{"id":91102,"date":"2026-11-15T04:30:00","date_gmt":"2026-11-14T23:00:00","guid":{"rendered":"https:\/\/www.taxaj.com/learn\/?p=91102"},"modified":"2026-11-15T04:30:00","modified_gmt":"2026-11-14T23:00:00","slug":"sarfaesi-notice-drt-kolkata-borrower-guide","status":"publish","type":"post","link":"https:\/\/www.taxaj.com/learn\/sarfaesi-notice-drt-kolkata-borrower-guide\/","title":{"rendered":"SARFAESI Notice From a Bank in Kolkata: Section 13(2), Your Reply, Possession, DRT Appeal and Settlement Options"},"content":{"rendered":"<p class=\"wp-block-paragraph\"><strong>When a bank or financial institution classifies a secured loan as a non-performing asset, it can enforce its security without going to court under the SARFAESI Act. The first step is a demand notice under section 13(2) giving the borrower 60 days to pay. If payment is not made, the bank can take possession of the secured property, with the help of the Chief Metropolitan Magistrate in Kolkata or the District Magistrate elsewhere, and sell it. Borrowers and guarantors can make a representation within the 60 days and, once the bank takes a measure such as possession, appeal to the Debts Recovery Tribunal within 45 days.<\/strong> Most cases end in a negotiated one-time settlement, which is far better than an auction.<\/p>\n<h2 class=\"wp-block-heading\">The SARFAESI process<\/h2>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Step<\/th>\n<th>What happens<\/th>\n<th>Your options<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>NPA classification<\/td>\n<td>Loan overdue beyond 90 days<\/td>\n<td>Regularise before NPA<\/td>\n<\/tr>\n<tr>\n<td>Section 13(2) notice<\/td>\n<td>Demand to pay the full dues within 60 days<\/td>\n<td>Pay, propose settlement, or object in writing<\/td>\n<\/tr>\n<tr>\n<td>Representation<\/td>\n<td>You raise objections<\/td>\n<td>Bank must reply within 15 days<\/td>\n<\/tr>\n<tr>\n<td>Section 13(4) possession<\/td>\n<td>Symbolic possession notice published in newspapers<\/td>\n<td>Appeal to DRT within 45 days<\/td>\n<\/tr>\n<tr>\n<td>Section 14 order<\/td>\n<td>CMM or DM orders physical possession<\/td>\n<td>Appeal to DRT<\/td>\n<\/tr>\n<tr>\n<td>Auction<\/td>\n<td>30-day notice of sale; e-auction<\/td>\n<td>Redeem by paying full dues before the sale is confirmed<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<h2 class=\"wp-block-heading\">When SARFAESI does not apply<\/h2>\n<ul class=\"wp-block-list\">\n<li>Loans below \u20b91 lakh.<\/li>\n<li>Where the amount due is less than 20% of the principal and interest.<\/li>\n<li>Agricultural land.<\/li>\n<li>Unsecured loans.<\/li>\n<li>Pledges of movables governed by other law.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">What to do on receiving a 13(2) notice<\/h2>\n<ol class=\"wp-block-list\">\n<li><strong>Check the numbers:<\/strong> principal, interest, penal charges and dates; get the loan statement.<\/li>\n<li><strong>Check the security:<\/strong> which properties and guarantees are listed.<\/li>\n<li><strong>Reply within the 60 days<\/strong>, pointing out errors, disputes, or a proposal; the bank must reply within 15 days with reasons if it rejects your objection.<\/li>\n<li><strong>Propose a realistic settlement<\/strong> or restructuring with cash flow projections.<\/li>\n<li><strong>Talk to other lenders<\/strong> if you have multiple loans; a consortium approach may help.<\/li>\n<\/ol>\n<h2 class=\"wp-block-heading\">Appealing to the Debts Recovery Tribunal<\/h2>\n<ul class=\"wp-block-list\">\n<li>File an application under section 17 before the DRT with jurisdiction (Kolkata has DRT benches for West Bengal matters) within 45 days of the bank&#8217;s measure.<\/li>\n<li>The DRT can set aside the measure if the bank did not follow the law (for example, defective notice, wrong NPA classification, property not secured).<\/li>\n<li>Appeals from DRT to the Debts Recovery Appellate Tribunal require a pre-deposit of 50% of the debt claimed, which the appellate tribunal can reduce to 25%.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Settlement and restructuring options<\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>One-time settlement (OTS):<\/strong> banks have board-approved OTS policies; offer a realistic lump sum or short instalments.<\/li>\n<li><strong>MSME restructuring:<\/strong> micro, small and medium enterprises have specific RBI frameworks for restructuring stressed accounts and a prior committee review before NPA in some cases.<\/li>\n<li><strong>Sale by the borrower:<\/strong> with the bank&#8217;s consent, sell the property privately at a better price and repay.<\/li>\n<li><strong>Insolvency:<\/strong> for corporate borrowers, creditors may also use the Insolvency and Bankruptcy Code; see our guide on <a href=\"https:\/\/www.taxaj.com\/learn\/nclt-kolkata-bench-guide-insolvency-merger-restoration\/\" target=\"_blank\" rel=\"noopener\">NCLT Kolkata<\/a>.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Guarantors<\/h2>\n<p class=\"wp-block-paragraph\">Personal guarantors are equally liable. They also receive notices and can be pursued under SARFAESI and, for corporate debtors, under the insolvency law for personal guarantors.<\/p>\n<h2 class=\"wp-block-heading\">Tax on settlement and sale<\/h2>\n<ul class=\"wp-block-list\">\n<li>A waiver of principal on a business loan can be taxed as income in some cases; interest waived that was earlier claimed as expense is taxable.