025. For reasons best known to the designated authority, the application had not been registered with a case number.
Observations:
Notwithstanding the best efforts of legislative body to ensure expeditious realization of secured assets, the delays on the part of designated authorities under Section 14 of SARFAESI Act would only add to NPA problem of banking sector.
In short, in the State of Tamil Nadu there is a deluge of petitions similar to this one exposing to the courts gross delays as well as gross abuse of power on the part of authorities designated under Section 14 of the SARFAESI Act.
Directions:
Therefore, this Court orders and directs Chief Metropolitan Magistrates, Chief Judicial Magistrates and District Magistrates exercising powers of Magistrate under Section 14 of the Insolvency and Bankruptcy Code, 2016 (the “Code”) in the State of Tamil Nadu to act as under.
Applications filed by secured creditors under Section 14 of the Insolvency and Bankruptcy Code shall be registered forthwith without subjecting the same to pre-registration hearing and the said application shall not be listed for arguments on registration of the application.
The scrutiny of applications shall be limited to:
Verification of territorial jurisdiction concerning the secured asset;
c) verification of service of notice under Section 13(2) of the Act on the borrower; and
Affidavit filed under section 14(1) of the Act and facts set out in the application and annexures thereto.
Whether the application is subject to any exceptions under Section 31 of the Act.
In light of the afore-stated circumstances, it is clarified that all proceedings under Section 14 of the Act would be of ministerial nature and no adjudicator role shall be assigned to Chief Metropolitan Magistrates/Chief Judicial Magistrates/District Magistrates. They shall not deal with and/or endeavor to decide the matters of (i) disputes between the secured creditors of a debtor; (ii) disputes between the debtors and their secured creditors; and (iii) disputes between third parties and debtors/their secured creditors and the same shall be dealt with and/or decided by the Debt Recovery Tribunal.
There should be no issue of notice to be given to the borrowers, mortgagors, guarantors and other third parties prior to the order under Section 14 of Insolvency and Bankruptcy Code be passed by the Chief Metropolitan Magistrate/Chief Judicial Magistrate/District Magistrate.
Power shall be given to the said Authority to take such action as may be necessary to secure compliance of the order, to use force if required or to approach Police or any other Agency for its implementation.
(6) The order on such application as aforesaid shall be passed and a copy thereof made available to the applicant within a period of thirty days from the date of the filing of such application. However, such period may extend to a maximum period of sixty days from the date of filing of such application and the reasons for delay in passing of the order on such application as aforesaid shall also be recorded and a copy thereof made available to the applicant in writing.
Designated authority shall have power to authorise any subordinate official to take possession of the secured assets and to hand over the same to the secured creditors or alternatively to appoint an Advocate Commissioner for the purpose.
As held by Supreme Court in dealing with such cases of tenant/ lessee in possession prior to mortgage, such matters should be dealt with expeditiously and not allowed to cause avoidable delay in disposing of the application filed under Section 14 of the Act.
Tenants, occupants or other persons who are affected by seizure of any asset or property in terms of the provisions of Section 14 of the Act, shall be entitled to pursue such remedies as are available to them under Section 17 of the Act read with the rules which have been framed by the Debt Recovery Tribunal as the case may be, and a mention of such fact should reflect in the order which is passed by the authority under Section 14 of the Act.
If the concerned authority fails to dispose off an application for realization of security interest within the time frame stipulated under the Act and High Court is approached for appropriate directions, the authority shall provide reasons for inaction. Such inaction would invite adverse remarks and necessary action.
The Registrar General of this Court shall forthwith circulate to copy of this judgment to (i) the Principal District and Sessions Judges all over Tamil Nadu; (ii) all the Chief Judicial Magistrates; and (iii) all the Additional Chief Judicial Magistrates functioning in this State under the said Section 14 of the said Act.
The Chief Secretary of Tamil Nadu shall also ensure circulation of a copy of this Judgment to all District Magistrates and Additional District Magistrates in the State, so that applications filed under Section 14 of the I&B Code are dealt with speed and avoid unnecessary litigations.
Conclusion:
As above, the inquiry under Section 14 of the SARFAESI Act is a ministerial inquiry and not an adjudication. Thus the Designated Authority need not enter into the disputes between the secured creditors and their debtors and other third parties.
The Chief Judicial Magistrate, Chengalpattu where the said petition is pending shall dispose off the pending Section 14 application of the respondent, Punjab National Bank in the said petition within a period of thirty days from the date of receipt of copy of this order. Such application shall be dealt with and disposed off as per the provisions of SARFAESI Act and as per the terms and conditions stipulated hereinabove.
ORDERED ACCORDINGLY.