Karnataka High Court
Shri Siddrameshwar Hiremath vs The General Manager And Hod on 21 February, 2026
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IN THE HIGH COURT OF KARNATAKA, AT DHARWAD
DATED THIS THE 21ST DAY OF FEBRUARY 2026
BEFORE
THE HON'BLE MRS JUSTICE K.S.HEMALEKHA
WRIT PETITION NO. 107149 OF 2025 (GM-RES)
BETWEEN:
SHRI. SIDDRAMESHWAR HIREMATH
S/O. PAVADAYYA,
AGE. 55 YEARS, OCC. GOVERNMENT EMPLOYEE,
R/O. 1B, K.H.B. COLONY, BEHIND R.N.SHETTY
STADIUM, K.C.PARK, DHARWAD- 580008,
TQ. AND DIST. DHARWAD.
...PETITIONER
(BY SRI. SUHAS K.HOSAMANI, ADVOCATE)
AND:
1. THE GENERAL MANAGER AND HOD
INDIAN OVERSEAS BANK, CENTRAL OFFICE,
762/763, IOB, ANNA SALAI, CHENNAI,
TAMIL NADU- 60002.
2. THE CHIEF MANAGER
INDIAN OVERSEAS BANK,
CENTRAL OFFICE, 762/763, IOB,
ANNA SALAI, CHENNAI, TAMIL NADU- 600002.
MANJANNA
E 3. THE BANK MANAGER
INDIAN OVERSEAS BANK
Digitally signed by
MANJANNA E
CIRCLE BRANCH, BANGALORE,
Location: HIGH COURT
OF KARNATAKA
LAKSHMINARAYANA COMPLEX,
DHARWAD BENCH
Date: 2026.02.27 3RD FLOOR, 10/1 PALACE ROAD,
17:05:40 +0530
VASANTH NAGAR, BANGALORE- 560052.
4. THE BANK MANAGER
INDIAN OVERSEAS BANK,
K.H.R.S BUILDING,
ALUR VENKAT RAO CIRCLE,
COLLEGE ROAD, JUBILEE CIRCLE,
DHARWAD- 580001.
5. THE AUTHORIZED OFFICER
INDIAN OVERSEAS BANK
HUBLI BRANCH, GROUND FLOOR,
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SATELLITE COMPLEX,
KOPPIKAR ROAD, HUBLI- 580020.
6. SHRI. AMBARAYA S/O. BASANNA MANJRE
AGE. MAJOR, OCC. NOT KNOWN TO PETITIONER,
R/O. 1/A, S.R.H.S. QUARTERS,
DDPI COMPOUND NEAR RN SHETTY STADIUM,
DHARWAD- 580001.
7. M/S GREEN AGRI SOLUTIONS
REPRESENTED BY ITS PROPRIETOR,
SHRI. ANILKUMAR S/O. AMBARAYA MANJRE,
AGE. MAJOR, OCC. BUSINESS,
R/O. 1/A, S.R.H.S QUARTERS,
DDPI COMPOUND, NEAR RN SHETTY STADIUM,
DHARWAD- 580001.
8. THE RESERVE BANK OF INDIA
CENTRAL POLICE, THROUGH ITS GOVERNOR,
SHAHID BHAGAT SINGH MARG, MUMBAI-40001.
9. THE REGIONAL DIRECTOR FOR KARNATAKA
RESERVE BANK OF INDIA,
10/3/8, NRUPATHUNGA ROAD,
POST BAG NO.5467, BANGALORE-560001.
