IN THE HIGH COURT AT CALCUTTA

CIVIL APPELLATE JURISDICTION

APPELLATE SIDE

BEFORE :-

THE HON’BLE JUSTICE SHAMPA SARKAR

&

THE HON’BLE JUSTICE AJAY KUMAR GUPTA

F.M.A 161 OF 2026

With

CAN 1 of 2026

Piramal Capital & Housing

Finance Limited & Ors.

vs.

Golam Sabir & Ors.

For the Appellants : Ms. Soni Ojha, Adv.

Ms. S.B. Chatterjee, Adv.

For the Respondent Nos. 1 & 2 : Mr. Proshit Deb, Adv.

Ms. Sucheta Mitra, Adv.

Judgment reserved on : 23.03.2026

Judgment pronounced on : 09.04.2026

Judgment uploaded on : 09.04.2026.

Shampa Sarkar, J.

1. The appeal arises out of a judgment and order dated December 24, 2025

passed by a learned Single Judge in WPA No. 14007 of 2025. The learned

Judge held that, as the claim of the Financial Institution/appellants was below

Rs. 20 lakhs, as would be evident from the notice under Section 13(2) of the

Securitisation and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’), the

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appellants could not undertake any action under the SARFAESI Act, being hit

by the threshold limit set forth in the notification dated February 12, 2021.

2. Ms. Ojha, learned Advocate for the appellant s submitted that the

appellant No.1 belonged to a special category, being a company registered

under the National Housing Bank Act, 1987 (hereinafter referred to as the NHB

Act). The NHB Act was specially enacted for Housing Finance Companies

(HFC). Therefore, the notification of 2021 would not be applicable to HFCs. The

learned Judge failed to consider the said aspect and also failed to appreciate

the fact that, separate set of notifications were issued by the Central

Government, (Ministry of Finance) under the provisions of the NHB Act, which

were exclusively applicable to HFCs. The appellants would fall within the

definition of any other institution under Section 2(1)(m)(iv) of the SARFAESI

Act. The appellants belonged to a special genre of companies created under and

regulated by a special enactment. Thus, the appellant No.1 could not be

treated as a Non-Banking Financial Company. The provisions of the SARFAESI

Act and the notifications framed thereunder, which were applicable to NBFCs

would not be applicable to the appellants. The NHB Act did not postulate the

applicability of Chapter III-B read with Section 45-I (f) of the Reserve Bank of

India Act, 1934 (hereinafter referred to the RBI Act). Therefore, HFCs could

not be deemed to have been included under the umbrella of NBFCs. For this

reason the minimum pecuniary threshold of 20 lakhs in order to initiate

SARFAESI proceeding would not be applicable to the appellants.

3. According to Ms. Ojha, the Central Government had issued a separate

set of notifications for HFCs. Thus, those notifications which were issued by

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the Ministry of Finance with regard to NBFCs as defined under clause (f) of

Section 45-I of the RBI Act, would not be applicable to HFCs registered under

Section 29A of the NHB Act.

4. She also raised the question of maintainability of the writ petition in view

of the fact that an alternative efficacious remedy was available before the Debts

Recovery Tribunal. Reliance was placed on the decision of the Madhya Pradesh

High Court in the matter of Virendra Rathore and Others vs. Tehsildar

Distt. Mandsaur and Others. Reported in 2024 SCC OnLine MP 3427 in

support of the contention that the Madhya Pradesh High Court had held that a

notification issued by the Central Government, Ministry of Finance on the

applicability of the SARFAESI Act on NBFCs, shall not be applicable in respect

of HFCs, but only in the context of NBFCs so defined under Chapter III-B of the

RBI Act. An HFC was entitled under the law to take recourse to the SARFAESI

Act for recovery of loans and borrowings irrespective of the fact that the claim

was below the threshold of 20 lakhs.

