SARFAESI Model Answers II: Remedies and the IBC

The second group of recurring mains questions concerns what happens after enforcement: the borrower's remedy before the Tribunal, the place of the writ jurisdiction, and how SARFAESI yields to the Insolvency and Bankruptcy Code. Each question below comes with an answer outline in the order an examiner expects, with the authority for every point.

Question 1: The DRT under Section 17

Examine the scope of the Debt Recovery Tribunal's jurisdiction under Section 17 of SARFAESI and the appellate remedy under Section 18.

Answer structure, Question 1

Figure 1: Answer structure, Question 1

Open. Section 17 is the post-decisional remedy that made the Act constitutional (Mardia) (Topic 7)
Develop. Wide standing; review of legality of the whole action (Ashok Saw Mill); available from symbolic possession (Hindon Forge) and against a s.14 order (Kanaiyalal) (Topics 68, 56, 57)
Close. Appeal under s.18: deposit mandatory but reducible (Narayan Chandra Ghosh) (Topics 38, 39)

Question 2: Writs against SARFAESI Action

Is a writ petition under Article 226 maintainable against action under SARFAESI? Discuss with case law.

Open. Article 226 is not ousted, but it is discretionary and yields to an efficacious alternative remedy (Topic 46)
The rule. Satyawati Tondon (2010): High Courts should not entertain writs where s.17 is available; interim stays at the notice stage deprecated.
The second bar. Phoenix ARC (2022): no writ against a private ARC or bank, which performs no public function in enforcing a contract (Topic 66)
Exceptions. Lack of jurisdiction, breach of natural justice, a statutory authority acting outside the Act, or challenge to a provision's validity.

Question 3: SARFAESI and the IBC

Discuss the interplay between SARFAESI and the Insolvency and Bankruptcy Code, 2016.

Situations and effects, Question 3

Figure 2: Situations and effects, Question 3

⚠ Exam trap

In Question 3, distinguish the corporate debtor from its guarantor: the IBC s.14 moratorium bars SARFAESI against the corporate debtor's assets, but not against a personal guarantor's (V. Ramakrishnan 2018), and a resolution plan does not discharge the guarantor (Lalit Kumar Jain 2021). Cite s.238 for overriding effect, and the Explanation to s.26E, which makes SARFAESI priority subject to the IBC.

Frequently Asked Questions

Which cases must appear in an answer on writs against SARFAESI action?

United Bank of India v Satyawati Tondon (2010) for the alternative remedy rule and the deprecation of interim stays, and Phoenix ARC v Vishwa Bharati Vidya Mandir (2022) for the bar against writs directed at private lenders. A strong answer then names the recognised exceptions, such as a lack of jurisdiction, a breach of natural justice, or a challenge to the validity of a statutory provision.