SARFAESI Possession Orders Must Be Kept On Hold For 45 Days If DRT Challenge Is Planned: Madras High Court

The Madras High Court has held that an order authorising a secured creditor to take possession of a borrower's secured property must be kept in abeyance for 45 days if the creditor is informed that steps are being taken to challenge the order before the Debts Recovery Tribunal (DRT).

“We are therefore of the view that an order passed under Section 14 of the SARFAESI Act will have to be kept in abeyance for a period of 45 days when it is brought to the notice of the secured creditor that steps are being taken to challenge the same before the jurisdictional DRT under Section 17 of the Act,” a Bench of Justice G.R. Swaminathan and Justice M.D. Sumathi held.

Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, allows a secured creditor to seek the assistance of a Chief Judicial Magistrate or District Magistrate to take possession of secured assets.

The Bench was hearing a plea filed by Adaikalam and his wife, Ananthi, seeking to halt physical possession proceedings initiated by Grihum Housing Finance Limited.

The petitioners had availed a loan from the housing finance company. The account appeared to have turned into a non-performing asset. Grihum approached the Chief Judicial Magistrate, Pudukkottai, under Section 14 and obtained an order on September 18, 2026. An Advocate Commissioner was appointed, and possession was scheduled for October 9, 2026.

The Court explained that Section 17 of the SARFAESI Act allows any person aggrieved by a measure taken under Section 13(4), including the borrower, to approach the jurisdictional DRT within 45 days from the date on which the measure was taken.

The Tribunal must examine whether the secured creditor's measures comply with the Act and its rules. If the challenge is upheld, it can also order restitution.

The Bench noted that an order under Section 14 is ministerial in nature and does not involve adjudication. The borrower is not heard at this stage. Adjudication takes place only when the DRT considers an application under Section 17.

The Court observed that the right to a judicial remedy is a human right. It referred to Article 8 of the Universal Declaration of Human Rights, which recognises the right to an effective remedy before competent national tribunals for violations of fundamental rights.

The Bench further held that proceedings under Section 17 are not appellate proceedings but are more in the nature of original proceedings. It reasoned that immediate enforcement of a Section 14 order could cause exceptional hardship to borrowers or third parties having rights in the subject matter. The possibility of restitution at a later stage might offer little consolation, it added.

The Court clarified that a Section 14 order would not remain in abeyance indefinitely. It would become operative again once the 45-day period expired.

The Bench said borrowers must promptly approach the DRT for interim relief. They cannot wait until the limitation period is about to expire and must remain vigilant from the outset.

In the present case, the petitioners' counsel informed the Court that an application under Section 17 had already been filed before the DRT, Madurai.

The Court directed the DRT Registry to number the application immediately, provided the papers were in order. It also directed the Tribunal to consider the petitioners' interim application on or before October 30, 2026.

The Court kept the impugned order on hold until then. It left it to the petitioners to persuade the Tribunal to grant interim relief, clarifying that the order would abide by the Tribunal's decision.

The writ petition was disposed of with no costs.

For Petitioners: Advocate C Nagamuthu

For Respondent: Advocate m Shakulhameed