Supreme Court Fast-Tracks SARFAESI Challenge: High Court Ordered to Decide Debt Recovery Petitions by October 31.


16 October 2025 Sarfaesi >> Corporate Law  

The Supreme Court of India has stepped in the case of recovery of debt against IFCI Limited, giving precedence to the disposal of associated challenges by the High Court of Punjab & Haryana to enable the sale of secured assets.

On 16th October, 2025, a bench comprising Hon'ble Mr. Justice J.B. Pardiwala and Hon'ble Mr. Justice K.V. Viswanathan disposed of Special Leave Petition being filed by IFCI Limited vs ACCIL Hospitality Private Limited & Ors.

The Kernel of the Lender's Concern:

The petition was a result of the pendency of two Civil Writ Petitions (No. 24980/2021 and No. 1223/2023) sought by the respondents in the High Court of Punjab & Haryana. These petitions call for a direct challenge to the recovery actions taken by IFCI Limited.

 

 

As contended by the learned ASG, Mr. N Venkataraman, the "anxiety on the part of the petitioner" was that the pendency of such proceedings was hindering the statutory process of selling off the secured assets under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. Such hindrance is especially serious when, as the Supreme Court has pointed out, there are buyers willing to acquire the assets.

The Extent of the Challenge in the High Court:

The writ petitions presented by the borrowers/guarantors prayed sweeping reliefs, on an overarching intent to set aside the debt and prevent the recovery action:
  • Quashing of the Auction Notice: The primary prayer requested certiorari to quash the auction notice dated November 17, 2021, issued under the SARFAESI Act.
  • Assignment of Debt Argument: The challenge was based on the argument that the debt had been assigned, with its subsequent extinguishment after the approval of a resolution plan for the Principal Borrower on October 26, 2020.
  • RBI Norms Challenge: The writ petitions also prayed for a writ of mandamus commanding the lender to release securities and clarify or set aside specific provisions of the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 and the Master Circular on Income Recognition, Asset Classification and Provisioning (IRAC) Norms, as discriminatory or unconstitutional.
The Supreme Court recognized the "peculiar facts and circumstances of this litigation" and, importantly, the "financial liabilities" at stake. The bench noted that an earlier application to the High Court to advance the hearing date had been rejected.

To avoid the recovery process being indefinitely delayed, the Supreme Court felt compelled to act decisively.

The Court gave a clear and time-specific directive:

"We request the High Court to see to it that the Civil Writ Petitions referred to above, are taken up for hearing and the same are disposed of on or before 31.10.2025."

By fixing a hard and fast deadline of October 31, 2025, the Supreme Court has emphasized the need for speedy resolution of commercial and financial disputes, particularly those relating to the enforcement of security interest legislation. By this order, the Special Leave Petitions are practically disposed of, placing the main focus once again before the High Court for a speedy final decision.