₹20-lakh SARFAESI threshold for NBFCs does not apply to qualifying housing finance companies, Calcutta High Court rules

The petitioners had obtained a house-building loan of ₹6,34,553 from respondent no. 2 on 14 August 2016.

After falling behind on repayments, they allegedly settled the outstanding dues by paying ₹3,00,000 on 31 March 2022.

Respondent no. 2 nevertheless initiated SARFAESI measures against their residential property, including notices under Sections 13(2) and 13(4) and an order under Section 14

The petitioners challenged those measures, contending that the loan fell below the ₹20 lakh threshold applicable to certain NBFCs under the notifications dated 24 February 2020 and 12 February 2021.

Respondent no. 2 relied on the notification dated 17 June 2021 concerning qualifying housing finance companies (HFCs), and also argued that the petitioners had an alternative statutory remedy.

1. Whether the ₹20 lakh threshold prescribed for specified NBFCs applied to respondent no. 2, a housing finance company registered under the National Housing Bank Act, 1987.

2. Whether respondent no. 2 could initiate SARFAESI measures in respect of the petitioners’ loan and whether the notices under Sections 13(2) and 13(4), and the order under Section 14, were legally sustainable.

Section 2(1)(m)(iv) of the SARFAESI Act permits the Central Government, by notification, to specify institutions and NBFCs as financial institutions for the purposes of the Act.

The notifications dated 24 February 2020 and 12 February 2021 prescribed a ₹20 lakh threshold for the relevant category of NBFCs defined under Section 45-I(f) of the Reserve Bank of India Act, 1934.

Separately, the notification dated 17 June 2021 specified HFCs registered under Section 29A(5) of the National Housing Bank Act, 1987, with assets of ₹100 crore or more, as financial institutions for SARFAESI purposes.

The Court also considered the Division Bench decision in Piramal Capital & Housing Finance Limited & Ors. v. Golam Sabir & Ors., FMA 161 of 2026, but held that it did not assist the petitioners on these facts.

The Court treated respondent no. 2’s registration as an HFC and the 17 June 2021 notification as the relevant basis for its SARFAESI status.

It held that an HFC satisfying that notification’s conditions could be regarded as a financial institution under Section 2(1)(m)(iv).

The ₹20 lakh threshold in the 2020 and 2021 notifications applied to the specified NBFC category and did not apply to respondent no. 2 in its capacity as a qualifying HFC.

Accordingly, the petitioners’ reliance on the smaller loan amount did not establish that the SARFAESI measures were without authority of law.

The writ petition was dismissed, without costs; the petitioners remained at liberty to approach the appropriate forum and raise their issues in accordance with law.