DRT Has Jurisdiction Over All Measures Taken Under SARFAESI Act | HC

Case Details: Chandradhara Rice Mill vs Union Bank of India - [2025] 179 taxmann.com 687 (HC-Karnataka)

Judiciary and Counsel Details

• Vibhu Bakhru, CJ. & C.M. Poonacha, J.
• Kiran Kumar K., Adv. for the Appellant.

Facts of the Case

In the instant case, the Appellant, a Small Enterprise covered by the MSMED Act, had availed a financial facility from the respondent bank and made a default in repayment of money. The respondent bank classified the account as a Non-Performing Asset (NPA).

Thereafter, the respondent Bank issued a notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) followed by a possession notice under section 13(4) of the SARFAESI Act.

The Appellant filed a writ petition challenging these SARFAESI measures, asserting that as an MSME it was entitled to rehabilitation under the RBI notification dated 29.05.2015 and that recourse to the SARFAESI could be taken only if such measures failed.

The Single Judge declined to entertain the writ petition, observing that certain issues required factual enquiry and that the petitioner must avail alternate remedies. On appeal to the High Court, the appellant contended that it could not approach the Debt Recovery Tribunal (DRT) under Section 17 because its challenge, based on RBI MSME rehabilitation guidelines, fell outside the DRT’s jurisdiction.

High Court Held

The High Court observed that any person aggrieved can move an application before the DRT in respect to any measures taken by a secured creditor under section 13(4) of the Act.

The High Court held that where the appellant’s grievance stemmed entirely from measures taken by the respondent bank under the SARFAESI Act, there was no merit in the contention that the DRT did not have the jurisdiction to entertain an application against measures instituted by the Bank. Thus, there were no grounds to fault the decision of the Single Judge in relegating the petitioner to avail its alternate remedies.

List of Cases Reviewed

• Order of Single Judge of the High Court in W.P. No.24937/2025 dated 24.09.2025 (para 8) affirmed