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📊 SARFAESI Act 2002 – Process Flow & Timeline

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act

Process Flow

1

📜 Section 13(2) – Demand Notice

Issued after account is classified as NPA. Demand for full repayment.

⏰ 60 DAYS to repay
✅ PAID — Case Closed / Loan Regularized
❌ NOT PAID — Proceed to Enforcement
2

⚖️ Section 13(3A) – Borrower Representation

Borrower can file written objection within 60 days.

⏰ Bank must reply within 15 DAYS
3

🏠 Section 13(4) – Possession

Creditor takes possession of secured assets.

📌 Symbolic Possession OR Physical Possession
4

👮 Section 14 – CMM / DM Assistance

If borrower resists physical possession, apply to Chief Metropolitan Magistrate or District Magistrate.

⏰ 30-45 DAYS for CMM order
5

🔄 Section 13(8) – Right of Redemption

Borrower can repay the full amount BEFORE auction and get the asset back.

⏰ Valid until sale confirmation
6

📢 Section 8(6) – Sale Notice

Notice for public auction of secured assets.

⏰ 30 DAYS pre-auction notice required
7

💻 E-Auction Process

Online public auction conducted through RBI approved portals.

📌 Reserve price & earnest money deposit required
8

📄 Sale Certificate & Recovery

Sale certificate issued to auction purchaser. Proceeds distributed.

✅ RECOVERY COMPLETED

🏛️ Appeal Mechanism

Section 17

Debt Recovery Tribunal (DRT)

⏰ 45 DAYS to appeal

If Bank acted improperly

Section 18

Debt Recovery Appellate Tribunal (DRAT)

⏰ Appeal against DRT order

💰 50% DEBT DEPOSIT MANDATORY

❌ Section 31 – What SARFAESI Does NOT Cover

🌾 Agricultural Land

Strictly exempt from SARFAESI

💰 Small Loans

Amount does not exceed ₹1 lakh

🤝 Pledge of Movables

Under Section 172 of Contract Act

📋 Complete List of Exclusions under Section 31 of SARFAESI Act, 2002

  • • 🌾 Agricultural Land: Any security interest created over agricultural land is strictly exempt from SARFAESI.
  • • 💰 Small Loans: Any security interest securing a financial asset (or loan) that does not exceed ₹1 lakh.
  • • 🤝 Pledge of Movables: Pledges of movable assets under Section 172 of the Indian Contract Act, 1872.
  • • 📜 General Contracts / Liens: Any lien on goods, money, or security given under the Indian Contract Act, Sale of Goods Act, or other existing laws.
  • • 🏛️ Non-Attachable Properties: Properties exempt from attachment or sale under Section 60 of the Code of Civil Procedure (CPC).
  • • ✈️ Maritime & Aviation Assets: Security interests created in aircraft or vessels (governed by Aircraft Act, 1934 and Merchant Shipping Act, 1958).
  • • 📦 Unpaid Seller's Rights: Rights of an unpaid seller under Section 47 of the Sale of Goods Act, 1930.

📌 Important Note

  • 🌾 Agricultural Land Check: Verify land records. SARFAESI does NOT apply to agricultural land.
  • 💰 Minimum Amount Check: Ensure outstanding amount exceeds ₹1 lakh.
  • 🤝 Security Type Verification: Confirm security interest is not a pledge of movables or a general lien.
  • ✈️ Special Asset Check: Aircraft and vessels are governed by separate laws.

📍 Jurisdiction (Section 17(1))

DRT has jurisdiction based on: Bank Branch location | Property situated location | Cause of action location

🚫 Section 34 – Civil Court Ouster

Civil courts cannot interfere in SARFAESI matters. Only DRT has jurisdiction. Exception: Cases involving fraud.