5. Mr. Proshit Deb, learned Advocate for the writ petitioner submitted that,

the appellant No. 1 was an NBFC. It did not have the jurisdiction or the

authority to institute SARFAESI proceedings as a secured creditor, as the claim

was below 20 lakhs. He relied on the notification issued on February 12, 2021

to contend that, NBFCs were allowed to resort to the machinery under the

SARFAESI Act for recovery of loans only when the minimum debt was Rs. 20

lakhs or more. He urged that the HFCs were a sub -species of the larger

category of NBFCs and therefore, were categorised as an NBFC by the Reserve

Bank of India in various notifications and Master Circulars. He further urged

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that, HFCs were covered under the larger umbrella of NBFC and therefore, the

notifications applicable with respect to the pecuniary threshold to institute

SARFAESI proceedings by NBFCs would also apply with all force to HFCs.

Reference was made to the Press Release by the RBI dated August 13, 2019,

the Master Direction on HFCs and NBFCs for the year 2021 and the RBI’s list

dated September 14, 2023 containing names of NBFCs in the Upper Layer

(NBFC-UL) under Scale Based Regulations for NBFCs. He demonstrated that

the name of the appellant no. 1 figured at serial no. 6 under the category of

non-debt taking HFC. Further reliance was placed on a similar list of the RBI

dated January 16, 2025. The list contained the names of NBFCs registered

with the RBI as on September 30, 2025.

6. Thus, it was contended by Mr. Deb that pursuant to the Press Release of

the Reserve Bank of India and the Circulars and directions issued by the RBI,

HFCs would be treated as a category of NBFC for regulatory purposes. By

notification dated February 24, 2020, NBFCs were entitled to invoke the

provisions of the SARFAESI Act for secured debts of Rs. 50 lakhs and above.

By a notification of February 12, 2021, the threshold was reduced to Rs. 20

lakhs.

7. According to Mr. Deb, HFCs being a sub -category or a substrata of

NBFCs, would be entitled to invoke the provisions of the SARFAESI Act if the

secured debt was of Rs. 20 lakhs and above. The notifications of February 24,

2020 and February 12, 2021 restrained an NBFC, as defined under clause (f) of

45-I of the RBI Act having assets worth Rs. 100 crores and above , from

invoking proceedings under the said Act, unless the secured debt was Rs. 20

5

lakhs or above. He referred to the Master Direction and Clauses 2.1 and 4.1.17

thereof, in support of the contention that an HFC would fall within the

definition of an NBFC, whose financial assets in the business of providing

finance for housing constituted at least 60% of its total assets. Housing

finance would mean providing finance as per clauses (a) and (k) of paragraph

4.1.1.6 of the said Master Direction. Similar provisions of the Reserve Bank of

India’s latest circular/direction dated November 28, 2025 were also relied

upon. Reliance was further placed on the Master Circular of January 5, 2022,

to buttress such argument. The decision of the Himachal Pradesh High Court

in Gupta Hardware Store and Ors. vs. Union of India and Ors. decided in

CWP No. 8566 of 2024 was referred to. The Hon’ble Court held that the

notifications of February 21, 2020 and February 12, 2021 would apply to

NBFCs and financial institutions, including HFCs.

8. Ms. Ojha countered such argument of Mr. Deb, inter alia, stating that at

present, the appellant no. 1 is a financial institution, but at the time of

issuance of the notice under Section 13(2) it continued to be an HFC and

retained its special category and uniqueness as an HFC. The earlier

notifications/circulars and directions of RBI, would not be applicable.

9. Heard the learned Advocates for the parties. The appellant No. 1 claimed

to be an HFC registered under the Act, 1987. It claimed to be covered by the

definition of “other institution” within the meaning of sub-clause (iv) of clause

(m) of sub-section 1 of Section 2 of the SARFAESI Act. The respondent nos. 1

and 2 were the borrowers and they had availed of financial assistance for

purchase of a house. Equitable mortgage was created as a security and a sum

6

of Rs. 12,70,000/- and a further sum of Rs. 50,800/ - towards insurance

premium had been sanctioned. The loan was sanctioned on a floating rate of

interest which was variable from time to time. Initially, the loan was repayable

in 180 equal monthly instalments of Rs. 17,368/-. The allegation was that the

borrower committed default in repayment of the loan and as a consequence

whereof, the loan was classified as a non performing asset (NPA) on September

3, 2024 as per the RBI guidelines.

