Debt recovery and SARFAESI practice at Unified Chambers And Associates, for lenders and for borrowers. The work covers Section 13 enforcement, Section 17 securitisation applications before the DRT, DRAT appeals, and recovery suits. Advocate Subodh Bajpai, the Senior Partner, practises at the Delhi High Court and before the DRT at Delhi.
Demand notices under the applicable statute
Section 13(2) notices, symbolic and physical possession, and sale of secured assets under the Security Interest (Enforcement) Rules, 2002
Original applications for debt recovery with interim relief and attachment orders
Section 7 and Section 9 applications for corporate insolvency resolution
Complaints on dishonoured cheques, with interim compensation under Section 143A
Identification and documentation of the debtor's assets for enforcement
One-time settlement and repayment-plan terms and documents
Execution of decrees and recovery certificates, and attachment and sale of assets
Review of loan documents, security, guarantees, and the debtor's assets.
Legal notices under the applicable provisions, with the statutory time limits.
Proceedings before the appropriate forum — the DRT, the NCLT, or the civil courts, and the magistrate's court for Section 138 complaints.
Applications for attachment, injunctions, and other interim protection.
Enforcement of orders through sale of assets, execution of settlements, or garnishee proceedings.
In-depth notes on the substantive law, procedural framework, and strategic considerations for this practice area. Written by Advocate Subodh Bajpai for clients, junior counsel, and others researching this area of Indian law.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI) allows banks and notified financial institutions to enforce security interests without the intervention of a court or tribunal. Enforcement under the Act is non-judicial; the courts and tribunals are involved only when a person aggrieved brings a challenge, or when the secured creditor seeks a Magistrate's assistance in taking possession. Each step is time-bound and must comply with the Act and the Security Interest (Enforcement) Rules 2002.
The Act is available where the borrower's account has been classified as a Non-Performing Asset (NPA) under the Reserve Bank of India's prudential norms. Classification is itself a substantive question and is often the first point a borrower contests. Under the prudential norms, an account generally becomes an NPA when interest or an instalment of principal remains overdue for more than ninety days, though the precise rules depend on the type of facility.
Section 13(2) requires the secured creditor to give the borrower written notice to discharge its liabilities in full within sixty days. Under Section 13(3) the notice must give details of the amount payable and of the secured assets intended to be enforced. Compliance with Section 13(2) is foundational: a notice defective in form, content or service affects every step that follows.
Under Section 13(3A), the borrower may respond to the notice with a representation or objection. The secured creditor must consider it and, if it does not accept it, communicate its reasons within fifteen days. Those reasons do not give the borrower a right to apply to the DRT under Section 17 at that stage; the borrower's remedy before the DRT arises once a measure under Section 13(4) is taken.
If the dues are not paid within the sixty days, the secured creditor may take measures under Section 13(4): taking possession of the secured asset (with the right to transfer it by lease, assignment or sale), taking over management of the business in certain cases, appointing a person to manage the asset, or requiring a person who has acquired a secured asset from the borrower to pay the secured creditor. Symbolic possession is taken by a possession notice affixed to the property and published; physical possession requires the borrower to vacate and, if the borrower does not cooperate, is taken with the Magistrate's assistance under Section 14. Under Section 13(8), if the dues with costs and charges are tendered before the publication of a notice for sale, the asset is not to be transferred. The Supreme Court has read that publication as the complete notice of sale under Rules 8 and 9, so the right ends when the thirty days under Rule 9(1) expire, counted from the last of service, publication and affixation; tendering before publication remains the safe course.
Where the borrower does not hand over possession, the secured creditor may request the Chief Metropolitan Magistrate or District Magistrate, within whose jurisdiction the asset is situated, to take possession and deliver it to the secured creditor. The request must be supported by the affidavit of the authorised officer declaring the particulars listed in the first proviso to Section 14(1), including service of the Section 13(2) notice and consideration of any Section 13(3A) representation.
The Magistrate is to pass suitable orders within thirty days, extendable for recorded reasons to a total of sixty days. At this stage the Magistrate verifies the affidavit and assists in taking possession; the borrower is not a party to be heard on the merits of the creditor's claim. Possession taken with the Magistrate's assistance is a measure under Section 13(4), so a borrower or any other person aggrieved by it may apply to the DRT under Section 17.
Any person aggrieved by a measure taken under Section 13(4) — including the borrower, a guarantor, or a person claiming title to or tenancy of the secured asset — may apply to the Debts Recovery Tribunal under Section 17. The application must be filed within forty-five days from the date on which the measure was taken. It does not lie against a Section 13(2) notice alone.
Under Section 17(2) the DRT examines whether the measures were taken in accordance with the Act and the Rules. Grounds commonly raised include defects in the Section 13(2) notice, failure to deal with a Section 13(3A) representation, wrongful NPA classification, and irregularities in possession, valuation or sale. If the DRT finds non-compliance, it may declare the measures invalid and restore possession or management (Section 17(3)). The application is to be disposed of within sixty days, extendable for recorded reasons to a total of four months (Section 17(5)).
Interim relief matters. Unless the DRT grants interim protection, the secured creditor may proceed to sale while the application is pending, and the position of a purchaser who has acquired the asset can limit the relief available later. An interim application is decided on the usual considerations of a prima facie case, balance of convenience and irreparable injury.
