Assignee Banks Exempt from Rs. 20 Lakh NBFC Threshold Under SARFAESI Act: An In-Depth Analysis

The intersection of debt assignment and the enforcement of security interests often presents complex jurisdictional questions, particularly when a loan transitions from a Non-Banking Financial Company (NBFC) to a traditional banking institution. The Calcutta High Court, in the notable case of Sek Saidul Human Hair & Others Vs Reserve Bank of India & Others, recently clarified a pivotal legal principle regarding the applicability of monetary thresholds under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002).

The Court definitively ruled that the specific monetary threshold restricting certain NBFCs from invoking the SARFAESI Act, 2002 does not permanently attach itself to the underlying debt. Consequently, if a bank—which operates under a different statutory classification—acquires such a loan, it is not bound by the NBFC-specific threshold and can freely initiate recovery proceedings. This comprehensive analysis breaks down the factual matrix, the statutory framework, the judicial precedents relied upon, and the broader implications of this significant judicial pronouncement.

Factual Matrix of the Dispute

The controversy originated from a credit facility availed by the petitioners, hereinafter referred to as the assessee, from Bajaj Finance Limited, a recognized financial institution. The principal quantum of the borrowing stood at Rs. 14,33,500. To secure this financial accommodation, the assessee created a mortgage over a specific immovable property in favor of the lending institution.

During the subsistence of the loan, the original financial institution assigned the debt to the respondent-bank. Following a default in repayment obligations, the assignee bank initiated recovery measures by issuing a statutory demand notice under Section 13(2) of the SARFAESI Act, 2002. This notice demanded the assessee to clear outstanding dues amounting to Rs. 18,75,630, which was calculated as the payable balance as of August 16, 2022. The assessee was granted the standard statutory period of sixty days to regularize the account.

Upon the failure of the assessee to discharge the demanded liability, the respondent-bank escalated the recovery process by invoking Section 13(4) of the SARFAESI Act, 2002. To facilitate the physical takeover of the mortgaged asset, the bank filed an application under Section 14 before the District Magistrate of Purba Medinipur. Adjudicating upon this application, the District Magistrate issued an order on September 24, 2025, directing the provision of police assistance to help the bank secure possession of the collateral. Aggrieved by this administrative order and the overarching recovery action, the assessee approached the Calcutta High Court by filing a writ petition (WPA 7240 of 2026).

The primary legal defense mounted by the assessee hinged on the jurisdictional competence of the assignee bank to invoke the SARFAESI Act, 2002. The assessee's legal counsel argued that the underlying secured debt was fundamentally ineligible for SARFAESI enforcement due to its quantum.