High Court: It is not necessary to inform before issuing order to take possession of property under SARFAESI Act A to Z Counsel

Allahabad High Court
– Photo: Amar Ujala

The Allahabad High Court has held that it is not necessary to inform the borrower of proceedings under Section 14 of the SARFAESI Act. But a copy of the order should be given to him. Court said in order to protect the interests of the secured creditor, the borrower should be given such notice of forcible eviction and possession, so that he can remove his goods by making alternative arrangements.

The court also said that if the District Magistrate does not take action under Section 14 within 60 days, he will not be deprived of his rights. The action will not be in vain. The court did not accept the plea of ​​violation of natural justice by not giving an opportunity of hearing before ordering eviction and taking possession of the property and said that the SARFAESI Act is designed to protect the interests of the lenders.

Under Section 14, the borrower does not have the right to be heard before the District Magistrate’s order to take possession of the property and hand it over to the lender. The Court has dismissed the petitions challenging the validity of Section 14 of the SARFAESI Act. This order has been given by the division bench of Justice Sunita Aggarwal and Justice VC Dixit while simultaneously deciding the petitions of Shipra Hotel Limited and many others.

In the petitions, the order passed under Section 14 of ADM Finance of Ghaziabad and Varanasi was challenged. Borrower petitioners said that an order has been issued to forcefully take possession of the property after giving them a chance to be heard. Due to which their natural rights have been violated. The court did not accept this and said that it is not necessary to give notice before passing the order, but it is necessary to give notice of the order passed with sufficient time, so that they can remove their goods and take possession of the property and hand it over to the lenders.

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The Allahabad High Court has held that it is not necessary to inform the borrower of proceedings under Section 14 of the SARFAESI Act. But a copy of the order should be given to him. Court said in order to protect the interests of the secured creditor, the borrower should be given such notice of forcible eviction and possession, so that he can remove his goods by making alternative arrangements.

The court also said that if the District Magistrate does not take action under Section 14 within 60 days, he will not be deprived of his rights. The action will not be in vain. The court did not accept the plea of ​​violation of natural justice by not giving an opportunity of hearing before ordering eviction and taking possession of the property and said that the SARFAESI Act is designed to protect the interests of the lenders.

Under Section 14, the borrower does not have the right to be heard before the District Magistrate’s order to take possession of the property and hand it over to the lender. The Court has dismissed the petitions challenging the validity of Section 14 of the SARFAESI Act. This order has been given by the division bench of Justice Sunita Aggarwal and Justice VC Dixit while simultaneously deciding the petitions of Shipra Hotel Limited and many others.

In the petitions, the order passed under Section 14 of ADM Finance of Ghaziabad and Varanasi was challenged. Borrower petitioners said that an order has been issued to forcefully take possession of the property after giving them a chance to be heard. Due to which their natural rights have been violated. The court did not accept this and said that it is not necessary to give notice before passing the order, but it is necessary to give notice of the order passed with sufficient time, so that they can remove their goods and take possession of the property and hand it over to the lenders.