The Allahabad High Court has held that Additional Commissioner of Police is not an officer subordinate to the District Magistrate and power to take possession under Section 14(1-A) SARFAESI Act cannot be delegated to him.

The Court was considering a Petition against mannerism of possession of property of Petitioner for being violative of Article 300A of the Constitution of India and contrary to the mandate of Section 14 SARFAESI Act.

The single bench of Justice Pankaj Bhatia observed, "In the present case, admittedly, the ADM did not take the possession himself and delegated the Additional Commissioner of Police with a further power to delegate it to a Police Officer for taking the possession........There is no material on record by either of the parties to suggest or argue that the Additional Commissioner of Police, can be termed as an officer subordinate to the Additional District Magistrate, even if the functional subordination test is accepted for interpreting Section 14(1-A) as held by the Hon’ble Supreme Court in the case of NKGSB Co-operative Bank Limited (Supra)."

The Petitioner was represented by Advocate Ashish Chaturvedi while the Respondent was represented by Advocate Abhishek Khare.

Facts of the Case

The Petitioner No.1 had taken a loan for purchasing of school buses sometime in the year 2015 and the Petitioners No.2 to 4 were the guarantors to the said loan. It was argued that there was a default in payment of the outstanding amount as such, the loan was classified as Non-Performing Asset (NPA) and the Bank issued a Notice under Section 13(2) of the SARFAESI Act. Subsequently, the Respondent no.3-Bank, assigned its rights to the Respondent no.2, which is a Assets Reconstruction Company and Notices under Section 13(4) were also issued and thereafter, an Application was filed under Section 14 of the SARFAESI Act before the Additional District Magistrate (ADM) for taking possession of the property. The ADM then directed the Respondent No.2 for taking possession of the property in question. It was also directed that the Respondent No.2 can take the actual possession of the property in question with the help of police authorities.

Counsel for the Petitioners argued that no Notice as was directed by the DRT to be given by the CMM/ADM was ever served upon the Petitioners. It was stated that the Recovery Agents of the Respondent no.2 came and took the forceful possession of the property in question. It was argued that no Government Official of the ADM Office was present and the manner in taking possession is neither sanctioned by law under Section 14 of the SARFAESI Act nor was it in consonance with the directions given by the DRT and thus clearly the rights of the Petitioners under Article 300A of the Constitution of India stood violated.

Reasoning By Court

The Court at the outset pointed out that the law with regard to the manner of taking possession as prescribed under Section 14 came for consideration before the Hon’ble Supreme Court in the case of NKGSB Co-operative Bank Limited vs Subir Chakravarty and others: (2022) in which, the Supreme Court was confronted with the question as to whether the physical possession in terms of the order under Section 14 can be taken by an Advocate Commissioner appointed under Section 14 or not and it was held that an advocate has to be regarded as an Officer of the Court and thus subordinate to CMM/ DM for the purpose of Section 14 (1-A) of the SARFAESI Act. The Court applied the test of ‘functional subordination’ to hold that an advocate was subordinate to the CMM/ DM, being an officer of the court.

Stressing that while Section 14(1-A) empowers the District Magistrate or the Chief Metropolitan Magistrate to “authorized any Officer subordinate to him” to take possession of the said assets and thereafter to forward such assets to the secured creditor, the Court stated that the Additional Commissioner of Police don not fit into that bracket even after applying the test of ‘functional subordination’.

"Admittedly as per the pleadings, the possession of immovable property (mortgaged) was taken by an Officer who was delegated the authority by the Additional Commissioner of Police and the officer delegated by him are neither functionally subordinate to the Additional District Magistrate nor can be termed as an officer of the court. In addition, the petitioners were also deprived of their possession over movable assets (which were not hypothecated/ mortgaged)....As, the possession of immovable and movable assets have been taken contrary to the mandatory provisions, I have no hesitation in holding that the remedy of issuance of a writ court be available as prima facie, there was a violation of the rights vested by virtue of Article 300A of the Constitution of India, which have been on the face of it not followed and thus a writ petition would lie. Thus, this conclusion deals with the argument of the Counsel for the respondents that a writ would not lie," the Court observed.

The Petition was accordingly allowed.

Cause Title: M/S Durga Travels Thru. Proprietor Pankaj Sharma And 3 Others (2025:AHC-LKO:15469)

Appearances:

Petitioner- Advocate Ashish Chaturvedi, Advocate Manoj Kumar Dwivedi, Advocate Vandana Singh

Respondent- Advocate Abhishek Khare, Advocate Parul Sharma, Advocate Shivansh Shukla

Click here to read/ download Order



Allahabad High CourtJustice Pankaj Bhatia

Sheetal Joon