Settled possession under SARFAESI resists forcible eviction; secured creditor must use Section 14 and restore possession if dispossession was unlawful.

Once a lessee in settled possession resists surrender after notice under the SARFAESI Act, the secured creditor cannot lawfully evict by private force or police assistance and must proceed under Section 14 before taking possession. The text further notes that where the record shows no voluntary surrender and the circumstances indicate forcible dispossession, restoration of possession to the lessee is warranted. It also states that ancillary directions inconsistent with settled procedure may be set aside, while an application for perjury action under Section 340 CrPC will fail absent a prima facie case of deliberate fabrication or misleading conduct.

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Issues: (i) Whether, after the lessees protested against delivery of possession, the secured creditor could take possession of the secured asset without recourse to Section 14 of the SARFAESI Act, 2002. (ii) Whether the possession taken on 6.4.2011 was voluntary or forcible and whether the petitioners were entitled to restoration of possession. (iii) Whether the directions issued by the Appellate Tribunal regarding filing of complaint for forcible possession and the application under Section 340 of the Code of Criminal Procedure, 1973 were sustainable.

Issue (i): Whether, after the lessees protested against delivery of possession, the secured creditor could take possession of the secured asset without recourse to Section 14 of the SARFAESI Act, 2002.

Analysis: The petitioners were found to be lessees in settled possession under a subsisting lease. After receiving notice under Section 13(2), they promptly disputed the alleged consent letter and expressly resisted surrender of possession. In such a situation, the secured creditor could not unilaterally evict them by using police assistance or private force, and was required to seek assistance under Section 14 before proceeding further. The earlier notice and the alleged consent letter did not displace the lessees' resistance, and the Tribunal held that the statutory route had become mandatory once possession was contested.

Conclusion: The secured creditor was not entitled to take possession without resorting to Section 14, and the contention to the contrary failed.

Issue (ii): Whether the possession taken on 6.4.2011 was voluntary or forcible and whether the petitioners were entitled to restoration of possession.

Analysis: The record, including the lease documents, the subsequent correspondence, the handwriting expert's report, the police complaint, and the panchanama, supported the conclusion that the alleged consent letter was doubtful and that the petitioners had not voluntarily surrendered possession. The handwritten insertion in the panchanama that possession was delivered voluntarily was treated as suspicious, and the surrounding circumstances showed that the bank had created the appearance of voluntary surrender. The petitioners were therefore found to have been forcibly dispossessed, and the secured creditor had acted without following the procedure prescribed by law. Restoration of possession to the petitioners was consequently warranted.

Conclusion: The possession was held to be forcible, and the petitioners were entitled to restoration of the suit property.

Issue (iii): Whether the directions issued by the Appellate Tribunal regarding filing of complaint for forcible possession and the application under Section 340 of the Code of Criminal Procedure, 1973 were sustainable.

Analysis: The direction preserving liberty to the petitioners to pursue remedies for forcible possession was maintained, but the further direction requiring the District Magistrate to take cognizance, secure presence by issuing warrants, and dispose of the matter was found to be contrary to settled legal principles. Separately, the application seeking initiation of proceedings under Section 340 was held to be without merit, as no prima facie case of deliberate fabrication or misleading conduct was made out on the materials placed before the Court.

Conclusion: The grievance against the impugned direction partly succeeded, while the application under Section 340 was rejected.

Final Conclusion: The petitioners succeeded in establishing illegal and forcible dispossession, the bank's challenge to restoration substantially failed, and the ancillary request for perjury action was rejected, leaving the connected matters disposed of in a mixed manner.

Ratio Decidendi: Once a lessee in settled possession resists delivery after notice under the SARFAESI Act, the secured creditor must proceed under Section 14 and cannot lawfully evict by force or police assistance; forcible dispossession without that procedure entitles the aggrieved lessee to restoration and collateral directions inconsistent with settled procedure are liable to be set aside.

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