Auction Purchaser Has Locus Standi To Seek Writ Enforcing U/S 14 SARFAESI Act Order For Physical Possession: Bombay High Court
The Bench said that denying writ court access to auction purchasers when Magistrate's Section 14 orders are ignored would cause a travesty of justice.
Justice Manish Pitale, Justice Shreeram V. Shirsat, Bombay High Court
The Bombay High Court has held that an auction purchaser under the SARFAESI Act, 2002 possesses the locus standi to file a writ petition under Article 226 of the Constitution of India seeking directions against State authorities to execute an order passed under Section 14 by a competent Magistrate and deliver physical possession of the secured asset.
The Court observed that shutting the doors of the writ court to auction purchasers who have deposited full consideration and obtained registered sale certificates would result in a travesty of justice, erode public faith in the rule of law, and allow defaulting borrowers to unlawfully retain possession despite the absence of any protective interim orders.
A Division Bench comprising Justice Manish Pitale and Justice Shreeram V. Shirsat while allowing a writ petition filed by an auction purchaser seeking physical possession of a secured property, observed, “We are of the opinion that in this petition, the petitioners, as auction purchasers, are calling upon the respondents – State authorities to perform their statutory and mandatory duties under law, including obeying directions contained in the order passed by the competent Magistrate under Section 14 of the said Act. The respondents – State authorities are duty-bound to implement the directions of the competent Magistrate. They have not been able to perform the same for various reasons and therefore, the petitioners, as the auction purchasers, clearly have the locus standi to knock the doors of writ Court to seek such a positive writ or direction against the respondents – State authorities”.
Advocate Rohan Cama appeared for the petitioners and R. S. Pawar, AGP appeared for the respondent.
The case originated from credit facilities of ₹1.35 crore extended by the respondent bank to the borrower and guarantor, who subsequently defaulted, leading to the account being classified as a Non-Performing Asset. Following symbolic possession under Section 13(4) of the SARFAESI Act, the bank conducted an e-auction after five failed attempts, wherein the petitioner emerged as the successful bidder, deposited the entire purchase price of ₹2.23 crore, and received a registered sale certificate in December 2021.
Despite a Section 14 order passed by the District Magistrate in February 2022 directing the Tahsildar to deliver physical possession, the state authorities failed to hand over the property while the borrowers initiated prolonged litigation before the Debts Recovery Tribunal and Appellate Tribunal without securing any interim stay. The auction purchasers subsequently approached the High Court under Article 226 for execution of the Magistrate’s possession order.
Analyzing the Supreme Court's decision in ITC Limited v. Blue Coast Hotels Limited & Ors. (2018) 15 SCC 99, the High Court held that while a secured creditor retains rights over the property until actual possession is transferred, a limited transfer of interest occurs in favor of the auction purchaser upon payment and registration of the sale certificate.
“If the writ Court shuts its doors to the auction purchasers like the petitioners, it would be a travesty of justice and the State authorities would be free not to abide by the specific directions issued by the competent Magistrate under the provisions of the said Act. This has a bearing on the concept of rule of law also, which cannot be ignored. The faith of citizens in the rule of law would be adversely affected, if this Court were to hold that an order of the competent Magistrate is not being obeyed, but no writ or direction can be issued, as such a grievance can be examined only at the behest of the secured creditor. We find that the petitioners, as auction purchasers, do have locus standi to maintain the present writ petition, in the light of registered sale certificate existing in favour of petitioner No.1 and there being no interim order of any kind operating in favour of the respondents throughout the pending proceedings and even today”, the Bench noted.
The Court directed the Tahsildar, Alibag to take physical possession of the property on August 13, 2026, and deliver it to the petitioner through the bank, while ordering the Superintendent of Police, Alibag to deploy requisite police force to ensure compliance.
Cause Title: M/s. Jasraj Restaurants Pvt. Ltd. and others v. State of Maharashtra and others (Writ Petition No. 8601 of 2026).
Appearances:
Petitioners: Rohan Cama, Janvi Joshi, Komal Patil, Manjula Chigari, and Vijayvati Jaiswar, i/b Manmohan Rao, Advocates.
Respondents: R. S. Pawar, AGP, Savita Nangare, Disha Shah (instructed by Law Focus), Mandar Soman, Mukesh Dongarge, Aniket M. Phad, Advocates.