CAV Order

1. What is assailed in this writ petition filed under Article 227 of Constitution of India is an order dated 03.12.2025 passed by the Additional Chief Judicial Magistrate, Raipur (for short "ACJM") in MJC No.1421/ 2025 by which the application under Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short " Act of 2002") filed by the respondent/ bank was allowed.

2. Learned counsel for the petitioner submits that the subject property in this writ petition is comprised in piece of Khasra No. 1799/ 1, 1800 Area 0.470 & 0.882 Hectare respectively which is situated at village Pangaon, P. H. N. 91/2, R.I.C. Lahod, Tahsil- Lavan, District- Balodabazar, Bhatapara (CG). He further submits that respondents No. 1 to 3 made an application for grant of financial assistance to respondent No.9. Their application was processed and a loan was sanctioned in favour of respondents No. 1 to 3, for which respondents No. 4 to 8 stood as guarantors. He further contends that the subject property was said to have been mortgaged with respondent No.9 by way of deposit of title deeds. He submits that there is a bona fide dispute regarding the ownership, title and share of the subject property. A civil suit was filed on 10.12.2024 by the petitioner, claiming his title and share over the suit property. Thus, the subject property, which is said to have been mortgaged with respondent No.9, does not possess a clear title. Apart from this, he submits that a mortgage by deposit of title deeds (equitable mortgage) under the Transfer of Property Act, 1882 (for short "Act of 1882") is not recognized in the State of Chhattisgarh. He contends that if such a mortgage is created by those means, it would be non-est and would not constitute a valid mortgage in the eyes of law. He further submits that to create a valid mortgage as security for a loan, there must be a registered mortgage deed. In the present case, no such registered mortgage deed exists, thus even arguendo, if the title deeds were deposited with the bank, such an act would not create a 'security interest' as defined under Section 2 (zb) of Act of 2002. He submits that in order to attract Section 14 of Act of 2002, there has to be a valid security interest created in favour of bank or financial institution. In the case at hand, since the title and share of the alleged security interest are the subject of a civil suit filed by the petitioner, no legal or valid mortgage was created by respondents No. 1 to 3 in favour of respondent No.9. As the alleged equitable mortgage fails to satisfy the definition under Section 2 (zb) of the Act of 2002, there cannot be any order of taking over the possession of the subject property by the learned ACJM. Furthermore, he submits that the ACJM, Raipur does not have the territorial jurisdiction to pass an order under Section 14 of the Act of 2002. He contends that as the subject property is situated in the District Balodabazar- Bhatapara, the learned ACJM traveled beyond his jurisdiction and authority while passing the impugned order allowing the application filed under Section 14 of Act of 2002 by respondent No.9. He submits that the petitioner, though neither the borrower nor the owner in the loan transactions, finds his rights adversely affected by the impugned order, therefore, this writ petition assailing the impugned order is maintainable. It is submitted that the law is no longer res integra the provisions of Act of 2002 cannot be invoked by the Banks or any financial institutions unless a valid, legal security interest is created in their favour. Thus, he submits that the impugned order suffers from a jurisdictional error and was passed beyond the capacity to grant an order of possession in respect of the subject property, as it does not constitute a 'security interest' under the Act of 2002. To elaborate his submissions regarding the creation of a mortgage, he placed reliance upon the decision of this Court passed in FA No. 95/2001 dated 13.07.2009. Regarding the maintainability of the writ petition and the powers of the ACJM to invoke Section 14 of Act of 2002 in the absence of any security interest, he placed reliance upon the decision of the Hon'ble Supreme Court in the cases of North Eastern Development Finance Corporation Ltd. (NEDFI) Vs. L. Doulo Builders and Suppliers Co. Pvt. Ltd. reported in (2026) 3 SCC 310; Indiabulls Housing Finance Limited Vs. Deccan Chronicle Holdings Limited and Others reported in (2018) 14 SCC 783; M. D. Frozen Foods Exports Private Limited and Others Vs. Hero Fincorp Limited reported in (2017) 16 SCC 741 and Transcore Vs. Union of India and Another reported in (2008) 1 SCC 125. Thus, he prays that the impugned order deserves to be set aside.