...RESPONDENTS
(BY SRI. ANAND K.BHANDIWAD, ADVOCATE FOR R4 AND R5;
NOTICE TO R1 TO R3 ARE SERVED;
NOTICE TO R6 AND R7 ARE DISPENSED WITH
VIDE ORDER DATED 25.09.2025;
SRI. VENKATESH KHARVI ACCEPTS NOTICE FOR
PROPOSED R8 AND R9 VIDE ORDER DATED 12.02.2026)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
MANDAMUS OR ANY OTHER ORDER OR DIRECTION, DIRECTING THE
RESPONDENT NO.4 AND 5 TO DELIVER THE PHYSICAL POSSESSION
OF RESIDENTIAL PROPERTY (G+1) BEARING NO.1A GROUND FLOOR
OF THE BLOCK NO.1 IN THE LAYOUT FORMED BY THE KARNATAKA
HOUSING BOARD OF CTS NO.28A/1C/D MEASURING 560 SQ.FEET
SITUATED AT DDPI COMPOUND, NEAR R.N. SHETTY STADIUM,
DHARWAD BY GIVING EFFECT TO SALE CERTIFICATE DATED
20.03.2025 ISSUED BY THE RESPONDENT NO.5 VIDE ANNEXURE B,
REF.NO.IOB/BR/HUBLI/004/2024-25 BY CONSIDERING THE
REPRESENTATION DATED 29.07.2025 SUBMITTED TO RESPONDENT
NO.4 BY PETITIONER TO VIDE ANNEXURE-C AND ETC.
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THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: THE HON'BLE MRS JUSTICE K.S.HEMALEKHA
ORAL ORDER
"Injustice anywhere is a threat to justice everywhere"
has been vividly stated by the Apex Court in the case of Kishor Singh Ravinder Dev Vs. State of Rajasthan1 (Kishor Singh), and further observed that, "where justice is in jeopardy, the Court is not non-aligned and acts with sensitive speed. Time is the essence where otherwise torture is the consequence". The facts of the case justify, attract the said observations to the instant case as well, where time are the essence, lest injustice is a baneful result of the petitioner.
2. The petitioner has approached this Court seeking a writ of mandamus directing respondent Nos.4 and 5 that the secured creditor bank and its authorized officer to deliver physical possession of the schedule property 1 AIR 1981 625 -4- NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR purchased by the petitioner in an E-auction conducted under the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 ("SARFAESI Act" for short) pursuant to the issuance of sale certificate dated 20.03.2025.
Brief Facts:
3. The schedule property was mortgaged by respondent No.7 in favour of respondent No.4-bank as security for credit facilities availed. Upon default in repayment, loan account was classified as NPA and proceedings were initiated under Section 13 of the SARFAESI Act. Symbolic possession of the property was taken under Section 13(4) read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 ('Rules, 2002' for short). Thereafter, the property was brought for sale through E-auction conducted under Rule 9 of the Rules, 2002. The petitioner emerged as a successful bidder. Upon payment of the entire sale consideration, the authorized -5- NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR officer issued a sale certificate dated 20.03.2025 in favour of the petitioner and the petitioner has registered sale certificate.
4. Despite issuance and registration of the sale certificate, physical possession of the property has not been delivered to the petitioner. The petitioner submitted a representation requesting delivery of possession. As no steps were taken, the present writ petition is filed.
5. Learned counsel for the petitioner would contend that the auction was conducted under the statutory framework of SARFAESI Act and Rules 2002. Rule 9 contemplates not merely issuance of sale certificate, but completion of sale process including delivery of possession.
The secured creditor, having conducted the auction and received full sale consideration, cannot abandon its statutory obligation midway. Section 14 of the SARFAESI Act provides statutory machinery to secure physical possession through the Magistrate. It is the submission that -6- NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR issuance of a sale certificate does not automatically extinguish the duty of the secured creditor, where only symbolic possession was taken and the action of the respondents in refusing to take steps under Section 14 is arbitrary and defeats the object of the SARFAESI Act.
6. Per contra, learned counsel appearing for respondent Nos.4 and 5 would contend that the symbolic possession was taken in accordance with Section 13(4) and Rule 8. The auction was conducted on, "as is where is", and "as is what is", basis. Sale certificate has been issued and registered. Upon issuance of the sale certificate, the property ceases to be the secured asset and the bank ceased to be a secured creditor. Therefore, the bank is not required to take further steps for securing physical possession. It is contended that it is for the auction purchaser to take independent legal remedies for eviction of the occupant.
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7. Reliance is placed on the decision of the Apex Court in the case of ITC Limited Vs. Blue Coast Hotels Ltd. and Others2 (ITC Ltd.), particularly paragraph Nos.48 and 50 to contend that once the sale certificate is issued the secured creditor's role comes to an end.
