Got a SARFAESI notice? Possession, auction and your deadlines

1Your rights

• 60 days to pay: a demand notice under section 13(2) of the SARFAESI Act gives you 60 days to pay the dues. It must state the amount and the secured assets.
• Object in writing: during those 60 days you can send a representation or objection (section 13(3A)). The lender must consider it and, if it doesn't accept it, tell you the reasons within 15 days of receiving it. Objecting doesn't pause the 60 days.
• Pay before the auction notice: if you pay all dues, costs and charges before the auction or sale notice is published, the property can't be sold (section 13(8)). The Supreme Court has held (2023) that this right ends once the auction notice is published.
• Notice before sale: the rules require a 30-day notice to the borrower before a sale, and a public notice of the auction.
• Challenge at the DRT: you can apply to the Debts Recovery Tribunal (DRT) within 45 days of a step taken under section 13(4), such as taking possession or issuing a sale notice (section 17). Civil courts can't hear these challenges.
• Guarantors and mortgagors too: the Act treats anyone who gave a guarantee or mortgaged property for the loan as a "borrower", with the same notices and rights. See guarantor being asked to pay.
• When SARFAESI doesn't apply: agricultural land; a security interest for ₹1 lakh or less; or where the amount due is less than 20% of the principal and interest (section 31). NBFCs can use it only if they have assets of ₹100 crore or more, and only for loans of ₹20 lakh or more.
• Fair recovery: RBI's rules bar recovery agents from intimidation, harassment, threatening calls, and calls before 8 am or after 7 pm.

2What the lender can lawfully do

• Take possession without going to court first. After 60 days, the lender can take possession: usually first "symbolic" possession (a notice on the property and in newspapers), then physical possession.
• Get help from the District Magistrate. For physical possession, the lender can apply to the District Magistrate or Chief Metropolitan Magistrate (section 14), who should decide within 30 days, extendable to 60. Officials and police may come to take possession.
• Sell the property by auction or tender after the required notices, and recover any shortfall from the borrower and guarantors.
• Continue while you challenge. A DRT application doesn't stop the process by itself; the DRT may grant a stay. An appeal against a DRT order to the DRAT requires depositing 50% of the dues (which the DRAT can reduce to 25%).

3What to do now

1. Read the notice carefully: which section it's under (13(2), 13(4), 14, or a sale notice), its date, the amount claimed and the property listed. Note when and how you received it, and keep the envelope.
2. Work out your deadlines with the tool in step 6, and set reminders.
3. Check the amount. Ask for a full account statement (the letter below does this) and compare it with your own records.
4. Decide your route with a lawyer: pay or refinance, propose a settlement, object, or challenge at the DRT. A settlement is the lender's decision, but asking in writing puts your offer on record. Until it's confirmed in writing, the deadlines still run.
5. Free legal aid: if you can't afford a lawyer, contact your District Legal Services Authority (see nalsa.gov.in). Eligible people get a lawyer free.
6. Beware of agents who promise to "stop the auction" or settle for a small fraction if you pay them first. Only the lender can agree a settlement, and only a court or tribunal can stop a sale.
7. If officials come with a magistrate's order, stay calm and don't obstruct them. Ask for a copy of the order and the inventory of items, take photos, and contact your lawyer.

4Create your letter

Fill in your details to get a ready letter, quoting the relevant rules, that you can send to your lender. It's marked "without prejudice", so it doesn't admit the amount claimed. Have a lawyer check it if you can.

5Send it so you have proof

The letter itself isn't proof. What the RBI Ombudsman, a consumer forum or a court will want to see is proof that the lender received it, and that depends on how you send it:

• Hand it in at the branch, with a second copy

  Very strong

  The lender's "received" stamp, signature and date on your copy (use the acknowledgement box on the printed letter)

• Registered Post or Speed Post

  Very strong

  The postal receipt, and the delivery record from India Post tracking

• Email to the lender's official grievance address

  Strong

  Your sent email with date and time, the lender's auto-reply, and any complaint ticket number. Keep the original emails, not just screenshots.

• The lender's online complaint form or app

  Strong

  The complaint reference number and confirmation. Save the confirmation page, email or SMS.

• Phone call, or speaking at the branch

  Weak

  Usually nothing you can show later. Always follow up in writing.

Keep everything together: your letter, proof of sending, the lender's replies and your loan documents. LoanReveal doesn't keep copies of your letters, so we can't confirm what you sent; the lender's stamp, the postal record or the lender's reference number is your proof. For court proceedings, electronic records such as emails may need extra formalities: ask a lawyer.

6Your deadlines, and where to get help

Pick the notice you received and its date to see the key dates.

The main remedy is the DRT, under section 17, filed by you or a lawyer within 45 days of the step you want to challenge. Find your DRT and its procedures on the DRT website.

The RBI Ombudsman can help with service problems, such as not getting an account statement or harassment by recovery agents, but it can't stop or overturn a SARFAESI action.

7Keep a case file

Record every step: when you wrote, how it was delivered, reference numbers and replies. Download it as a dated PDF timeline with a checklist of documents to attach, ready for your lawyer, legal aid office or the DRT.

Frequently asked questions