Punjab & Haryana High Court Refuses to Interfere With Magistrate’s Rejection of SARFAESI Section 14 Application; Holds Assignment Pending DRT Approval Bars Possession Proceedings

Case Name: ASREC (India) Limited v. State of Punjab and Others

Date of Judgment: 24 December 2025

Citation: CWP-29981-2025

Bench: Hon’ble Mr. Justice Sheel Nagu, Chief Justice and Hon’ble Mr. Justice Sanjiv Berry

Held: The Punjab and Haryana High Court dismissed a writ petition challenging rejection of an application under Section 14 of the SARFAESI Act and held that the District Magistrate did not exceed jurisdiction in declining assistance for taking possession where the petitioner’s claim as secured creditor was founded on an assignment deed pending approval before the Debt Recovery Tribunal. The Court held that while proceedings under Section 14 are ministerial and non-adjudicatory, the Magistrate is duty-bound to satisfy himself regarding compliance of statutory prerequisites, including the petitioner’s subsisting right and title as a secured creditor.

Summary: The petitioner, an asset reconstruction company, sought quashing of an order passed by the Additional District Magistrate dismissing its application under Section 14 of the SARFAESI Act for taking possession of secured assets mortgaged by the borrower. The petitioner claimed rights over the secured assets on the basis of an assignment agreement executed with the original lender bank and contended that the Magistrate had impermissibly entered into adjudication while rejecting the application.

The High Court examined the statutory scope of Section 14 and reiterated that the role of the Chief Metropolitan Magistrate or District Magistrate is ministerial in nature and does not involve adjudication of disputes between the borrower and the secured creditor. However, the Court emphasised that the Magistrate is required to satisfy himself regarding strict compliance with the conditions prescribed in the proviso to Section 14, including the legitimacy of the applicant’s status as a secured creditor.

On facts, the Court found that the assignment agreement relied upon by the petitioner was pending approval before the Debt Recovery Tribunal and had not attained finality. In the absence of any order recognising or approving the assignment in favour of the petitioner, the Magistrate was justified in declining to act on the application. The Court also noted that the Magistrate had granted liberty to the petitioner to file a fresh application after removing the legal impediments identified.

The Court rejected the contention that rejection of the application amounted to adjudication, holding that ensuring compliance with mandatory statutory requirements does not amount to deciding inter se disputes. The reliance placed by the petitioner on judgments restricting adjudicatory powers under Section 14 was held to be misplaced in the absence of proof of completed assignment.

Decision: The writ petition was dismissed. The impugned order rejecting the application under Section 14 of the SARFAESI Act was upheld. The petitioner was granted liberty to move a fresh application after complying with statutory requirements and obtaining requisite approval of the assignment deed.