ICICI Bank Ltd Vs District Police Chief (Kerala High Court)
Summary: The Kerala High Court allowed a writ petition filed by ICICI Bank Limited challenging the order dated 30.05.2026 passed by the Additional Chief Judicial Magistrate, Ernakulam, which dismissed the bank’s application on the ground that the Magistrate had become functus officio after possession of the secured asset had earlier been taken and handed over to the bank.
The petitioner had initiated proceedings under the SARFAESI Act and obtained orders from the Additional Chief Judicial Magistrate, Ernakulam, with the assistance of an Advocate Commissioner. Possession of the secured asset belonging to respondents 3 and 4 was taken and handed over to the bank on 11.05.2026. The borrowers subsequently allegedly broke open the lock and seal, trespassed into the property and took possession of the secured asset. The bank filed Ext.P5 complaint, on the basis of which Ext.P6 FIR was registered. Since the Advocate Commissioner had already submitted a report and returned the warrant stating that possession had been taken and handed over to the bank, the bank filed Ext.P7 application seeking reopening of the MC and assistance for taking possession. The ACJM, however, dismissed the application through Ext.P8 order dated 30.05.2026, holding that it had become functus officio.
Before the High Court, the bank submitted that the borrowers had forcefully re-entered the secured asset after lawful possession had been delivered to the secured creditor pursuant to orders passed by the ACJM. It was contended that the bank continued to be a secured creditor and the property continued to be a secured asset, and therefore the bank was entitled to seek recourse to Section 14 of the SARFAESI Act for obtaining possession again. Reliance was placed on Federal Bank Limited, Vallithode Branch, Kozhikode v. Thahira and others [2016 KHC 773], which, according to the petitioner, held that the Chief Judicial Magistrate has power under Section 14 to restore possession where the borrower has unlawfully trespassed into the secured property.
The learned Government Pleader submitted that any direction issued by the Chief Judicial Magistrate or the High Court for police assistance to enable the petitioner to obtain possession would be complied with by respondents 1 and 2.
The High Court examined Section 14 of the SARFAESI Act and held that where possession of a secured asset is required to be taken by the secured creditor, the secured creditor may request the Chief Judicial Magistrate to take possession and forward the asset to the secured creditor. The Court held that the fact that the secured creditor had previously obtained possession but was subsequently unlawfully deprived of it by the borrower did not alter the bank’s status as secured creditor or the property’s status as secured asset.
The Court further held that nothing in Section 14 indicated that the Chief Judicial Magistrate becomes functus officio merely because jurisdiction had previously been exercised and possession had been delivered to the secured creditor. The Court noted that, while exercising powers under Section 14, the Chief Judicial Magistrate performs a purely ministerial act and that the function is neither adjudicatory nor quasi-judicial. It observed that Section 14 was incorporated to meet contingencies where a secured creditor may not be able to take possession of a secured asset by itself. Accepting the ACJM’s interpretation would, in the Court’s view, defeat the purpose of Section 14 and potentially enable borrowers or guarantors to forcibly deprive secured creditors of possession.
The High Court was also supported in its view by Thahira (supra). It accordingly held that Ext.P8 order passed by the ACJM could not be sustained and was liable to be set aside.
The Court therefore allowed the writ petition, set aside the P8 order dated 30.05.2026 in CMP No.2/2026 in MC No.90/2026 passed by the ACJM, Ernakulam, and directed the ACJM to consider CMP No.2/2026 in MC No.90/2026 afresh and pass orders in accordance with law as expeditiously as possible, and in any event within two months from receipt of a copy of the judgment.
The decision is significant in the context of Section 14 of the SARFAESI Act, as the High Court held that earlier delivery of possession to the secured creditor does not, by itself, render the Chief Judicial Magistrate functus officio where the borrower subsequently unlawfully re-enters the secured asset. The matter was, however, remanded to the ACJM for fresh consideration and the High Court did not itself finally direct delivery of possession.
