The Bombay High Court affirmed that auction purchasers under the SARFAESI Act can approach the writ court for specific directions to obtain physical possession of a secured asset, overruling the contention that only the secured creditor may file such a petition.
Background & Facts
The Dispute
The petitioners, a consortium of auction purchasers, bought the secured asset situated at Gat No.2126, Survey No.101, Hissa No.4A, Village Nagaon, Taluka Alibag, District Raigad. The asset was originally a secured asset of respondent No.2 - a bank, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act). The petitioners seek physical possession of the property.
Key Facts
- 29.06.2021: Respondent No.2 conducted an e-auction of the secured asset; petitioner No.1 emerged as the successful bidder.
- 26.07.2021: Sale certificate issued in favour of petitioner No.1.
- 15.12.2021: Sale certificate registered (1/18 CNR No: HCBM010323762026).
- 02.02.2022: District Magistrate, Raigad, under Section 14 of the SARFAESI Act, ordered respondent No.5 - Tahsildar, Alibag to take physical possession of the property and hand it over to respondent No.2 - bank.
- 11.08.2021: Respondent Nos.3 and 4 filed Securitisation Application No.76 of 2021 before the Debts Recovery Tribunal - I (DRT), challenging the bank’s actions.
- 01.08.2023: DRT dismissed an interim application by respondents as dilatory.
- 21.03.2024: DRT dismissed a belated amendment application by respondents.
- 05.09.2024: Bombay High Court directed the Debts Recovery Appellate Tribunal (DRAT) to dispose of the pending appeal.
- 22.09.2025: DRAT allowed the amendment sought by respondents.
- 21.01.2026: Bombay High Court permitted petitioners to respond to amended pleadings and directed DRT to decide the pending application by 26.02.2026.
- 12.03.2026, 16.04.2026, 04.05.2026: Extensions granted to DRT for disposal.
- 29.05.2026: DRT finally dismissed the securitisation application, rejecting respondents’ contentions.
- 28.07.2026: Present writ petition filed (WP No.8601 of 2026).
Procedural History
- 29.06.2021 - E-auction conducted by respondent No.2 - bank.
- 26.07.2021 - Sale certificate issued to petitioner No.1.
- 15.12.2021 - Sale certificate registered.
- 02.02.2022 - Magistrate order under Section 14 directing possession.
- 11.08.2021 - Securitisation Application No.76 of 2021 filed before DRT.
- 01.08.2023 - DRT dismisses interim application (dilatory tactics).
- 21.03.2024 - DRT dismisses amendment application.
- 05.09.2024 - Bombay High Court directs DRAT to dispose of appeal.
- 22.09.2025 - DRAT allows amendment.
- 21.01.2026 - Bombay High Court permits petitioners to respond; directs DRT to decide by 26.02.2026.
- 12.03.2026, 16.04.2026, 04.05.2026 - Extensions to DRT.
- 29.05.2026 - DRT dismisses securitisation application.
- 28.07.2026 - Writ petition filed before the High Court.
Parties' Positions
- Petitioners (auction purchasers) argue that the registered sale certificate and the absence of any interim order in their favour give them locus standi to seek possession.
- Respondent Nos.3 and 4 (borrower and guarantor) contend that only the secured creditor (respondent No.2 - bank) can maintain a writ petition under Section 14.
- Respondent No.2 - bank supports the petitioners’ prayer, stating that the direction furthers the object of the SARFAESI Act.
- State authorities (respondent Nos.1,5,7,8) maintain that they will comply with any lawful direction.
Relief Sought
The petitioners seek:
- Specific directions for physical possession of the subject property to be handed over to them.
- Enforcement of the magistrate’s order dated 02.02.2022.
- Directions to respondent No.5 - Tahsildar to take possession on 13.08.2026 and hand it to the bank, which shall then hand it to the petitioners.
- Police assistance for the execution of the possession order.
- Confirmation that the DRAT may continue to hear the appeal of respondents Nos.3 and 4.
The Legal Issue
The central question is whether auction purchasers who have obtained a registered sale certificate under the SARFAESI Act have locus standi to file a writ petition under Article 226 for specific directions to obtain physical possession of the secured asset, or whether such a petition can be filed only by the secured creditor.