10. The appellant no. 1 issued a demand notice dated September 16, 2024

under Section 13(2) of the SARFAESI Act. In spite of service of the notice, the

borrowers neither repaid the loan nor made any representations. On April 22,

2025, the borrowers raised objections in respect of the notice under Section

13(2) of the SARFAESI Act. The appellants replied to the same. Thereafter, the

borrowers filed an application under Article 226 of the Constitution of India,

challenging the notice dated September 16, 2024, issued by the appellant no.

1.

11. In the writ petition the authority of the appellant no. 1 to invoke the

provisions of the SARFAESI Act was challenged on the ground that , the

notification dated February 24, 2020, which was amended by the notification

dated February 12, 2021 by the Ministry of Finance would be applicable ,

insofar as, the minimum threshold to initiate SARFAESI proceedings was

concerned. The claim of the appellant no. 1 was being less than Rs. 20 lakhs,

as such the notice under section 13(2) of the said Act, was bad in law. The

borrowers relied upon the Master Circular of January 5, 2022 and the Press

Release of the RBI dated September 14, 2022.

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12. The appellants specifically contended that, an HFC was a special

category of institution registered under the NHB Act. The regulations and the

notifications governing an NBFC, as defined either under the SARFAESI Act, or

under RBI Act would not govern HFCs. HFCs were unique in their procedure

for establishment, composition and their nature of business. The power to

invoke the SARFAESI Act would not be governed by the Circulars applicable to

NBFC. HFCs had the authority to invoke SARFAESI proceedings even if the

debt due was below the threshold of 20 lakhs.

13. The learned Single Judge considered the facts of the case and the

submissions of the respective parties with regard to the maintainability of the

writ petition. His Lordship held that when a litigant had a statutory remedy

available to him as an alternative or an efficacious remedy for ventilating his

grievances, a writ court would be slow to entertain a writ petition. However, in

the case in hand, the issue was not with regard to a challenge to the action

taken under the SARFAESI Act simpliciter, but the issue was with regard to the

jurisdiction of the appellants to initiate proceedings under the SARFAESI Act.

The issue of jurisdiction of the appellants over the subject matter of the writ

petition went to the very root and as such, the writ petition was maintainable.

14. The decisions of State of U.P vs. Mohammad Nooh reported in 1958

SCR 595 and Whirlpool Corporation vs. Registrar of Trade Marks,

Mumbai and Others reported in (1998) 8 SCC 1 are referred to. These

decisions had carved out the exceptions as to when the existence of an

alternative remedy would not be a bar to entertaining a writ petition, namely, a)

where the writ petition was for enforcement of any fundamental right; b) where

8

there were violations of principles of natural justice’ c) where the order or the

proceeding was wholly without jurisdiction; and d) where the vires of an Act

was under challenge.

15. Hence, we agree with the findings of the learned Single Judge that, when

the question of jurisdiction of the appellant no. 1 to proceed under the

SARFAESI Act had been raised, the same being a pure question of law, the

question of self-imposed restriction by the writ court, requiring the borrowers

to approach the Debts Recovery Tribunal did not arise. Lack of subject matter

jurisdiction went to the very root of authority of the appellant no. 1 to proceed

under the SARFAESI Act. The allegation was that, the appellant no. 1 acted in

excess of jurisdiction under the law and in such a situation, an alternative and

efficacious remedy would not be a bar. The writ petition was filed alleging

wrongful exercise of power by the HFC. It is trite that, when questions of

jurisdiction in respect of any action by a statutory authority are raised or when

pure questions of law arise with regard to the existence and exercise of power

by a statutory authority, alternative remedy is not a bar to entertaining the writ

petition. The writ court has the jurisdiction to address such issue and amend

the wrong.

