Supreme Court rules that damages claims under SARFAESI must go through DRT

The Supreme Court delivered a ruling establishing that any claim for damages arising under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act must follow the designated remedy through the Debt Recovery Tribunal (DRT). The judgment reinforces the statutory mechanism established for resolving disputes related to the enforcement of security interests by lenders. Litigants seeking compensation must direct their grievances to the appropriate tribunal rather than alternative judicial forums.

In the Indian financial and legal framework, special statutes often create dedicated adjudicatory bodies to expedite specific categories of recovery and asset disputes. The old practice of bypassing specialized tribunals for civil remedies creates jurisdictional conflicts and delays debt resolution. The Supreme Court's stance ensures that matters concerning financial assets and associated damages remain within the specialized purview of the Debt Recovery Tribunal, maintaining the legislative intent behind the SARFAESI framework.

Legal practitioners and financial institutions must review ongoing litigation strategies to align with this judicial mandate. Counsel should advise clients to file damages claims strictly within the Debt Recovery Tribunal to avoid procedural dismissal. Bottom line: Adhering to the mandated judicial forum prevents costly procedural delays in asset recovery and financial litigation.