Arguments Presented
For the Petitioners
- The petitioners rely on the registered sale certificate dated 26.07.2021 as evidence of a limited transfer of interest, invoking ITC Limited v. Blue Coast Hotels Limited and Celir LLP v. Bafna Motors to argue that auction purchasers acquire a substantial interest and may approach the writ court.
- They cite Section 13(2) and Section 13(4) of the SARFAESI Act, asserting that symbolic possession by the bank does not extinguish the purchaser’s right to actual possession.
- They emphasize the absence of any interim order favouring respondents Nos.3 and 4, making the petitioners the only aggrieved party.
For the Respondents (Nos.3 and 4)
- Respondents argue that only the secured creditor (the bank) can invoke Section 14 of the SARFAESI Act to seek possession, relying on ITC Limited v. Blue Coast Hotels Limited.
- They contend that the auction purchaser’s interest is limited and that the bank retains the right to take actual possession until it does so.
- They raise a procedural objection, claiming the writ petition is not maintainable by the auction purchaser.
The Court's Analysis
The Court began by examining the statutory scheme of the SARFAESI Act, particularly Section 2(1)(d) defining a “secured creditor,” and Section 13 dealing with transfer of secured assets. It noted that the Supreme Court in ITC Limited v. Blue Coast Hotels Limited held that the secured creditor retains the right to take actual possession even after a limited transfer to an auction purchaser.
"We find nothing in the provisions of the Act that renders taking over of symbolic possession illegal. This is a well-known device in law..."
The Court observed that the auction purchaser, having paid the full consideration and obtained a registered sale certificate, acquires a limited transfer of interest under Section 13(6). While the bank retains symbolic possession, the purchaser’s right to actual possession is a statutory entitlement that can be enforced through a writ.
The Court distinguished the view that only the secured creditor may file a writ, stating that the Supreme Court’s observations do not preclude an auction purchaser from seeking enforcement of a magistrate’s order. It relied on the Patna High Court decision in Md. Ajim @ Md. Ajim Uddin v. State of Bihar which upheld the locus standi of an auction purchaser.
Further, the Court emphasized the principle of rule of law: state authorities must implement the magistrate’s order under Section 14. Denying the petitioners’ writ would frustrate the statutory scheme and undermine confidence in the enforcement mechanism of the SARFAESI Act.
Consequently, the Court concluded that the petitioners have clear locus standi, the magistrate’s order is binding on the state authorities, and the auction purchaser is entitled to physical possession.
The Verdict
The writ petition is allowed in terms of prayer clauses (a), (c), (e) and (f). The Court directs:
- Respondent No.5 - Tahsildar, Alibag to take physical possession of the subject property on 13.08.2026 and hand it over to respondent No.2 - bank, which shall immediately hand it over to the petitioners.
- Respondent No.7 - Superintendent of Police, Alibag to ensure police assistance, including provision of lady constables, for the execution of the possession order on the same date.
- Prayer clauses (g) and (h) are reserved for the petitioners to pursue in appropriate forums.
- The DRAT may continue to hear the appeal of respondents Nos.3 and 4 on its own merits.
What This Means For Similar Cases
Auction Purchasers Can Invoke Writ Jurisdiction
- Practitioners should advise auction purchasers that a registered sale certificate confers sufficient interest to approach the High Court under Article 226 for possession.
- The presence of a magistrate’s order under Section 14 creates a statutory duty on state authorities, which can be enforced via writ.
State Authorities Must Implement Magistrate Orders
- State officials (e.g., Tahsildars, police) are obligated to act on orders passed under the SARFAESI Act; failure may result in contempt or specific directions.
- Counsel should ensure that any claim of “no interim order” is documented to avoid procedural delays.
Symbolic vs. Actual Possession Distinction
- While banks may hold symbolic possession, the transfer of interest to the auction purchaser remains enforceable.
- Litigation strategy should focus on establishing the absence of any interim order favouring the borrower/guarantor.
Practical Takeaways
- File writ petitions promptly after obtaining a sale certificate and magistrate order.
- Cite ITC Limited v. Blue Coast Hotels Limited, Celir LLP v. Bafna Motors, and Md. Ajim @ Md. Ajim Uddin for locus standi arguments.
- Request police assistance explicitly to avoid enforcement delays.
