Au Small Finance Bank Ltd. v. the State of Maharashtra

Bombay HC20 Sept 2025WP/7925/2025

Case brief

AI extract

What is this about?

Au Small Finance Bank Ltd v. State of Maharashtra & Ors., Writ Petition No. 7925 of 2025, Bombay HC Aurangabad Bench, decided 20th September 2025 (Manish Pitale & Y. G. Khobragade, JJ.). Keywords: SARFAESI Act Section 14; District Magistrate order executed; bank put in possession; re-encroachment by borrower-respondents 5–7; Rule of Law violation; respondents 1–4 directed to restore possession within 10 days; petition allowed; pending applications disposed.

What did the court decide?

Respondent Nos.1 to 4 directed to ensure the petitioner Bank is put back in possession of the subject property within ten (10) days; pending applications, if any, stand disposed of. ¶¶30

Au Small Finance Bank Ltd. Vs the State of Maharashtra — Banking and Recovery | Bombay HC (2025)

What the court decided

AI extract

Outcome

Respondent Nos.1 to 4 directed to ensure the petitioner Bank is put back in possession of the subject property within ten (10) days; pending applications, if any, stand disposed of.

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Issue for consideration

Whether respondent Nos.1 to 4 (State authorities) should be directed to restore the petitioner Bank to possession of the subject property re-encroached upon by respondent Nos.5 to 7 notwithstanding the executed Section 14 SARFAESI order.

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Court's answer

It is undisputed that after the petitioner Bank was put in possession of the subject property in execution of an order under Section 14 of the SARFAESI Act passed by respondent No.2 – Magistrate, respondent Nos.5, 6 and 7 blatantly violated the Rule of Law by again encroaching upon the property; if the Bank is not put back in possession it would amount to continued violation of Rule of Law, which cannot be permitted.

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Ratio / Principle

The petition is allowed: respondent Nos.1 to 4 are directed to ensure that the petitioner Bank is put back in possession of the subject property within a period of ten (10) days.

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Key takeaways

This Court has been issuing directions in such petitions for placing petitioners / financial institutions back in possession at the earliest, so that the majesty of Law is respected.obiter¶¶26

Detailed headnote1 paragraphs

Bombay High Court (Aurangabad Bench), Writ Petition No. 7925 of 2025, decided 20th September 2025 by Manish Pitale and Y. G. Khobragade, JJ. Au Small Finance Bank Ltd v. The State of Maharashtra & Ors.: after an order passed by respondent No.2 – District Magistrate under Section 14 of the SARFAESI Act, 2002 was executed and the Bank put in possession of the borrowers' (respondent Nos.5–7) property, those respondents again encroached upon it. Holding it undisputed that such re-encroachment was a blatant violation of the Rule of Law which could not be permitted to continue, the Court allowed the petition and directed respondent Nos.1 to 4 to ensure the Bank was put back in possession within ten (10) days; pending applications stood disposed of.

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937.WP.7925.2025.doc

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2025:BHC-AUG:25676-DB

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD

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WRIT PETITION NO. 7925 OF 2025

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Au Small Finance Bank Ltd

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...Petitioner

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Versus

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The State of Maharashtra & Ors.

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...Respondents

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 Mr. Jajoo Mukul Vijaykumar, for Petitioner.  Mr. V. M. Kagne, AGP for Respondent Nos.1 to 4.  Mr. D. B. Nikam, for Respondent Nos.5 to 7.

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CORAM : MANISH PITALE AND Y. G. KHOBRAGADE, JJ. DATE : 20^th SEPTEMBER 2025.

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P. C. :

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The petitioner is a small finance bank and a registered

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banking company, which had obtained an order from the respondent No.2 – District Magistrate under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), in the context of properties belonging to the borrowers i.e. respondent Nos.5, 6 and 7. The order was executed and the petitioner – Bank was put in possession of the

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property.

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It is the case of the petitioner that thereafter, respondent Nos.5, 6 and 7 in a most illegal manner again encroached upon the

Page1 of 3

Shrikant Malani

937.WP.7925.2025.doc

said property and therefore, the petitioner was constrained to approach the respondent authorities for relief.

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Since the respondent Nos.5, 6 and 7 continue to encroach upon the said property, the petitioner is constrained to filed the present writ petition.

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The learned AGP appears on behalf of respondent Nos.1 to 4 and Mr. Nikam, learned counsel appears for respondent Nos.5, 6 and 7.

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It is undisputed that after the petitioner – Bank was put in possession of the subject property in execution of an order passed under Section 14 of the SARFAESI Act, by the respondent No.2 – Magistrate, the respondent Nos.5, 6 and 7 in a blatant exhibition of violation of Rule of Law again encroached upon the said property. If the petitioner – Bank is not put back in possession of the said property, it would amount to continue violation of Rule of Law, which cannot be permitted.

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This Court has been issuing directions in such petitions for placing the petitioners / financial institutions back in possession at the earliest, so that the majesty of Law is respected.

Page2 of 3

Shrikant Malani

937.WP.7925.2025.doc

In view of the above, the petition is allowed. The respondent Nos.1 to 4 are directed to ensure that the petitioner – Bank is put back in possession of the subject property within a period of ten (10) days from today.

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Pending applications, if any, also stand disposed of.

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(Y. G. KHOBRAGADE, J.) (MANISH PITALE, J.)

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Page3 of 3

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Shrikant Malani

Au Small Finance Bank Ltd. v. the State of Maharashtra

Case brief

What is this about?

What did the court decide?

Au Small Finance Bank Ltd. v. the State of Maharashtra

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

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