16. In the decision of M/S Godrej Sara Lee Ltd. vs. The Excise and

Taxation Officer cum-Assessing Authority & Ors. reported in 2023 SCC

OnLine SC 95, it was held that an alternative remedy would not stand in the

way when questions of jurisdiction or pure questions of law which went to the

very root of exercise of power by a concerned authority had been raised.

Admittedly, in this case, there are no disputed questions of fact, but only a

9

question of law as to whether the appellant no. 1 could invoke the SARFAESI

Act when the claim was below the threshold of 20 lakhs. Reference is made to

the decisions of State of U.P and Others vs. Indian Hume Pipe Co. Ltd.

reported in (1977) 2 SCC 724 and Union of India and Another vs. State of

Haryana and Another reported in (2000) 10 SCC 482. The learned Single

Judge did not err in holding that the writ petition was maintainable.

17. Now, adverting to the issues which fell for consideration before the

learned Judge, we find that the learned Judge relied on the Press Release dated

August 13, 2019 which recorded that the Finance No. 2 Act, 2019 had

amended the NHB Act, conferring certain powers with regard to regulation of

HFCs, to the RBI. The RBI pursuant thereof, brought within its fold all HFCs,

and directed that those HFCs would thenceforth be treated as one of the

categories of NBFCs. The RBI also directed that the HFCs would comply with

the directions and instructions issued by NHB till such time the RBI issued a

revised framework for the HFCs. The relevant portions of the August 13, 2019,

Press Release are quoted below :-

“ August 13, 2019

Transfer of Regulation of Housing Finance Companies (HFCS) to

Reserve Bank of India

The Finance (No.2) Act, 2019(23 of 2019) has amended the National

Housing Bank Act, 1987 conferring certain powers for regulation of Housing

Finance Companies (HFCs) with Reserve Bank of India. The Central

Government has since issued notification appointing August 09, 2019 as the

date on which the relevant part of that Act, namely, Part VIl of Chapter VI

shall come into effect.

HFCs will henceforth be treated as one of the categories of Non-Banking

Financial Companies (NBCs) for regulatory purposes. Reserve Bank will

carry out a review of the extant regulatory framework applicable to the FCs

and come out with revised regulations in due course. In the meantime, HFCs

shall continue to comply with the directions and instructions issued by the

National Housing Bank (NHB) till the Reserve Bank issues a revised

10

framework. NHB will continue to carry out supervision of HFCs and HFCs

will continue to submit various returns to NHB as hitherto. The grievance

redressal mechanism with regard to HFCs will also continue to be with the

NHB.

A housing finance institution, which is a company, desirous of making an

application for registration under sub-section 2 of section 29A of the

National Housing Bank Act, 1987(as amended by Act 23 of 2019) may

approach the Department of Non-Banking Regulation, Reserve Bank of

India.

Any clarification in this regard can be obtained over email or from

The Chief General Manager

Department of Non-banking Regulation (DNBR)

Reserve Bank of India

2

nd floor, Centre 1, World Trade Centre

Cuffe Parade, Colaba

Mumbai- 400005

Yogesh Dayal

Chief General Manager”

18. Pursuant to the Press Release, RBI issued a revised framework in 2021.

The directions of 2021 were called the Non-Banking Financial Company –

Housing Finance Company (Reserve Bank Directions) 2021. Apart from

Chapter XII of the said directions, all other directions were made applicable to

HFCs registered under Section 29-A of the NHB Act, Clause 4.1.17 of which is

quoted below :-

“4.1.17. “Housing finance company” shall mean a company

incorporated under the Companies Act, 2013 that fulfils the following

conditions :

a. It is an NBFC whose financial assets, in the business of providing

finance for housing, constitute at least 60% of its total assets (netted off

by intangible assets). Housing finance for this purpose shall mean

providing finance as stated at clauses (a) and (k) to Paragraph 4.1.16.

b. Out of the total assets (netted off by intangible assets), not less than

50% should be by way of housing finance for individuals as stated at

clauses (a) to (e) of Paragraph 4.1.16.”

