The Bombay High Court has granted ad-interim relief in a writ petition challenging the Debts Recovery Appellate Tribunal's (DRAT) order condoning delay in filing a securitisation application beyond the statutory 45-day period. The Court highlighted a critical jurisdictional issue regarding the DRT's power to entertain applications filed beyond the prescribed limitation period, relying on Supreme Court precedent.
Background & Facts
The Genesis
The petitioners are auction purchasers of a secured asset auctioned by the respondent No. 1 Bank (secured creditor). The respondent Nos. 2 and 3 are the original borrowers who defaulted on their loan obligations. The secured creditor initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
Key Facts
- The respondent Nos. 2 and 3 filed a securitisation application before the Debts Recovery Tribunal (DRT), Pune, on a date beyond the 45-day limitation period prescribed under the SARFAESI Act.
- They simultaneously filed an application for condonation of delay, seeking an extension of the limitation period.
- The DRT, by an order dated 8th April, 2025, dismissed the condonation application, holding that sufficient cause was not made out by the respondents.
- Aggrieved by the DRT's order, the respondents filed an appeal before the Debts Recovery Appellate Tribunal (DRAT).
- The DRAT, by the impugned order dated 3rd July, 2026, allowed the appeal, condoned the delay, and directed the DRT to take up the securitisation application on merits.
Procedural History
- 8th April, 2025: DRT dismisses the application for condonation of delay filed by respondent Nos. 2 and 3.
- 3rd July, 2026: DRAT allows the appeal, condones the delay, and remands the matter to the DRT for adjudication on merits.
- 16th July, 2026: Present writ petition filed before the Bombay High Court seeking quashing of the DRAT's order and interim stay of further proceedings.
The Parties' Positions
The petitioners contend that the DRAT erred in condoning the delay, as the DRT lacks jurisdiction to entertain applications filed beyond the 45-day limitation period. They rely on the Supreme Court's decision in Bank of Baroda and Anr. vs. M/s. Parasaadilal Tursiram Sheetgrah Pvt. Ltd. and Ors. (Civil Appeal No. 5240 of 2022), which has been followed by multiple High Courts, including the Karnataka High Court in Kailasam P. vs. Karnataka Bank Ltd. (2025 SCC OnLine Kar 16631).
The respondents, represented by the secured creditor and the original borrowers, waived notice and did not oppose the interim relief sought by the petitioners.
Relief Sought
The petitioners seek:
- Quashing of the DRAT's order dated 3rd July, 2026.
- Stay of further proceedings in the securitisation application pending before the DRT, Pune.
- Interim relief restraining the DRT from proceeding with the matter until final disposal of the writ petition.
The Legal Issue
The central question is whether the Debts Recovery Tribunal has jurisdiction to condone delay in filing a securitisation application beyond the 45-day limitation period prescribed under the SARFAESI Act.
Arguments Presented
For the Petitioners
The petitioners argue that the DRT lacks jurisdiction to condone delay in filing a securitisation application beyond the 45-day period. They rely on the Supreme Court's decision in Bank of Baroda v. Parasaadilal, which has been consistently followed by the Karnataka High Court, Madras High Court, and Orissa High Court. The petitioners submit that the DRAT's order condoning the delay is contrary to law and goes to the root of the matter, as the DRT's jurisdiction is circumscribed by the statutory limitation period.
For the Respondent Nos. 2 and 3
The respondents did not oppose the interim relief sought by the petitioners and waived notice before the Court. The secured creditor, represented by the respondent No. 1 Bank, also did not oppose the interim relief.
The Court's Analysis
The Court examined the issue of the DRT's jurisdiction to condone delay in filing securitisation applications beyond the 45-day limitation period. The Court noted that the petitioners had raised a critical jurisdictional issue before the DRAT, which was not addressed in the impugned order. The Court observed:
"We find that the impugned order of the DRAT makes no reference to the said issue although the copy of the written notes of arguments filed before the DRAT indeed show that such issue was raised on behalf of the petitioners."
The Court relied on the Supreme Court's decision in Bank of Baroda v. Parasaadilal, which held that the DRT does not have the power to condone delay if the securitisation application is filed beyond the 45-day period. The Court noted that this position has been followed by multiple High Courts, including the Karnataka High Court in Kailasam P. vs. Karnataka Bank Ltd.
The Court held that the issue raised by the petitioners goes to the root of the matter and requires consideration. It observed that the petitioners would suffer prejudice if the DRT proceeds further in the matter, as the DRAT's order condoning the delay is contrary to law.
The Verdict
The Court granted ad-interim relief in favor of the petitioners. It stayed the effect, operation, and implementation of the DRAT's order dated 3rd July, 2026, and stayed further proceedings in the securitisation application pending before the DRT, Pune. The Court directed the respondents to file reply affidavits by 5th August, 2026, and listed the matter for final disposal on 10th August, 2026.
What This Means For Similar Cases
Jurisdictional Limits Are Non-Negotiable
- The DRT's jurisdiction to entertain securitisation applications is strictly circumscribed by the 45-day limitation period prescribed under the SARFAESI Act.
- Condonation of delay beyond this period is impermissible, as the DRT lacks the power to extend the limitation period.
Precedent Is Binding
- The Supreme Court's decision in Bank of Baroda v. Parasaadilal is binding on all forums, including the DRT and DRAT.
- High Courts, including the Karnataka High Court, Madras High Court, and Orissa High Court, have consistently followed this precedent, reinforcing the jurisdictional limits of the DRT.
Procedural Compliance Is Critical
- Parties must ensure that securitisation applications are filed within the 45-day limitation period to avoid jurisdictional challenges.
- Condonation of delay applications must be carefully drafted to address the jurisdictional issue, as the DRT and DRAT are bound by the statutory limitation period.
