SARFAESI Action For Debt Below ₹20 Lakh? P&H High Court Stays Dispossession From Sole Residential House
The Punjab and Haryana High Court has issued notice of motion and directed that borrowers shall not be dispossessed from their residential house till the next date of hearing, in a petition challenging recovery proceedings initiated under the SARFAESI Act, 2002 by a Non-Banking Financial Company in respect of a secured debt of less than ₹20 lakh.Justice Jasgurpreet Singh Puri and Justice...
The Punjab and Haryana High Court has issued notice of motion and directed that borrowers shall not be dispossessed from their residential house till the next date of hearing, in a petition challenging recovery proceedings initiated under the SARFAESI Act, 2002 by a Non-Banking Financial Company in respect of a secured debt of less than ₹20 lakh.
Justice Jasgurpreet Singh Puri and Justice Sanjiv Berry said, "At this stage, learned counsel for the petitioners submitted that respondent No. 1 is likely to take possession of their residential house today itself. We, therefore, direct that, till the next date of hearing, the petitioners shall not be dispossessed from their residential house."
Counsel for the petitioners submitted that respondent No. 1 is a Non-Banking Financial Company, and referred to the notice dated 09.06.2025 issued under Section 13(2) of the SARFAESI Act, in which the recoverable outstanding amount was shown as ₹7,41,831, below ₹20 lakh.
Reliance was placed on the notification dated 12.02.2021 issued by the Ministry of Finance (Department of Financial Services), by which the earlier notification S.O. 856(E) dated 24.02.2020 was amended, substituting the words "rupees fifty lakh and above" with "rupees twenty lakh and above". It was contended that, consequently, respondent No. 1 could not have proceeded against the petitioners under the SARFAESI Act at all, the recoverable amount being below the threshold.
Counsel referred to an order passed by the same Court on 04.08.2026 in Akash Kumar and another v. Piramal Capital & Housing Finance Limited, in which notice of motion had been issued on a similar question of law.
The writ petition, filed under Articles 226 and 227, contends that the assumption of jurisdiction by the respondent is coram non judice, rendering the entire recovery proceedings void ab initio, and seeks a writ of certiorari quashing the notices under Sections 13(2) and 13(4) and the order under Section 14, along with a writ of mandamus protecting the petitioners' possession.
It is pleaded that a housing loan of ₹8,63,697 was sanctioned in 2016, that the petitioners have since paid more than ₹15 lakh against it, and that a notice of dispossession dated 03.07.2026 was issued threatening physical dispossession with police assistance on or before 11.08.2026 from what is their sole residential property.
At the hearing, counsel submitted that respondent No. 1 was likely to take possession of the residential house that very day.
Recording this, the Court directed that till the next date of hearing the petitioners shall not be dispossessed from their residential house.
The matter has now been listed for September 16.
Mr. Sunpreet Singh, Advocate, Mr. Gurmehar Sekhon, Advocate, Mr. Simran Virk, Advocate for the petitioners.