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Judgment
The respondent filed S.A. bearing no.189/2026 titled as Abhimanyu Sharma V HDB Financial Limited & another which was allowed vide order dated 18.05.2026. The relevant portion of the impugned order dated 18.05.2026 is reproduced as under:-
It appears that respondents have initiated the proceedings under the Act illegally and without creating security interest as per Section 26-D of the Act and the same has been created after the initiation of the proceedings under the Act i.e. on 21.11.2025 after issuance of notice under Section 13(2) of the Act dated 15.10.2025, which is not permissible under the law.
As per Section 26-D of the SARFAESI Act, it is mandatory that no secured creditor shall be entitled to exercise the right of enforcement of securities under Chapter-III unless the security interest created in its favour by the borrower has been registered with the Central Registry.
In light of above discussion, it is clear that the secured asset was not registered with the Central Registry in light of Section 26-D of the SARFAESI Act before initiation of SARFAESI proceedings, which is pre-requisite for initiation of SARFAESI proceedings. Therefore, SARFAESI proceedings initiated by respondents are illegal and liable to be quashed.
Non-registration of CERSAI before initiation of SARFAESI proceedings is a crucial illegality in the SARFAESI proceedings. It is not proved that the secured asset was registered with the Central Registry before initiation of the SARFAESI proceedings.
After considering the above facts and circumstances as well as evidence on record, present SA is liable to be allowed.
SA is allowed. SARFAESI proceedings initiated by the respondents are hereby quashed since initiation. It is made clear that respondents may initiate fresh SARFAESI proceedings in accordance with law.
At the time of arguments, Sh. Yogesh Kumar, Advocate has argued that possession of the secured asset was fixed on the date of arguments.
If possession of the secured asset was taken by respondents during the pendency of the SA then the same may be handed over to applicant or from to whom from the possession was taken within 10 days.
The counsel for the appellant argued that the delay in registering security interest with the Central Registry does not extinguish the rights of the appellant under the SARFAESI Act and relied upon a judgment of the Delhi High Court in Capt Raminder Singh Wadhwa V. AXIS Bank Limited & other, W.P(C) 6766/2024, decided on 01.06.2024.
It is apparent that the appellant registered the security interest created in its favour by the borrower on the portal of Central Registry on 21.11.2025 while the notice under Section 13(2) of the SARFAESI Act was issued on 15.10.2025. The DRT in the impugned order has categorically observed that the provision of Section 26-D is mandatory and it is pre-requisite for initiation of SARFAESI proceedings and accordingly DRT held that the SARFAESI proceedings initiated by the appellant is liable to be quashed and quashed accordingly.
Section 26-D deals with the right of enforcement of securities and it is reproduced as under:-
26-D. Right of enforcement of securities. – Notwithstanding anything contained in any other law for the time being in force, from the date of commencement of the provisions of this Chapter, no secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter III unless the security interest created in its favour by the borrower has been registered with the Central Registry.
It is apparent from bare reading of Section 26-D of the Act that secured creditor is not entitled to exercise its right of enforcement of securities unless and until the security interest created in its favour by the borrower is registered with the Central Registry. The appellant has not complied with this mandatory requirement as per Section 26-D of the SARFAESI Act before initiating action against the borrower. The judgment relied upon by the appellant does not provide any help to the argument advanced by the counsel for the appellant. The impugned order dated 18.05.2026 does not require any interference by this Tribunal. The appeal is devoid of any merits and hence dismissed.