Isabella Mariam

The High Court of Judicature at Allahabad, Lucknow Bench, Single Bench of Justice Pankaj Bhatia allowed a petition challenging the dismissal of an interim relief application by the Debts Recovery Tribunal (DRT) on the ground of limitation. The Court quashed the impugned DRT order dated 17 June 2025 and remanded the matter to the DRT for a fresh decision on merits. It directed that the DRT consider the petitioners' grievances in accordance with law and observed that till disposal of the interim application, the parties shall maintain status quo with regard to the title and possession of the property in question. The Court further directed the DRT to decide the interim application with expedition, preferably within one month of receiving a certified copy of the order.

The dispute arose from credit facilities availed by the petitioners from the assignor of respondent no. 3, later assigned to respondent no. 3. Proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) were initiated for recovery of dues. The petitioners contended they never received notices under Section 13(2) and 13(4) of the SARFAESI Act as required under the Security Interest (Enforcement) Rules, 2002 (2002 Rules). They claimed they became aware of the proceedings on 15 April 2025, when an information notice was affixed on petitioner no. 1's property, stating that physical possession would be taken on or after 2 May 2025 pursuant to an order dated 10 March 2025 by the Additional District Magistrate (ADM) under Section 14 of the SARFAESI Act.

Also Read: Supreme Court: There Is Nothing Like Optional | Bar Councils Cannot Collect Any Additional Fee During Enrolment

Upon obtaining copies of the ADM's order and related proceedings, the petitioners filed an application under Section 17 of the SARFAESI Act on 21 April 2025 before the DRT, along with a delay condonation application as an abundant caution, and an application for interim relief. The DRT rejected the interim relief application on 2 May 2025. The petitioners approached the High Court, which in a prior order dated 16 May 2025 quashed that rejection for want of reasoning, directing the Ministry of Finance to consider training the concerned officer. On remand, the DRT again dismissed the interim relief application on 17 May 2025, holding that the Section 17 application was hopelessly barred by limitation, computing limitation from the possession notice dated 18 May 2023 under Section 13(4).

The DRT also examined compliance with Rule 8(1) and 8(2) of the 2002 Rules and found no material prejudice to the petitioners from any error in the demand notice. The matter was listed for further proceedings.

The petitioners challenged this second dismissal, arguing that Section 14 proceedings are a continuation of Section 13(4) actions and thus constitute a continuous cause of action enabling challenges within the limitation period from the latest action. They contended that the DRT erred in both dismissing on limitation grounds and in adjudicating merits without condoning delay.

The respondents argued the DRT correctly found service of the Section 13(4) notice and that no interference was warranted, adding that the petitioners had a remedy of appeal under Section 18 of the SARFAESI Act.

Justice Pankaj Bhatia recorded: "Ex-facie, the observations made by the DRT that the S.A. was hopelessly barred by limitation is utterly erroneous as the starting point of limitation has been considered by the DRT to be the service of notice under Section 13(4) and not the knowledge derived by the petitioners as pleaded by them, from the date when the order under Section 14 was affixed."

The Court referred extensively to Supreme Court judgements, including Mardia Chemicals Ltd. v. Union of India, (2004) 4 SCC 311, noting: "The position of the appeal under Section 17 of the Act is like that of a suit in the court of the first instance under the Code of Civil Procedure." It recorded that a borrower may file under Section 17 after measures under Section 13(4) and before sale/auction, and that such proceedings are a continuous cause of action.

Quoting Hindon Forge Pvt. Ltd. v. State of U.P., (2019) 2 SCC 198, the Court reiterated that possession under Rules 8(1) and 8(2) read with Section 13(4) triggers the right to approach the DRT and that the object of the Act includes enabling borrowers to seek recourse against wrongful measures without waiting for sale.

It cited Gujarat High Court’s decision in Manglesh Champaklal Gandhi v. Aditya Birla Finance Ltd., which held that a borrower can challenge bank actions within 45 days from the last step of the process, and the Supreme Court’s Kanaiyalal Lalchand Sachdev v. State of Maharashtra, (2011) 2 SCC 782, which held that Section 14 actions are after Section 13(4) and fall within Section 17(1).

The Court also referred to its own precedent in Naveen Kumar Dwivedi v. DRT, holding that all actions under Section 13(4) give separate causes of action to approach the DRT.

Also Read: Meghalaya High Court Orders Vigil On Cement Company | State To Monitor And Prevent Illegal Limestone Mining

The Court concluded: "Section 14 is continuance of the proceedings under Section 13(4) of the SARFAESI Act and would give a cause of action to file an S.A. before the DRT. All the steps contemplated under Section 13(4), give a cause of action to the borrower or the person aggrieved to approach the DRT by filing a petition under Section 17 and are a continuous cause of action."

The Court quashed the DRT’s order dated 17 June 2025. It remanded the matter to the concerned DRT to pass a fresh order after considering the petitioners’ grievances in accordance with law. It directed that till disposal of the interim application in the S.A., the parties shall maintain status quo regarding the property’s title and possession. It further ordered the DRT to decide the interim application expeditiously, preferably within one month from the date of production of a certified copy of the order.

Advocates Representing the Parties:

For the Petitioners: Sri Alok Saxena, Advocate; Sri Paras Pradhan, Advocate

For the Respondents: A.S.G.I.; C.S.C.; Sri Abhishek Khare, Advocate

Case Title: Vimla Kashyap and Ors v. Union of India and Ors

Neutral Citation: 2025: AHC-LKO:45592

Case Number: Matters under Article 227 No. 3953 of 2025

Bench: Justice Pankaj Bhatia