Court directs state authorities to enforce Section 14 of SARFAESI Act, 2002, restoring mortgaged property possession amid borrowers' forceful repossession and police inaction.
In a significant ruling reinforcing the rule of law and the enforcement of security interests, the Rajasthan High Court (Jaipur Bench) has directed the State of Rajasthan and its authorities to restore possession of a mortgaged property to Indusind Bank Limited. The order follows the bank's petition seeking intervention after borrowers who defaulted on their loan forcibly reclaimed possession of the property despite lawful possession being taken by the bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
The case arose when respondents 4 and 5, who had borrowed money from Indusind Bank and defaulted on repayment, had their accounts declared Non-Performing Assets (NPA). Consequently, the bank initiated proceedings under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate (CJM) of Kotputli, who allowed the application on August 30, 2025, ordering the police to take possession of the mortgaged property located at Flat No. 173/101, Meri Gold Green Acres, Neemrana, Alwar.
The police enforced the order and took possession on December 10, 2025. However, the borrowers forcefully retook possession thereafter, leading to an FIR being registered (No. 33/2026) at Shahjahanpur Police Station. Despite over a year passing, the police and district authorities failed to restore possession to the bank, prompting Indusind Bank to approach the High Court.
Justice Anoop Kumar Dhand, presiding over the matter, highlighted the failure of state agencies to uphold the lawful order and stressed the obligation of authorities to maintain the rule of law. The Court relied on the precedent set in Atma Ram Bishnoi v. District Collector, where similar circumstances warranted stern directions to ensure possession was restored to the financial institution.
The Court observed that allowing borrowers to repossess mortgaged property by force undermines legal processes and encourages lawlessness. It therefore ordered respondents 1 to 3 (including district authorities and police) to take all necessary steps to restore the property possession to Indusind Bank within six weeks from receipt of the certified copy of the judgment.
This ruling reaffirms the judiciary's commitment to enforcing the SARFAESI Act provisions effectively and ensuring state functionaries act promptly to protect the rights of secured creditors against defaulting borrowers employing muscle power.
Bottom Line:
Enforcement of the order passed under Section 14 of the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 - Directions issued to restore possession of mortgaged property to the petitioner-Bank and uphold rule of law.
Statutory provision(s): Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Section 14
Indusind Bank Limited v. State of Rajasthan, (Raj)(Jaipur Bench) : Law Finder Doc Id # 2979261
