Conditional interim protection granted against SARFAESI proceedings due to non-availability of Presiding Officer at DRT.

The petitioner, a borrower, challenged an order dated 26-07-2025 passed by the CJM, Balaghat and subsequent recovery proceedings initiated by the Tehsildar, Waraseoni, on 24-02-2026.

The petitioner alleged that an authorized agent of the respondent finance company defrauded her and misappropriated EMI payments.

Although the petitioner sought to challenge these actions before the Debts Recovery Tribunal (DRT), the counsel submitted that the office of the Presiding Officer at the DRT Jabalpur is currently vacant.

Whether the High Court should grant interim protection to a borrower under Article 226 when the statutory alternative forum (DRT) is non-functional due to the absence of a Presiding Officer?

The Court primarily relied on the precedent set in M/s Divyadeep Sugar and Industries Pvt. Ltd. and Others v. India Bank and Others (W.P. No. 25138/2021), which established guidelines for protecting borrowers' interests during vacancies in the DRT.

The Court also referenced Rule 9(1) of the Security Interest (Enforcement) Rules, 2002, under the SARFAESI Act, 2002, regarding the procedure for sale of immovable secured assets.

The Court noted the administrative exigency where the DRT Jabalpur was non-functional.

Rather than deciding the case on merits—specifically the allegations of fraud and misappropriation—the Court applied the equitable framework established in the Divyadeep Sugar precedent.

To balance the rights of the secured creditor with the borrower's right to statutory recourse, the Court conditioned interim relief on a "pro-rata" deposit of the debt.

By directing a 20% deposit of the outstanding amount, the Court ensured the petitioner’s bona fides while preserving the status quo until a functional DRT could adjudicate the Securitization Application.

It directed the petitioner to deposit 20% of the dues within 30 days (with 50% of that amount to be deposited within 15 days).

The petitioner was ordered to file a Securitization Application (SA) within 15 days.

The Court held that no coercive action or auction of the property shall take place until the DRT decides on the interim relief prayer, provided the petitioner complies with the deposit directions.

The respondents were further directed to follow Rule 9(1) of the Security Interest (Enforcement) Rules, 2002.