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The short answer
A SARFAESI notice under Section 13(2) is a 60-day demand from a bank or financial institution to repay a loan that has become a non-performing asset, failing which it can take possession of the mortgaged property without going to court. Within that period you can pay, negotiate, or send a written objection under Section 13(3A), which the bank must answer within 15 days. If the bank takes possession under Section 13(4), you can apply to the Debts Recovery Tribunal (for Odisha, at Cuttack) within 45 days.
A SARFAESI notice under Section 13(2) means your lender has classified the loan as a non-performing asset (NPA) and intends to enforce its security over the house, shop, land or other property you mortgaged, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The Act lets banks, housing finance companies, larger NBFCs and asset reconstruction companies take possession and sell secured property without filing a suit. The deadlines are short, so read the notice the day it arrives.
The stages of a SARFAESI action
| Stage | What happens | Your window |
|---|---|---|
| Section 13(2) demand notice | Bank demands the full dues and lists the secured assets | 60 days to pay or object |
| Section 13(3A) objection | You send a representation; bank must reply with reasons | Bank replies within 15 days |
| Section 13(4) possession | Bank takes symbolic or physical possession, issues a possession notice and publishes it in newspapers | 45 days to apply to the DRT (Section 17) |
| Section 14 order | If resistance is expected, the bank asks the Chief Judicial Magistrate or District Magistrate to help take physical possession | Can also be challenged before the DRT |
| Sale notice and auction | Bank gives the borrower 30 days' notice of sale and publishes the auction notice | Pay the full dues before the auction notice is published to redeem |
Step 1: check whether SARFAESI applies at all
Section 31 of the Act excludes some cases. The bank cannot use SARFAESI where:
- the security is agricultural land (relevant to many rural mortgages in Odisha; whether land is agricultural depends on its actual use and character, not only the Record of Rights entry, so see the Record of Rights and land conversion);
- the financial asset is not more than ₹1 lakh; or
- the amount due is less than 20 per cent of the principal and interest.
Also check that the account was actually classified as an NPA on the date stated, that the amount claimed matches your statements, and that the notice was sent to every borrower and guarantor named in the loan. For NBFCs, SARFAESI is available only to notified NBFCs above a size threshold and for larger loans; check the current threshold.
Step 2: respond to the SARFAESI 13(2) notice within 60 days
- Get your papers. Loan agreement, mortgage deed or memorandum of deposit of title deeds, sanction letter, the full account statement and all correspondence.
- Do not transfer or lease the property. After receiving the notice you cannot sell, lease or otherwise transfer the secured assets (except in the ordinary course of business) without the lender's written consent (Section 13(13)).
- Send a written objection (Section 13(3A)). Point out errors in the amount, wrong NPA classification, payments not credited, an exempt asset, or a pending restructuring request. The bank must consider it and communicate its reasons for rejecting it within 15 days. Send it by registered post and email and keep proof. The rejection itself cannot be taken to the DRT at this stage; the right to apply arises once the bank acts under Section 13(4).
- Negotiate in writing. Ask for restructuring, a payment schedule or a one-time settlement (OTS). Get any settlement terms in writing on the bank's letterhead before paying.
Step 3: after a 13(4) possession notice
The possession notice is delivered to you, affixed on the property and published in two newspapers, one in the local language. "Symbolic" possession may come first, with physical possession later, often with an order of the Chief Judicial Magistrate or District Magistrate under Section 14. If you believe the action is unlawful, the remedy is a securitisation application under Section 17 before the Debts Recovery Tribunal.
DRT Cuttack: filing a securitisation application
Borrowers and other affected persons in Odisha approach the Debts Recovery Tribunal at Cuttack; confirm the jurisdiction for your district on the DRT portal. Key points:
- The application must be filed within 45 days from the date the measure under Section 13(4) was taken.
- Any person aggrieved can apply, including a guarantor, a co-owner or a tenant in possession.
- Grounds include non-compliance with the notice requirements, exempt property, a wrong amount, a defective sale notice or reserve price, and procedural breaches of the Security Interest (Enforcement) Rules, 2002.
- The DRT can declare the measures invalid, restore possession, and grant an interim stay of the auction, often on terms such as a deposit.
- Filing is done online through the DRT e-filing system with the prescribed fee; check the current fee for your claim amount.
An appeal against the DRT order lies to the Debts Recovery Appellate Tribunal (for the Cuttack DRT, at Kolkata) within 30 days under Section 18, but only after depositing 50 per cent of the debt claimed by the bank or determined by the DRT, whichever is less. The appellate tribunal can reduce this to 25 per cent.
Can a bank auction be stopped?
A bank auction can be stopped by paying the full dues, with costs and charges, before the auction notice is published (Section 13(8)). The Supreme Court has held that after the 2016 amendment the borrower's right to redeem ends on publication of that notice. The Security Interest (Enforcement) Rules require 30 days' notice to the borrower before sale, and the property cannot be sold until 30 days after the public notice of sale. Otherwise, an auction can be stayed only by the DRT (or the appellate tribunal) on a proper application. Filing a writ in the Orissa High Court is generally not entertained, because the Supreme Court has said the DRT remedy should be used first; a writ may lie only in exceptional cases.
Practical cautions
- Do not ignore the notice: deadlines run whether or not you respond.
- Do not use force or abuse against officials or agents at the property; it can lead to criminal cases. For recovery agent misconduct, see loan recovery agent harassment.
- If the bank recovers less than the dues from the sale, it can still claim the balance, for example before the DRT under the Recovery of Debts and Bankruptcy Act, 1993.
- Keep checking your credit report after any settlement.
If you cannot afford representation, see free legal aid in Odisha. Information on related work is under civil litigation; for courts and tribunals in Cuttack, see courts.
Odia terms used in this guide
| Odia | Transliteration | Meaning |
|---|---|---|
| ବନ୍ଧକ | bandhaka | mortgage, pledge |
| ନିଲାମ | nilama | auction |
Frequently asked questions
What is the time limit after a SARFAESI 13(2) notice?
The notice gives 60 days to pay the dues. Within that time you can send a written objection under Section 13(3A), and the bank must reply with reasons within 15 days.
How many days do I have to approach the DRT after a 13(4) possession notice?
A securitisation application under Section 17 must be filed within 45 days from the date the bank took the measure under Section 13(4). In Odisha, it goes to the Debts Recovery Tribunal at Cuttack.
Can a bank use SARFAESI against agricultural land?
No. Section 31 excludes security interests in agricultural land. It also excludes loans of up to ₹1 lakh and cases where less than 20 per cent of the principal and interest remains due.
How can I stop a bank auction?
Pay the full dues, costs and charges before the auction notice is published, or obtain a stay from the Debts Recovery Tribunal on a securitisation application. The bank must also give 30 days' notice of sale.
Can I file a writ in the Orissa High Court against a SARFAESI notice?
Generally not, because the Supreme Court has held that the DRT remedy under Section 17 should be used. A writ may be entertained only in exceptional cases.
What deposit is needed to appeal a DRT order?
An appeal to the Debts Recovery Appellate Tribunal under Section 18 needs a deposit of 50 per cent of the debt, which the appellate tribunal can reduce to 25 per cent. The appeal must be filed within 30 days.
Official sources
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (India Code)
- Debts Recovery Tribunals (official portal)
- Reserve Bank of India
- Orissa High Court, Cuttack (official website)
General information, not legal advice. Every matter turns on its own facts and documents, and the law and official procedures change. Check the current position with the concerned office, or take advice on your own facts, before acting.