Court directs Advocate Commissioner and Police to take physical possession by September 17, 2026, following delay by authorities and unlawful occupation by borrowers
In a significant ruling on September 10, 2026, the Bombay High Court (Division Bench comprising Justices Manish Pitale and Shreeram V. Shirsat) directed the immediate physical possession of a secured asset by Edelweiss Asset Reconstruction Company Limited, the petitioner, under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The order came after a protracted delay in executing a possession order passed by the Chief Judicial Magistrate, Esplanade, Mumbai, and persistent unlawful occupation of the asset by the borrowers/co-borrowers.
The petitioner company, an Asset Reconstruction Company (ARC) registered with the Reserve Bank of India, inherited the secured asset after assignment from the original lender. The borrowers availed a loan against property but defaulted, leading to the account being declared a Non-Performing Asset (NPA) in August 2018. Following a demand notice under Section 13(2) of SARFAESI Act and symbolic possession under Section 13(4), the petitioner filed a securitisation application under Section 14 after non-payment.
The Chief Judicial Magistrate had earlier appointed the Advocate Commissioner (Respondent No. 2) to take physical possession with police assistance. However, on the scheduled date in November 2025, the borrowers refused to hand over possession of the entire secured asset, allowing possession only of the ground floor. The first floor remained occupied by the borrowers. Efforts to auction the property were stalled due to an application under the Insolvency and Bankruptcy Code, 2016, but after the moratorium was lifted, the asset was sold, and proceeds deposited with the petitioner.
Despite this, the borrowers unlawfully re-entered and occupied the property, removing seals placed by the Advocate Commissioner. An FIR was lodged (FIR No. 0527 of 2026) against the borrowers for trespass, but the police (Respondent No. 4) failed to take effective action. The petitioner's repeated follow-ups with the Advocate Commissioner and police yielded no results, leading to the present writ petition.
The Court observed that the inaction and delay by the Advocate Commissioner and police had defeated the object of the SARFAESI Act, which aims at speedy recovery and enforcement of security interests. It ordered Respondent No. 2 (Advocate Commissioner), assisted by Respondent No. 4 (police), to take possession of the secured asset on or before September 17, 2026, with adequate police personnel including lady constables. The police were instructed to use reasonable, proportionate force and to video record the possession process for transparency and future reference.
The Court further warned the borrowers, co-borrowers, and all unlawful occupants to vacate immediately and not to obstruct the process. Non-compliance or obstruction would attract contempt of court proceedings. The police were directed to serve a copy of the order to all occupants. The police were also mandated to file an affidavit explaining steps taken post-FIR registration and reasons for any non-compliance.
This judgment underscores the Court's commitment to enforcing timely possession under SARFAESI Act and ensuring secured creditors' rights are not thwarted by undue delays or illegal occupation. The case has significant implications for asset reconstruction companies and lenders in enforcing security interests efficiently.
Bottom Line:
SARFAESI Act - Delay in taking physical possession of secured asset by authorities - Court directs immediate possession with police assistance, warns borrowers/co-borrowers against obstruction, and mandates compliance under strict scrutiny.
Statutory provision(s):
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 3, 13(2), 13(4), 14; Insolvency and Bankruptcy Code, 2016 (referenced)
