DRT Must Decide Securitisation Applications Within Statutorily Mandated Timeline : Supreme Court
The Supreme Court has reaffirmed that under Section 17(5) of the SARFAESI Act, every Debt Recovery Tribunal (DRT) is statutorily required to decide securitisation applications within sixty days, extendable up to a maximum of four months only if proper reasons are recorded in writing for each instance of delay. This recent ruling followed the Supreme Court’s criticism of the DRT Dehradun for failing to follow this statutory mandate and emphasized that any deviation from these timelines frustrates the legislative purpose of quick debt recovery and speedy adjudication of borrowers’ grievances.
Key Points from the Supreme Court Ruling
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The statutory timeline for disposal of a securitisation application by the DRT is sixty days from the date of application, which can be extended to four months in exceptional cases, with written reasons for such extension.
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The Supreme Court held that the DRT cannot ignore or bypass these deadlines, and failure to comply with this mandate is impermissible.
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The reasoning for extension must be recorded explicitly, and mere inaction or delay by the tribunal violates the spirit of the SARFAESI Act.
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The judgement cited prior cases (e.g., Indian Bank v. L. Kesavan, Mardia Chemicals v. Union of India, Canara Bank v. M. S. D. Prasad) to underscore that urgency in disposal is crucial to the efficacy of the SARFAESI mechanism.
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The Supreme Court directed all DRTs to strictly follow this timeline and dispose of pending securitisation applications promptly, warning that future non-compliance will be treated seriously.
Practical Impact
For banks, financial institutions, and borrowers, the ruling provides clarity and assurance that DRTs must act expeditiously and cannot keep applications pending indefinitely. Advocates handling SARFAESI matters can cite this ruling to press for time-bound adjudication and to challenge undue delay in proceedings.
Statutory Reference
The key provision is Section 17(5) of the SARFAESI Act, 2002, which reads:
“The application made under sub-section (1) shall be dealt with by the Debt Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application. Provided that the Debt Recovery Tribunal may extend the said period of sixty days up to a further period not exceeding four months if reasons for such extension have been recorded in writing.”
This recent Supreme Court pronouncement strengthens the legislative intent for timely disposal, reinforcing accountability in the DRT process.
The Supreme Court in Indian Overseas Bank v. M/s Radhey Infra Solutions (Pvt.) Ltd. & Ors. (decided on 7 October 2025) issued a firm directive to the Debts Recovery Tribunal (DRT), Dehradun, reinforcing that all securitisation applications under Section 17(1) of the SARFAESI Act must be adjudicated within the statutorily mandated timeline—sixty days, with a maximum extension up to four months for recorded reasons.