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19. The definition clearly states that an HFC was an NBFC, whose financial

assets in the business of providing housing loan constituted at least 60% of its

total assets.

20. Certain parameters were framed under the said directions. The Master

Circular of the Reserve Bank of India dated January 5, 2022, specified under

clause 1.1(a) that NBFCs would mean Non-Banking Financial Companies

registered under the RBI which also included housing fina nce companies

registered under Section 29A of the NHB Act. The relevant portion is quoted

below :-

“a. NBFCs means the Non-Banking Financial Companies registered with

the Reserve Bank of India, which shall also include Housing Finance

Company (HFC) registered under Section 29A of the National Housing

Bank Act, 1987.”

21. Thus, His Lordship relied on the Master Direction of 2021 and the

Master Circular of 2022 to hold that the definition of NBFC was inclusive and

HFCs were also within the umbrella of NBFC. It was a sub-set within the set of

NBFCs. By a further direction or clarification in the form of a List, the Reserve

Bank of India included 15 NBFCs in its list of Upper Layer under Scale Based

Regulation. The list provided as follows :-

Sl.

No.

Name of the NBFC Category of the NBFC

1. LIC Housing Finance Limited Deposit taking HFC

2. Bajaj Finance Limited Deposit taking BNFC-ICC

3.

Shriram Finance Limited

(formerly Shriram Transport

Finance Company Limited)

Deposit taking NBFC-ICC.

4. Tata Sons Private Limited Core Investment Company (CIC).

5. L & T Finance Limited Non-deposit taking NBFC-ICC.

6.

Piramal Capital & Housing

Finance Limited

Non-deposit taking HFC.

7. Cholamandalam Investment and Non-deposit taking NBFC-ICC.

12

Finance Company Limited

8.

Indiabulls Housing Finance

Limited

Non-deposit taking HFC

9.

Mahindra & Mahindra Financial

Services Limited

Deposit taking NBFC-ICC

10

Tata Capital Financial Services

Limited

Non-deposit taking NBFC-ICC

11 PNB Housing Finance Limited Deposit taking HFC

12 HDB Financial Services Limited Non-deposit taking NBFC-ICC

13 Aditya Birla Finance Limited Non-deposit taking NBFC-ICC

14 Muthoot Finance Limited Non-deposit taking NBFC-ICC

15 Bajaj Housing Finance Ltd. Non-deposit taking HFC

22. The appellant no. 1 appeared at serial no. 6 and had been identified

under the category of NBFC, as a non-deposit taking HFC. Similarly, in the list

of January 16, 2025, the name of Piramal Capital and Housing Finance

Limited appears at serial No. 10 which is quoted below :-

Sl. No. Name of the NBFC Category of the NBFC

1 LIC Housing Finance Limited Deposit taking HFC

2 Bajaj Finance Limited Deposit taking NBFC-ICC

3 Shriram Finance Limited Deposit taking NBFC-ICC

4 Tata Sons Private Limited Core Investment Company

5 Cholamandalam Investment and Finance

Company Limited Non-deposit taking NBFC-ICC

6 L&T Finance Limited (Formerly known as

L&T Finance Holdings Limited) Non-deposit taking NBFC-ICC

7 Mahindra & Mahindra Financial Services

Limited Deposit taking NBFC-ICC

8 Aditya Birla Finance Limited Non-deposit taking NBFC-ICC

9 Tata Capital Limited Non-deposit taking NBFC-ICC

10 Piramal Capital & Housing Finance Limited Non-deposit taking HFC

11 PNB Housing Finance Limited Deposit taking HFC

12 HDB Financial Services Limited Non-deposit taking NBFC-ICC

13 Sammaan Capital Limited (Formerly known

as Indiabulls Housing Finance Limited) Non-deposit taking NBFC-ICC

14 Muthoot Finance Limited Non-deposit taking NBFC-ICC

15 Bajaj Housing Finance Limited Non-deposit taking HFC

13

23. His Lordship rightly held that, based on the classification of an HFC in

the Master Circular, the directions and the Press Release of the RBI read with

the definition of NBFC under Section 45-I (f) of the RBI, the appellant no. 1 was

an NBFC. Section 45-I (f) defines a Non-Banking Financial Company as a

financial institution, which is a company. The relevant definition is quoted

below :-

“45-I. ***

(f) “non-banking financial company” means –

(i) a financial institution which is a company;