8. This Court has carefully considered the rival contentions and perused the material on record. The point that arises for consideration is:
"Whether upon issuance (and even registration) of the sale certificate in favour of the auction purchaser, the secured creditor's duties stands concluded so as to absolve it from taking steps for delivery of physical possession, including by invoking Section 14 of the SARFAESI Act?"
9. The enforcement mechanism under the SARFAESI Act proceeds in a structured statutory sequence, section 13(2) demand notice, Section 13(4) measures including taking possession, Rule 8 procedure for taking possession of immovable property, Rule 9 issuance of sale 2 C.A.Nos.2928-2930 of 2018 D.D 19.03.2018 -8- NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR certificate and delivery of possession, Section 14 assistance of Magistrate for securing possession.
10. The above provisions form a continuous statutory chain and they cannot be read in isolation. The measures under Section 13(4) was expressly required to be taken in accordance with the "Rules", Rule 8 governs the manner of taking possession of the immovable property, Rule 9 of the Rules governs (i) confirmation of sale, (ii) issuance of sale certificate, (iii) delivery of possession.
11. Rule 9 is not confined merely to issuance of sale certificate. The Rule contemplates completion of the sale process including the delivery. Therefore, once an auction is conducted under the Rules, the consequences falling under the Rules necessarily apply. The secured creditor cannot rely on Rule 8 to conduct auction, but ignore the obligation arising therefrom.
12. Section 14 provides for assistance of the Chief Metropolitan Magistrate or District Magistrate for taking -9- NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR possession of secured assets. The first provision to Section 14 (1) requires the secured creditor to file an affidavit affirming:
i. Classification of account as NPA.
ii. Service of demand notice.
iii. Consideration of objections.
iv. Compliance with statutory requirements.
v. Taking of measures under Section 13(4).
Upon satisfaction of these formalities, the Magistrate is required to assist in taking possession.
13. The Apex Court in the case of Balakrishna Rama Tarle (dead) through LRs and another Vs. Phoenix ARC Private limited and Others3 (Balakrishna Rama Tarle), has held at paragraph Nos.4 to 7 as under:
4. "We have heard learned counsel appearing on behalf of the petitioners at length. At the outset, it is required to be noted that after initiation of the 3 AIR 2022 SC 4756
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR proceedings and taking steps under Section 13(2) and 13(4) of the SARFAESI Act, thereafter, the secured creditor has approached the District Magistrate by submitting an application under Section 14 of the SARFAESI Act and has requested the District Magistrate/Additional District Magistrate to assist the secured creditor in obtaining the possession of the secured assets. It is required to be noted that neither the original borrowers nor even the petitioners who are claiming to be a tenant of the secured assets have initiated any proceedings before Debt Recovery Tribunal under Section 17 of the SARFAESI Act. The proceedings before the District Magistrate were under Section 14 of the SARFAESI Act. In the said application under Section 14 of the SARFAESI Act instead of passing any final order to assist the secured creditor in getting the possession of the secured assets and while keeping the said application, the Additional District Magistrate has passed an order that only after the termination of the tenancy rights of the petitioner by the finance company (secured creditor) by following due procedure of law the further orders regarding possession of the mortgage property, the said application shall be decided. The aforesaid order passed by the Additional District Magistrate has been set aside by the High Court which is the subject matter of the present Special Leave Petition.
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5. Therefore, the short question which is posed for consideration of this Court is whether while exercising the powers under Section 14 of the SARFAESI Act, the District Magistrate/designated authority could have passed such an order that unless and until the secured creditor terminates the tenancy rights of the third person by following due procedure of law and further orders regarding possession of the mortgaged property then and then only an application under Section 14 of the SARFAESI Act will be decided?
