Banks and financial institutions are part of the firm's client base, and its practice covers banking and finance, recovery matters and creditors' rights. A banking lawyer's work begins before any default, with the loan and security documents; a debt recovery lawyer's continues through enforcement under the SARFAESI Act and proceedings before the Debt Recovery Tribunal. The firm also advises borrowers and guarantors on the remedies the same laws give them.
Enforcement under the SARFAESI Act
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) lets a secured creditor enforce its security without a court decree once the borrower's account is classified as a non-performing asset. The steps are:
- Demand notice (Section 13(2)). The borrower is called on to pay the full liability within sixty days.
- Objection (Section 13(3A)). The borrower may object, and the creditor must consider the objection and, if it rejects it, give reasons within fifteen days.
- Measures (Section 13(4)). If the dues remain unpaid, the creditor may take possession of the secured assets, with the right to transfer them by lease, assignment or sale, take over management of the business, or appoint a manager.
- Assistance (Section 14). Where the borrower resists, the creditor applies to the Chief Metropolitan Magistrate or District Magistrate for help in taking physical possession.
- Sale. The asset is sold under the Security Interest (Enforcement) Rules, 2002, after valuation and notice to the borrower, who may redeem it by paying the full dues with costs until the sale notice is published.
The Act does not reach every loan. Section 31 excludes, among others, security interests in agricultural land, financial assets of not more than ₹1 lakh, and cases where the amount due is less than 20 per cent of the principal and interest.
Remedies for borrowers and guarantors
A borrower, guarantor or any other person aggrieved by a measure under Section 13(4) may apply to the Debt Recovery Tribunal under Section 17 within 45 days of the measure. The tribunal examines whether the creditor followed the Act and the rules, and can restore possession if it did not. An appeal lies to the Debt Recovery Appellate Tribunal under Section 18 on deposit of 50 per cent of the debt, which the appellate tribunal may reduce to 25 per cent.
Common grounds of challenge include the date and basis of the NPA classification, defects in the notices, the valuation and reserve price, and an auction that departs from the rules. The High Court generally expects the remedy under Section 17 to be used first and entertains writ petitions only in exceptional cases; see High Court writs and appeals.
DRT Jabalpur and recovery suits
Banks and financial institutions recover debts of ₹20 lakh and above through the Debt Recovery Tribunal under the Recovery of Debts and Bankruptcy Act, 1993, and the civil courts cannot hear those claims. For Chhattisgarh, that is DRT Jabalpur, whose jurisdiction covers Madhya Pradesh and Chhattisgarh. The tribunal decides the claim and any counter-claim or set-off and issues a recovery certificate, which a Recovery Officer executes by attachment and sale.
Claims below ₹20 lakh, and claims by lenders that are not banks or financial institutions under the Act, go to the civil courts, often as summary suits under Order 37 of the Code of Civil Procedure or as commercial suits. For large corporate defaults, lenders also weigh insolvency proceedings under the IBC.
Loan documents, settlements and the ombudsman
Enforcement is only as good as the documents behind it. The firm drafts and reviews loan agreements, hypothecation and pledge deeds, mortgages, guarantees and intercreditor arrangements, checks title and encumbrances, and sees that charges are registered with the Registrar of Companies and with CERSAI, the central registry set up under the SARFAESI Act.
Many recoveries end in settlement. A one-time settlement is negotiated under the lender's board-approved policy or a scheme it has announced, and its terms should require withdrawal of pending DRT or SARFAESI proceedings and release of the security once payment is complete. Complaints of deficient service by a bank, as distinct from recovery disputes, can be taken to the Reserve Bank of India's ombudsman after the bank's own grievance process has been tried.
Lenders and borrowers with a SARFAESI notice or a DRT matter can reach the firm at its Bilaspur office.
What the practice handles
- Loan, security and guarantee documentation
- Title and encumbrance checks, and registration of charges with the ROC and CERSAI
- Demand and possession notices under Section 13 of the SARFAESI Act
- Applications under Section 14 for assistance in taking possession
- Securitisation applications under Section 17 and appeals under Section 18
- Recovery applications and their defence before DRT Jabalpur
- Recovery suits, including summary suits under Order 37
- One-time settlements and restructuring of loan accounts
- Advice to borrowers and guarantors on NPA classification and enforcement
- Creditors' rights in insolvency proceedings
Where these matters are heard
- Debt Recovery Tribunal, Jabalpur, for Madhya Pradesh and Chhattisgarh
- Debt Recovery Appellate Tribunal
- Chief Metropolitan Magistrates and District Magistrates, for applications under Section 14
- Civil and Commercial Courts, for recovery suits outside the DRT's jurisdiction
- High Court of Chhattisgarh at Bilaspur
- Reserve Bank of India's ombudsman, for complaints of deficient banking service
Questions about Banking, Finance & Recovery
What should a borrower do after receiving a Section 13(2) notice?
Check the amount claimed against the account statements, the date and basis of the NPA classification and the description of the secured assets. Within the sixty days, the borrower can pay, propose a settlement or object under Section 13(3A), and the lender must answer an objection with reasons within fifteen days. The notice itself cannot be challenged before the DRT; the remedy under Section 17 arises once measures under Section 13(4) are taken.
Which DRT hears cases from Raipur and Bilaspur?
The Debt Recovery Tribunal at Jabalpur, whose jurisdiction covers Madhya Pradesh and Chhattisgarh. It hears recovery applications by banks and financial institutions for debts of ₹20 lakh and above, and applications under Section 17 of the SARFAESI Act against measures taken on assets in Chhattisgarh. Appeals from its orders go to the Debt Recovery Appellate Tribunal, subject to the pre-deposit the law requires.
Can a bank take possession of a house without a court order?
Yes, if the house is mortgaged to secure the loan, the account is a non-performing asset and the bank follows the SARFAESI procedure: a sixty-day demand notice, consideration of any objection, a possession notice and, where it needs physical possession against resistance, an order of the District Magistrate or Chief Metropolitan Magistrate under Section 14. A departure from that procedure can be challenged before the DRT.
What is the deadline to challenge a SARFAESI measure?
An application under Section 17 must be filed before the DRT within 45 days from the date the measure under Section 13(4) was taken. The tribunal can set the measure aside and restore possession if the creditor did not follow the Act or the rules. Filing the application does not by itself halt a sale, so interim relief has to be sought separately and promptly.
Is a one-time settlement binding on the bank?
Once the lender sanctions it in writing and the borrower meets its terms, the lender is bound to accept the settled amount, withdraw its proceedings and release the security. The lender is not obliged to offer a settlement and decides under its own board-approved policy. If payments are missed, the sanction commonly lapses under its terms and the original claim revives, so the payment schedule must be realistic.
Can a bank use SARFAESI against agricultural land?
No. Section 31 excludes security interests created in agricultural land, along with other categories such as financial assets of not more than ₹1 lakh and cases where the amount due is less than 20 per cent of the principal and interest. Whether land is agricultural is a question of fact, and revenue entries are only part of the answer. The lender can still sue, or approach the DRT, for the debt.
A question that is not answered here? Send it to the firm.
This page describes the law in general terms as of 24 September 2026. It is not legal advice. The outcome of any matter depends on its facts, and the firm does not guarantee results.
