Wrongful Possession Under SARFAESI: When and How to Challenge It

Possession taken under Section 13(4) of the SARFAESI Act is only lawful where every preceding step, the demand notice, the response to any representation, and where applicable the Section 14 authorisation, was itself properly followed. Where that is not the case, the possession can be wrongful, and the law provides a specific route to challenge it.

Recognising Wrongful Possession

Common indicators include possession taken before the 60-day notice period had actually lapsed, a demand notice with a materially incorrect outstanding amount, physical possession taken without a valid Section 14 order, or possession of assets not actually covered by the security documents.

The Correct Remedy: Section 17, Not a Civil Suit

A person aggrieved by wrongful possession must approach the Debts Recovery Tribunal through a Securitisation Application under Section 17, not a civil court, which generally lacks jurisdiction to entertain challenges to SARFAESI enforcement. This must be filed within 45 days of the possession being taken.

What Relief Is Available

Where the Tribunal finds the possession was indeed wrongful, it can direct restoration of possession to the borrower, along with any consequential relief the circumstances warrant. Where possession has already led to a sale, the analysis becomes more complex, and the earlier the challenge is raised, the stronger the available relief tends to be.

Evidence That Strengthens a Challenge

Copies of the original notice, proof of the date possession was actually taken, any representation filed and the bank's response to it, and, where physical possession is involved, the Section 14 order itself, are all central to establishing that the possession departed from the required process.

Acting Within the Window

Because the 45-day limitation period is applied strictly, anyone who believes possession of their property was taken wrongfully should seek legal advice immediately rather than after the window has closed, since delay is often fatal to an otherwise strong case.