Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Court rulings support that filing under Section 17(1) is possible at any stage after measures are taken, including during or after sale proceedings, as long as the applicant is aggrieved by the measures or the sale ["Dena Bank VS Shri Sihor Nagarik Sahakari Bank Limited - Gujarat"], ["A.A.Joseph vs Hong Kong And Shanghai Banking Corporation Limited - Kerala"], ["RAM MURTY PYARA LAL VS CENTRAL BANK OF INDIA - Delhi"], ["N. P. Pushpangadan VS Federal Bank Ltd. - Current Civil Cases"].
Analysis and Conclusion:
References:
In the complex world of banking and finance in India, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) empowers secured creditors to recover dues efficiently. But what happens when a borrower wants to challenge these actions? A common query arises: can a Section 17(1) application be filed at the stage of sale of property under the Securitisation Act?
This question is critical for borrowers facing auction notices and creditors streamlining recovery. This post explores the legal position, drawing from Supreme Court and High Court judgments, to provide clarity. Note: This is general information based on judicial precedents and not specific legal advice. Consult a qualified lawyer for your case.
The SARFAESI Act allows secured creditors (like banks) to enforce security interests without court intervention. Under Section 13(2), creditors issue a demand notice. If unpaid, Section 13(4) permits measures like taking possession, sale, or management of secured assets.
Section 17(1) offers aggrieved persons (borrowers, guarantors, etc.) a remedy: filing an application before the Debts Recovery Tribunal (DRT) against any measure under Section 13(4). The expression any person in Section 17(1) is of wide import. Tushar Kanti Karmakar vs Shilabati Hospital Private Limited - 2025 Supreme(Cal) 923
The debate centers on timing: Can this be filed during the sale process, before physical possession?
Judicial precedents affirm that a Section 17(1) application can be filed at the stage of sale of property, even before actual physical possession by the secured creditor.
The Supreme Court and High Courts have clarified that measures under Section 13(4) trigger the right to approach DRT once initiated, not completed. Borrower can file application u/s 17 even after taking all measures u/s 13(4) and before the date of sale auction. N. C. M. L. Industries Ltd. through Director VS Debts Recovery Tribunal, Lucknow - Dishonour Of Cheque (2018)
Key points:- The right arises upon initiation of measures, including possession notices under Rule 8(1) and 8(2) of the Security Interest (Enforcement) Rules, 2002. Section 17 reads as under:- Section 17 (1) of the Act and possession notice had been referred to under Rule 8 (1) and 8 (2). Devender Yadav VS Punjab National Bank - 2023 Supreme(P&H) 2527- Symbolic or constructive possession suffices; physical handover isn't required. The borrower can also approach the Tribunal if measures taken u/s 13 are not in conformity with provisions of the Act. HINDON FORGE PVT. LTD. VS STATE OF UTTAR PRADESH THROUGH DISTRICT MAGISTRATE GHAZIABAD - 2018 0 Supreme(SC) 1107- Applications are maintainable during sale proceedings or before finalization, provided Section 13(4) steps have started. N. C. M. L. Industries Ltd. through Director VS Debts Recovery Tribunal, Lucknow - Dishonour Of Cheque (2018)
A 2017 Supreme Court judgment explicitly states the borrower can challenge before the auction date. It distinguishes initiation from completion of measures: until actual or symbolic possession, measures are incomplete, but the right to file exists from initiation. N. C. M. L. Industries Ltd. through Director VS Debts Recovery Tribunal, Lucknow - Dishonour Of Cheque (2018)
Another ruling reinforces: Section 13(4)(a) should not be read in the light of sub-clauses (b) and (c) or sections 14 and 15. HINDON FORGE PVT. LTD. VS STATE OF UTTAR PRADESH THROUGH DISTRICT MAGISTRATE GHAZIABAD - 2018 0 Supreme(SC) 1107
High Courts echo this. For instance, petitioners have filed Section 17(1) to prevent physical possession during proceedings. The petitioner had also preferred application No. 1 of 2007 before the Debt recovery Tribunal under section 17 (1) of the Securitisation Act mainly praying that respondent No. I herein be prevented from taking physical possession. DENA BANK VS SIHOR NAGARIK SAHAKARI BANK LIMITED - 2008 Supreme(Guj) 84DENA BANK vs SHRI SIHOR NAGARIK SAHAKARI BANK LIMITED
In cases involving auction purchasers, courts direct sale deeds post-SARFAESI remedies, underscoring the process's stages. Varshaben Pareshkumar Patel VS Authorized Officer, Union Bank Of India - 2024 Supreme(Guj) 374
Courts interpret measures broadly:- Initiation triggers remedy: Notice under Section 13(4) or possession notice activates Section 17(1).- Symbolic possession key: Paper possession (notice) counts as constructive possession.- Purpose: Quick redressal without frustrating creditor actions, but preventing abuse.
