SARFAESI Enforcement Cannot Be Defeated by Matrimonial Residence Claims — DRAT Delhi Upholds DRT Order
Case Background: Meenakshi Goel Vs HDFC Bank Ltd. (DRAT Delhi)
The Debts Recovery Appellate Tribunal (DRAT), Delhi recently delivered a significant ruling in Meenakshi Goel Vs HDFC Bank Ltd., where the core question before the Tribunal was whether a wife's statutory right of residence under the Protection of Women from Domestic Violence Act, 2005, could operate as a bar against a secured creditor's enforcement action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act"). The Tribunal's detailed analysis has far-reaching implications for cases involving third-party occupants of mortgaged properties.
Preliminary Issue: Pre-Deposit Waiver Under Section 18 of the SARFAESI Act
Before examining the merits of the appeal, DRAT Delhi first addressed the appellant's application seeking exemption from the mandatory pre-deposit requirement under Section 18 of the SARFAESI Act.
The appellant argued that she stood entirely outside the loan transaction — she was not the borrower, guarantor, or mortgagor. Her position was that of a wholly independent third party, and accordingly, the statutory pre-deposit condition should not be imposed upon her.
The Tribunal placed reliance on the Delhi High Court's ruling in Manju Devi V Mis. RBL Bank & others, W.P.(C) No.11766/2016 decided on 01.02.2017, which specifically held that the mandatory pre-deposit requirement under Section 18 of the SARFAESI Act does not extend to persons who have not obtained any financial facility from the institution concerned. Accepting this position, DRAT allowed the waiver application, clearing the path for the substantive appeal to be heard.
Factual Matrix
The Matrimonial Background and Residence
The appellant, Mrs. Meenakshi Goel, had solemnised her marriage with Respondent No. 2 on 20.09.1999. The couple, along with their three daughters, had been residing at property bearing No. 16, East Avenue Road, East Punjabi Bagh, New Delhi (hereinafter referred to as "the subject property"). The subject property had come into the possession of Respondent No. 3 (the appellant's father-in-law) through a family settlement.
Following matrimonial discord, Respondent No. 2 allegedly deserted the appellant on 17.11.2022 and vacated the premises, leaving the appellant and her daughters in occupation.
Court Orders Protecting the Appellant's Residence
Seeking protection against dispossession, the appellant pursued the following legal remedies:
- She filed a complaint under
Section 12of the Protection of Women from Domestic Violence Act, 2005 bearing MC No. 629/2024 before the Mahila Court, Tis Hazari, Delhi. The court vide order dated 18.09.2024 restrained Respondents No. 2 and 3 from dispossessing the appellant and her minor daughters from the shared household. - She also instituted a civil suit bearing CS/SCJ 1395/2024 before the Civil Judge, Tis Hazari Courts, Delhi, and secured an order dated 28.09.2024 restraining Respondents No. 2 and 3 from dispossessing her from the subject property.
The Loan Transaction and SARFAESI Proceedings
Unknown to the appellant at the time, Respondent No. 4 — a partnership firm in which Respondents No. 2 and 3 were partners — had availed a loan facility of ₹7.5 crore from HDFC Bank (Respondent No. 1) on 20.09.2019. The subject property, along with movable assets of Respondent No. 4, had been mortgaged as security in favour of the bank.
Upon default by Respondent No. 4, the loan account was declared a Non-Performing Asset (NPA) on 16.11.2023. The bank thereafter initiated recovery proceedings under the SARFAESI Act:
- A demand notice dated 19.02.2024 was issued under
Section 13(2)of the SARFAESI Act demanding repayment of ₹4,20,92,231.87 along with future interest. - A notice under
Section 13(4)of the SARFAESI Act was affixed on the subject property on 22.05.2024, followed by a second notice dated 12.11.2024.