An affidavit accompanying an application under Section 14 of the SARFAESI Act

An affidavit accompanying an application under Section 14 of the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) is a crucial document. It serves as a sworn statement by the authorized officer of the secured creditor, providing essential declarations to the Chief Metropolitan Magistrate (CMM) or District Magistrate (DM) for taking possession of secured assets. The purpose of this affidavit is to enable the CMM/DM to satisfy themselves that all necessary conditions under the Act have been met, thereby facilitating a swift and ministerial process for taking possession.

An affidavit accompanying an application under Section 14 of the SARFAESI Act is a mandatory legal requirement that must be filed by the Authorized Officer of the secured creditor (usually a financial institution or bank). This affidavit serves as a solemn declaration containing specific factual details about the loan transaction, including the existence of the loan, the borrower's default, the security interest created, issuance of the notice under Section 13(2), and the borrower's failure to repay despite the notice. The affidavit also confirms that any objections raised by the borrower were considered and rejected, along with reasons communicated to the borrower. This ensures that the application for possession of secured assets is supported by verified facts, as required by the proviso to Section 14 of the Act.

The role of this affidavit is crucial because the District Magistrate (DM) or Chief Metropolitan Magistrate (CMM), who assists the secured creditor in taking possession of the secured asset, does not conduct a detailed adjudication or hearing on the merits of the case. Instead, the magistrate's function is largely ministerial, limited to verifying the correctness of the information provided in the affidavit and application. The court is not required to issue notice to the borrower or third parties, nor adjudicate on the validity of the mortgage, quantum of debt, or other disputes. The affidavit thus forms the core evidence enabling the magistrate to pass an order within the stipulated 30 to 60 days timeframe under Section 14.

In practice, failure to file a complete and duly affirmed affidavit can render the Section 14 application defective and liable to be set aside, as courts have emphasized the affidavit’s mandatory nature. However, procedural defects such as a missing affidavit may sometimes be cured by filing additional affidavits, provided the substantive requirements are met and the secured creditor complies with the statutory provisions, including issuance of fresh Section 13(2) notices if necessary. This procedural safeguard balances the secured creditor’s rights to recover dues with the borrower's right to due process under the SARFAESI framework.

The SARFAESI Act, specifically Section 14, mandates that such an application must be accompanied by a duly affirmed affidavit. This affidavit must contain specific declarations, including the aggregate amount of financial assistance granted and the total claim as on the date of filing, details of the security interest created and that it is valid and subsisting, and confirmation that the claim is within the limitation period. Furthermore, it must declare that the borrower has committed default, that the sixty-day notice under Section 13(2) was duly served, and that any objections or representations from the borrower were considered and reasons for non-acceptance communicated.

The affidavit is a cornerstone for the CMM/DM to pass orders for taking possession, as their role under Section 14 is primarily ministerial and not adjudicatory. They are not required to issue notice to the borrower or conduct extensive hearings, but rather to satisfy themselves with the contents of the affidavit. The timely submission of a comprehensive and accurate affidavit, adhering to all the requirements laid down in the proviso to Section 14(1), is therefore vital for the secured creditor to obtain prompt assistance from the CMM or DM in enforcing their security interest.