DRAT: DRT Cannot Dismiss Entire Securitisation Application if Challenge to Sale Notices is Within Limitation
- REEDLAW
- Aug 5
- 3 min read
Updated: Aug 12
REEDLAW Legal News Network reports that the Debts Recovery Appellate Tribunal (DRAT), Kolkata, has held that the Debts Recovery Tribunal (DRT) cannot summarily dismiss a securitisation application in its entirety if the challenge to certain sale notices under the SARFAESI Act is filed within the prescribed limitation period.
The Debts Recovery Appellate Tribunal (DRAT), Kolkata Bench, chaired by Justice Anil Kumar Srivastava, while adjudicating a batch of two appeals, held that when a securitisation application under the SARFAESI Act challenges both a time-barred possession notice and sale notices issued within the limitation period, the Debt Recovery Tribunal (DRT) cannot dismiss the application in its entirety. The Tribunal clarified that valid objections to sale notices must be adjudicated on their merits, and directed the DRT to restore the application to the extent of the maintainable claims.
The Debts Recovery Appellate Tribunal (DRAT), presided by Justice Anil Kumar Srivastava, disposed of two connected appeals arising from a securitization application filed by the appellants under Section 17 of the SARFAESI Act. The appellants had initially challenged a possession notice dated 26.11.2019 and two subsequent sale notices dated 11.01.2024 and 07.02.2024 through Application No. NDN 136 of 2024, which was dismissed by the DRT, along with an application for condonation of delay. The appellants then filed a recall application (MA No. 111 of 2024), limiting their challenge to the sale notices and withdrawing the challenge to the possession notice. This application too was dismissed by the DRT as not maintainable.
On appeal, the DRAT held that while the challenge to the possession notice was time-barred and rightly rejected, the DRT had erred in dismissing the entire securitization application, as the challenge to the sale notices was made within the prescribed limitation period. The Appellate Tribunal observed that the DRT ought to have allowed the recall application at least to the extent it related to the sale notices, since the appellants had clarified that they were no longer pressing the relief regarding the possession notice.
Accordingly, the DRAT allowed both appeals with a direction to the DRT to restore NDN No. 136 of 2024 only to the extent of the challenge made to the sale notices dated 11.01.2024 and 07.02.2024. The DRT was further directed to give the respondent bank an opportunity to file objections and thereafter decide the application on the merits, in accordance with law.
Mr. Nemani Srinivas, Advocate, represented the Appellant.
Mr. Omkar Ganguli, Advocate, appeared for the Respondents.
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