Independently of the SARFAESI Act, a bank or financial institution may file an Original Application (OA) under Section 19 of the Recovery of Debts and Bankruptcy Act 1993. The Act applies where the debt due is twenty lakh rupees or more, and within that range the civil courts' jurisdiction is excluded.
In an OA, the defendant files a written statement and may claim set-off or make a counter-claim; evidence is ordinarily led on affidavit under the Tribunal's procedure rules; and the Tribunal is to endeavour to dispose of the application within 180 days (Section 19(24)). If the claim succeeds, the DRT issues a recovery certificate, which the Recovery Officer executes by attachment and sale of property, arrest and detention, or appointment of a receiver. Section 25 still lists arrest and detention, but the Finance Act 2026 removed the arrest procedure from the income-tax recovery rules that Recovery Officers borrow under Section 29, so whether that mode remains usable is unsettled. A person aggrieved by an order of the Recovery Officer may appeal to the DRT under Section 30 within thirty days.
On the lender side, work in this area includes preparing the OA, proving the debt through the statement of account and the certifications the law requires, and steps in execution. On the borrower and guarantor side, it includes the written statement, objections to the evidence, counter-claims where the lender's conduct gives rise to a claim, and interim protection during execution.
Appeals from DRT orders lie to the DRAT. An appeal under Section 20 of the RDB Act is to be filed within forty-five days of receipt of the order; an appeal under Section 18 of the SARFAESI Act within thirty days. Both require a pre-deposit of fifty per cent — under Section 21 of the RDB Act, of the debt determined by the DRT; under Section 18 of the SARFAESI Act, of the debt claimed by the secured creditor or determined by the DRT, whichever is less. The DRAT may, for recorded reasons, reduce the deposit to not less than twenty-five per cent.
An appeal to the DRAT is a first appeal on facts and law: the Appellate Tribunal can re-examine findings of fact as well as questions of law. A review of a DRT order, by contrast, lies before the DRT itself under Section 22 of the RDB Act. There is no further statutory appeal from the DRAT; its orders may be challenged before the High Court under Articles 226 and 227 of the Constitution. Because of the pre-deposit, whether to appeal needs to be considered alongside the cost of the deposit.
Asset Reconstruction Companies (ARCs) registered with the Reserve Bank of India under the SARFAESI Act acquire non-performing loans from banks and pursue resolution or recovery using the same SARFAESI and DRT remedies. Work in this area includes proceedings concerning accounts acquired by ARCs and advice on the legal structure of assignment transactions.
A single distressed account may be the subject of SARFAESI enforcement, a DRT Original Application, and an IBC application at the same time. Once a CIRP is admitted, the moratorium under Section 14 of the IBC bars SARFAESI enforcement and suits or proceedings against the corporate debtor, though not proceedings against guarantors (Section 14(3)(b)). How the parallel proceedings interact needs to be worked out at the outset.
Borrower-side recovery work includes contesting wrongful NPA classification, making representations under Section 13(3A) against Section 13(2) notices, applications under Section 17 with interim-relief applications once Section 13(4) measures are taken, defending DRT Original Applications (including by counter-claim), and negotiating One-Time Settlements (OTS) with lenders where a commercial resolution is preferable to litigation.
An OTS needs careful documentation — in particular, that the lender will issue a no-dues certificate, withdraw pending proceedings, release the security on payment, and update credit-information records — since each of these affects the borrower's future position.
The statutes prescribe their own timelines: sixty days to pay after a Section 13(2) notice; fifteen days for the secured creditor to respond to a Section 13(3A) representation; thirty days (extendable to sixty) for the Magistrate under Section 14; forty-five days to file a Section 17 application and four months, at most, for its disposal; 180 days as the target for a DRT Original Application; and, under Section 12 of the IBC, 180 days for a CIRP, extendable once by up to 90 days, within an outer limit of 330 days including time taken in legal proceedings. The time matters actually take depends on the forum's workload and on how contested the matter is.
The chambers do not predict the outcome of litigation. What a client can expect is an assessment of the merits, the procedural path, the realistic range of possibilities, and the likely time involved, so that decisions about whether to litigate, defend or settle are made on an informed basis.
An original application before the Debts Recovery Tribunal (DRT) lies, by a bank or financial institution, for debts of ₹20 lakh and above (Section 1(4) of the Recovery of Debts and Bankruptcy Act, 1993). Smaller debts are recovered through civil suits, including summary suits under Order XXXVII of the Code of Civil Procedure. Where a cheque has been dishonoured, Section 138 of the Negotiable Instruments Act provides a separate remedy.
It depends on the forum and the facts. The Recovery of Debts and Bankruptcy Act, 1993 asks the DRT to endeavour to decide an original application within 180 days, but many matters take longer. A corporate insolvency resolution process under the IBC must be completed within 180 days, extendable by 90, with an outer limit of 330 days including litigation (Section 12).
Recovery can proceed against personal guarantors. Transfers made to defeat creditors can be challenged — as avoidance transactions in an IBC process, or as fraudulent transfers under Section 53 of the Transfer of Property Act, 1882.
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