(ii) a non-banking institution which is a company and which has as

its principal business the receiving of deposits, under any scheme or

arrangement or in any other manner, or lending in any manner;

(iii) such other non-banking institution or class of such institutions, as

the Bank may, with the previous approval of the Central Government

and by notification in the Official Gazette, specify.”

24. The notification issued by the Central Government on June 17, 2021

specified that a Housing Finance Company registered under sub -section 5 of

Section 29A of the NHB Act, 1987 was a financial institution for the purpose of

the said Act i.e. the SARFAESI Act. Thus, HFCs were brought within the fold of

NBFC as a financial institution by the notification of the Ministry of Finance

dated June 17, 2021. The relevant portion is quoted below :-

“NOTIFICATION

New Delhi, the 17

th June, 2021

S.O. 2405(E).— In exercise of the powers conferred by sub-clause (iv) of

clause (m) of sub-section (1) of section 2 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest

Act, 2002 (54 of 2002), and in supersession of the notifications of the

Government of India, Ministry of Finance numbers S.O.1282 (E), dated

the 10th November, 2003, S.O. 1083 (E) dated 16th March, 2006, S.O.

2757 dated 19th September, 2007, S.O. 1516(E) dated 23rd June,

2010, S.O. 3466 (E) dated 18th December, 2015, and S.O.404(E) dated

22nd January, 2018, except as respects things done or omitted to be

done before such supersession, the Central Government hereby

specifies such housing financial companies registered under sub-section

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(5) of section 29A of the National Housing Bank Act, 1987 (53 of 1987),

having assets worth rupees one hundred crore and above, as financial

institutions for the purposes of the said Act.”

25. Under the RBI Act, a NBFC, as has already been discussed hereinabove,

includes a financial institution, which is a company. The notification of June

17, 2021 read with the definition of Non-Banking Financial Company under

Section 45-I(f) of the RBI Act establishes the fact that the Central Government

had specified that HFCs registered under sub-section (5) of Section 29A of the

NHB Act, 1987 having assets worth Rs. 100 crores and above would be a

financial institution for the purpose of the SARFAESI Act. Section 2(1)(m)(iv) of

the SARFAESI ACT defines a financial institution as hereunder. Section

2(1)(m)(iv) is quoted below:-

“2.(1).(m) “financial institution” means---

(iv) any other institution or non-banking financial company as defined

in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of

1934), which the Central Government may, by notification, specify as

financial institution for the purposes of this Act;”

26. A combined reading of Section 2(1)(m)(iv) of the SARFAESI Act, the

notification of June 27 of 2021 and S ection 45-I(f) of the RBI Act clearly

indicates that HFCs were brought under the fold of NBFC. His Lordship rightly

appreciated that the amendment of August 29, 2023, which was relied upon by

Ms. Ojha had been repealed and replaced by the Master Direction of October

19 , 2023, being the Master Direction /Reserve Bank of India (Non-Banking

Financial Company – Scale Based Regulations) Directions, 2023. Regulation 2

thereof, provided that the regulatory structure of Non -Banking Financial

Companies would be in four layers based on size. Regulation 2.3 clearly

15

specified that the middle layer included Housing Finance Companies as

NBFCs. Regulation 4 which related to the applicability of the directions also

specifically pertained to Housing Finance Companies . Regulation 4.3.6,

provided that, all such HFCs were bound by the Master Direction-Non-Banking

Financial Company – Housing Finance Company (Reserve Bank) Directions,

2021 as amended from time to time. HFCs were a category of NBFCs as would

be apparent from the Press Release and thereafter the Master Directions of

2021. Regulation 2.3 and 4.3.6 are quoted below:-

2.3 Middle Layer The Middle Layer shall consist of (a) all deposit taking

NBFCs (NBFCs-D), irrespective of asset size, (b) non-deposit taking

NBFCs with asset size of ₹1,000 crore and above and (c) NBFCs

undertaking the following activities (i) Standalone Primary Dealer (SPD),

(ii) Infrastructure Debt Fund-Non-Banking Financial Company (IDF -

NBFC), (iii) Core Investment Company (CIC), (iv) Housing Finance

Company (HFC) and (v) Non-Banking Financial Company-Infrastructure

Finance Company (NBFC-IFC).

