AAP Tax Law
SARFAESI Act, 2002 | Chapter III

Section 18A of SARFAESI Act - Validation of Fees Levied

Section 18A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) is a validating provision. It retrospectively confirms the legality of fees levied and collected for certain proceedings before the Debts Recovery Tribunal (DRT) and the Debts Recovery Appellate Tribunal (DRAT) before the 2004 amendments.

Text of Section 18A: Validation of fees levied

Any fee levied and collected for preferring, before the commencement of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004, an appeal to the Debts Recovery Tribunal or the Appellate Tribunal under this Act, shall be deemed always to have been levied and collected in accordance with law as if the amendments made to sections 17 and 18 of this Act by sections 10 and 12 of the said Act were in force at all material times.

Legislative history: Section 18A was inserted by section 13 of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004 (Act 30 of 2004), with effect from 11 November 2004. The reference to an “appeal” in the validating provision reflects the terminology applicable to earlier proceedings.

Meaning and legal effect of Section 18A

The expression “shall be deemed always” creates a retrospective legal fiction. It treats the fees collected before the commencement of the 2004 amendment as lawfully levied, on the assumption that the changes introduced to sections 17 and 18 by sections 10 and 12 of the 2004 Amendment Act had applied at the relevant times.

The provision concerns the validity of the levy and collection of fees. It does not itself decide the merits of a challenge to a secured creditor's enforcement measures, dispense with the statutory requirements governing those measures, or establish a new general fee rate.

  • Section 17: permits a person, including a borrower, aggrieved by measures under section 13(4), to apply to the DRT, ordinarily within 45 days from the measure complained of, subject to the Act's provisions.
  • Section 18: provides an appeal to the DRAT against a DRT order under section 17, subject to the applicable statutory requirements, including those relating to time and deposit for borrower appeals.

Section 18A addresses a historical question: whether fees collected for such proceedings before the 2004 amendment could be treated as valid notwithstanding the subsequent changes in the law.

Scope and practical significance

For older SARFAESI proceedings, Section 18A is relevant where the legality of a filing or appeal fee collected before the 2004 amendment is disputed. Its application depends on the date, nature and statutory basis of the fee. For current filings, the applicable provisions of sections 17 and 18 and the relevant rules and fee schedules must be consulted.

Official legal resources

For the current consolidated legislation and amendments, refer to the India Code legislative database, the Gazette of India and the Department of Financial Services. Check the official text and notifications where the date of commencement or a historical fee is material.