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Analysing the retrieved Case Laws
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The courts have emphasized that the DRT and its appellate bodies should exercise their powers judiciously and within the scope of the law, and not misconstrue their jurisdiction to interfere with validly conducted sales ["Shanti Jaiswal VS State Bank of India - Dishonour Of Cheque"].
Analysis and Conclusion:
References:- ["Bank Of Baroda vs G.S. Srinivas Gupta Son Of G.N. Shankar Narayan - Karnataka"]- ["H.V. Infrastructure Pvt. Ltd. vs State of Maharashtra - Bombay"]- ["Shanti Jaiswal VS State Bank of India through Branch Manager, Ranchi - 2014 0 Supreme(Jhk) 895"]- ["Star Trace Engineering Division Rep. by its Propretrix P. Ponnal VS Registrar, Debts Recovery Tribunal - II, Chennai - Madras"]- ["Sudhakara K. Prabhu, S/o. Late M. N. Vasudev VS Nimmy John, W/o. Late John Chakola - Kerala"]- ["Sharp Industries VS Bank of Maharashtra - Allahabad"]- ["LAL BAI PATEL VS CENTRAL BANK OF INDIA - Allahabad"]- ["Sukhjinder Singh VS State Bank Of India - Punjab and Haryana"]- ["Shanti Jaiswal VS State Bank of India - Dishonour Of Cheque"]
In the complex world of debt recovery in India, the Debt Recovery Tribunal (DRT) plays a pivotal role in enforcing debts due to banks and financial institutions. A common question arises: Power of debt recovery tribunal to set aside the sale certificate? This issue often surfaces when borrowers or affected parties challenge auction sales of secured assets. While the DRT has statutory authority under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act), this power is not unlimited. Understanding its scope can help stakeholders navigate recovery proceedings effectively.
This post breaks down the DRT's jurisdiction, key conditions for setting aside a sale certificate, and insights from judicial precedents. Note that this is general information and not specific legal advice—consult a qualified lawyer for your situation.
The DRT's power to set aside a sale certificate is limited and governed by the RDB Act. It can confirm, modify, or cancel sales, but only within procedural and jurisdictional bounds. Courts have emphasized compliance with statutory rules and respect for the finality of confirmed sales. As recognized in key judgments, the DRT oversees validity but cannot interfere lightly with concluded proceedings. Official Liquidator, U. P. and Uttarakhand VS Allahabad Bank - 2013 2 Supreme 494
Here are the core principles:
These points highlight a balanced approach: protecting creditor rights while allowing remedies for grave flaws.
Under the RDB Act, DRTs wield civil court-like powers for recovery sales. They ensure statutory compliance, such as proper notices and auctions. If violations occur—like inadequate publication—the DRT may set aside the sale. Official Liquidator, U. P. and Uttarakhand VS Allahabad Bank - 2013 2 Supreme 494 The Tribunal's role is supervisory, focusing on procedural integrity.
In related SARFAESI Act contexts, DRTs can even set aside transactions and restore possession if measures under Section 13(4) are flawed. For instance, The Debt Recovery Tribunal has been conferred power to even set aside a transaction including the sale and to restore possession to the borrower in an appropriate case. NEW DELUXE ICE CREAM, ALLAHABAD VS DEBTS RECOVERY TRIBUNAL, ALLAHABAD - 2017 Supreme(All) 1251
Courts require clear evidence of irregularities. Mere technical defects won't suffice unless they cause substantial prejudice. The DRT can set aside a sale certificate if procedural irregularities, non-compliance with statutory rules, or violations of principles of natural justice are established. V. Ashok Kumar VS Syndicate Bank, Hyderabad - 2018 0 Supreme(AP) 712 Confirmed sales are binding unless illegally conducted. Official Liquidator, U. P. and Uttarakhand VS Allahabad Bank - 2013 2 Supreme 494
DRT cannot re-assess auction merits or commercial decisions. Its scope is procedural. The Tribunal's jurisdiction to set aside a sale is not unfettered; it cannot normally interfere with a sale that has been confirmed unless there are specific grounds. Shanti Jaiswal VS State Bank of India through Branch Manager, Ranchi - 2014 0 Supreme(Jhk) 895 High Courts under Article 227 supervise but won't act as appellate bodies absent grave injustice. The High Court's jurisdiction under Article 227 is supervisory, not appellate; it can't correct mere errors by subordinate courts unless there is a serious dereliction of duty or failure of justice. AUGUSTINE MATHEW vs THE SOUTH INDIAN BANK - 2025 Supreme(Online)(Ker) 57683
