Unreasonable Delay In Taking SARFAESI Possession Defeats Act: Bombay High Court

A Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat directed the Advocate Commissioner, with police assistance, to take physical possession of the secured property on September 17, 2026 and hand it over to Edelweiss Asset Reconstruction Company Limited.

The Court permitted the police to use reasonable and proportionate force, deploy women constables and videograph the possession process. It also warned the borrowers and other occupants against obstructing implementation of the order.

The Bench observed: “We are of the opinion that the unreasonable and unexplained delay on the part of Respondent no. 2 in taking physical possession has completely defeated the provisions of the SARFAESI Act. The Respondent No. 4 has also failed to take effective steps pursuant to registration of FIR.”

Background

The borrowers had obtained a loan against property from the original lenders but subsequently defaulted. Their account was classified as a non-performing asset in August 2018.

The loan account was assigned to Edelweiss in May 2021. After issuing a demand notice under Section 13(2) of the SARFAESI Act, Edelweiss took symbolic possession of the secured property in April 2024 and approached the Chief Judicial Magistrate at Esplanade, Mumbai, under Section 14.

In May 2025, the Magistrate appointed an Advocate Commissioner to take physical possession with police assistance. When possession was attempted in November 2025, the borrowers refused to vacate the entire property. Only the ground floor could be secured, while the borrowers retained the first floor.

Edelweiss thereafter proposed to sell the property by public auction. The initial auction was cancelled because insolvency proceedings triggered a moratorium. After the moratorium was lifted, the property was auctioned and the successful purchaser paid the entire consideration.

Petitioners' Submissions

Advocate Nikhil Rajani submitted that before registering the sale certificate, Edelweiss officials discovered that the seal placed by the Advocate Commissioner on the ground floor had been removed and the borrowers had re-entered the property.

Edelweiss lodged an FIR for trespass but alleged that the police took no effective action. Repeated requests to the Advocate Commissioner to complete the possession process also yielded no result, while the auction purchaser awaited possession despite paying the full sale price.

Court's Directions

The Court directed the police to provide adequate personnel and assist the Advocate Commissioner in removing the borrowers, co-borrowers or any other unlawful occupants.

The occupants were ordered to vacate immediately with their belongings and warned that obstruction could invite contempt proceedings.

The Bench further directed the concerned police officer to remain personally present on the next hearing date if possession was not secured and to file an affidavit explaining the failure. The officer was also required to disclose the steps taken after registration of the FIR.

The matter was listed for compliance on September 23, 2026.

For Petitioners: Nikhil Rajani

For State: Assistant Government Pleader Anupama Pawar