A notice under Section 13(2) of the SARFAESI Act, 2002 requires payment in full within sixty days. During that period the borrower may object in writing, and the bank must give reasons for rejecting the objection within fifteen days. The Debts Recovery Tribunal can only be approached after the bank takes possession, within forty-five days.
Jurisdiction. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is a central statute and applies across India. The Debts Recovery Tribunals sit in most States, and the branch, the borrower and the mortgaged property are frequently in three different places — Section 17(1A) is what decides which Tribunal hears the matter. Section 30 of the Advocates Act, 1961 entitles an advocate to practise throughout India, and these matters are commonly conducted for borrowers who are not resident in the State where the security lies.
Section 13(2) is not a warning letter. It is the step that makes everything after it lawful. Two things must already be true before it can be issued: there must be a default in repayment of a secured debt, and the account must have been classified by the secured creditor as a non-performing asset. The notice must then, under Section 13(3), give the details of the amount payable and identify the secured assets the creditor intends to proceed against. If the sixty days pass without full payment, the creditor becomes entitled to take one or more of the measures in Section 13(4) — and the most consequential of them, possession of the property, needs no order of any civil court.
One restriction begins the moment the notice is received rather than when the sixty days end. Section 13(13) forbids the borrower from transferring the secured assets named in the notice by sale, lease or otherwise, except in the ordinary course of business, without the prior written consent of the secured creditor. A sale arranged in that window to raise the money — which is the first idea most borrowers have, and often a sensible one commercially — is a sale made in the teeth of the section unless the bank's written consent is taken first.
There is, and it is a narrower point than most borrowers expect. Section 13(3A) was inserted after the Supreme Court in Mardia Chemicals held that where a borrower raises an objection or places facts before the secured creditor, "such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower". The section now fixes fifteen days for that communication. But the same judgment, and the proviso that Parliament enacted, are equally clear that those reasons are for the borrower's information only and give rise to no right to approach the Tribunal at that stage.
So the reply is not a remedy. It is the record. The objection that is put on paper within the sixty days — that the account was wrongly classified, that the figure demanded includes charges never debited to the account, that the property described is not the property mortgaged, that the loan is one the Act cannot reach at all — is the objection the Tribunal will later be asked to test against the bank's fifteen-day reasons. The commonest difficulty in these matters is not a bad case; it is a borrower who spent the whole sixty days negotiating at the branch counter, put nothing in writing, and arrives after possession with nothing on record but a memory of what a manager said.
On the day a measure under Section 13(4) is actually taken. Section 17(1) allows any person, including the borrower, aggrieved by any of those measures to apply to the Debts Recovery Tribunal within forty-five days from the date on which the measure was taken. That date is a question of fact and it is worth pinning down early, because the forty-five days run from it and not from the day the borrower learns of it, and not from the date of the bank's reasons under Section 13(3A).
What the Tribunal is asked to decide is set by Section 17(2): whether the measures taken were in accordance with the Act and the rules. If it concludes they were not, Section 17(3) empowers it to declare the recourse invalid, to restore possession or management to the borrower, and to pass such other directions as it considers necessary. This is the provision under which a property that has already gone out of the borrower's hands can come back, and it is the reason the compliance record — the notice, the objection, the reasons, the affidavit before the District Magistrate — matters more in these hearings than the story of how the business came to fail.
Section 17(5) tells the Tribunal to dispose of the application within sixty days, and caps total pendency at four months, extendable only for reasons recorded in writing. Where that is exceeded, Section 17(6) lets either party ask the Appellate Tribunal to direct expeditious disposal — a step rarely taken and worth remembering when an application has been pending far past the statutory outer limit.
It is not, and a great deal of wasted effort follows from assuming that it is. Where the creditor needs help to take possession, Section 14 lets it apply in writing to the Chief Metropolitan Magistrate or the District Magistrate in whose jurisdiction the asset lies, and that authority is to take possession of the asset and forward it to the creditor. The application must carry an affidavit of the authorised officer declaring nine specified things, among them that the sixty-day notice under Section 13(2) was served and that the borrower's objection was considered and reasons for non-acceptance communicated. The order is to be passed within thirty days, extendable for reasons recorded in writing but not beyond sixty days in the aggregate.
The borrower is not a party to that exercise, and Section 14(3) states that no act done by the Magistrate or the District Magistrate under the section shall be called in question in any court or before any authority. What the affidavit does give the borrower is a checklist: it is a sworn statement, filed by the bank, of the very compliances that Section 17 lets the Tribunal examine. Where one of those declarations is untrue — the notice not served, the objection never answered — the place to say so is the Tribunal, not the District Magistrate's office.
Usually not, and the reason is not a lack of jurisdiction but a rule of restraint the High Courts apply to themselves. In United Bank of India v. Satyawati Tondon, Supreme Court, 26 July 2010, (2010) 8 SCC 110, it was held that the High Court "will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions". A borrower who spends six weeks on a writ petition that is dismissed on that ground has usually also spent the forty-five days available under Section 17.
The writ jurisdiction under Articles 226 and 227 remains what it always was for the case that genuinely falls outside the statutory scheme. But the ordinary grievance — wrong figures, defective service, possession taken without compliance — is the grievance Section 17 was written for, and it is heard by a tribunal that can restore possession, which the writ court will generally decline to do while that alternative stands unused.
Section 13(8) fixes the point at which the answer changes. If the amount due to the secured creditor, together with all costs, charges and expenses incurred by it, is tendered at any time before the date of publication of the notice for public auction, or for inviting quotations or tender from the public, or for private treaty, then the secured asset shall not be transferred, and where any step towards transfer has already been taken, no further step shall be taken. The provision was recast in 2016 and the earlier, later cut-off — the date of sale or transfer — is no longer the law. The date to work back from is therefore the publication of the sale notice, not the auction date printed on it.
That distinction decides whether a borrower who has arranged funds is in time. It is worth reading the published notice for its date of publication the day it appears, and it is a poor use of the remaining days to assume that money produced on the morning of the auction will be accepted as of right.
Section 31 puts several categories outside the Act entirely, and three of them account for most of the arguments that succeed at the threshold. Clause (i) excludes any security interest created in agricultural land. Clause (h) excludes a security interest securing repayment of a financial asset not exceeding one lakh rupees. Clause (j) excludes any case in which the amount due is less than twenty per cent of the principal amount and interest thereon.
The agricultural land exclusion is the one most often raised and least often documented. Whether a particular parcel is agricultural land is decided on what the revenue record shows and what the land is in fact used for, not on what the loan documents call it — which is why the jamabandi and the khasra entries are worth obtaining at the outset. Where the security is Rajasthan agricultural land, the position in the revenue record is set out in the note on land revenue laws and the revenue courts, and any conversion of the land's use under Section 90A of the Rajasthan Land Revenue Act, 1956 is part of the same enquiry.
Take the date of the notice and count sixty days forward on a calendar, in writing. Obtain the statement of account for the whole period of the loan and check the figure demanded against it, item by item, including charges and interest reversals. Obtain the title documents and the revenue record for the mortgaged property and confirm what the property actually is. Then put the objection under Section 13(3A) on record within the sixty days, by a mode that produces proof of delivery, and diarise the fifteenth day after it for the bank's reasons.
If possession is taken, the date it was taken becomes the only date that matters; the application under Section 17 is to be filed within forty-five days of it. A note on the same subject in Hindi, written around the Rajasthan borrower and the Debts Recovery Tribunal as it is encountered here, is available at SARFAESI नोटिस धारा 13(2): बैंक कब्ज़ा और DRT में बचाव.