Kerala High Court: DRT cannot reject unnumbered SARFAESI applications on maintainability or locus grounds at the preliminary stage; issues require adjudication after hearing parties

The petitioner challenged coercive measures initiated by respondents 1 and 2 under the SARFAESI Act concerning the alleged secured asset. She filed a Securitisation Application under Section 17 before the DRT-I, Ernakulam, together with an application for stay. The application was defectively and tentatively numbered as NDN(SA) No. 1308 of 2026.

The DRT Registry placed the unnumbered application before the Presiding Officer to consider its maintainability. By order dated 7 July 2026, the DRT examined the merits, held that the petitioner lacked locus standi, and rejected the application as not maintainable without granting her a proper opportunity of hearing. The petitioner therefore approached the High Court under Article 227 of the Constitution.

1. Whether the Registrar of the DRT could suo motu refer an unnumbered Securitisation Application to the Presiding Officer or Tribunal for deciding questions of maintainability or locus standi.

2. Whether the DRT could reject an unnumbered application filed under Section 17 of the SARFAESI Act at the preliminary stage by deciding maintainability or locus standi without formal adjudication and hearing the parties.

The Court applied Rule 5 of the Debts Recovery Tribunal (Procedure) Rules, 1993, which limits the Registrar’s role to endorsing the date of presentation, scrutinising applications, permitting correction of defects, and declining registration by a reasoned order if defects are not cured; it does not authorise the Registrar to reject or dismiss an application or to suo motu refer it to the Tribunal.

The Court relied on Vincent v. Housing and Urban Development Corporation, 2003 (3) KHC 79, holding that the Registrar is only a ministerial officer and cannot exercise judicial powers.

It also relied on Kanigiri Jaya Sri v. The Debts Recovery Tribunal, 2023 Supreme AP 98, for the principle that an application under Section 17 cannot be rejected by the DRT at the preliminary stage merely as not maintainable, and Ameena Salim v. Presiding Officer, DRT-I, Ernakulam, 2024 KHC 886, which held that questions concerning a party’s status, locus standi, or other substantial defects require judicial adjudication after hearing the parties and cannot be treated as formal defects.

Rule 5 required the Registrar first to determine only whether the application contained curable defects. If the application was in order, or if defects were cured within the time granted, it had to be registered and numbered; if defects remained uncured, the Registrar could only decline registration by a reasoned order.

The Registrar had no authority to investigate the merits, raise doubts regarding maintainability, or refer the matter suo motu to the Presiding Officer, since such conduct would involve the exercise of judicial power by a ministerial officer.

The DRT also erred by examining the documents and merits of the petitioner’s claim and deciding that she lacked locus standi while the application remained unnumbered.

Questions of locus standi and maintainability involve substantial issues of fact and law and therefore cannot be decided in chambers through the procedure applicable to formal defects; they must be adjudicated on the judicial side after numbering the application and hearing the concerned parties.

The DRT could reject the application only after a formal defect was established, the applicant was given a reasonable opportunity to cure it, and the defect remained uncured.

The order dated 7 July 2026 in NDN(SA) No. 1308 of 2026 was set aside. The matter was remitted to the Registrar, DRT-I, Ernakulam, with directions to scrutinise the application strictly under Rule 5: if defects remained uncured, the Registrar could decline registration by a speaking order; if there were no defects or they were cured within the permitted time, the application had to be numbered and placed before the Tribunal for consideration in accordance with law.