5.1 While considering the aforesaid question/issue, the scope, ambit, and jurisdiction of the District Magistrate/designated authority under Section 14 of the SARFAESI Act are required to be considered. Section 14 of the SARFAESI Act reads as under: − "14. Chief Metropolitan Magistrate or District Magistrate to assist secured creditor in taking possession of secured asset.--(1) Where the possession of any secured assets is required to be taken by the secured creditor or if any of the secured assets is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR possession or control of any such secured assets, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or as the case may be, the District Magistrate shall, on such request being made to him--
(a) take possession of such asset and documents relating thereto; and
(b) forward such asset and documents to the secured creditor: [Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that--
(i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application;
(ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting security interest over such properties and the claim of the Bank or
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR Financial Institution is within the limitation period;
(iii) the borrower has created security interest over various properties giving the details of properties referred to in sub clause (ii)above;
(iv) the borrower has committed default in repayment of the financial assistance granted aggregating the specified amount;
(v) consequent upon such default in repayment of the financial assistance the account of the borrower has been classified as a nonperforming asset;
(vi) affirming that the period of sixty days notice as required by the provisions of subsection (2) of section 13, demanding payment of the defaulted financial assistance has been served on the borrower;
(vii) the objection or representation in
reply to the notice received from the
borrower has been considered by the
secured creditor and reasons for
non−acceptance of such objection or
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representation had been communicated to the borrower;
(viii) the borrower has not made any repayment of the financial assistance in spite of the above notice and the Authorised Officer is, therefore, entitled to take possession of the secured assets under the provisions of sub−section (4) of section 13 read with section 14 of the principal Act;
(ix) that the provisions of this Act and the rules made thereunder had been complied with:
Provided further that on receipt of the affidavit from the Authorised Officer, the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, shall after satisfying the contents of the affidavit pass suitable orders for the purpose of taking possession of the secured assets [within a period of thirty days from the date of application] [Provided also that if no order is passed by the Chief Metropolitan Magistrate or District Magistrate within the said period of thirty days for reasons beyond his control, he may, after recording reasons in writing for the same, pass the order within such further period but not exceeding in aggregate sixty
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR days.] Provided also that the requirement of filing affidavit stated in the first proviso shall not apply to proceeding pending before any District Magistrate or the Chief Metropolitan Magistrate, as the case may be, on the date of commencement of this Act.] [(1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,--(i)to take possession of such assets and documents relating thereto; and (ii) to forward such assets and documents to the secured creditor.] (2) For the purpose of securing compliance with the provisions of sub−section (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the District Magistrate [any officer authorised by the Chief Metropolitan Magistrate or District Magistrate] done in pursuance of this section shall be called in question in any court or before any authority."
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR 5.2 On a fair reading of Section 14 of the SARFAESI Act, it appears that for taking possession of the secured assets in terms of Section 14(1) of the SARFAESI Act, the secured creditor is obliged to approach the District Magistrate/Chief Metropolitan Magistrate by way of a written application requesting for taking possession of the secured assets and documents relating thereto and for being forwarded to it (secured creditor) for further action.
The statutory obligation enjoined upon the CMM/DM is to immediately move into action after receipt of a written application under Section 14(1) of the SARFAESI Act from the secured creditor for that purpose. As soon as such an application is received, the CMM/DM is expected to pass an order after verification of compliance of all formalities by the secured creditor referred to in the proviso in Section 14(1) of the SARFAESI Act and after being satisfied in that regard, to take possession of the secured assets and documents relating thereto and to forward the same to the secured creditor at the earliest opportunity. As observed and held by this Court in the case of NKGSB Cooperative Bank Limited v. Subir Chakravarty & Ors. (Civil Appeal No. 1637/2022) (Reported in AIR 2022 SC 1325) decided on 25.02.2022, the aforesaid act is a
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR ministerial act. It cannot brook delay. Time is of the essence and this is the spirit of the special enactment. In the recent decision in the case of M/s R.D. Jain and Co. V. Capital First Ltd. & Ors. (Civil Appeal No. 175/2022) (Reported in AIROnline 2022 SC 1137) decided on 27.07.2022, this Court had an occasion to consider the powers exercisable by District Magistrate/Chief Metropolitan Magistrate under Section 14 of the SARFAESI Act. After considering the object and purpose of Section 14 of the SARFAESI Act and the Scheme of the Act under Section 14, it is observed and held in paragraphs 7 to 9 as under: − "7. Now so far as the powers exercisable by DM and CMM under Section 14 of the SARFAESI Act are concerned, statement of objects and reasons for which SARFAESI Act has been enacted reads as under:
− "STATEMENT OF OBJECTS AND REASONS The financial sector has been one of the key drivers in India's efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with the international prudential norms and accounting practices there are certain areas in which the banking and financial sector do not have a level
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of nonperforming assets of banks and financial institutions. Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These Committees, inter alia, have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the court. Acting on these suggestions, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 was promulgated on the 21st June, 2002 to regulate securitisation and reconstruction of financial assets
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR and enforcement of security interest and for matters connected therewith or incidental thereto. The provisions of the Ordinance would enable banks and financial institutions to realise longterm assets, manage problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce nonperforming assets by adopting measures for recovery or reconstruction."
