Red Flag File: The Stay That Lands After the Auction

The pattern

Nothing in this has gone wrong yet. A stay is a pause, not a finding: the tribunal has not decided that the bank erred, only that it wants to hear the application before the sale is completed. The bank is the party that defends its sale. What the buyer has to manage is time, money held with the bank, and the clocks that were running when the stay arrived.

How it shows in the papers

• A securitisation application (an “S.A.”, the number a DRT gives an application under s.17) on the tribunal’s case status, naming the bank as respondent.
• An interim order in that application, typically worded as a direction not to confirm the sale, not to issue the sale certificate, or not to take further steps until the next date.
• A letter from the bank telling the successful bidder that the sale is subject to the tribunal’s order.
• The sale notice’s own terms on stays. Many say the certificate will not issue while a stay operates, the deposit is held without interest, and no request for its return will be entertained during that time.

The order itself is the document to read first. Its words decide what is paused: confirmation, the certificate, possession, or all further steps. Each has a different effect on the buyer’s position.

The rule

1. 1

   Who can apply, and when

   “Any person (including borrower)” aggrieved by a measure under s.13(4), such as taking possession or a sale, may apply to the DRT within 45 days of the date the measure was taken.

   SARFAESI Act s.17(1)

2. 2

   What the tribunal checks

   Whether the bank’s measures followed the Act and the Rules. If they did not, it may declare them invalid and restore possession; if they did, the bank may proceed.

   s.17(2)–(4)

3. 3

   Tenancy claims

   Where an applicant claims a lease or tenancy, the tribunal may examine whether it has expired, breaches the Transfer of Property Act s.65A or the mortgage terms, or was created after the bank’s demand notice.

   s.17(4A)

4. 4

   How long the tribunal should take

   The application is to be disposed of within 60 days, extendable for recorded reasons to four months in all; after that, a party may ask the Appellate Tribunal to direct a quicker decision. The tribunal follows the procedure of the Recovery of Debts Act, and it is in that hearing that interim orders such as a stay are made.

   s.17(5)–(7)

5. 5

   Appeal

   Any person aggrieved by the DRT’s order may appeal to the Debts Recovery Appellate Tribunal (DRAT) within 30 days of receiving it. A borrower appellant must first deposit 50% of the debt due, as claimed by the bank or determined by the DRT, whichever is less; the DRAT may reduce this, for reasons recorded in writing, to not less than 25%.

   s.18(1) and provisos

How long a stay actually lasts varies with the tribunal, the case and any appeal. The four-month figure in s.17(5) is a statutory direction for the decision, not a promise about the date a particular stay lifts.

What the courts have said

• A SARFAESI sale is a statutory sale under Rules 8 and 9, and it is complete only when the buyer has paid in full and the Authorised Officer has issued the sale certificate (Indian Overseas Bank v. RCM Infrastructure Ltd, Supreme Court, 2022, para 32). Confirmation and the 25% do not complete it on their own, which is why a stay before the certificate matters.
• Where a DRT order could be appealed under s.18, a writ petition to the High Court that skipped the appeal was deprecated; the Court described it as a circuitous route that appeared to have been taken to avoid the pre-deposit (Supreme Court, 16 Nov 2022, Civil Appeal 8470 of 2022, para 34). In that case it was the auction purchaser who brought the appeal, and the sale was upheld.
• A confirmed sale is not beyond question. If the Rule 9 periods run out while a sale is held up, the sale can be exposed to a further challenge; our guides to the balance deadline and to redemption cover how the courts have treated that.

Where a check catches it

Point 2 of the six-point check is a litigation sweep: the DRT, the DRAT, the NCLT, the High Court and the civil courts. It shows an application under s.17 that is already on record, and any stay already granted. It holds as of the day it was run. An application filed after that day, inside the 45-day window, is not covered, and no search before the auction can rule one out.

• Before EMD: a litigation search dated close to the EMD deadline, read with an advocate. A pending s.17 application is common and is not by itself a verdict; what matters is what it challenges and whether any order has been made.
• Before EMD: a review of the sale procedure, which looks at the notices, their service and dates, and the valuation, and so at how exposed the sale is to a procedural challenge.
• Before bidding: read the sale notice’s terms on stays, interest and refunds, so the effect on your money is known in advance.
• After the win: run the search again before paying the balance.

What the buyer can still do

Ask the bank, in writing, for its position: whether the order pauses confirmation, the certificate or all steps; where your deposit is held and on what terms; and whether the balance deadline is treated as running or suspended while the order operates. Keep the reply. If the bank has not yet received the balance, do not assume the clock has stopped unless it says so in writing.

Take an advocate’s advice on whether to apply to be heard in the application. A buyer whose purchase is under challenge has an interest in the outcome; the bank defends its own process, and the buyer’s dated payments and correspondence may be relevant to it. The advocate can also tell you what an appeal by either side would mean for timing.

Keep every dated document: the sale notice, the bid confirmation, payment receipts, the bank’s letters and each order. If the tribunal finally sets the sale aside, the usual remedy is a refund of what was paid; whether interest is added is for the court to decide in each case.

Questions buyers ask

Sources

Statutes, rules and judgments first. Checked as of 17 October 2026; the law and portal practice change, so confirm against the source before relying on a detail.

1. StatuteSARFAESI Act, 2002 — s.17 (application to the DRT, s.17(4A), s.17(5)–(7))
2. StatuteSARFAESI Act, 2002 — s.18 (DRAT appeal and pre-deposit)
3. RulesSecurity Interest (Enforcement) Rules, 2002 — Rule 9
4. JudgmentIndian Overseas Bank v. RCM Infrastructure Ltd, Supreme Court, 18 May 2022 (Civil Appeal 4750 of 2021)
5. JudgmentSupreme Court, 16 Nov 2022, Civil Appeal 8470 of 2022
6. Official portalDebts Recovery Tribunals and DRATs — case status