1. Court’s decision
The Delhi High Court has dismissed a writ petition filed by a borrower-company seeking to quash a DRAT order that declined interim relief against an auction conducted under the SARFAESI Act. The Court held that when an effective statutory remedy is already being pursued—particularly one involving the same grounds and the same sale notice—it is wholly impermissible for the High Court to entertain a parallel writ petition under Article 226. Reaffirming that writ jurisdiction is discretionary and narrow in matters arising under SARFAESI, the Court concluded that the petitioner must pursue its pending appeal before the DRAT and the securitisation application pending before the DRT.
The High Court emphasised that interference with an interim tribunal order is extremely limited and that the petitioner failed to show any exceptional circumstances such as lack of jurisdiction or violation of natural justice. While interim protection had earlier been granted, the Court clarified that the pending statutory proceedings are fully capable of granting complete relief—including setting aside the sale and restoring status quo ante—if the petitioner ultimately succeeds.
2. Facts
The borrower and co-borrowers availed a housing loan of approximately ₹7.5 crore secured against property in New Punjabi Bagh, Delhi. Following repeated defaults, the account was classified as NPA in August 2019. A demand notice under Section 13(2) of the SARFAESI Act was issued, followed by a possession notice under Section 13(4). The lender approached the Chief Metropolitan Magistrate under Section 14 and secured an order authorizing possession.
The borrower filed a securitisation application (SA 258/2022) before the DRT. A sale notice issued in April 2022 was stayed by the DRT subject to conditions, which the borrower claims to have fulfilled. Following jurisdictional reorganisation, the matter was renumbered as TSA 798/2022.
In March 2023, the lender issued a fresh sale notice scheduling auction for 28 March 2023. The borrower sought urgent restraint before the DRT, but the tribunal refused interim relief. The DRAT subsequently also declined interim protection but allowed parties to complete pleadings in the main appeal. Meanwhile, the auction went ahead and a sale certificate was issued to the auction purchaser.
The borrower then filed the present writ petition challenging the DRAT’s interim order and seeking sweeping reliefs including quashing the sale, nullifying all steps taken under SARFAESI, cancellation of the sale certificate, and restoration of possession.
3. Issues
The central legal issues before the High Court were:
- Whether a writ petition is maintainable under Article 226 challenging an interim order of the DRAT when the main appeal is still pending.
- Whether the High Court should intervene in SARFAESI proceedings where an alternative statutory remedy is available and already invoked.
- Whether alleged illegality in the sale notice dated 10 March 2023 permits bypassing the statutory hierarchy.
- Whether the High Court can adjudicate on the auction’s validity when that issue is already sub judice before DRT/DRAT.
4. Petitioner’s arguments
The petitioner argued that both DRT and DRAT committed serious error in refusing to stay the auction. It contended that the sale notice dated 10 March 2023 violated the earlier DRT stay order of 30 May 2022, which had protected the property from auction as long as the borrower complied with stipulated conditions. The petitioner alleged collusion between the lender and the auction purchaser, undervaluation of the mortgaged asset, procedural irregularities in valuation, and breach of SARFAESI Rules governing sale.
The petitioner asserted that the auction was conducted in violation of law and that the subsequent sale certificate was void. It further claimed that the DRAT wrongly relied on the borrower’s inability to deposit ₹5.5 crore on the same day and its non-participation in auction. The petitioner argued that High Court intervention was necessary as its property rights had been irreversibly prejudiced and as the DRT/DRAT had failed to grant timely relief.
5. Respondent’s arguments
The lender opposed maintainability, arguing that the writ petition was an attempt to circumvent the statutory scheme. Since the appeal against the DRT’s refusal of interim relief was pending before the DRAT, and the securitisation application itself remained sub judice before DRT, the petitioner already had full access to effective remedies. Interference by the High Court would undermine the SARFAESI mechanism.
Respondent No. 1 further argued that the earlier DRT stay applied only to the April 2022 sale notice and was conditional. Once the borrower failed to fulfil subsequent conditions, the lender was entitled to proceed. It submitted that it had even offered a one-time settlement of ₹5.5 crore, which the borrower did not comply with.
The auction purchaser supported the lender’s submissions and emphasised the validity of the sale process.
