NBFCs With Assets Over ₹100 Crore Can Invoke SARFAESI Act: Allahabad High Court

On 24 March, the Allahabad High Court held that non-banking financial companies (NBFCs) with assets of Rs. 100 crore or more qualify as financial institutions under the SARFAESI Act, 2002 and can enforce security interest in secured debts. A Bench comprising Justices Ajit Kumar and Swarupama Chaturvedi referring to the Ministry of Finance notification dated 24 February 2020, observed: “With the plain reading of the notification, it is clear that through the above notification the Central...

DRT Cannot Condone Delay Beyond 45 Days In Pleas Challenging SARFAESI Recovery Measures: Karnataka High Court

Recently, the Karnataka High Court held that the Debt Recovery Tribunal (DRT) cannot condone delays beyond the 45-day limit for filing applications under Section 17 of the SARFAESI Act, which allows borrowers to challenge a bank's recovery actions before the tribunal. The court clarified that Section 5 of the Limitation Act, 1963, which permits courts to excuse in case of sufficient cause, does not apply to such proceedings. The single-judge bench of Justice Lalitha Kanneganti observed...

SARFAESI, RDB And PMLA Must Be Reconciled; Recovery Laws Cannot Prevail Over PMLA: Bombay High Court

The Bombay High Court at Nagpur recently held that the provisions of the SARFAESI Act and the Recovery of Debts and Bankruptcy Act do not override the Prevention of Money Laundering Act, observing that the statutes operate in different fields and must be interpreted so as to reconcile their provisions without defeating the object of the PMLA.A division bench of Justices M. S. Jawalkar and Nandesh S. Deshpande held, “The objective of the legislation in PMLA being distinct from the purposes of two...

Right Of Redemption Ends Once Auction Notice Is Published Under SARFAESI: Bombay High Court

The Bombay High Court on Tuesday reiterated that once an auction notice is published under the SARFAESI Act, the borrower's right of redemption stands extinguished and the Debt Recovery Tribunal cannot set aside the auction sale in a manner that effectively permits redemption. The Court observed that passing such an order in the teeth of Section 13(8) of the Act and binding Supreme Court precedents constitutes a jurisdictional error. Relying on the precedents, the court reiterated that...

Kerala High Court Sets Aside Banking Ombudsman Order For Failing To Give Reasoned Decision

The Kerala High Court recently set aside an order passed by the Banking Ombudsman rejecting a borrower's complaint over increase in interest rate on a gold loan from 14.5% to 17%, holding that the authority failed to pass a reasoned order despite a specific direction from the Court. A single bench of Justice Harisankar V. Menon was considering a writ petition filed by the borrowers, challenging the Ombudsman's order. The petitioners contended that the rate of interest was increased by the bank...

State's Failure To Promptly Execute Section 14 SARFAESI Order Defeats Purpose Of Law: Punjab & Haryana High Court

The Punjab and Haryana High Court has recently observed that failure of state authorities to implement orders passed under Section 14 of the SARFAESI Act, which empowers the District Magistrate to assist secured creditors in taking physical possession of secured assets, defeats the statutory mandate of expeditious enforcement of security interests and undermines binding judicial precedents, observing that such inaction paralyses the statutory mechanism. Allowing a writ petition filed by IIFL...

Bank Cannot Enforce Mortgage After Underlying Sale Deed Held Void, DRAT Kolkata Sets Aside DRT Hyderabad Order

The Debts Recovery Appellate Tribunal (DRAT) at Kolkata has recently set aside an order of the Debts Recovery Tribunal-II, Hyderabad, which had dismissed a securitisation challenge filed by subsequent purchaser Mirza Sardar Baig, ruling that Indian Overseas Bank could not enforce a mortgage based on an earlier sale deed that was later declared null and void by a civil court. The Appellate Tribunal held that the bank could not enforce any security interest once the sale deed on the basis of...

DRT Has No Inherent Power To Refund Court Fee In Section 17 SARFAESI Proceedings: Karnataka High Court

The Karnataka High Court has recently held that the Debts Recovery Tribunal (DRT) has no inherent power to refund court fees paid in proceedings under Section 17 of the SARFAESI Act in the absence of an express statutory provision, even if the proceedings become infructuous due to settlement between the parties, ruling that courts cannot order the refund of a statutory levy unless authorized by law.Emphasising that court fees are governed strictly by statute, the Division Bench of Chief Justice...

No Need To Produce Trust Deed If Debt Assigned To ARC Through Valid Assignment Agreement: DRAT Kolkata

The Debts Recovery Appellate Tribunal (DRAT) at Kolkata has recently held that when a debt is assigned to an Asset Reconstruction Company through a valid assignment agreement, production of a Trust Deed cannot be insisted upon where the assignment itself is not based on a trust deed. Chairperson Justice Anil Kumar Srivastava observed: “Accordingly, when the registration, under Section 3 of the Act, was done to become an Asset Reconstruction Company and the assignment was made on the basis of...

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....