One of the most misunderstood aspects of the SARFAESI Act, 2002 is the concept of possession. Borrowers often panic upon seeing a possession notice pasted on their property, assuming immediate eviction. In reality, SARFAESI recognises two distinct types of possession—symbolic possession and physical possession—each with different legal consequences.

This article explains the difference between symbolic possession and physical possession under SARFAESI, their legal basis, and the rights and remedies available to borrowers.

What Is Possession Under SARFAESI?

Possession under SARFAESI refers to the exercise of control by the secured creditor over the secured asset after default. It is one of the enforcement measures available to banks under Section 13(4) of the Act.

Possession can be:

• Symbolic (constructive), or

• Physical (actual)

Symbolic Possession – Meaning and Legal Effect

What Is Symbolic Possession?

Symbolic possession is the first stage of enforcement, where the bank:

• Issues a possession notice

• Affixes it on the secured property

• Publishes it in two newspapers (one vernacular)

At this stage:

• The borrower usually continues to occupy the property

• Legal control is asserted by the bank

• No forcible eviction takes place

Legal Basis of Symbolic Possession

Symbolic possession is taken under:

• Section 13(4) of the SARFAESI Act

• Rule 8 of the Security Interest (Enforcement) Rules, 2002

It signifies that the bank has invoked its statutory right of enforcement.

Why Banks Take Symbolic Possession First

Banks generally prefer symbolic possession because:

• It complies with due process

• It avoids immediate confrontation

• It allows borrowers an opportunity to approach DRT

Symbolic possession is often a precursor to auction proceedings.

Physical Possession – Meaning and Legal Effect

What Is Physical Possession?

Physical possession involves:

• Actual dispossession of the borrower

• Taking control of the property

• Locking and sealing premises, if required

This stage has serious consequences, as the borrower loses access to the property.

How Physical Possession Is Taken

Physical possession may be taken:

• With the borrower’s cooperation, or

• Through assistance of police and administration

Banks usually invoke Section 14 of the SARFAESI Act to seek help from the District Magistrate or Chief Metropolitan Magistrate.

Key Differences Between Symbolic and Physical Possession

Borrower’s Remedy at Each Stage

After Symbolic Possession

Borrowers can:

• File application before Debt Recovery Tribunal (DRT) under Section 17

• Seek interim stay on further proceedings

• Challenge legality of possession notice

This is the most effective stage to seek relief.

After Physical Possession

Borrowers can still:

• Approach DRT

• Seek restoration of possession

However:

• Relief becomes more difficult

• Courts are cautious

• Practical hardships increase

Common Illegalities in Possession Proceedings

Possession—symbolic or physical—can be challenged if:

• Demand notice was defective

• Objections under Section 13(3A) were ignored

• Asset is agricultural land

• Section 14 order is mechanical

• Possession notice not properly served

Procedural compliance is mandatory at every stage.

Misconceptions Among Borrowers

❌ Symbolic possession means eviction
❌ Bank can break open premises without notice
❌ No remedy after possession

✔ In reality:

• Symbolic possession does not evict

• Physical possession requires legal process

• Remedies exist at every stage

Practical Advice for Borrowers

• Do not panic on seeing possession notice

• Act immediately after symbolic possession

• Do not wait for physical dispossession

• Preserve photographs and documents

• Seek legal advice at the earliest

Conclusion

The distinction between symbolic possession and physical possession under SARFAESI is not merely technical—it has serious legal and practical consequences. Symbolic possession is a warning and an opportunity; physical possession is a crisis point. Borrowers who understand this difference and act promptly can effectively protect their rights and property.

FAQs

Q. Can a bank take physical possession directly?

Generally no. Symbolic possession usually precedes physical possession.

Q. Can borrowers stay in the property after symbolic possession?

Yes, unless physical possession is taken lawfully.

Q. Is court permission required for physical possession?

Magistrate assistance under Section 14 is commonly required.