Challenges must follow timelines and rules, akin to Income Tax Act Schedule II Rules 60-61 (applied analogously). Applications require deposits and must prove irregularities. Official Liquidator, U. P. and Uttarakhand VS Allahabad Bank - 2013 2 Supreme 494Maddineni Venkateswarlu VS State Bank of India - 2024 0 Supreme(Telangana) 483 Under SARFAESI, secured creditors retain possession rights post-sale certificate if not transferred. Punjab Nation Bank vs Additional District Magistrate, Raisen - 2024 Supreme(MP) 782
Once confirmed, sales gain finality. DRT intervenes sparingly: The order confirming the sale is generally binding, and the Tribunal's power to set aside the sale is exercised cautiously. Official Liquidator, U. P. and Uttarakhand VS Allahabad Bank - 2013 2 Supreme 494 Possession to auction purchasers, if lawful, isn't easily disturbed. Allahabad Bank VS Rajesh Pal - 2014 Supreme(All) 1983
Technical lapses without prejudice don't warrant annulment. V. Ashok Kumar VS Syndicate Bank, Hyderabad - 2018 0 Supreme(AP) 712 In SARFAESI proceedings, DRTs handle Section 13 measures exclusively, barring civil courts. Cases like company liquidations underscore special tribunal primacy over general courts. Pratibha Shipping Company Limited VS Praxis Energy Agents - 2019 Supreme(Mad) 2003EIH Limited VS Balaji Hotels and Enterprises Limited - 2021 Supreme(Mad) 3330
Precedents show DRT setting aside auctions for violations, like ignoring court orders, but restoring status quo cautiously. Dilip Shivhare vs Authorized Officer - 2026 Supreme(Online)(MP) 2099
Judicial trends reinforce limits:
These illustrate DRT's focused mandate amid RDB and SARFAESI frameworks.
The DRT should limit interventions to proven violations, preserving auction sanctity.
The DRT's power to set aside sale certificates is established but confined to procedural irregularities under the RDB Act. It safeguards fairness without undermining finality. Typically, confirmed sales stand unless fraud, collusion, or rule breaches are evident. Official Liquidator, U. P. and Uttarakhand VS Allahabad Bank - 2013 2 Supreme 494V. Ashok Kumar VS Syndicate Bank, Hyderabad - 2018 0 Supreme(AP) 712Shanti Jaiswal VS State Bank of India through Branch Manager, Ranchi - 2014 0 Supreme(Jhk) 895
Key Takeaways:- Focus on procedural compliance to avoid challenges.- DRT jurisdiction is narrow—merits aren't re-litigated.- Integrated RDB/SARFAESI remedies prioritize efficiency.
Stay informed on evolving precedents. For tailored guidance, seek professional legal counsel.
References: Cited judgments including Official Liquidator, U. P. and Uttarakhand VS Allahabad Bank - 2013 2 Supreme 494, V. Ashok Kumar VS Syndicate Bank, Hyderabad - 2018 0 Supreme(AP) 712, Shanti Jaiswal VS State Bank of India through Branch Manager, Ranchi - 2014 0 Supreme(Jhk) 895, Maddineni Venkateswarlu VS State Bank of India - 2024 0 Supreme(Telangana) 483, B. Rajarajeshwari VS Presiding Officer Debts Recovery Tribunal–II Spencer Towers Chennai - Current Civil Cases (2017), AUGUSTINE MATHEW vs THE SOUTH INDIAN BANK - 2025 Supreme(Online)(Ker) 57683, Punjab Nation Bank vs Additional District Magistrate, Raisen - 2024 Supreme(MP) 782, NEW DELUXE ICE CREAM, ALLAHABAD VS DEBTS RECOVERY TRIBUNAL, ALLAHABAD - 2017 Supreme(All) 1251, Allahabad Bank VS Rajesh Pal - 2014 Supreme(All) 1983.
#DRT #DebtRecovery #SaleCertificate
, (for short, 'the Tribunal') in MA No.138 of 2008 and to set aside the order dated 07.03.2008 passed by the Debt Recovery Tribunal, (for short 'DRT') Bengaluru in AOR No.2 of 2003 and thereby allow the Miscellaneous Appeal No.138 of 2008 on the files of the Debt Recovery Appellate Tribunal, Chennai. ... Naveen Bhandary, to set aside the order dated 23.08.2013 passed by the Debt ....
Officer and the Debt Recovery Tribunal. ... Chikhrodharwala made a fresh Application for setting aside the order dated 20.04.2007 and subsequent Recovery Proceedings initiated thereafter before Debt Recovery Tribunal, Mumbai. ... He would submit that the order of Debt Recovery Tribunal appended at page No.201 to 204 and the sale proclamation issued by the Recovery#HL_EN....
The question therefore, is whether the sale in favour of the respondents 3 and 4 has to set aside. ... Therefore, once the sale does not take place or if the sale is set aside by the Tribunal or a Court of law on material irregularities, the right of redeem automatically revives. ... In any event, the sale has taken place and the sale certificate has been issued. The petitioners have got every rig....