3. Mr. Mishra, learned counsel for the respondent No.9 raised a preliminary objection regarding the maintainability of the writ petition, as there exists an alternative remedy to file an appeal Section 17 of the Act of 2002. He further submits that if any person is aggrieved by any action of a Bank or financial institutions under the Act of 2002, the same can be challenged by the petitioner before the Debt Recovery Tribunal (DRT). As the petitioner has not resorted to alternative remedy, this writ petition may not be entertained by this Court. He placed reliance upon the decision of Hon'ble Supreme Court in the cases of PHR Invent Educational society Vs. Uco Bank and Others reported in (2024) 6 SCC 579; South Indian Bank Limited and others Vs. Naveen Mathew Philip and Another reported in (2023) 17 SCC 311 and Agarwal Tracom Private Limited Vs. Punjab National Bank and Others reported in (2018) 1 SCC 626. Alternatively, he submits that the petitioner, being a stranger to the loan transactions, has no locus standi to challenge the order of the ACJM. He submits that the borrowers in the loan transaction i.e. respondents No. 1 to 3 had already challenged the order passed by learned ACJM before the DRT, Jabalpur, under Section 17 of the Act of 2002. Thus, since the validity of the impugned order is already under consideration before the DRT, this Court may not exercise its power under Article 227 of Constitution of India. He further submits that Section 14 of Act of 2002 has a broad connotation; if the subject property or related documents are situated or found within the territorial jurisdiction of the ACJM or District Magistrate, as the case may be, such authority would assume jurisdiction under Section 14 of the Act of 2002. In the present case, the Maudhapara Branch, Raipur of respondent No.9 sanctioned and disbursed the loan to respondents No. 1 to 3 and the security documents were executed in relation to the property with the said branch, thus, the submissions of Mr. Singh are liable to be rejected. Apart from this, he submits that the Section 2 (zb) of Act of 2002 recognizes a mortgage by deposit of title deeds. In view of the matter, the said title deeds had been deposited by respondents No. 1 to 3 which creates a valid mortgage. Thus the argument that an equitable mortgage is not recognized in the State of Chhattisgarh and that the reliance placed on the aforementioned judgment is misplaced. He further submits the subject property has been put to auction, a sale notice has been issued, and upon the completion of the necessary formalities prescribed under the relevant Rules, the sale certificate would be issued. Hence, he prays for dismissal of the writ petition.

4. I have heard learned counsel for the parties and perused the record.

5. First this Court would like to deal with the submission of Shri Mishra with regard to maintainability of the writ petition. It is not in dispute that the petitioner has challenged the order passed by the learned ACJM by which an application under Section 14 of the Act of 2002 filed by the respondent-bank was granted. It is also not in dispute that the petitioner is not a party to this proceedings.

6. The petitioner counsel tried to persuade this Court that the mortgage was not done in accordance with law and SARFAESI Act can be invoked in respect of security interest as defined in the Act of 2002 as such there was no creation of any valid security interest, the order passed by the learned ACJM is beyond jurisdiction hence this writ petition is maintainable.

7. Supreme Court in case of United Bank of India Vs. Satyawati Tandon and others reported in (2010) 8 SCC 110 has held as under:

          "55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."

8. Likewise, in the case of PHR Invent (Supra) the Hon'ble Supreme Court in paragraph 38 has observed and held as under:

          "It has however been clarified that the High Court will not entertain a a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance."

9. Likewise in the matter of Authorized Officer State Bank of Authorized Officer, State Bank of Travancore and another vs. Mathew K.C., 2018 SCC OnLine 55 in reference to challenge to the proceedings under Section 13(4) of the Act and the Supreme Court held that :

          "4. The SARFAESI Act is a complete code by itself, providing for expeditious recovery of dues arising out of loans granted by financial institutions, the remedy of appeal by the aggrieved under Section 17 before the Debt Recovery Tribunal, followed by a right to appeal before the Appellate Tribunal under Section 18. The High Court ought not to have entertained the writ petition in view of the adequate alternate statutory remedies available to the Respondent. The interim order was passed on the very first date, without an opportunity to the Appellant to file a reply. Reliance was placed on United Bank of India V. Satyawati Tandon, 2010 (8) SCC 110, and General Manager, Sri Siddeshwara Cooperative Bank Limited V. Ikbal, (2013) 10 SCC 83. The writ petition ought to have been dismissed at the threshold on the ground of maintainability. The Division Bench erred in declining to interfere with the same."

