Received a bank or SARFAESI notice? Talk to a lawyer first.

The Debts Recovery Tribunal (DRT) is a specialised tribunal set up under the Recovery of Debts and Bankruptcy Act, 1993. Banks, financial institutions and asset reconstruction companies file recovery applications there for debts of ₹20 lakh or more. Borrowers and guarantors also approach the DRT under Section 17 of the SARFAESI Act to challenge action taken by a bank on secured assets.

Yes, in many cases. Under the SARFAESI Act, once a secured loan account is classified as a non-performing asset, the bank can issue a 60-day demand notice under Section 13(2). If the dues are not paid, it can take possession of the secured assets under Section 13(4) without first going to court. The borrower can then challenge that action before the DRT.

You have 60 days to pay the amount demanded or send a written objection or representation to the bank under Section 13(3A). The bank must consider it and reply with reasons within 15 days if it rejects your objection. Use this period to check the amount and interest, propose a restructuring or one-time settlement, and gather your loan and security documents.

A securitisation application under Section 17 of the SARFAESI Act must be filed before the DRT within 45 days from the date the bank takes a measure such as possession. The DRT can examine whether the bank followed the law, and can restore possession if it did not. Missing the 45-day window seriously limits your options, so act immediately.

The DRT can stay an auction on a Section 17 application where the borrower shows a strong case, for example errors in the notice or procedure. A borrower can also redeem the property by paying the full dues, with costs, before the auction notice is published. In practice, a credible settlement offer to the bank is often the quickest way to stop a sale.

Yes. A one-time settlement (OTS) or restructuring can be negotiated with the bank at any stage, before notices, during SARFAESI action or while a DRT case is pending. Once agreed, the settlement should be recorded in writing and, if a case is pending, placed before the DRT so the proceedings can be closed.

Yes. Under the Indian Contract Act, a guarantor’s liability is generally co-extensive with that of the borrower, so the bank can proceed against you without first exhausting its remedies against the company. Promoters and directors who have signed personal guarantees are often named in the bank’s recovery application. Releases or caps on guarantees should be negotiated as part of any settlement.

No. Under Section 31 of the SARFAESI Act, it does not apply to security interests in agricultural land, to secured debts below ₹1 lakh, or where the amount due is less than 20% of the principal and interest. In those cases, the bank has to use other remedies such as a recovery application or a civil suit.

Usually yes. An appeal to the Debts Recovery Appellate Tribunal must be filed within 30 days and generally requires a pre-deposit of 50% of the amount due, which the DRAT may reduce to 25% on an application with reasons. The pre-deposit is not a fee; it is held while the appeal is decided.

Yes. Your first consultation with a bwise360 lawyer is free and carries no obligation. We review your notice or order, explain the deadlines that apply to you, and set out options such as an objection, a DRT application or a settlement.