<\/li>\n<li>A forced sale of property triggers capital gains for the owner.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Example: an MSME&#8217;s factory loan<\/h2>\n<p class=\"wp-block-paragraph\">A Howrah engineering unit with a \u20b92.5 crore term loan and cash credit fell behind after losing a major customer, and the account became an NPA. The bank issued a section 13(2) notice. The owners replied within 30 days pointing out that the bank had not applied the MSME restructuring framework and that interest had been charged above the sanctioned rate. They submitted a revival plan with a new order book. The bank corrected the interest, restructured the loan under its MSME policy, and withdrew the notice.<\/p>\n<h2 class=\"wp-block-heading\">Where the bank has already taken possession<\/h2>\n<p class=\"wp-block-paragraph\">If symbolic possession has been taken and an auction notice published, you can still:<\/p>\n<ul class=\"wp-block-list\">\n<li>Apply to the DRT within 45 days of the measure, with grounds such as defective notice or wrong valuation.<\/li>\n<li>Pay the full dues with costs before the sale is completed to redeem the property, as the law allows until publication of the auction notice, subject to the latest amendments and court rulings.<\/li>\n<li>Propose a private sale with the bank&#8217;s consent at a higher price.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Home loans<\/h2>\n<p class=\"wp-block-paragraph\">For home loans, banks generally follow the same process. Borrowers can seek restructuring, an extended tenure, or a settlement. Tenants in a mortgaged property have protections under the law; landlords should disclose tenancies to the bank.<\/p>\n<h2 class=\"wp-block-heading\">Quick checklist on receiving a notice<\/h2>\n<ol class=\"wp-block-list\">\n<li>Note the date of receipt and the 60-day deadline.<\/li>\n<li>Get the loan account statement and sanction letters.<\/li>\n<li>Check NPA date and interest charged.<\/li>\n<li>Reply in writing with objections or a proposal.<\/li>\n<li>Track the bank&#8217;s reply within 15 days.<\/li>\n<li>Seek legal advice before any possession notice.<\/li>\n<\/ol>\n<h2 class=\"wp-block-heading\">FAQs<\/h2>\n<h3 class=\"wp-block-heading\">How many days do I get after a SARFAESI 13(2) notice?<\/h3>\n<p class=\"wp-block-paragraph\">60 days to pay or respond.<\/p>\n<h3 class=\"wp-block-heading\">Can I challenge a SARFAESI action in Kolkata?<\/h3>\n<p class=\"wp-block-paragraph\">Yes, by applying to the Debts Recovery Tribunal within 45 days of the bank&#8217;s measure.<\/p>\n<h3 class=\"wp-block-heading\">Does SARFAESI apply to agricultural land?<\/h3>\n<p class=\"wp-block-paragraph\">No.<\/p>\n<h3 class=\"wp-block-heading\">Can a guarantor be proceeded against under SARFAESI?<\/h3>\n<p class=\"wp-block-paragraph\">Yes, if the guarantor&#8217;s property is mortgaged as security; personal guarantors may also face recovery proceedings.<\/p>\n<p class=\"wp-block-paragraph\">TAXAJ, with its legal team, advises borrowers in Kolkata on SARFAESI notices, DRT applications, OTS proposals and the tax effects. Talk to our <a href=\"https:\/\/www.taxaj.com\/ca-in-kolkata\" target=\"_blank\" rel=\"noopener\">Kolkata team<\/a>.<\/p>\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/wa.me\/918802912345?text=I%20received%20a%20SARFAESI%20notice%20from%20my%20bank\" target=\"_blank\" rel=\"noopener\">WhatsApp our Kolkata team<\/a><\/div>\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link wp-element-button\" href=\"tel:+918802812345\">Call 88028 12345<\/a><\/div>\n<\/div>\n<p class=\"has-small-font-size wp-block-paragraph\"><em>Last updated 11 November 2026. Sources: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, sections 13, 14, 17, 18 and 31; Security Interest (Enforcement) Rules, 2002; RBI frameworks on MSME restructuring and compromise settlements. General information only; take legal advice on your facts.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What Kolkata borrowers and guarantors should do on receiving a SARFAESI demand notice: the 60-day notice under section 13(2), your representation and the bank&#8217;s reply, symbolic and physical possession, the Chief Metropolitan Magistrate&#8217;s order, appealing to the Debts Recovery Tribunal within 45 days, and one-time settlement and MSME restructuring.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[4,8],"tags":[],"class_list":["post-91102","post","type-post","status-publish","format-standard","hentry","category-investments","category-legal-ipr"],"_links":{"self":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/91102","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/comments?post=91102"}],"version-history":[{"count":1,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/91102\/revisions"}],"predecessor-version":[{"id":92219,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/91102\/revisions\/92219"}],"wp:attachment":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/media?parent=91102"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/categories?post=91102"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/tags?post=91102"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}