The Bombay High Court has affirmed that once a secured creditor follows due process under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the State is duty-bound to enforce physical possession against unlawful trespass by borrowers or third parties. This judgment reinforces the statutory framework designed to protect financial institutions from coercive interference during asset recovery.
Background & Facts
The Dispute
The petitioner, SVC Co-operative Bank Limited, is a secured creditor that extended loans to respondent Nos. 6 and 7, the borrowers, secured by two residential flats - Nos. 205 and 206 - in the 'Toran Sparsh' building at Gat No. 602, Village Khopi, Taluka Bhor, District Pune. The borrowers defaulted on repayment obligations, triggering the bank’s recourse under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act).
Key Facts
- The loan agreement was executed with the two flats as mortgaged security.
- Borrowers defaulted on repayment obligations, leading the bank to issue a notice under Section 13(2) of the Securitisation Act on or before 2023.
- As default continued, the bank issued a possession notice under Section 13(4) of the Securitisation Act.
- On 27.09.2024, the bank, with the assistance of respondent No. 2 - Nayab Tahsildar, Bhor, Pune - obtained physical possession of both flats after breaking open locked doors, following an order under Section 14 of the Securitisation Act issued by the Competent Magistrate.
- Subsequent auction attempts were disrupted: on 12.02.2026, during inspection for the fourth auction, it was discovered that:
- Flat No. 205 was illegally occupied by a third party.
- Flat No. 206 was re-trespassed by the borrowers themselves (respondent Nos. 6 and 7).
- The bank approached the local police inspector for restoration of possession, but no action was taken.
- The bank filed two writ petitions (WP No. 4303 of 2026 and WP No. 4387 of 2026) before the Bombay High Court seeking enforcement of its lawful possession.
Procedural History
- 27.09.2024: Physical possession of flats obtained by bank with Tahsildar’s assistance under Section 14 order.
- 12.02.2026: Discovery of trespass during auction inspection.
- Late February 2026: Bank’s formal request to police for restoration denied or ignored.
- March 2026: Writ Petitions filed before Bombay High Court.
- 09.04.2026: Hearing before Justices Manish Pitale and Shreeram V. Shirsat.
The Parties' Positions
For the Petitioner (SVC Co-operative Bank)
- Argued that possession was lawfully obtained under the Securitisation Act after full compliance with Sections 13(2), 13(4), and 14.
- Contended that trespass by borrowers or third parties is a criminal act and a blatant violation of the rule of law.
- Emphasized that repeated trespasses in Pune district have rendered the Securitisation Act ineffective without State enforcement.
- Requested the Court to direct State authorities to restore possession and prevent further unlawful occupation.
For the Respondents (Borrowers Nos. 6 and 7)
- Submitted that they are contesting the bank’s claim before the Debt Recovery Tribunal (DRT), with the next hearing scheduled on 05.05.2026.
- Argued that the High Court should refrain from interfering while DRT proceedings are pending.
- Did not dispute the legality of the bank’s possession but sought delay through procedural objections.
Relief Sought
The petitioner sought:
- A direction to respondent State authorities to restore physical possession of flats Nos. 205 and 206 to the bank.
- Police assistance to remove trespassers.
- Enforcement of the bank’s rights under the Securitisation Act without further delay.
The Legal Issue
The central question was whether State authorities are obligated to assist a secured creditor in retaining or restoring physical possession of secured assets after lawful acquisition under the Securitisation Act, even when the borrower challenges the debt before the DRT.
Arguments Presented
For the Petitioner
The bank relied on the statutory scheme of the Securitisation Act, particularly Sections 13 and 14, which create a self-contained enforcement mechanism. It cited Mardia Chemicals Ltd. v. Union of India to argue that the Act is designed to ensure swift recovery and that judicial interference during enforcement is limited. The bank emphasized that possession under Section 14 is not merely procedural but a substantive right, and that trespass constitutes a criminal act under the Indian Penal Code. The Court’s intervention was sought not to decide the debt dispute but to uphold the rule of law.
For the Respondent
The borrowers contended that the pendency of proceedings before the DRT operates as an automatic stay on enforcement actions. They argued that the High Court should not entertain writ petitions when an alternative remedy under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, is available. However, they did not dispute the factual legality of the bank’s possession under Section 14.
The Court's Analysis
The Court rejected the borrowers’ argument that the pendency of DRT proceedings precludes enforcement of possession. It held that the Securitisation Act creates an independent statutory right to possession, which is not suspended merely because the borrower files a challenge before the DRT. The Court observed that the DRT’s jurisdiction is adjudicatory, not prohibitory, and does not operate as an automatic injunction against enforcement.
"This Court cannot grant premium to their aforesaid activity of blatantly violating rule of law and trespassing into properties, physical possession of which was duly handed over to the petitioner bank (secured creditor) after following the procedure prescribed under the Securitisation Act."
The Court noted the systemic failure of State authorities in Pune district to enforce possession orders, calling it a "rampant violation of the rule of law." It emphasized that the State’s duty under Section 14 is not discretionary but mandatory: once a Magistrate’s order is issued, the District Magistrate or other designated officer must assist in taking possession. The Court further held that the borrowers’ remedy lies in contesting the debt before the DRT, not in physically occupying the property.
The Court distinguished between the right to contest liability and the illegality of trespass. It held that allowing trespass to persist would render the entire Securitisation Act ineffective and encourage lawlessness.
The Verdict
The writ petitions were allowed. The Court directed:
- Respondent No. 2, Nayab Tahsildar, Bhor, Pune, to take physical possession of flats Nos. 205 and 206 on 21.04.2026.
- Respondent No. 5, Senior Inspector, Rajgad Police Station, to provide police assistance, including lady constables, for the possession drive.
- The police team may use reasonable and necessary force, if required, to remove trespassers.
- The Nayab Tahsildar and Senior Inspector shall remain personally present before the Court on 24.04.2026 if compliance is not effected.
- The matter is listed for compliance on 24.04.2026.
What This Means For Similar Cases
State Enforcement Is Non-Negotiable
- Practitioners representing secured creditors must immediately file writ petitions if State authorities refuse to assist in enforcing possession under Section 14.
- The burden is now on the State to act; delay or inaction can be challenged directly before the High Court.
DRT Proceedings Do Not Stay Possession
- Borrowers cannot use pending DRT matters as a shield for illegal occupation.
- Banks may proceed with auction or sale even while DRT litigation is ongoing, provided possession was lawfully obtained.
Trespass Is a Criminal Matter
- Repeated trespasses by borrowers should be reported to police as cognizable offences under Section 441 IPC (Criminal Trespass).
- Legal notices under the Securitisation Act should be accompanied by formal police complaints to create a record of unlawful conduct.
Procedural Compliance Must Be Documented
- Banks must meticulously maintain records of Section 13 notices, Section 14 orders, and possession reports.
- Any interference after possession must be documented with photographs, witness statements, and police complaints to strengthen future writ petitions.
Enforcement Requires Coordination
- Banks should proactively coordinate with Tahsildars and police before auction dates to prevent last-minute trespass.
- A standard operating procedure for enforcement, including police liaison protocols, should be institutionalized.