* * *

* * *

4.3.6 HFC - Master Direction – Non-Banking Financial Company –

Housing Finance Company (Reserve Bank) Directions, 2021, as amended

from time to time.

27.

28. The decision of the Madhya Pradesh High Court in Virendra Rathore

(supra) was rightly distinguished by the learned Judge. It had been observed in

the decision that, there were no notifications which indicated either an express

or implied intention of the Central Government to bring Housing Finance

Companies within the fold of NBFCs. The relevant paragraph s of the said

decision are quoted below :-

“29. That it was further contention of the petitioner that the notifications of

2021 & 2022 have applied the pecuniary threshold to all the NBFCs as a

generic class, across the board and therefore specific mention of any

16

company or for that matter of respondent HFC (SRG Finance) was never

needed. Since the minimum pecuniary threshold was being determined and

prescribed for all NBFCs across the plane, therefore it would automatically

cover Respondent HFC as well. This contention of the petitioner is taken

forward only to be rejected. As already stated supra, the HFIs/HFCs being a

special genre of FIs/companies, created and regulated by special enactment

of NHB Act, the same cannot be compartmentalised.

In the bogie of NBFCs, more so when NHB Act does not u/s 29-A postulate

the applicability of Chapter HI-B r/w Section 45(I)(f) of the RBI Act. Therefore

HFIs/HFCs like the respondent cannot impliedly be deemed to have been

included under the umbrella of NBFCs, till and until such an intention is

express and explicit under the NHB Act or the notifications issued under it.

For this reason, therefore the minimum pecuniary threshold of 20 lakhs shall

not apply to HFIs/HFCs as contended by the petitioner as prescribed in case

of the NBFCs.

30. For yet another reason the contention of the petitioner is liable to be

rejected. That being issuance of separate series of notifications by the very

same department, very same arm of the Central Government (Ministry of

Finance), as would be explicated infra for the HFCs/HFIs. HFCs/HFIs are

governed holistically by Section 29- A of the NHB Act, the notifications that

have been issued qua them specifically shall regulate applicability of

SARFAESI to them and not other notifications issued generically for NBFCs.

Bare glance at various notifications issued for HFCs/HFIs from time to time

by the Central Government also shows that earlier HFCs were being

mentioned specifically to be treated as FIs under Section 2(I)(m)(iv) of

SARFAESL Otherwise there was never any occasion or necessity for the

Central Government to have come up with a distinct bee line of notifications

for HFCs/HFIs. The fact that notifications are issued separately with a

separate list of enumerated HFCs/HFIs by the Central Government is

indicative of the regime that HFCs/HFIs stand in an altogether different steel

silo then the NBFCs. Ergo therefore the contentions of the respondent

deserves acceptance that HFCs/HFIs are an entirely different special class,

which are covered under the phrase ‘any other institution’ adumbrated under

Section 2(1)(m)(iv) of SARFAESI Act and can't be classed with other NBFCs.”

29. In the case in hand, the borrowers brought on record the notification of

September 14, 2023 and also the master circulars and directions, which would

indicate that, HFCs had been classified as NBFCs, being sub-categorised as a

non-deposit taking HFC.

