Bombay High Court Flags Misuse Of IBC By Borrowers To Stall SARFAESI Recovery After Auction Sale

The Bombay High Court on Wednesday flagged a disturbing trend of defaulting borrowers invoking provisions of the Insolvency and Bankruptcy Code to frustrate proceedings under the SARFAESI Act, even after auction rights had crystallised in favour of auction purchasers. A Division Bench of Justices Manish Pitale and Shreeram V. Shirsat was hearing a writ petition filed by auction purchasers challenging a November 26, 2025 order of the Debts Recovery Tribunal-I, Mumbai, which had halted further...

Delay In Taking Possession Of Secured Asset Not Ground To Close Section 14 SARFAESI Proceedings: Supreme Court

The Supreme Court on Tuesday held that a Chief Judicial Magistrate (CJM) is under a statutory obligation to ensure execution of a warrant of possession under Section 14 of the SARFAESI Act and cannot close proceedings merely because possession could not be taken within the prescribed time limit. The top court cautioned that the secured creditor cannot be made to run from pillar to post for recovery.A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe was hearing an appeal filed by...

Borrower Who Ignored Private Treaty Sale Notice Cannot Later Question Lack Of Written Terms: DRAT Chennai

The Debts Recovery Appellate Tribunal at Chennai has held that a borrower who neglects to respond to notice of a proposed private treaty sale, despite having knowledge of it, cannot later challenge the sale as invalid for want of written terms of the private treaty.The tribunal was dealing with cross-appeals filed by ICICI Bank and the auction purchaser challenging the order of the Debts Recovery Tribunal, Chennai, dated February 18, 2013, which had set aside the sale of secured property....

Pendente Lite Interest Is In Court's Discretion, Contractual Rate Not Mandatory: DRAT Mumbai

The Debts Recovery Appellate Tribunal (DRAT) at Mumbai recently reiterated that pendente lite interest (interest pending litigation) need not always follow the contractual rate and can be reduced in appropriate cases based on judicial discretion exercised by the tribunal. Chairperson Justice G. Chandrasekharan made the observation while deciding cross-appeals arising from a recovery proceeding before the DRT, Aurangabad, in which recovery of Rs. 10,12,68,365 together with interest had been...

Refund Of Auction Amount Does Not Bar Auction Purchaser From Challenging DRT Order Under SARFAESI: DRAT Allahabad

The Debts Recovery Appellate Tribunal (DRAT) at Allahabad has held that a refund of the auction amount to a purchaser after a SARFAESI auction does not render the appeal infructuous, and the auction purchaser retains the right to challenge an order allowing the borrowers to redeem the secured property after the sale. The observation was made by Chairperson Justice R.D. Khare while allowing an appeal filed by an auction purchaser against the order dated September 11, 2019, passed by the Debts...

Omission Of NPA Date In SARFAESI Demand Notice Is Technical Error, Recovery Action Not Invalid: DRAT Chennai

The Debts Recovery Appellate Tribunal at Chennai has observed that mere omission to mention the date of classification of a loan account as a Non-Performing Asset (NPA) in a demand notice issued under the SARFAESI Act is only a technical lapse and does not invalidate the recovery proceedings initiated by the bank. Chairperson Justice G. Chandrasekharan observed, “Mere omission to mention the date of classification of account as NPA in the Demand Notice, is only a technical error by oversight....

Illegal NPA Classification For MSME Borrower Vitiates SARFAESI Proceedings: DRT Chandigarh

The Debts Recovery Tribunal at Chandigarh has held that proceedings under the SARFAESI Act cannot be sustained where the loan account was classified as a Non-Performing Asset without following the mandatory procedure applicable to MSME borrowers, rendering the NPA declaration illegal. The tribunal held that once the classification itself is contrary to law, all subsequent enforcement measures taken under the Act are liable to be quashed. Presiding Officer Mridulesh Kumar Singh made the...

DRAT Chennai Sets Aside Exemption From SARFAESI Action Granted After Bank Did Not Deny Agricultural Land Claim

The Debt Recovery Appellate Tribunal (DRAT) at Chennai has set aside an order of the Debt Recovery Tribunal-II, Chennai, which had granted exemption from recovery under the SARFAESI Act after accepting the borrower's claim that the secured asset was agricultural land. The appellate tribunal examined whether the tribunal below was justified in allowing the plea mainly because the bank had not specifically denied the exemption claim. In that context, the tribunal presided over by Chairperson...

Interest Loss Not Ground For Condonation Of Delay: DRAT Kolkata Rejects ASREC Appeal Filed After 910 Days

The Debts Recovery Appellate Tribunal at Kolkata has refused to condone a delay of 910 days in filing an appeal, holding that the explanation offered by the appellant did not disclose sufficient cause to justify condonation of such an inordinate delay. The tribunal also observed that delay cannot be condoned merely on the ground that the claimants were deprived of interest during the period of delay. The observations were made by Chairperson Justice Anil Kumar Srivastava while deciding an...

High Courts Can Examine Valuation, Reserve Price In Recovery Proceedings Under Supervisory Jurisdiction: Supreme Court

The Supreme Court on Friday observed that high courts may invoke their supervisory jurisdiction to examine valuation and reserve price fixation in recovery proceedings where credible issues are raised regarding the adequacy of valuation or the fairness of the process. A bench of Justices J.B. Pardiwala and R. Mahadevan made the observation while dismissing an appeal filed by an auction purchaser challenging a Madras High Court judgment dated February 6, 2020, which had remitted the matter to...

Educational Institutions Should Not Be Shut Down For Debt Recovery When Other Options Exist: DRAT Kolkata

The Debts Recovery Appellate Tribunal (DRAT) at Kolkata has recently observed that educational institutions should not be shut down or their management taken over by secured creditors when other lawful modes of recovery are available, while partly allowing an appeal filed by Kotak Mahindra Bank against an interim order passed by the Debts Recovery Tribunal, Kolkata.Chairperson Justice Anil Kumar Srivastava observed, “Educational Institutions are not to be shut down or their Management should...

Agricultural Officer Certificate Not Enough To Claim SARFAESI Exemption For Agricultural Land: DRT Ernakulam

The Debts Recovery Tribunal at Ernakulam has recently held that a certificate issued by an Agricultural Officer is not sufficient by itself to prove that a secured property is agricultural land exempt from recovery under the SARFAESI Act, reiterating that the burden lies on the borrower to establish the nature of the land at the time the loan was availed.Presiding Officer Sovan Kumar Dash dismissed a securitization application filed by borrowers challenging recovery proceedings initiated by...