SARFAESI Limitation: DRT Chandigarh Dismisses Borrower’s Challenge as Time-Barred. The Debts Recovery Tribunal (DRT-III), Chandigarh recently reaffirmed an important principle under the SARFAESI Act, 2002: a challenge to recovery measures must be filed within the statutory limitation period of 45 days.
The case involved borrowers who sought to challenge actions taken by a secured creditor under the SARFAESI Act, including demand notices, possession notices, and proceedings initiated for taking possession of the secured asset.
Under the SARFAESI Act, borrowers have exactly 45 days from the date a physical/symbolic possession or auction notice [Section 13(4) measures] is taken to file a Securitisation Application (SA) with the DRT. At DRT Chandigarh (SCO No. 33-35, Sector 17A), failing to file within this 45-day window requires a formal delay condonation petition under the Limitation Act. [1, 2, 3, 4, 5]
Also Read-CONDONATION OF DELAY PETITION IN DRT CHANDIGARH
Crucial SARFAESI Limitation Rules
- The 45-Day Clock: The 45-day limitation period begins strictly from the date the bank takes action or affixes the notice to the property, not from any subsequent execution letter (like a local Tehsildar’s notice). [1, 2]
- No Automatic Condonation: Delay condonation by the DRT is discretionary and not a right; you must provide a valid, substantive reason for the delay. [1, 2, 3, 4, 5]
- Applicable Condonation Laws: Precedents from the Punjab & Haryana High Court confirm that DRTs do have the jurisdiction to entertain a Section 5 Limitation Act petition to condone delays in SARFAESI filings
Background of the Dispute
The borrowers had obtained a housing loan and mortgaged their residential property as security. Following repayment defaults, the loan account was classified as a Non-Performing Asset (NPA).
Thereafter, the secured creditor initiated proceedings under the SARFAESI Act by issuing:
- Demand Notice under Section 13(2)
- Possession Notice under Section 13(4)
- Proceedings under Section 14 before the Magistrate for obtaining assistance in taking possession of the secured asset
The borrowers later approached the DRT challenging these measures.
Core Issue: From Which Date Does Sarfaesi Limitation Begin?
The borrowers argued that limitation should be counted from a possession-related communication issued by the local administrative authority for execution of the Magistrate’s order.
The secured creditor, however, contended that limitation had already commenced from the statutory measures taken under Section 13(4) of the SARFAESI Act and that the application had been filed far beyond the prescribed period.
Also Read-Whether DRT or High Court Chandigarh for Payment Default (NPA)
DRT’s Findings on Sarfaesi Limitation
The Tribunal held that a communication issued by an Executive Magistrate or Tehsildar for implementing an order under Section 14 is merely an execution-related step and not an independent “measure” under Section 13(4) of the SARFAESI Act.
Accordingly, limitation cannot be calculated from such execution notices.
The Tribunal observed that the relevant period must be counted from the statutory measures contemplated under the Act, such as:
- Possession notice under Section 13(4), or
- Other legally recognized SARFAESI measures
Since the borrowers approached the Tribunal beyond the prescribed 45-day period, the application was held to be barred by limitation.
No Delay Condonation Application Filed
An important factor noted by the Tribunal was that the borrowers had neither filed an application seeking condonation of delay nor provided sufficient explanation for approaching the Tribunal after expiry of limitation.
The Tribunal emphasized that limitation provisions under the SARFAESI Act are intended to ensure speedy recovery proceedings and cannot be ignored.
Service of Notices Also Upheld
The borrowers had argued that notices under Sections 13(2) and 13(4) were not properly served.
After examining postal records, tracking reports, publication details, and affixation records, the Tribunal concluded that the notices had been duly served in accordance with law.
The Tribunal also rejected the contention that a borrower must be given notice before the Magistrate passes an order under Section 14 of the SARFAESI Act.
Key Legal Takeaways
- A Securitization Application under Section 17 must generally be filed within 45 days of the SARFAESI measure being challenged.
- Execution notices issued for implementing a Section 14 order do not create a fresh cause of action for limitation purposes.
- Delay should be properly explained and accompanied by an application for condonation wherever required.
- Service records, postal tracking, publication, and affixation continue to play an important role in establishing valid service of notices.
- Proceedings under Section 14 are primarily execution-oriented, and prior notice to the borrower is generally not required.
- Possession Letters: In a significant ruling for the Chandigarh DRT, the tribunal held that a Tehsildar’s letter for the execution of a Magistrate’s order does not count as a fresh “SARFAESI measure,” and limitation cannot be calculated from that date. [1]
- NPA Classification: Banks must properly classify the loan as an NPA per RBI guidelines before initiating SARFAESI. A challenge to this can be part of your SA if filed promptly
- Calculate Timeline: Identify the exact date the bank physically or symbolically possessed the secured asset.
- Review Bank Action: Ensure the bank served you the initial 60-day notice under Section 13(2).
- Approach the Tribunal: For debt amounts over Rs. 20 Lakhs, the SA must be filed via the DRT e-filing portal before further coercive measures (like property auctions) progress
Conclusion
This decision serves as a reminder that borrowers seeking to challenge SARFAESI proceedings must act promptly. Courts and Tribunals consistently emphasize that the SARFAESI Act was enacted to ensure speedy enforcement of security interests, and limitation provisions are a crucial part of that framework.
Also Read-DRT Case Return of Amount to Auction Purchaser
Failure to challenge recovery measures within the prescribed period may result in dismissal of the proceedings regardless of the merits of the underlying dispute.
By Satish Mishra Advocate, More on 99888-17966
Source: DRT-III Chandigarh Order dated 20.05.2026 in a Securitization Application under Section 17 of the SARFAESI Act.
