High Court

1. Heard Shri Avdhesh Shukla, learned Counsel for the petitioner, Shri Ashok Pandey appearing for opposite party No.4 and 5, who are the borrowers. None appears for opposite party No.3 and 6 to 9 who are legal heirs of the guarantors.

2. Since both these petitions arise out of same set of facts, therefore, they are being heard and decided together treating Writ C No.5011 of 2024 as the leading one.

3. We have heard Shri Ashok Pandey, learned Counsel for the opposite party No.4 and 5, who says that the proceedings for recovery are without jurisdiction and he has already initiated proceedings before the D.R.T. bearing S.A. No.479 of 2023 but he accepts the fact that as of now there is no interim order or interim protection in his favour by the D.R.T. at Allahabad.

4. We have gone through the impugned order. The application of the Bank has been dismissed for the following reasons:- " पततवलल पसततत पक उपसससत, सतनत गयत। यतचल कक अधधवकत कत मतखय तकर हह कक कट/ पशनगत धतरत कक अततगत मतखय मकटटटपटधलटन मधजसटट कट कट यह अधधकतर पदतन ककयत गयत हह कक यकद ऋण गहलतत समय सक ऋण कक अदतयगल नहह करतत हह तट बनधकशतदत समपधत कत कबजत ऋणदततत कट कदयक जतनक मम सहतयतत करकगत। धजसकक अनतगरत यतचल दतरत कनयमतनतसतर पशनगत यतकचकत पसततत कक गई हह। कवपकल कक धजलत मधजसटट अधधवकत दतरत मतखयतत कहत गयत हह कक पशनगत यतकचकत सरफक सल ऐकट कक धतरत 14 कक अनतगरत गतहय नहह हह। चच बबक दतरत ऋण पदतन ककयत गयत सत उसकक ममतयत हट चतकक हह और अभल तक पशनगत भचकम कत वतसतकवक वतररस ककन हह यह धसद नहह हट सकत हह। ऐसल सससकत मम ममतक कक कवरद न तट नटकटस दल जत सकतल हह न हल उसकक कवरद कटई आदकश हल पतररत ककयत जत सकतत हह। चकक धजस भचकम कट बनधक करकक यतचल/ चकक यह कनकवरवतद रप सक सतय हह कक यतचल दतरत धजस भचकम कट बनधक करकक कवदतन अधधवकत कक तकर कट सतनत तसत पततवलल कत अवलटकन ककयत गयत। पकक कक चच कवपकल कट ऋण पदतन ककयत गयत हह उक भचकम कक वतसतकवक सवतमल कक ममतयत हट चतकक हह और उसकत वतसतकवक वतररस ककन हह। यह तथय न तट यतचल धसद कर सकत हह न हल कवपकल दतरत धसद ककयत गयत हह। ऐसल सससकत मम पशनगत यतकचकत कट चलतयक जतनक कत कटई औकचतय पतलत नहह हटतत हह। अतत पशनगत यतकचकत इसल सतर पर कनरसत ककयक जतनक यटगय हह। आदकश अतत उपरटक कववकचन कक आधतर पर पशनगत यतकचकत एतददतरत कनरसत कक जततल हह। बतद आवशयक कतयरवतहल यह पततवलल सचकचत अकभलकखतगतर हट।"

5. It is not in dispute that the borrowers, who are opposite party No.4 and 5 herein were arrayed as opposite parties in those proceedings. The legal position has already been elucidated by us in two judgments dated 25.10.2024 passed in Writ C No. 8867 of 2024 (Bank of Baroda Vs. State of U.P. and 8 others) and 14.11.2024 passed in Writ C No. 9723 of 2024 (Pnb Housing Finance Ltd. Lko. Thru. Authorised Representative Mr. Surya Prakash Mishra vs. State of U.P. and others) wherein relying upon various decisions of Hon'ble the Supreme Court we have held that the borrower is not entitled to hearing under Section 14 of the SARFAESI Act, 2002 before the District Magistrate nor are the said proceedings adjudicatory in nature. As regards, the guarantor though he had died his legal heirs were parties. In any case, if the borrower is not entitled to hearing then the guarantor on the same logic and reasoning would also not be entitled to hearing.