The application can be filed even before the physical possession is taken, provided measures under Section 13(4) have been initiated. N. C. M. L. Industries Ltd. through Director VS Debts Recovery Tribunal, Lucknow - Dishonour Of Cheque (2018)
Not every stage allows filing:- Pre-initiation: No measures under Section 13(4)? Application not maintainable. to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of section 17. Varshaben Pareshkumar Patel VS Authorized Officer, Union Bank Of India - 2024 Supreme(Guj) 374- Post-sale completion: After auction and sale deed execution, locus standi may lapse. Petitioners lacked locus standi post-execution of sale deed. Alternative remedy under Section 17 precludes writ jurisdiction. Devender Yadav VS Punjab National Bank - 2023 Supreme(P&H) 2527- No aggrieved status: Claims barred by Section 13(13) (e.g., fraudulent transfers) deny standing. The petitioner cannot be categorised as any person aggrieved. Dommati Prashanthi VS Indian Bank, Warangal - 2018 Supreme(AP) 93- Delay issues: Strict timelines; DRAT may not condone under Limitation Act Section 5 for Section 18 appeals. Poonam Garg VS Chief Manager, State Bank of Patiala
Writ petitions under Article 226 are discouraged if Section 17 remedy exists. Maruthi Corporation Limited VS SICOM Limited - 2022 Supreme(Telangana) 316
In priority disputes, registered charges prevail. IJM Financial and Management Services Pvt. Ltd. VS State Bank of Mysore - 2012 Supreme(All) 3451
| Stage | Maintainable? | Key Citation ||-------|---------------|--------------|| Pre-13(4) | No | Varshaben Pareshkumar Patel VS Authorized Officer, Union Bank Of India - 2024 Supreme(Guj) 374 || Notice/Symbolic Possession | Yes | N. C. M. L. Industries Ltd. through Director VS Debts Recovery Tribunal, Lucknow - Dishonour Of Cheque (2018) || Physical Possession/Sale Process | Yes | HINDON FORGE PVT. LTD. VS STATE OF UTTAR PRADESH THROUGH DISTRICT MAGISTRATE GHAZIABAD - 2018 0 Supreme(SC) 1107 || Post-Sale Deed | Limited/No | Devender Yadav VS Punjab National Bank - 2023 Supreme(P&H) 2527 |
In summary, the law balances creditor efficiency with borrower safeguards. Stay informed, as tribunals must reason orders adequately. JIMMY THOMAS S/O THOMAS VS INDIAN BANK, SOUTH BAZAR BRANCH - 2023 Supreme(Ker) 306
This analysis draws from cited judgments. Judicial interpretations evolve; professional advice essential.
#SARFAESIAct, #Section17, #SecuritisationLaw
... The petitioner had also preferred Application No. l of 2007 before the Debt Recovery Tribunal under Section 17(1) of the Securitisation Act mainly praying that Respondent No. l herein be prevented from taking physical possession of the property from the petitioner. ... Sub-section (1) of Section 17 permits any person including the borrower who is aggrieved by any of the measures referred to in....
file an application under Section 17(1) before DRT. ... Once the right to approach DRT matures and securitisation application under Section 17(1) is filed by the borrower, it is open to DRT to deal with the same on merits and pass appropriate orders in accordance with law. ... Even that by itself, from the scheme of the Act and the Rules, in the backdrop of the objective of the Act#HL_EN....
under Section 17 of the Act. ... It is important to mention at this stage that, the application under Section 17 was filed by the Company, its three Directors, being Sri Vinod Kumar, Smt. Gayatri Devi and Sri Rameshwar Prasad. ... The present proceedings commence with a challenge to the above referred sale certificate in an application under Section 17 of the Act#HL_END....
