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IN THE HIGH COURT AT CALCUTTA
REETOBROTO KUMAR MITRA, J.
Golam Sabir and Another – Appellants
Versus
Piramal Capital and Housing Finance Limited and Others – Respondents
WPA No. 14007 of 2025
Decided On : 24-12-2025
Based on the provided legal document, the key points are as follows:
The core issue revolves around whether a housing finance company (HFC), specifically the respondent, qualifies as a non-banking financial company (NBFC) under applicable regulations, thus determining its authority to invoke the SARFAESI Act for debt recovery (!) (!) .
The petitioners obtained a home loan from the respondent, which was classified as a non-performing asset after default, prompting the respondent to issue a notice under Section 13(2) of the SARFAESI Act for recovery of dues (!) (!) (!) (!) .
The petition challenges the respondent’s authority to invoke the SARFAESI Act, arguing that as a housing finance company registered under the Act of 1987, it is not classified as a NBFC and therefore cannot act under the thresholds set for NBFCs (!) (!) (!) .
The respondent contends that it is a NBFC, as classified by various regulatory notifications and classifications issued by the Reserve Bank of India (RBI), including the inclusion of the respondent in a recent official notification of NBFCs (!) (!) (!) .
The court examined the regulatory framework, including press releases, notifications, and circulars, establishing that housing finance companies registered under the Act of 1987 are now classified as NBFCs, and thus fall within the jurisdiction of the SARFAESI Act when the secured debt exceeds the specified threshold (!) (!) (!) (!) .
The court found that the respondent was specifically notified as a NBFC, and consequently, the threshold limits for invoking the SARFAESI Act apply. Since the claim amount was below Rs. 20 lakh, the respondent's action under the SARFAESI Act was deemed without jurisdiction and was set aside (!) (!) .
The court also addressed procedural aspects, noting that the petitioners' challenge on jurisdiction is valid and that the remedy under the SARFAESI Act is not an efficacious alternative for contesting the jurisdictional issue raised in the writ petition (!) (!) (!) (!) .
The decision clarifies that, despite the respondent being a housing finance company, its classification as a NBFC based on recent notifications and regulations makes it subject to the thresholds and provisions of the SARFAESI Act (!) (!) (!) (!) .
The court ordered that since the action was without jurisdiction, it is to be set aside, but the respondent is free to pursue recovery through other lawful means, as appropriate (!) .
No costs were awarded, and the court emphasized that urgent certified copies of the order could be provided upon application (!) (!) .
In summary, the court's ruling hinges on the classification of the respondent as a NBFC under recent regulatory notifications, which imposes a threshold limit on the invocation of the SARFAESI Act. Since the claim was below this limit, the respondent's action was found to be without jurisdiction and was accordingly nullified.
| Table of Content |
|---|
| 1. question of law arises from facts. (Para 1 , 2 , 3) |
| 2. arguments over jurisdiction and classification. (Para 4 , 5 , 6) |
| 3. court’s detailed consideration of regulations and classifications. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32) |
| 4. respondent's claim not actionable due to jurisdiction. (Para 33 , 34) |
| 5. final order and directive on costs. (Para 35 , 36 , 37 , 38) |
JUDGMENT :
REETOBROTO KUMAR MITRA, J.
1. On a very short factual conspectus, a rather interesting question of law has arisen.
2. The facts in a nutshell are summarised hereunder:
a. the petitioners had availed of a home loan for a sum of Rs.13,20,800/- from the respondent no. 1 on September 19, 2023, against the security of an equitable mortgage.
b. Though the petitioners made certain payments towards liquidation of the loan, they were unable to clear the entire outstanding amount. Thus, there was a default on the part of the petitioners in repayment of the loan. The petitioners' account was classified as a non-performing asset on September 3, 2024.
c. Upon the petitioners' credit facility being classified as a non-performing asset, the respondent no. 1 issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter the Act) on September 14, 2024. The demand in this notice by the respondent no. 1 from the petitioners was for recovery of a sum of Rs. 13,86,974.82/-.
3. It is in this factual conspectus that the writ petition has been filed challenging the authority of the respondent to invoke the provisions of the said Act.
4. The petitioners’ challenge questions the root of the authority of the respondent, which is a housing finance company registered under Section 29A of the National Housing Bank Act, 1987 (hereinafter the Act of 1987), to invoke the provisions of the SARFAESI Act for recovery of a secured debt below Rs. 20 lakhs. Consequentially, the petitioner challenges the usurpation of power by a statutory authority under the said Act at the behest of the respondent to receive, try, and entertain any application by a secured creditor classified as a NBFC below the threshold limit of Rs. 20 lakhs.
5. Mr. Proshit Deb ld. Advocate appearing for the petitioners has made his submissions which may be summarized as under:-
a. The respondent no. 1 is a HFC under the Act of 1987. It is duly registered under Section 29(A) of the Act of 1987.
b. Pursuant to the press release of August 13, 2019 by the Reserve Bank of India (hereinafter referred to as the RBI), all HFCs would be treated as one of the categories of NBFCs, as stated: “HFCs will henceforth be treated as one of the categories of Non-Banking Financial Companies (NBFCs) for regulatory purposes. Reserve Bank will carry out a review of the extant regulatory framework applicable to the HFCs and come out with revised regulations in due course.”
c. By a notification dated February 24, 2020, NBFCs were entitled to invoke the provisions of the said Act for secured debts of Rupees 50 lakhs and above.
d. The amendment of February 12, 2021 reduced the threshold amount to Rs. 20 lakhs, which means presently, a NBFC will only be able to invoke the provisions of the said Act if the secured debt is of Rs. 20 lakh and above.
e. Consequentially, the respondent no. 1 falls squarely within the ambit of the notification dated February 24, 2020, as modified by the notification dated February 12, 2021. Both notifications restrain any NBFC, as defined in clause (f) of Section 45-I of the Reserve Bank of India Act, 1934, having assets worth Rupees 100 crores and above, from invoking proceedings under the said Act unless the secured debt is of rupees 20 lakhs and above.
f. He has also placed reliance on the Master Direction issued by the RBI relating to Housing Finance Companies (Reserve Bank) Directions, 2021, to support his contention that a HFC has been
Housing Finance Companies are classified as Non-Banking Financial Companies, bound by threshold limits for invoking SARFAESI Act, with actions below Rs. 20 lakh deemed unauthorized.
Financial institutions cannot initiate SARFAESI proceedings for loan amounts below Rs.20,00,000/- as per Central Government regulations.
The availability of alternative remedies under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 renders a writ petition not maintainable, especially aga....
A writ petition against a Non-Banking Financial Company is not maintainable as it does not perform a public function, referring to precedents set by the Supreme Court.
Court permitted withdrawal of petition to seek statutory remedies at the Debts Recovery Tribunal.
Petitioners did not establish MSME status prior to loan classification as NPA; statutory remedies under SARFAESI Act must be availed instead of writ jurisdiction.
Writ petitions against private financial institutions under the SARFAESI Act are not maintainable; statutory remedies must be pursued instead.
No writ petitions against NBFCs under Article 226; relief must be sought in DRT.
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