Section 18C of SARFAESI Act: Right to Lodge a Caveat
Section 18C of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: Right to lodge a caveat.
Section 18C of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) permits a secured creditor or another person entitled to appear in specified proceedings to lodge a caveat. A caveat is a precautionary filing requesting notice and an opportunity to be heard when an anticipated or pending application or appeal comes before the competent forum.
Who can lodge a caveat under Section 18C?
Sub-section (1). When an application or appeal is expected or has already been made under Section 17(1), Section 17A, Section 18(1) or Section 18B, a secured creditor or any person claiming a right to appear at its hearing may lodge a caveat before the relevant Debts Recovery Tribunal, District Judge, Debts Recovery Appellate Tribunal or High Court, as applicable.
Service of caveat and notice of proceedings
Sub-section (2). A caveator must serve notice of the caveat by registered post, acknowledgement due, upon the person who has filed, or is expected to file, the relevant application or appeal. The statutory provision addresses caveats lodged by secured creditors and by other persons claiming a right to appear.
Sub-section (3). If the application or appeal is filed after a caveat is lodged, the relevant tribunal or court must serve notice of the application or appeal upon the caveator.
Sub-section (4). Where notice of the caveat has been served upon the applicant or appellant, that person must furnish the caveator with copies of the application or appeal and supporting papers or documents filed, or to be filed, in the proceeding, as required by the section.
How long does a caveat remain effective?
Sub-section (5). A caveat ordinarily ceases to be in force 90 days after lodgement, unless the application or appeal referred to in sub-section (1) has been made before that period expires. The date of lodgement should therefore be recorded carefully.
Practical procedure and purpose
- Identify the proceeding under Sections 17, 17A, 18 or 18B and the competent tribunal or court.
- Identify the caveator's legal interest and the expected applicant or appellant.
- Lodge the caveat according to the applicable forum's filing requirements and serve notice by the statutory method.
- Retain the filing acknowledgement and proof of service, and monitor the 90-day period.
A caveat is intended to secure notice and an opportunity to participate; it does not by itself determine the merits, grant a stay, or automatically prevent an application or appeal from being filed.
Relationship with other SARFAESI remedies
Section 17 concerns challenges to measures taken under Section 13(4), while Section 18 concerns appeals to the Appellate Tribunal. Section 17A and Section 18B contain special provisions historically relating to Jammu and Kashmir; their application should be considered in light of subsequent constitutional and statutory changes and the current jurisdictional framework.
Legislative history and official resources
Section 18C was inserted by Section 7 of Act 1 of 2013 with effect from 15 January 2013. For the current consolidated statutory text and any subsequent changes, consult India Code (Government of India). Tribunal-related filing information may also be checked through the Debts Recovery Tribunals portal. Applicable rules, practice directions and jurisdictional orders should be verified before filing.