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📊 SARFAESI Act 2002 – Process Flow & Timeline

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

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
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3
🏠 Section 13(4) – Possession
Creditor takes possession of secured assets.
📌 Symbolic Possession OR Physical Possession
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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
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5
🔄 Section 13(8) – Right of Redemption
Borrower can repay the full amount BEFORE auction and get the asset back.
⏰ Valid until sale confirmation
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6
📢 Section 8(6) – Sale Notice
Notice for public auction of secured assets.
⏰ 30 DAYS pre-auction notice required
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7
💻 E-Auction Process
Online public auction conducted through RBI approved portals.
📌 Reserve price & earnest money deposit required
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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.