Thus, the underlying purpose of the SARFAESI Act is to empower the financial institutions in India to have similar powers as enjoyed by their counterparts, namely, international banks in other countries. One such feature is to empower the financial institutions to take possession of securities and sell them. The same has been translated into provisions falling under Chapter III of the SARFAESI Act. Section 13 deals with enforcement of security interest. Sub Section (4) thereof envisages that in the event a default is committed by the borrower in discharging his liability in full within the period specified in sub−section (2), the secured creditor may take recourse to one or more of the measures provided in sub−section (4). One of the measures is to take possession of the secured assets of the borrower including the right to transfer by way of lease,
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR assignment or sale for realising the secured asset. That, they could do through their "authorised officer" as defined in Rule 2(a) of the Security Interest (Enforcement) Rules, 2002.
7.1 After taking over possession of the secured assets, further steps to lease, assign or sale the same could also be taken by the secured creditor. However, Section 14 of the SARFAESI Act predicates that if the secured creditor intends to take possession of the secured assets, must approach the CMM/DM by way of an application in writing, and on receipt of such request, the CMM/DM must move into action in right earnest. After passing an order thereon, he/she (CMM/DM) must proceed to take possession of the secured assets and documents relating thereto for being forwarded to the secured creditor in terms of Section 14(1) read with Section 14(2) of the SARFAESI Act. As noted earlier, Section 14(2) is an enabling provision and permits the CMM/DM to take such steps and use force, as may, in his opinion, be necessary.
7.2 At this stage, it is required to be noted that along with insertion of sub−section (1A), a proviso has also been inserted in
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR sub−section (1) of Section 14 of the SARFAESI Act whereby the secured creditor is now required to comply certain conditions and to disclose that by way of an application accompanied by affidavit duly affirmed by its authorised officer in that regard. Sub−Section (1A) is in the nature of an explanatory provision and it merely restates the implicit power of the CMM/DM in taking services of any officer subordinate to him. As observed and held by this Court in the case of NKGSB Cooperative Bank Ltd. (supra), the insertion of sub−section (1A) is not to invest a new power for the first time in the CMM/DM as such."
(Emphasis supplied)
14. The Apex Court has held that:
i. Section 14 is a ministerial exercise.
ii. The Magistrate is not required to adjudicate the disputes.
iii. Section 14 can be invoked even post confirmation of sale.
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR iv. The provision exists precisely to secure physical possession.
Therefore, Section 14 is not rendered otiose after issuance of sale certificate. On the contrary, it is a statutory mechanism to ensure that symbolic possession is converted into actual physical possession.
15. The submission of the respondent-Bank that once a sale certificate is issued, the secured creditor ceases to have any duty cannot be accepted, the reliance placed upon the decision of the Apex Court in the case of ITC Ltd, stated supra, more particularly by relying upon paragraph Nos.49 and 50, which held as under:
"49. In Mulla's the Transfer of Property Act48:-
"The section (s.8) does not apply to court sales, for such sales effect a transfer by the operation of law. The principle of the section was, however, applied in a case decided by Madras High Court where a debt for unpaid purchase money on a sale of land was attached and sold, and the auction purchaser was
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR held entitled to the charge which the vendor had under s 55(4) (b) on the property in the hands of the buyer. The court, after observing that the present section did not apply to court sales, said: The effect of applying s 8 is to strengthen the sale certificate by transferring the lien along with it."