30. The Central Government specified in 2020 that NBFCs as defined in

clause (f) of 45-I of the RBI Act having assets worth Rs. 100 crores and above

would be entitled to enforce security interest if the secured debts were Rs. 50

17

lakhs and above, as a financial institution for the purpose of the said Act. This

threshold of 50 lakhs was reduced to 20 lakhs by the amendment vide

notification dated February 12, 2021. Both the notifications are quoted below :-

“NOTIFICATION

New Delhi, the 24th February, 2020

S.O. 856(E).- In exercise of the powers conferred by sub-clause (iv) of clause

(m) of sub-section (1) of section 2 of the Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2022 (54 of 2002),

and in supersession of the notifications of the Government of India, Ministry

of Finance numbers S.O. 2641(E), dated 5th August, 2016, S.O. 4176(E)

dated the 27th August, 2018, and S.O. 5391(E) dated 24th October, 2018,

except as respects things done or omitted to be done before such

supersession, the Central Government hereby specifies such non-banking

financial companies as defined in clause (f0 of section 45-I of the Reserve

Bank of India Act, 1934(2 of 1934), having assets worth rupees one hundred

crore and above, which shall be entitled for enforcement of security interest in

secured debts of rupees fifty lakh and above, as financial institutions for the

purposes of the said Act.”

“NOTIFICATION

New Delhi, the 12th February, 2021

S.O. 652(E).—In exercise of the powers conferred by sub-clause (iv) of clause

(m) of subsection (1) of section 2 of the Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002),

the Central Government hereby makes the following amendment in the

notification of the Government of India, Ministry of Finance (Department of

Financial Services), number S.O. 856 (E), dated the 24th February, 2020 ,

published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-

section (ii), dated the 25th February, 2020, namely:—

In the said notification, for the words, “rupees fifty lakh and above” the

words “rupees twenty lakh and above” shall be substituted.”

31. The notifications were made applicable to financial institutions for the

purpose of the SARFAESI Act. The notification of 17

th

June, 2021 specified that

HFCs registered under sub-section 5 of Section 29A of the NHB Act, 1987

having assets worth Rs. 100 crores and above would be a financial institution

for the purpose of the SARFAESI Act. Thus, a combined reading of the

notification of February 24, 2020 and of June 17, 2021 would indicate that

Central Government specified that such Non -Banking Financial Companies

18

which fell within the definition of Section 45-I (f) of the RBI Act being a

financial institution, would be entitled to proceed under the SARFAESI Act to

recover secured debt of Rs. 50 lakhs and above, which was later reduced to 20

lakhs upon granting the HFCs the status of a financial institution. The

notification of June 17 also granted HFCs the status of financial institution for

the purpose of the Act and moreover, as per Section 45-I financial institutions

were companies falling within the definition of NBFC.

32. Under such circumstances, we do not have any hesitation to hold that

the learned Single Judge rightly arrived at a finding that the notifications of

February 24, 2020 and February 12, 2021 would be applicable in the case of

the appellant no. 1. By the time the notice under Section 13(2) of the

SARFAESI Act had been issued by the appellant no. 1, the appellant no. 1 was

already under the umbrella and/or within the definition of the NBFC for the

purpose of invocation of the provisions of the SARFAESI Act.

33. Thus, we agree with the conclusion arrived at by the learned Single

Judge that once HFCs had been notified as financial institutions on June 17,

2021 and brought within the purview of the SARFAESI Act and upon being

within the regulatory framework of the Reserve Bank of India, there was no

reason to hold that an HFC would not be bound by the notification of February

24, 2020 as modified on February 12, 2021. The appellant no. 1 was clearly

covered by the notifications and could not proceed under the SARFAESI Act in

respect of the claim against the borrowers, which was below Rs. 20 lakhs.

34. However, His Lordship clarified that the decision would not preclude the

appellant no. 1 from undertaking other step available in law to recover the

19

outstanding amount from the writ petitioner. Consequently, the order

impugned does not call for interference.

35. Accordingly the appeal is dismissed. Connected application is also

disposed of.

36. Urgent photostat certified copies of this judgment, if prayed for, be

supplied to the parties upon fulfilment of requisite formalities.

(Shampa Sarkar, J.)

1. I agree.

(Ajay Kumar Gupta, J.)