SARFAESI Exam Traps: Twelve Common Errors Corrected

Most marks lost on SARFAESI go to a few recurring errors: a swapped percentage, a wrong period, a case cited for the opposite proposition. This note sets the twelve most common against the correct position, with a checklist to close.

1. Figures and Procedure

Six errors on numbers and procedure

Figure 1: Six errors on numbers and procedure

Percentages. 60% for consortium consent, 75% for qualified buyers; the struck-down 75% deposit was in old s.17(2), not s.18 (Topic 86)
Periods. 45 days to apply to the DRT, 30 days to appeal to the DRAT; redemption ends on publication of the sale notice (Topics 85, 30)
Process. No election between SARFAESI and the RDB Act; the s.14 Magistrate acts ministerially within a directory time limit (Topics 51, 29)

2. Forum, Coverage and Interfaces

$Six errors on remedies and reach$

Figure 2: Six errors on remedies and reach

Forum. s.17 before the DRT is the remedy; a writ is exceptional and the s.34 bar yields only for relief the DRT cannot give (Topics 46, 73)
Coverage. Co-operative banks are in; a challenge lies from symbolic possession; the 90-day NPA test comes from RBI norms (Topics 58, 56, 9)
IBC. The moratorium protects the corporate debtor, not a personal guarantor (Topic 78)

⚠ Checklist before submitting

Every figure carries its section: 60 days s.13(2), 15 days s.13(3A), 45 days s.17, 30 days s.18, 60% s.13(9), 50% s.18. Every proposition carries a case and year. The remedy named is the DRT under s.17 unless the question points to an exception. Post-2016 terms are used: asset reconstruction company, redemption until publication of the sale notice, s.26E priority from 24 January 2020.

3. Frequently Asked Questions

What is the most common mistake in SARFAESI answers?

Swapping figures. Candidates often give seventy-five per cent as the consent needed under Section 13(9), when it is sixty per cent in value, or say that Mardia Chemicals struck down the Section 18 deposit, when it struck down the seventy-five per cent deposit then required for a Section 17 application.

How should a SARFAESI answer name the borrower's remedy?

The default remedy is an application under Section 17 to the Debt Recovery Tribunal within forty-five days of the measure. A writ petition should be presented only as an exception, citing Satyawati Tondon and Phoenix ARC, and a civil suit only where the relief sought, such as a declaration of title, lies beyond the Tribunal's power, citing Prabha Jain.

Which post-2016 changes are most often missed in SARFAESI answers?

Three. The right of redemption under Section 13(8) now ends on publication of the sale notice, not at the sale, as confirmed in Celir LLP v Bafna Motors (2023). The separate securitisation company and reconstruction company have been replaced by a single asset reconstruction company. And secured creditors enjoy priority over government dues under Section 26E, in force from 24 January 2020.

4. Related Topics

Topic 85: SARFAESI Time Limits. Every deadline in one chart.
Topic 88: Leading Cases Digest I. The authorities behind these corrections.