Bank can proceed with flat possession under SARFAESI Act after three months if borrower doesn't approach DRT

The HC dismissed a petition challenging a Magistrate's action under Section 14 of the SARFAESI Act, 2002 regarding flat possession. The Court held that Magistrates assist banks in taking possession of secured assets under Section 13(4), and aggrieved parties must approach the DRT within 45 days. Given the petition's pendency since November 2014, the Court extended interim orders for three months, allowing petitioners to approach the DRT. If no DRT proceedings are initiated within this period, respondents may proceed under SARFAESI Act. The petition was dismissed with liberty to approach DRT.

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Issues:
Challenge to order under SARFAESI Act, 2002 by District Magistrate without hearing petitioners; Claim of acquired interest in premises through agreements for sale; Dispute over possession of mortgaged premises under SARFAESI Act, 2002; Availability of alternate remedy before Debt Recovery Tribunal (DRT); High Court's jurisdiction under Articles 226 and 227 of the Constitution to entertain SARFAESI Act matters.

Analysis:
The petition challenges an order by the District Magistrate under the SARFAESI Act, 2002 regarding possession of certain premises without hearing the petitioners, who claim interest through agreements for sale. Respondent No.4, the Bank, asserts its right to take possession due to default by Respondent No.5, the borrower. The Bank argues that prior agreements for sale do not defeat the mortgage. The Bank and Additional Government Advocate argue that the petitioners have an alternate remedy before the DRT under the SARFAESI Act, 2002, and thus, the High Court should not entertain the petition.

The High Court explains that actions under Section 14 of the SARFAESI Act, 2002 by the Magistrate assist banks in securing assets, and aggrieved parties can seek redressal before the DRT within 45 days. Referring to Supreme Court judgments, the High Court emphasizes that matters under the SARFAESI Act should be dealt with by the DRT, and High Courts should not entertain such cases under Articles 226 and 227 of the Constitution. The petitioners are directed to approach the DRT, and the interim order is extended for three months to facilitate this process.

The High Court dismisses the petition but grants liberty to the petitioners to approach the DRT. The Court clarifies that it has not examined the merits of the case, leaving all contentions open for determination by the DRT. The petition and related application are disposed of with no order as to costs, instructing all parties to act based on the court's order.

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