6. Analysis of the law
The High Court carefully examined the limits of writ jurisdiction where specialised statutory tribunals exist. The Court cited two major Supreme Court authorities: M.S. Sanjay v. Indian Bank (2025) and Celir LLP v. Bafna Motors (2024). Both reaffirm that Article 226 jurisdiction is discretionary and must yield to the legislative scheme providing a complete code for recovery disputes.
The Court reiterated that SARFAESI proceedings must run through the DRT–DRAT hierarchy and that writ jurisdiction is exceptional, permissible only where there is a patent lack of jurisdiction, violation of natural justice, or an illusory remedy.
The Court emphasised that the DRAT’s order was purely interlocutory, and interfering with an interim refusal of stay would amount to overriding the statutory structure. The same issues—validity of the sale notice, alleged undervaluation, impact of the previous stay—were squarely before the DRAT in the pending appeal.
7. Precedent analysis
The Court relied extensively on:
• Satyawati Tondon — High Courts must not interfere when effective remedies under SARFAESI exist.
• Varimadugu Obi Reddy — Borrowers must not bypass pre-deposit requirements by approaching High Courts.
• Celir LLP — SARFAESI is a complete code; writ jurisdiction must be exercised with extreme restraint.
The Court applied these decisions to reaffirm that the borrower must pursue the pending DRAT appeal and DRT proceedings.
8. Court’s reasoning
The High Court reasoned that:
• The petitioner’s appeal before the DRAT concerns the same sale notice and same grievances.
• Entertaining the writ would create parallel proceedings and render the statutory appeal redundant.
• The pendency of the securitisation application (TSA 798/2022) before the DRT further reinforces the availability of an efficacious remedy.
• The writ petition essentially seeks adjudication on merits of the sale—something the statutory tribunals are already empowered to do.
• No exceptional circumstances, such as lack of jurisdiction or breach of natural justice, were shown.
• An interim order of a tribunal cannot be converted into a full adjudication under writ jurisdiction.
9. Conclusion
The High Court dismissed the writ petition on maintainability grounds. It held that the petitioner must pursue its pending statutory remedies before the DRT and DRAT. No findings were made on merits. The Court noted that the sale certificate issued in favour of the auction purchaser remains subject to the outcome of the statutory proceedings. It also clarified that if the petitioner succeeds before the DRT or DRAT, those forums have full authority to set aside the sale and restore rights.
10. Implications
This ruling strengthens the jurisprudence holding that High Courts cannot act as alternate appellate forums under SARFAESI. Borrowers cannot challenge interim orders through Article 226 to bypass statutory timelines, pre-deposit requirements, or pending appeals. The decision reinforces judicial discipline, statutory hierarchy, certainty in enforcement of security interests, and the integrity of the SARFAESI framework. Financial institutions gain confidence that recovery actions will not be thwarted by parallel writ proceedings. Borrowers, meanwhile, must diligently pursue statutory remedies without seeking premature High Court intervention.
Case Law References
M.S. Sanjay v. Indian Bank (2025) — Clarified discretionary limits of writ jurisdiction; High Courts must avoid interfering when statutory remedies exist. Applied as guiding principle.
Celir LLP v. Bafna Motors (2024) — Reaffirmed that SARFAESI is a self-contained code; High Courts should refrain from intervening where alternate remedies exist. Heavily relied upon.
United Bank of India v. Satyawati Tondon — Landmark rule that writ petitions should not bypass SARFAESI appeals. Applied to reject maintainability.
Varimadugu Obi Reddy (2023) — Borrowers cannot circumvent pre-deposit requirement by filing writ petitions. Cited for discipline in statutory appeals.
FAQs
1. Can a borrower file a writ petition against a DRAT interim order under SARFAESI?
Generally no. The High Court will not intervene under Article 226 when an efficacious statutory remedy—such as a pending DRAT appeal—is available.
2. Does refusal of interim relief by DRAT allow direct High Court interference?
Only in exceptional cases such as lack of jurisdiction or violation of natural justice. Mere disagreement with interim refusal is insufficient.
3. What happens to a sale certificate during pending SARFAESI litigation?
The tribunals (DRT/DRAT) can set aside the sale, cancel the certificate, and restore possession if the borrower succeeds. High Court interference is unnecessary unless extraordinary grounds exist.