Andhra Pradesh High Court orders DRT to decide 3-year-old SARFAESI case in 2 weeks

The Andhra Pradesh High Court has directed the Debts Recovery Tribunal (DRT) at Visakhapatnam to decide, within two weeks, a borrowers' challenge to a bank's recovery action that has been pending for about three years. In an order pronounced on 29 October 2026, a division bench allowed a writ petition filed by City Union Bank and held that the law expects the tribunal to decide such cases within four months.

What Happened

According to the order, two borrowers took several loan facilities from City Union Bank between 2016 and 2022 against mortgaged property. The bank classified the accounts as non-performing assets on 26 October 2022 and began recovery under the SARFAESI Act, the law that lets lenders take over and sell pledged property. It issued a demand notice on 2 February 2023, possession notices, and an auction notice dated 25 July 2023.

On 5 September 2023, the borrowers filed a securitisation application, a challenge to the bank's recovery steps, before the DRT at Visakhapatnam. The tribunal granted an interim stay on 7 February 2025. The bank told the High Court that pleadings were complete but the tribunal kept adjourning the case without reasons.

The court noted that Section 17(5) of the SARFAESI Act requires the DRT to dispose of such an application within 60 days. The tribunal may extend this for reasons recorded in writing, but the total time cannot exceed four months from the date of the application. The court said Parliament did not intend to give the tribunal unlimited time, and that delay causes hardship to the bank and to auction purchasers. It relied on a Supreme Court ruling in Indian Overseas Bank v. Radhey Infra Solutions, which held that the DRT must abide by this time limit.

The court directed the DRT to decide the application, in accordance with law, within two weeks of receiving its order.

What It Means

Borrowers and guarantors who challenge a bank's SARFAESI action before a DRT, and lenders who defend such cases, can expect a decision within the four-month limit set by Section 17(5). Where a tribunal lets a case drag on without recorded reasons, the ruling shows that the High Court can be approached for a direction to decide it quickly.

Source: High Court judgment