This Court observed in Abdul Aziz49 that a sale through court is different from a sale inter parties:-
"What is sold at a court sale is the right, title and interest of the judgment debtor, and the extent of that interest is a mixed question of fact and law to be decided according to the circumstances of each particular case, and depends upon what the court intended to sell, and the purchaser intended to buy."
We note that even though the entire right, title and interest were purported to have been transferred, all the rights, transfer and interest could not be said to have been transferred since the possession of the property was not transferred to creditor. The possession was retained by the debtor who continued to do business and receive rent from the rooms on
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR the property and has in fact continued to do so till date. There is no doubt that after taking over the property from debtor, the creditor also acquired the right to receive the usufruct of the property i.e. the rent in this case. However, this was an interest in the property which was not at any point of time transferred to the auction purchaser.
50. In this case, the creditor did not have actual possession of the secured asset but only a constructive or symbolic possession. The transfer of the secured asset by the creditor therefore cannot be construed to be a complete transfer as contemplated by Section 8 of the Transfer of Property Act. The creditor nevertheless had a right to take actual possession of the secured assets and must therefore be held to be a secured creditor even after the limited transfer to the auction purchaser under the agreement50. Thus, the entire interest in the property not having been passed on to the creditor in the first place, the creditor in turn could not pass on the entire interest to the auction purchaser and thus remained a secured creditor in the Act."
(Emphasis supplied)
16. A careful reading of the above paragraph of the decision in ITC Ltd., the Apex Court framed the issue
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR "whether the creditor could maintain an application under Section 14, despite having taken only symbolic possession prior to sale, which depends upon whether the creditor continued to remain a secured creditor after such sale" and a careful reading of paragraph No.50 would indicate that the Apex Court while considering a situation where auction purchaser sought entitlement to rents from running property, when the secured creditor itself had not taken physical possession. The Court observed that since the entire interest in the property had not vested in the secured creditor by virtue of only symbolic possession, the creditor could not in turn pass such complete interest to the auction purchaser. The issue considered was thus confined to entitlement to rents and nature of possession. It does not lay down that upon issuance of a sale certificate, the secured creditor stands absolved of its statutory obligation to secure physical possession. On the contrary, the judgment recognizes that where actual possession has not been taken, the secured creditor continues to retain rights
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR under the Act and thus, the contention of the respondent that upon issuance of a sale certificate, the secured creditor ceases to have any obligation, cannot be accepted for the following reasons:
i. The sale is conducted by the secured creditor.
ii. Sale certificate is issued by its authorized officer.
iii. Entire consideration is received by the secured creditor.
iv. Rule 9 contemplates delivery of possession.
v. Section 14 provides statutory mechanism for securing physical possession.
17. If the argument of the bank is accepted, it would lead to an anomalous situation where the secured creditor conducts auction, receives sale consideration, issues sale certificate and leaves the purchaser to independently initiate eviction proceedings. Such interpretation would
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR defeat the object of the Act, which is to provide a complete and effective enforcement mechanism. The enforcement process under SARFAESI Act culminates not merely in transfer of title, but in effective realization of the secured asset. Thus, this Court is of the considered view that delivery of possession forms part of the enforcement mechanism under the SARFAESI Act and Section 14 remains available even post-confirmation of sale and the secured creditor is obligated to take appropriate steps under Section 14, if physical possession has not been delivered and accordingly, the point framed for consideration is answered and this Court pass the following:
ORDER i. The writ petition is allowed.
ii. Respondent Nos.4 and 5 shall, if physical possession has not already been delivered, initiate appropriate proceedings under Section 14 of the SARFAESI Act by filing an affidavit as contemplated under the first proviso to Section 14 (1) within four
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NC: 2026:KHC-D:2785 WP No. 107149 of 2025 HC-KAR weeks from the date of receipt of the copy of this order.
iii. On an affidavit being filed, the Judicial Magistrate shall consider the affidavit in accordance with law.
Sd/-
JUSTICE K.S.HEMALEKHA MBM Ct:VH List No.: 1 Sl No.: 6