A Section 17 application is filed before the Debts Recovery Tribunal within forty-five days of the measure under Section 13(4) that is being challenged, usually the taking of possession. Any aggrieved person may file, not only the borrower. No deposit is required to be heard; a stay is discretionary and, where granted, usually comes with conditions.
Jurisdiction. The SARFAESI Act, 2002 is a central statute and applies across India, and Section 17(7) makes the Tribunal decide these applications, as far as may be, under the Recovery of Debts and Bankruptcy Act, 1993 — the Act Section 17(7) still calls by its former name, the Recovery of Debts Due to Banks and Financial Institutions Act. The Tribunal changes with the property and the account; the law does not. Section 30 of the Advocates Act, 1961 entitles an advocate to practise throughout India.
Expl.For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.
(1A)An application under sub-section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction— (a) the cause of action, wholly or in part, arises; (b) where the secured asset is located; or (c) the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being.
(5)Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application: Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1).
Section 17(1) opens the Tribunal to a person "aggrieved by any of the measures referred to in sub-section (4) of section 13". There are four such measures: taking possession of the secured assets, with the right to transfer them by lease, assignment or sale; taking over the management of the borrower's business; appointing a manager for assets already taken; and a written notice to anyone who owes money to the borrower, requiring that money to be paid to the bank instead. Until one of them has happened, there is nothing before the Tribunal to decide.
A good many people who telephone with a Section 13(2) notice in hand have to be slowed down at exactly this point. The notice is a demand, not a measure. Nor is the bank's letter turning down the borrower's objection. The Explanation to Section 17(1), set out above, says so in terms, and it restates what the Supreme Court held in Mardia Chemicals: the reasons are given for the borrower's information, "without giving rise to any right to approach the Debt Recovery Tribunal under Section 17 of the Act, at that stage" (para 80(1)). An application filed on the notice alone is premature. What the sixty days are for, and what a written objection can achieve, is set out in SARFAESI Section 13(2) notice: what a borrower can actually do.
Where the bank took physical possession with the help of the District Magistrate or Chief Metropolitan Magistrate under Section 14, the Magistrate's own act is protected: Section 14(3) provides that no act of the Magistrate, or of an officer the Magistrate authorises, done under the section "shall be called in question in any court or before any authority". The application is therefore framed against the secured creditor's measure, which is what Section 17 reaches.
The words are "any person (including borrower)". The Act does not confine the Tribunal to the person who signed the loan. A guarantor whose house is the security, a co-owner who never joined in the mortgage, a buyer who learnt of the loan from a possession notice pasted on the gate, a tenant in occupation: each is a person aggrieved if the measure reaches his interest. Whether the claim succeeds is another matter; standing is not the obstacle.
Tenants have a sub-section of their own. Section 17(4A), inserted in 2016, lets the Tribunal examine a claimed lease or tenancy and decide whether it has expired or stood determined, is contrary to Section 65A of the Transfer of Property Act, 1882, is contrary to the terms of the mortgage, or was created after the notice under Section 13(2). If it falls within any of the four, the Tribunal may pass such order as it deems fit in accordance with the Act, notwithstanding anything to the contrary in any other law. A lease that bears a date after the demand notice is the first document the bank's counsel will point to.
The application is made "along with such fee, as may be prescribed", and the proviso to Section 17(1) allows the rules to prescribe different fees for a borrower and for anyone else. The fee is paid at filing; it is not a deposit, and it is not a condition of the kind discussed below.
Section 17(1) itself speaks only of "the Debts Recovery Tribunal having jurisdiction in the matter". Since 1 September 2016, Section 17(1A) has said what that means, and it gives three places, any of which will do: where the cause of action arises, wholly or in part; where the secured asset is located; or where the branch or other office of the bank maintains the account in which the debt is outstanding.
The choice matters more than it looks. Take a Jodhpur trader whose working-capital account is run from a branch in another State, with the mortgaged shop in Jodhpur: clause (b) takes the application to the Tribunal that hears Rajasthan matters, which sits at Jaipur, and clause (c) takes it to the Tribunal where the branch is. Clients from western Rajasthan are often surprised that the case will not be heard in Jodhpur at all. The reverse case is as common: a borrower living in Delhi or Mumbai with inherited or mortgaged property in Rajasthan can file where the property is or where the account is, and the choice is worth making deliberately rather than by default.
The period runs "from the date on which such measure had been taken". Not from the demand notice, and not from the sale notice if the real complaint is about the possession. Count from the earliest measure you mean to attack and file well inside the forty-five days. Do not rely on a later step, whether a sale notice or a Magistrate's order, to revive a challenge to an earlier measure that has already gone unchallenged for longer than the period.
Is the forty-fifth day final? Section 24 of the 1993 Act applies the Limitation Act, 1963 "as far as may be" to "an application made to a Tribunal", and applications to condone delay are filed and argued on that footing. But an application that arrives on the forty-sixth day has turned a right into a request, and the safer course is to treat the forty-fifth day as a wall. The periods under the Limitation Act itself are tabulated in the Limitation Period Lookup.
