Expert Answers to Your Consumer Legal Questions

Ans.

Yes. A borrower or another affected person can challenge a possession measure taken under Section 13(4) of the SARFAESI Act before the Debts Recovery Tribunal. Section 17 provides a period of 45 days from the date of the challenged measure to approach the competent DRT.

The tribunal examines whether the bank action complies with the Act and applicable rules. A demand notice under Section 13(2) alone generally does not provide the same basis for a Section 17 application. The notice, possession action and relevant dates must therefore be examined carefully.

Ans.

No. Filing a case before the DRT does not automatically stop a bank auction or possession proceedings. Interim protection must be specifically sought, and the tribunal must pass an order granting it. A pending case should not be treated as confirmation that the auction has been postponed.

The bank’s notices, auction schedule and alleged legal defects are relevant to the challenge. Any protection depends on the tribunal’s order and its conditions. Borrowers should check exactly what the order restrains, because an order concerning one stage of recovery may not prevent every subsequent action.

Ans.

Yes. A guarantor can face recovery proceedings before the DRT where the claim falls within its jurisdiction. Under Section 128 of the Indian Contract Act, a guarantor’s liability generally extends to the same debt as the principal borrower’s liability, unless the guarantee contract provides otherwise. Signing a guarantee can therefore create substantial financial responsibility.

However, the scope of liability depends on the guarantee’s terms and the relevant facts. Any contractual limit, discharge of the guarantee or loss of securities may affect the claim. These issues require examination of the guarantee deed, loan documents and the bank’s conduct; liability should not be assumed solely from the amount stated in a recovery notice.