In plain words: SARFAESI gives banks strong powers — but only if they follow the procedure exactly. Procedural lapses are among the most effective grounds to challenge the action.
Why procedure matters
Because SARFAESI lets a bank act without a prior court decree, the courts insist on strict compliance with the notice and sale procedure. A genuine, material lapse can lead the DRT to set aside the action.
Common lapses to look for
- Wrong or premature NPA classification/date.
- Defective 13(2) demand notice — wrong amount, improper service.
- Failure to consider the 13(3A) representation or give reasons.
- Short notice or no proper publication of the sale.
- Undervaluation / wrong reserve price.
- Enforcing an exempt asset (e.g. agricultural land).
- Ignoring the right of redemption.
Material vs trivial lapses
Not every technicality helps — the DRT looks at whether the lapse caused prejudice or went to the root of the action. Material breaches of mandatory requirements carry the most weight.
How to use them
- Preserve every notice and publication.
- Identify specific breaches of the Act and Rules.
- Raise them in a timely Section 17 application.
The takeaway
A borrower's best defence is often not emotion but procedure — holding the bank to the exact requirements the law imposes.
Frequently asked questions
Can a technical error stop a SARFAESI sale? A material procedural lapse can lead the DRT to set the action aside.
Do all errors help? No — the lapse generally must be material and cause prejudice.
How do I raise them? In a timely Section 17 application before the DRT.
How Vakil Help Desk helps
Vakil Help Desk advises borrowers and guarantors on SARFAESI notices, DRT and DRAT proceedings, auctions, one-time settlements and stressed-asset disputes. If your bank has issued a demand or possession notice, or you are facing recovery, we can help you respond in time.
This article is for general legal awareness, not individual legal advice. SARFAESI and DRT procedure, time limits and thresholds are set by statute and RBI norms and can change, and the right step depends on your facts and the current position. Please consult a lawyer before acting on a recovery notice.