6. For the past few years, the Banks have been filing applications under Section 14 of the SARFAESI Act, 2002 arraying the said borrowers and guarantors, therefore, this confusion arises and the District Magistrates have been proceeding under Section 14 of the SARFAESI Act, 2002 as if they were proceeding with a suit, an aspect, which has already been dealtwith by us in our judgments referred hereinabove. The entire approach while deciding such applications has been flawed, as in this case. Apparently, the District Magistrate was not aware of the scope of Section 14 of the SARFAESI Act, 2002 but since we have already explained the scope in the above mentioned judgments and as the order is apparently bad in view of the said judgments, the reasons being not sustainable, we, quash the same and direct the District Magistrate, Ayodhya to take a fresh decision on the application under Section 14 of the SARFAESI Act, 2002 strictly in accordance with the above mentioned judgments. Since this order is without prejudice to the right of the borrower or the guarantor to raise all possible issues challenging the recovery proceedings before the D.R.T. in the proceedings which are pending or in any fresh proceeding which may be initiated hereinafter, we do not wish to go into the question of jurisdiction being raised by the borrower in these proceedings as they arise out of proceedings under Section 14 of the SARFAESI Act, 2002 wherein the borrower or the guarantor was not entitled to be heard, therefore, we, see no reason to enter into the said issue but without prejudice to the rights, if any, of the borrower and the guarantor before the D.R.T. The writ petition bearing Writ C No.5011 of 2024 is allowed in the aforesaid terms with a direction to the District Magistrate, Ayodhya to take a fresh decision in the light of above at the earliest say within one month.

7. The writ petition bearing Writ C No.5614 of 2025 is disposed of with the observation that as and when an order is passed under Section 14 of the SARFAESI Act, 2002 by District Magistrate, Ayodhya, the consequences will follow accordingly, meaning thereby if the physical possession is handed over to the Bank then the Bank obviously will hand it over to the petitioner unless there is any legal impediment in the form of a stay etc. by a Tribunal or a Court. (Om Prakash Shukla, J.) (Rajan Roy, J.) Order Date :- 16.7.2025 -Piyush-

1. Heard Shri Avdhesh Shukla, learned Counsel for the petitioner, Shri Ashok Pandey appearing for opposite party No.4 and 5, who are the borrowers. None appears for opposite party No.3 and 6 to 9 who are legal heirs of the guarantors.

2. Since both these petitions arise out of same set of facts, therefore, they are being heard and decided together treating Writ C No.5011 of 2024 as the leading one.

3. We have heard Shri Ashok Pandey, learned Counsel for the opposite party No.4 and 5, who says that the proceedings for recovery are without jurisdiction and he has already initiated proceedings before the D.R.T. bearing S.A. No.479 of 2023 but he accepts the fact that as of now there is no interim order or interim protection in his favour by the D.R.T. at Allahabad.

4. We have gone through the impugned order. The application of the Bank has been dismissed for the following reasons:- " पततवलल पसततत पक उपसससत, सतनत गयत। यतचल कक अधधवकत कत मतखय तकर हह कक कट/ पशनगत धतरत कक अततगत मतखय मकटटटपटधलटन मधजसटट कट कट यह अधधकतर पदतन ककयत गयत हह कक यकद ऋण गहलतत समय सक ऋण कक अदतयगल नहह करतत हह तट बनधकशतदत समपधत कत कबजत ऋणदततत कट कदयक जतनक मम सहतयतत करकगत। धजसकक अनतगरत यतचल दतरत कनयमतनतसतर पशनगत यतकचकत पसततत कक गई हह। कवपकल कक धजलत मधजसटट अधधवकत दतरत मतखयतत कहत गयत हह कक पशनगत यतकचकत सरफक सल ऐकट कक धतरत 14 कक अनतगरत गतहय नहह हह। चच बबक दतरत ऋण पदतन ककयत गयत सत उसकक ममतयत हट चतकक हह और अभल तक पशनगत भचकम कत वतसतकवक वतररस ककन हह यह धसद नहह हट सकत हह। ऐसल सससकत मम ममतक कक कवरद न तट नटकटस दल जत सकतल हह न हल उसकक कवरद कटई आदकश हल पतररत ककयत जत सकतत हह। चकक धजस भचकम कट बनधक करकक यतचल/ चकक यह कनकवरवतद रप सक सतय हह कक यतचल दतरत धजस भचकम कट बनधक करकक कवदतन अधधवकत कक तकर कट सतनत तसत पततवलल कत अवलटकन ककयत गयत। पकक कक चच कवपकल कट ऋण पदतन ककयत गयत हह उक भचकम कक वतसतकवक सवतमल कक ममतयत हट चतकक हह और उसकत वतसतकवक वतररस ककन हह। यह तथय न तट यतचल धसद कर सकत हह न हल कवपकल दतरत धसद ककयत गयत हह। ऐसल सससकत मम पशनगत यतकचकत कट चलतयक जतनक कत कटई औकचतय पतलत नहह हटतत हह। अतत पशनगत यतकचकत इसल सतर पर कनरसत ककयक जतनक यटगय हह। आदकश अतत उपरटक कववकचन कक आधतर पर पशनगत यतकचकत एतददतरत कनरसत कक जततल हह। बतद आवशयक कतयरवतहल यह पततवलल सचकचत अकभलकखतगतर हट।"

