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Juris EagleAdvisoryArbitrationLitigation

Practice

Banking, SARFAESI and DRT

Representation in debt recovery, SARFAESI enforcement and regulatory banking matters before tribunals and financial regulators.

When a loan turns non-performing, the law gives a secured lender an enforcement route that runs largely outside the ordinary civil courts, and gives the borrower and any guarantor a defined set of forums in which to contest it. Banking, SARFAESI and DRT work covers both sides of that process.

Enforcement and possession

The SARFAESI Act allows a secured creditor to classify an account as non-performing, issue a demand notice, and, if the demand is not met, take possession of and sell the secured asset without first going to court. A borrower or guarantor who wants to contest that action (on the ground that the classification was wrong, that the notice was defective, or that the possession or auction process was not properly followed) does so before the Debts Recovery Tribunal, and from there, if necessary, the Debts Recovery Appellate Tribunal.

Recovery proceedings

Where a lender proceeds by way of a recovery suit rather than SARFAESI enforcement, that suit is filed before the Debts Recovery Tribunal rather than a civil court, under the Recovery of Debts and Bankruptcy Act. The Tribunal's process is intended to move faster than ordinary civil litigation, and both banks and borrowers appear before it regularly enough that its procedure has developed its own conventions distinct from the civil courts.

Restructuring and regulatory questions

Not every stressed account proceeds straight to enforcement. Reserve Bank of India directions on non-performing asset classification set out when and how an account is categorised, and a lender and borrower may instead pursue a restructuring proposal that keeps the account performing under revised terms. Advisory on this question sits alongside the underlying regulatory compliance obligations that apply to how banks and non-banking financial companies conduct lending and recovery. What a party on either side of a stressed loan has to decide is whether the account is genuinely capable of restructuring, or whether enforcement, with its defined tribunal process and timelines, is the more realistic path forward.

The three routes open to a secured creditor, and the moratorium under section 14 of the CodeThree routes open to a secured creditor, each drawn as a lane of three steps in order. Enforcement under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: demand notice under section 13(2), measures under section 13(4), application to the Debts Recovery Tribunal under section 17. Recovery before the Debts Recovery Tribunal under the Recovery of Debts and Bankruptcy Act, 1993: application under section 19, recovery certificate, appeal under section 20. Initiation under the Insolvency and Bankruptcy Code, 2016: application under section 7, admission order, moratorium under section 14. A shaded band crosses all three lanes from the point of admission onward, marking the moratorium: once admission is ordered, enforcement of the security interest and proceedings before the Tribunal both stop. The lanes show order, not duration.Moratorium under section 14 of the CodeEnforcement under the SARFAESI Act, 2002Demand notice,section 13(2)Measures undersection 13(4)Application to theTribunal, section 17Recovery before the Debts Recovery TribunalApplication,section 19RecoverycertificateAppeal,section 20Initiation under the Insolvency and Bankruptcy Code, 2016Application,section 7AdmissionorderMoratorium,section 14
Three routes, each in its own order of steps. They are alternatives in practice rather than stages of one process, and the drawing is sequence and not duration: nothing here is to scale in time. The band marks what section 14 of the Insolvency and Bankruptcy Code, 2016 does on admission. From that order, enforcement of the security interest is prohibited and proceedings against the corporate debtor are stayed, so the first two routes stop where the band begins, whoever opened them.The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, sections 13 and 17; the Recovery of Debts and Bankruptcy Act, 1993, sections 19 and 20; the Insolvency and Bankruptcy Code, 2016, sections 7 and 14

What this covers

DRT proceedings
Representation before the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal in recovery and defence matters.
SARFAESI enforcement and challenge
Advisory and representation in possession, auction and account classification actions taken under the SARFAESI Act.
Guarantor and borrower defence
Defence of borrowers and guarantors against enforcement action initiated by banks and non-banking financial companies.
NPA classification and restructuring
Advisory on non-performing asset classification and restructuring proposals under Reserve Bank of India directions.
Regulatory banking compliance
Advisory on Reserve Bank of India regulations applicable to lending and recovery conduct.

Statutes and instruments

A linked instrument has a page stating what it does and who it binds.

  • The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
  • The Recovery of Debts and Bankruptcy Act, 1993
  • The Banking Regulation Act, 1949
  • The Reserve Bank of India Act, 1934
  • The Indian Contract Act, 1872

Forums

  • Debts Recovery Tribunal
  • Debts Recovery Appellate Tribunal
  • High Courts

Sectors this practice works in

The sector page states the industries within it and the regulators and forums involved.

Counsel

  • Adv. Harsha Swaroop P

    B.E., LL.B., LL.M. (Corporate & Commercial Law)

    Corporate, Projects & Regulatory

  • Adv. Ravi Kumar

    BA, MBA, LL.B., LL.M. (Corporate & Commercial Law)

    Employment, Workplace & Banking

Notes