10. In the matter of Standard Chartered Bank vs. V. Noble Kumar and others, 2014 (1) MPLJ 396, the Supreme Court has held that :

          "30. The "appeal" under Section 17 is available to the borrower against any measure taken under Section 13(4). Taking possession of the secured asset is only one of the measures that can be taken by the secured creditor. Depending upon the nature of the secured asset and the terms and conditions of the security agreement, measures other than taking the possession of the secured asset are possible under Section 13(4). Alienating the asset either by lease or sale etc. and appointing a person to manage the secured asset are some of those possible measures. On the other hand, section 14 authorises the Magistrate only to take possession of the property and forward the asset along with the connected documents to the borrower. Therefore, the borrower is always entitled to prefer an "appeal" under section 17 after the possession of the secured asset is handed over to the secured creditor. Section 13(4)(a) declares that the secured creditor may take possession of the secured assets. It does not specify whether such a possession is to be obtained directly by the secured creditor or by resorting to the procedure under section 14. We are of the opinion that by whatever manner the secured creditor obtains possession either through the process contemplated under section 14 or without resorting to such a process obtaining of the possession of a secured asset is always a measure against which a remedy under section 17 is available."

11. In light of the aforesaid authorities, it is quite evident that, against the impugned order, the petitioner had an efficacious alternative remedy of filing an application under Section 17 of Act of 2002.

12. Learned counsel for the petitioner sought to persuade this Court to exercise its jurisdiction under Article 227 of the Constitution of India on the ground that, notwithstanding the availability of an alternative remedy, the impugned order had been passed without jurisdiction and suffered from patent illegality. It was contended that there was no valid mortgage in existence and that a civil suit concerning the subject property was already pending adjudication; therefore, the creation of a security interest in favour of Respondent No. 9 was not legally sustainable. However, this Court is not inclined to accept the said submission.

13. All the aforesaid grounds can appropriately be examined by the Debts Recovery Tribunal (DRT) if an application is filed by the petitioner under Section 17 of the Act of 2002. It is also noteworthy that Shri Mishra, learned counsel appearing for respondent No. 9 submitted that the borrower has already approached the DRT challenging the impugned order. In such circumstances, the appropriate remedy available to the petitioner is also to approach the DRT. Shri Mishra further contended that the petitioner, being a stranger to the transaction in question, cannot invoke the jurisdiction of this Court. However, this submission does not find favour with this Court in view of the judgment of the Hon'ble Supreme Court in case of Jagdish Singh V/s. Heeralal & Others, (2014) 1 SCC 479 as any person as envisaged in Secton 17 of the Act of 2002 would also include the petitioner.

14. Accordingly, this Court is of the considered opinion that the petitioner is entitled to avail the statutory remedy under Section 17 of the Act of 2002.

15. Another contention raised on behalf of the petitioner is that the ACJM lacked territorial jurisdiction to entertain the application under Section 14 of the Act of 2002, as the property in question is not situated within his territorial limits. For a proper appreciation of this contention, it would be apposite to refer to the provisions contained in Section 14 of the Act, which clearly indicate that the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, may entertain an application where the secured asset or the documents relating thereto are situated or found. In the present case, it has been submitted by learned counsel for Respondent No. 9 that the loan was advanced from Raipur and according to him, the necessary documents were executed within the jurisdiction of the concerned ACJM . Therefore, this contention also deserves to be rejected. Moreover, this Court is not inclined to entertain the present petition in view of the availability of an efficacious alternative remedy.

16. In light of the above case law, which has been cited by the learned counsel for the petitioner, with due respect, the same may not come to the rescue of the petitioner in the given facts and circumstances of the case, particularly when this Court is not inclined to exercise jurisdiction under Article 227 on account of the alternative remedy available.

17. For the reasons aforesaid, the writ petition fails and is hereby dismissed. However, liberty is reserved in favour of the petitioner to approach the Debts Recovery Tribunal by filing an application under Section 17 of the Act of 2002. In the event such an application is filed, the learned DRT shall consider and decide the same in accordance with law without being influenced by any of the observation made in this writ petition.