Delay Alone Doesn’t Vitiate NPA Order: Delhi HC Upholds DRAT Ruling Restoring SARFAESI Measures Against Company [Read Judgment]

The Delhi High Court has upheld the ruling restoring proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, of the Debt Recovery Appellate Tribunal (DRAT).

The court also held that the delay of 9 months in passing the order cannot vitiate the tribunal's classification of the accounts of the petitioner as Non‑Performing Assets (NPAs) under Reserve Bank of India (RBI) guidelines.

Dhir International, the petitioner, was a garment manufacturer and exporter. It had a long banking relationship with Karnataka Bank, availing multiple facilities, including working capital loans, overdraft and export bill financing. On 8 September 2016, the bank classified its accounts as NPAs and issued a demand notice under Section 13(2) of the SARFAESI Act.

The company contested the classification before the Debts Recovery Tribunal (DRT), which in June 2018 ruled in its favour, holding that the accounts had not remained irregular for 90 days and quashing SARFAESI measures. Karnataka Bank appealed, and in April 2025, the DRAT reversed the DRT’s order, restoring the bank’s enforcement rights.

Aggrieved by this, the petitioners approached the high court.

The petitioner argued that the DRAT reserved the judgment in July 2024 but delivered it nine months later in April 2025, and this was in violation of CPC and Article 21. It was also submitted that the DRAT reversed a well-reasoned DRT order and had relied on export bills not pleaded before the DRT.

The petitioner further argued that accounts were not continuously irregular for 90 days and deposits had been made within permissible limits.

The bank argued that RBI guidelines mandate borrower- wise classificatio, once defaults occurred in export bills and WCTL, all facilities had to be treated as NPA. also ststatements of account showed instalments unpaid and export bills overdue beyond 360 days. It was argued that the DRAT correctly applied RBI prudential norms and estored SARFAESI measures. It was also contended that the petition lacked maintainability due to the liquidation/CIRP status of the petitioners.

The division bench of Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar observed that mere delay in the pronouncement of a judgment, by itself, is not sufficient to invalidate the decision of the learned DRAT.

“Appellate fora such as the DRAT are known to be heavily burdened with work, and some degree of delay, though undesirable, is often inevitable. Such delay cannot, ipso facto, be treated as demonstrative of any bias, arbitrariness or illegality in the decision-making process.” said the high court.

It was also observed that unless the party alleging can show that the delay has materially affected the reasoning of the judgment or has caused serious prejudice to its case, delay alone cannot be a ground to set aside an otherwise reasoned order.

It was further observed that the Petitioner did not avail the remedy as contemplated in Anil Rai v. State of Bihar.

No application was ever filed before the learned DRAT seeking an early pronouncement of the judgment, nor was any attempt made to approach the appropriate authority in terms of the guidelines laid down by the Supreme Court.

It was also observed that, having consciously chosen not to invoke that remedy at the relevant time, the petitioner cannot now be permitted to contend that the delay in pronouncement, by itself, vitiates the impugned judgment.

The court ruled that the challenge laid to the Impugned Judgment passed by the learned DRAT is unsustainable and accordingly rejected the same.

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