5. It is not in dispute that the borrowers, who are opposite party No.4 and 5 herein were arrayed as opposite parties in those proceedings. The legal position has already been elucidated by us in two judgments dated 25.10.2024 passed in Writ C No. 8867 of 2024 (Bank of Baroda Vs. State of U.P. and 8 others) and 14.11.2024 passed in Writ C No. 9723 of 2024 (Pnb Housing Finance Ltd. Lko. Thru. Authorised Representative Mr. Surya Prakash Mishra vs. State of U.P. and others) wherein relying upon various decisions of Hon'ble the Supreme Court we have held that the borrower is not entitled to hearing under Section 14 of the SARFAESI Act, 2002 before the District Magistrate nor are the said proceedings adjudicatory in nature. As regards, the guarantor though he had died his legal heirs were parties. In any case, if the borrower is not entitled to hearing then the guarantor on the same logic and reasoning would also not be entitled to hearing.

6. For the past few years, the Banks have been filing applications under Section 14 of the SARFAESI Act, 2002 arraying the said borrowers and guarantors, therefore, this confusion arises and the District Magistrates have been proceeding under Section 14 of the SARFAESI Act, 2002 as if they were proceeding with a suit, an aspect, which has already been dealtwith by us in our judgments referred hereinabove. The entire approach while deciding such applications has been flawed, as in this case. Apparently, the District Magistrate was not aware of the scope of Section 14 of the SARFAESI Act, 2002 but since we have already explained the scope in the above mentioned judgments and as the order is apparently bad in view of the said judgments, the reasons being not sustainable, we, quash the same and direct the District Magistrate, Ayodhya to take a fresh decision on the application under Section 14 of the SARFAESI Act, 2002 strictly in accordance with the above mentioned judgments. Since this order is without prejudice to the right of the borrower or the guarantor to raise all possible issues challenging the recovery proceedings before the D.R.T. in the proceedings which are pending or in any fresh proceeding which may be initiated hereinafter, we do not wish to go into the question of jurisdiction being raised by the borrower in these proceedings as they arise out of proceedings under Section 14 of the SARFAESI Act, 2002 wherein the borrower or the guarantor was not entitled to be heard, therefore, we, see no reason to enter into the said issue but without prejudice to the rights, if any, of the borrower and the guarantor before the D.R.T. The writ petition bearing Writ C No.5011 of 2024 is allowed in the aforesaid terms with a direction to the District Magistrate, Ayodhya to take a fresh decision in the light of above at the earliest say within one month.

7. The writ petition bearing Writ C No.5614 of 2025 is disposed of with the observation that as and when an order is passed under Section 14 of the SARFAESI Act, 2002 by District Magistrate, Ayodhya, the consequences will follow accordingly, meaning thereby if the physical possession is handed over to the Bank then the Bank obviously will hand it over to the petitioner unless there is any legal impediment in the form of a stay etc. by a Tribunal or a Court. (Om Prakash Shukla, J.) (Rajan Roy, J.) Order Date :- 16.7.2025 -Piyush-