We say this only to put the matter in the correct perspective and it is not as if the borrower, who had mortgaged the property of another, could not have filed the application before the D.R.T. under Section-17(1). ... Kamna Enterprises, approached the Debt Recovery Tribunal, Patna under Section-17 of the Act of 2002. The application filed by the borrower was allowed. ... Securitisation#....
Section 17 of the Act. Section 17 reads as under:- Section 17 (1) of the Act and possession notice had been referred to under Rule 8 (1) and 8 (2) of the Security Interest (Enforcement) Rules, 2002. ... (1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction- (....
17(1) of the Act. ... was wrongly accepted beyond the limitation period stipulated under Section 17(1). - The court affirms that the presiding officer ... (A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 - Section 17( ... order of the Debt Recovery Tribunal (DRT), Ernakulam, in an application filed by the 3rd respondent herein under the provisions of Sectio....
If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression “any person” used in Section 17(1) is of wide import. ... Tanushree Manna, Guarantor, filed an application (S.A. No. 330/2010) before the Kolkata D.R.T. No. 2 agai....
to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of section 17.] ... to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of section 17.]" ... – petitioner to invoke remedy under Section 17 of the SAR....
The petitioner had also preferred application No. 1 of 2007 before the Debt recovery Tribunal under section 17 (1) of the Securitisation Act mainly praying that respondent No. I herein be prevented from taking physical possession of the property from the petilioner. ... Section 17 of the Act pertains to right to appeal. Sub-section (1) of section#HL_EN....
The petitioner had also preferred Application No.1 of 2007 before the Debt Recovery Tribunal under section 17(1) of the Securitisation Act mainly praying that respondent No.1 herein be prevented from ... Sub-section (1) of section 17 permits any person including the borrower who is aggrieved by any of the measures referred to in sub-section (4) of sec....
It is submitted that a combined reading of sub-section (3) and (4) of Section 17 indicates that, the moment a Securitisation Application is filed under Section 17 of the Act, there is an automatic stay of the proceedings. It is submitted that under sub-section (5) of Section 17, the Securitisation Application filed under Section 17 has to be disposed of within four months from the date of application. It is submitted that at least for the aforesaid period of four months, the proceedings initiated by the bank will have to be kept in abeyance. He submits with reference to the....
Proceedings were initiated by the respondent for recovery of outstanding dues from the appellant under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly, ‘the SARFAESI Act’ hereinafter). When notice was issued to auction sale the mortgaged property by the respondent, appellant filed securitisation application under Section 17 of the SARFAESI
2. The aforestated appeal was filed by the petitioner assailing the order dated 15.07.2013 passed by the Debts Recovery Tribunal, Hyderabad (hereinafter 'the Tribunal), in S.A.No.129 of 2008. This securitisation application was filed by the petitioner under Section 17 of the SARFAESI Act to set aside the sale of the house property bearing Municipal No.11-24-256, Desaipet Road, Pochamma Maidan, Warangal, by the bank in exercise of powers under the SARFAESI Act.
JUDGMENT Badar Durrez Ahmed, J.—The question that arises for consideration in this writ petition is – whether the Debts Recovery Appellate Tribunal has jurisdiction to condone the delay under Section 5 of the Limitation Act, 1963 in the filing of an appeal under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the Securitisation Act’)? That application was filed on 04.02.2008 and was registered as S.A. No.152/2008 with the Debts Recovery Tribunal-II, Chandigarh. We need not advert to the merits....
The challenge was made on the ground that the property was mortgaged by the respondent No. 2 being borrower, therefore, there is a charge of the appellant. 3. The relevant facts for adjudication of the present case are that the appellant being-Financial Institution filed the Securitisation Application under Section 17 of the SARFAESI Act, 2002 challenging the sale proclamation with regard to the property belonging to the respondent No.
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