TaxGuru coverage on the role and powers of the District / Chief Metropolitan Magistrate under Section 14, Chief Judicial Magistrate’s jurisdiction under Section 14, Section 17 of the SARFAESI Act, and physical possession of secured assets under SARFAESI is also available.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner – ICICI Bank Limited, by initiating proceedings under the SARFAESI Act, had taken possession of a secured asset belonging to respondents 3 and 4 after obtaining orders from the Additional Chief Judicial Magistrate, Ernakulam, with the assistance of an Advocate Commissioner, on 11.05.2026. But, the borrowers trespassed into the property again after breaking open the lock and seal and took possession of the secured asset unlawfully. Immediately, the petitioner filed Ext.P5 complaint, and on the basis of the same, Ext.P6 FIR was registered. Since the Advocate Commissioner had already filed a report and had returned the warrant stating that possession has been taken and handed over to the bank, the petitioner preferred Ext.P7 application seeking reopening of the MC and assistance for taking possession. But, as per Ext.P8 order dated 30.05.2026, the learned Additional Chief Judicial Magistrate, Ernakulam dismissed the application stating that it had become functus officio. It is aggrieved by Ext.P8 order, this writ petition has been filed by the petitioner.
2. Heard the learned counsel for the petitioner and the learned Government Pleader appearing for respondents 1 and 2. There is no representation for respondents 3 and 4.
3. The learned counsel for the petitioner submitted that Ext.P8 order passed by the ACJM, Ernakulam is without properly appreciating the facts and law. He submitted that respondents 3 and 4 have forcefully re-entered into the secured asset, after the secured creditor has taken lawful possession of the secured asset, as per the orders passed by the ACJM and therefore, the petitioner, still being a secured creditor is legally entitled to seek recourse to Section 14 of the SARFAESI Act and get back possession. He further submitted that this Court in the decision in Federal Bank Limited, Vallithode Branch, Kozhikode v. Thahira and others [2016 KHC 773] has categorically held that the CJM in terms of Section 14 has the power to restore possession of the secured asset, if the borrower has trespassed into the property unlawfully.
4. The learned Government Pleader submitted that if an order is passed either by the CJM or by this Court directing the police to assist the petitioner for getting back possession of the secured asset, the same will be complied with by respondents 1 and 2.
5. On an anxious consideration of the submissions made at the Bar, I am of the view that there is considerable merit in the submissions made by the learned counsel for the petitioner. The relevant portion of Section 14 of the SARFAESI Act is extracted below:-
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 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:
6. A reading of the aforesaid Section would clearly show that whenever possession of any secured asset is to be taken by the secured creditor, the secured creditor may, for the purpose of taking possession or control of such secured asset, make a request to the Chief Judicial Magistrate, and the Chief Judicial Magistrate, on such request, is required to take possession of the secured asset and forward the same to the secured creditor. Even if, as in the instant case, the secured creditor had, on an earlier occasion, taken possession of the secured asset and was later denuded of the possession by the borrower unlawfully, that would not change the status of the petitioner as a secured creditor or the status of the property as a secured asset. There is also nothing in Section 14 of the SARFAESI Act which would indicate that, once the Chief Judicial Magistrate has exercised jurisdiction and delivered possession of the secured asset to the secured creditor, he becomes functus officio. At this juncture, it should be kept in mind that the Chief Judicial Magistrate, while exercising powers under Section 14 of the SARFAESI Act, performs a purely ministerial act. His function is neither adjudicatory nor quasi-judicial, and he is also not required to adjudicate disputes involving criminal jurisdiction. Further, Section 14 of the SARFAESI Act has been incorporated to meet contingencies where the secured creditor may not be able to take possession of the secured asset by itself. If the view taken by the learned ACJM in Ext. P8 order is accepted, the same would undoubtedly defeat the very purpose for which Section 14 has been incorporated in the statute. The same would also help unscrupulous borrowers or guarantors to take the law into their own hands and denude the secured creditor of possession forcibly and with impunity, resulting in a travesty of justice. I am also supported in this view by the decision of this Court in Thahira (supra). Ergo, I have no hesitation in holding that Ext. P8 order passed by the learned ACJM cannot be sustained and is liable to be set aside.
7. In the result, this writ petition is allowed as follows:-
i. P8 order dated 30.05.2026 in CMP No.2/2026 in MC No.90/2026 passed by the ACJM, Ernakulam is set aside.
ii. The ACJM, Ernakulam is directed to consider CMP No.2/2026 in MC No.90/2026 afresh and pass orders thereon as per law, as expeditiously as possible, at any rate, within a period of two months from the date of receipt of a copy of this judgment.
