DRT Advocate

The position

A demand notice under Section 13(2) starts a clock. A possession notice follows, then a sale notice carrying a date. By the time most borrowers telephone, that date is a fortnight away and several remedies have closed behind them. The Debts Recovery Tribunal is where the borrower's case is actually fought, and the application that reaches it has to be complete, not merely urgent.

When clients come to this chamber

• A notice under Section 13(2) or 13(4) has been received.
• An auction or e-auction notice has been published and a sale date is fixed.
• The District Magistrate has been approached under Section 14 for possession.
• The bank has filed an original application to recover its dues.
• A recovery certificate has issued and the recovery officer has begun attachment.
• Your property was mortgaged as security for someone else's loan.

What the representation involves

• Securitisation applications under Section 17, with an interim prayer to stay the sale
• Representations under Section 13(3A) while the sixty-day period is still open
• Challenges to possession, valuation, reserve price and publication of the sale notice
• Defence of original applications, with counter-claim and set-off where the facts allow
• Guarantor and co-borrower defence, and protection of third-party security
• Objections before the recovery officer and appeals under Section 30

Reading the notice before doing anything else

Every SARFAESI matter begins with a document, and the document usually contains the defence. A notice under Section 13(2) must state the amount claimed, the details of the secured asset, and the intention to enforce the security if the amount is not paid within sixty days. Notices that omit particulars, that misdescribe the property, that are signed by an officer without the authority to do so, or that are served on an address the bank knew to be wrong, are all met regularly.

The computation matters as much as the form. Interest applied at a rate not in the sanction letter, penal interest compounded where the agreement does not permit it, charges levied without notice, and amounts appropriated to interest ahead of principal in a way the contract does not authorise — these are found by reconciling the statement line by line, which takes a day and frequently changes the shape of the matter.

Rule 8 and Rule 9: where auctions actually fail

The Security Interest (Enforcement) Rules 2002 prescribe the mechanics of a sale, and it is here that most successful challenges are grounded. A sale notice must give thirty clear days. Publication is required in two newspapers of adequate circulation, one of them in the vernacular. The property must be valued by an approved valuer and a reserve price fixed on that valuation. The successful bidder deposits twenty-five per cent immediately and the balance within the period prescribed.

Each of those requirements has generated litigation, and each is capable of being breached in a way that is visible on the face of the record. Thirty days counted inclusively rather than clearly; publication in a newspaper with no circulation where the property lies; a valuation two years stale; a reserve price fixed below the valuation without reason recorded. None of this requires evidence to establish. It requires the notice, the newspaper and the valuation report, read together.

What a Section 17 application should contain

A securitisation application is not a complaint about the bank. It is a challenge to specified measures taken under Section 13(4), and it succeeds by identifying which measure is impugned, on what ground, and what the Tribunal is asked to do about it. Applications that recite the borrower's financial difficulties at length and reach the legal grounds on the ninth page do their own case no favours.

The interim prayer is drafted with equal care. A blanket request to restrain the bank from all further action is easier to refuse than a specific request to restrain confirmation of a sale scheduled for a stated date. Precision in the prayer is what allows a Tribunal to grant something on the first hearing.

Settlement, and when it is the better route

Not every borrower should fight. Where the dues are correctly computed, the notices are sound and the property is worth appreciably more than the debt, the realistic objective is often time and terms rather than a contested victory. A one-time settlement negotiated while an application is pending carries more weight than one sought from a position of no leverage, which is a practical reason to file even where settlement is the intended destination.

What we do not do is encourage a contested application in order to bill for it. Where the record does not support a challenge, that is said at the first meeting, and the work shifts to negotiating the best terms available and protecting the borrower during the negotiation.