Durga Travels Case: Illegal Possession Under SARFAESI Act and Protection of Property Rights under Article 300A

The recent judgment delivered by the Allahabad High Court Lucknow Bench in M/s Durga Travels Thru Proprietor Pankaj Sharma & Ors. v. Debts Recovery Tribunal, Lucknow & Ors. has reaffirmed a crucial constitutional principle: no person can be deprived of property except by authority of law.

The Court examined the legality of the manner in which physical possession of a mortgaged property was taken by an Asset Reconstruction Company (ARC) under the SARFAESI Act, 2002 and held that the possession was contrary to law, violative of Section 14(1-A) of the SARFAESI Act, and infringed Article 300A of the Constitution of India.

This judgment is an important safeguard for borrowers and guarantors against arbitrary and high-handed recovery actions.

Factual Background

M/s Durga Travels obtained a loan in 2015 for purchase of school buses.

Petitioners No. 2 to 4 stood as guarantors.

Upon default, the account was declared NPA and proceedings under SARFAESI Act were initiated.

An order under Section 14 SARFAESI Act was passed by the Additional District Magistrate (ADM) authorising assistance for taking possession.

Despite this, petitioners alleged that on 25.02.2025, recovery agents forcibly took possession without presence of competent magistrate authority, without statutory notice, and by breaking open locks.

Core Legal Issue

Whether physical possession of secured assets can be taken:

By police officials deputed by the Additional Commissioner of Police,

Without the presence or authorisation of an officer subordinate to the District Magistrate or CMM,

And without complying with notice requirements under Section 14 SARFAESI Act.

Court’s Key Findings

The High Court held:

1. Only Magistrate or Subordinate Officer Can Take Possession

Under Section 14(1-A) SARFAESI Act, possession can be taken only by:

District Magistrate / Chief Metropolitan Magistrate, or

Any officer subordinate to them.

In the present case, possession was taken by police officers deputed by the Additional Commissioner of Police, who is not subordinate to the ADM.

➡ Therefore, the entire action was ultra vires.

2. Further Delegation is Impermissible

The ADM had delegated power to the Additional Commissioner of Police, who further delegated it to police officers.

The Court held that sub-delegation of statutory power is not permissible unless expressly provided by law.

3. Violation of Article 300A – Right to Property

Since possession was taken without authority of law:

> Petitioners were deprived of their property in violation of Article 300A of the Constitution.

This itself justified invocation of writ jurisdiction.

4. Even Alternative Remedy Does Not Bar Writ Jurisdiction

Although SARFAESI Act provides remedies before DRT, the Court held:

Where fundamental procedural safeguards are violated,

And where constitutional rights are infringed, a writ petition is maintainable.

5. Directions of ADM and DRT Were Ignored

No prior notice was served on guarantors.

DRT had earlier directed at least 15 days’ notice before physical possession.

These mandatory directions were admittedly not followed.

Final Outcome

Writ petition allowed.

Court declared the possession action illegal.

ARC permitted to initiate fresh possession proceedings strictly in accordance with Section 14(1-A) SARFAESI Act.

Legal Significance of the Judgment

This ruling clearly establishes that:

✔ Banks and ARCs cannot use private muscle power.

✔ Police can assist only when properly authorised under Section 14.

✔ Magistrate’s statutory role is central and non-transferable.

✔ Property rights under Article 300A remain strongly protected.

Practical Takeaway for Borrowers & Guarantors

If possession is taken:

Without magistrate-authorised officer,

Without proper notice,

Or through recovery agents,

such action is liable to be set aside by constitutional courts.

Conclusion

The Durga Travels judgment reinforces the supremacy of rule of law over recovery expediency. Even in financial default cases, authorities must strictly follow statutory procedure. Recovery cannot be achieved by shortcuts or coercive methods.

At Recollect Associates, we regularly represent borrowers, guarantors, and businesses in SARFAESI litigation, possession challenges, and writ proceedings before High Courts.

For consultation or legal assistance, feel free to contact us.

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