Ranchi, July 15: The Jharkhand High Court has taken a firm stand against delays in the recovery of bad loans, ruling that District Magistrates (DCs) and Chief Judicial Magistrates (CJMs) cannot hold up proceedings under the SARFAESI Act by examining ownership or title disputes, as their role is purely administrative.
Justice Anand Sen passed the order while hearing a batch of petitions filed by Jharkhand Gramin Bank, Canara Bank, UCO Bank, HDFC Bank, Jana Small Finance Bank and other financial institutions, which complained that their applications under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act had remained pending for several months.
The banks submitted that the prolonged pendency had prevented them from taking possession of mortgaged properties, thereby hampering the recovery of defaulted loans.
“Under Section 14 of the SARFAESI Act, the role of the District Magistrate and Chief Judicial Magistrate is purely administrative,” Justice Sen observed.
Clarifying the scope of powers under the law, the court said the responsibility of the authorities is limited to facilitating possession of secured assets and does not extend to deciding disputes over ownership or transfer of property.
“The purpose is to provide assistance in securing possession of the mortgaged property, not to examine the validity of ownership or transfer of the property,” the court said.
Justice Sen further observed that unnecessary delays at the administrative stage undermine the objective of the SARFAESI Act and unfairly benefit loan defaulters.
“Unnecessary delay at this stage defeats the very purpose of the SARFAESI Act and gives undue advantage to defaulters,” the court said.
Referring to earlier Supreme Court rulings, the High Court reiterated that District Magistrates and Chief Judicial Magistrates are not expected to adjudicate property disputes while dealing with applications under Section 14.
“District Magistrates and Chief Judicial Magistrates are not required to investigate property titles or adjudicate disputes while considering applications under Section 14,” the order stated.
The court directed that once a bank has fulfilled all statutory requirements under the SARFAESI Act, the competent authority should promptly pass orders to facilitate possession of the mortgaged property.
“If the bank has completed the statutory formalities, the competent authority must promptly pass orders to facilitate possession of the mortgaged property,” Justice Sen said.
During the hearing, the Jharkhand government submitted that delays in processing Section 14 applications were largely due to the heavy workload of the district administration. However, the High Court underscored that administrative constraints cannot become a reason to frustrate the purpose of the law, which is intended to ensure timely recovery of secured assets by banks and financial institutions.
