The Calcutta High Court in its recent judgment on September 1, 2017 in the case of United Bank of India & Anr. Vs. State of West Bengal & Ors. said that a secured creditor cannot invoke Section 14 of SARFAESI Act after the sale of Secured Asset.
The appellants had filed an appeal in the Calcutta HC to direct the District Magistrate to consider and dispose of an application filed under Section 14 of the Act. In addition, they also contended that they were still entitled to maintain a writ petition for the relief prayed for in spite of the fact that the immovable property was sold in respect to which application was filed under the abovementioned section. The petitioner added that taking over possession would come under the word “transfer” as used in Section 14 and even after an immovable property is sold, has been executed and registered, the secured creditor can legitimately invoke the said provision.
The respondents pleaded that once an immovable property is sold by the secured creditor, it ceases to have no security interest in the said asset and shouldn’t be permitted to invoke the provisions of the Act in question.
The court decided the case in favor of the respondents and held that since the security interest stands dissolved as soon as the sale certificate is issued and hence, secured creditor can no longer claim such over any immovable property sold and in order to take possession of the secured asset, assistance of Chief Metropolitan Magistrate or District Magistrate is required as mentioned in Section 14 of the SARFAESI Act.
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