Section 22(1) of the 1993 Act frees the Tribunal from the procedure of the Code of Civil Procedure and tells it to be guided by the principles of natural justice; Section 22(2)(c) lets it receive evidence on affidavit. None of this makes the application informal. It is decided largely on documents, and a document the applicant does not file is, for practical purposes, not in the case. The papers usually needed are:
The grounds follow from Section 17(2), which tells the Tribunal to consider whether the measures "are in accordance with the provisions of this Act and the rules made thereunder". That is the frame for every ground worth pleading: the sixty days were not allowed in full; the notice did not give the amount or identify the assets as Section 13(3) requires; the objection was not answered within fifteen days under Section 13(3A); the property is outside the Act under Section 31; the claim was not made within the period of limitation, in which case Section 36 disentitles the creditor from taking any measure at all. An application that argues the merits of the loan rather than the legality of the measure reads as a grievance, not a ground. The relief clause should track Section 17(3): a declaration that the recourse is invalid, restoration of possession or management, such other directions as are necessary, and interim relief pending disposal.
Nothing in Section 17 halts the bank because an application has been filed. The stay has to be asked for and granted, and its source is not a sub-section but the judgment that upheld the Act. In Mardia Chemicals, para 80(3), the Supreme Court held that the Tribunal, "in exercise of its ancillary powers", has jurisdiction to pass a stay or interim order, subject to such conditions as it thinks fit to impose. Conditions are built into that sentence. The one most often imposed is a deposit of part of the dues, fixed on the facts; the arguments that move it are the ones about the legality of the measure and the value of the security, not the ones about hardship.
Expect the bank to be there at the first hearing. Section 18C allows a secured creditor to lodge a caveat where an application is expected. If one has been lodged, the caveator must serve notice of it on you by registered post, acknowledgment due; once your application is filed, the Tribunal must serve notice of it on the caveator; and you must give the caveator copies of the application and of the documents filed with it. A caveat lapses after ninety days unless the application is made within that period. A registered letter from the bank giving notice of a caveat means exactly this, and the file should be ready for a contested hearing rather than an ex parte one.
No. As enacted in 2002, Section 17(2) required a borrower to deposit seventy-five per cent of the amount claimed in the demand notice before the Tribunal would entertain the application. The Supreme Court called that "an oppressive, onerous and arbitrary condition against all the canons of reasonableness" (Mardia Chemicals, para 80(4)) and declared the sub-section ultra vires Article 14 (para 82). The Section 17(2) in the Act today, substituted in 2004, is a different provision altogether: it tells the Tribunal what to examine. A deposit enters at two points only: as a condition the Tribunal may attach to an interim stay, and on appeal to the Appellate Tribunal.
Section 17(5) requires disposal within sixty days of the application, extendable for reasons recorded in writing, but not beyond four months of pendency in all. Section 17(6) exists because that period is not always kept: once it has passed, any party may apply to the Appellate Tribunal for a direction to the Debts Recovery Tribunal to dispose of the matter expeditiously. For the borrower, this is why the interim order, and the conditions on it, is often the order that matters most in the first months.
At the end, Section 17(3) allows the Tribunal to declare the recourse to any measure invalid, restore possession or management to the applicant, and pass such other directions as are necessary. If the measure is upheld, Section 17(4) entitles the secured creditor to proceed "notwithstanding anything contained in any other law for the time being in force". Where possession is held to have been taken otherwise than in accordance with the Act and is ordered to be returned, Section 19 entitles the borrower or other applicant to compensation and costs as the Tribunal determines.
Section 18(1) allows an appeal to the Debts Recovery Appellate Tribunal within thirty days from the date of receipt of the order. The second proviso is the hard part: no appeal is entertained unless the borrower has deposited fifty per cent of the amount of debt due from him, as claimed by the secured creditor or determined by the Tribunal, whichever is less. The third proviso lets the Appellate Tribunal, for reasons recorded, reduce the deposit to not less than twenty-five per cent. The contrast with Section 17 is the practical lesson: the first stage is the one a borrower can contest without paying to be heard, and it is the one to prepare for properly.
A writ petition against a possession notice is still one of the commonest false starts at the Rajasthan High Court's Principal Seat in Jodhpur, usually because the High Court is nearby and the Tribunal is at Jaipur. Article 226 is not excluded, but in United Bank of India v. Satyawati Tondon (Supreme Court, 26 July 2010) 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 the rule applies with greater rigour where the dues of banks and financial institutions are concerned. A petition dismissed on that ground has spent days the forty-five-day period cannot spare. The civil court is closed more firmly still: Section 34 takes away its jurisdiction over matters the Tribunal is empowered to determine and forbids any court or authority to grant an injunction against action taken under the Act.
The stage before this one is set out in SARFAESI Section 13(2) notice: what a borrower can actually do; the auction stage, including redemption under Section 13(8), in Can a bank auction of my property be stopped?; and the same ground in Hindi, written around the Rajasthan borrower, in SARFAESI नोटिस धारा 13(2): बैंक कब्ज़ा और DRT में बचाव. The Act is a central statute; consultation by telephone or video is available to borrowers outside Rajasthan, and how a consultation is arranged is described on the consultation page.