Recovery Tribunal, Ernakulam against the recovery measures initiated against the property belonging to them. ... I.A.No.3135 of 2025 was filed with a prayer to stay all further proceedings including confirmation of sale, issuance of sale certificate and registration of sale certificate pursuant to Anex.A21 sale notice. ... The High Court can set aside or ignore the findings of facts of an inferior....
The appellate tribunal had set aside the auction sale held by the bank on 10.9.2018 after quashing the order of Debt Recovery Tribunal dated 31.1.2019, in Securitization Appeal No. 59 of 2018. ... Recovery Appellate Tribunal in Regular Appeal No. 17 of 2020 dated 15.12.2020 has been set aside. ... Debts Recovery Appellate Tribunal, Allahabad), Special Appeal Def....
Section 17 of the Act provides for remedy of approaching the Debt Recovery Tribunal to any person including a borrower who is aggrieved by measure taken by the secured creditor. ... Accordingly, Question No.3 is answered holding that a Secured Creditor cannot approach a Debt Recovery Tribunal against an action or inaction of the Chief Metropolitan Magistrate or the District Magistrate.
I find that the impugned order dated 10.12.2009 passed by the Debt Recovery Appellate Tribunal, Kolkata suffers from serious infirmities and therefore, it is liable to be set aside. Accordingly, it is set aside and the writ petition is allowed. ... Ravindra”, I am of the opinion that the learned Debts Recovery Appellate Tribunal misconstrued the power and jurisdiction of the Debt Recove....
I find that the impugned order dated 10.12.2009 passed by the Debt Recovery Appellate Tribunal, Kolkata suffers from serious infirmities and therefore, it is liable to be set aside. Accordingly, it is set aside and the writ petition is allowed. ... Ravindra”, I am of the opinion that the learned Debts Recovery Appellate Tribunal misconstrued the power and jurisdiction of the Debt Recove....
The Borrower then challenged Exhibit-P19 order of the DRT dated 29 August 2005 before the Debt Recovery Appellate Tribunal. ... Recovery Officer, Debts Recovery Tribunal, and Debts Recovery Appellate Tribunal. ... A person aggrieved by a sale conducted in the execution of a certificate may apply to the Tax Recovery Officer to set aside the sale....
Prior thereto, the petitioner never challenged the order dated 20.03.2019 passed by the Debt Recovery Tribunal, by which the auction sale in his favour was set aside. ... The Debt Recovery Tribunal, in Securitisation Application No.17 of 2016, vide order dated 20.03.2019, set aside the auction sale dated 13.11.2015 and directed the Bank to restore the possession mortgaged proper....
This Court had on 10.03.2000 granted leave subject to the condition that the Official Liquidator is impleaded and no coercive steps are taken against the assets of the Company during or after the conclusion of the proceedings before the Tribunal. Upon application made to the Company Court, the Company Court set aside the sale as the same was in violation of the orders of the Company Court granting permission. However, the Debt Recovery Tribunal issued a Recovery Certificate and the property of the Company was sold in execution of the said Recovery Certificate.
Once the Tribunal passes an order that the debt is due, the Tribunal has to issue a certificate under Section 19(22) to the Recovery Officer for recovery of the debt specified in the certificate. The RDB Act requires the Tribunal alone to decide applications for recovery of debts due to banks or financial institutions. It appears that basically the Tribunal is to adjudicate the liability of the defendant and then it has to issue a certificate under Section 19(22). Under Section 18, the jurisdiction of any other court or authority which would otherwise have had jurisdiction ....
The Debt Recovery Tribunal has been conferred power to even set aside a transaction including the sale and to restore possession to the borrower in an appropriate case. Upon such application being made, the Debt Recovery Tribunal is entitled under sub-section (3) of Section 17 to question the action taken by the Secured Creditor and the transactions entered into by virtue of Section 13(4-A) of the SARFAESI Act, 2002. The relevant ‘Paragraph-39’ of the said judgment is relevant to be reproduced:
It was submitted that in the present case, it is the competent authority under the ULC Act who has exclusive jurisdiction to take a decision under section 8(4) of the ULC Act as regards the extent of excess vacant land held by a person. Once the Tribunal passes an order that the debt is due, the Tribunal has to issue a certificate under section 19(22) to the Recovery Officer for recovery of the debt specified in the certificate. Under the circumstances, the proceedings under the ULC The Recovery of Debts Due to Banks and Financial Institutions Act, 1993, requires the Tribun....
The Debt Recovery Tribunal has not set aside the sale certificate dated 04.10.2008 nor it has set aside any proceedings or measures taken under Section 14 of the Act. Insofar as the second submission is concerned that the Appellate Tribunal ought not to have issued a direction to the Bank to restore possession to the appellant is concerned clearly the record indicates that the application filed before the Debt Recovery Tribunal on 02.05.2011 had assailed the proceedings initiated under Section 14 of the Act and the sale certificate dated 04.10.2008.
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