SARFAESI ACT, 2002 | CHAPTER VI

Section 32: Protection of Action Taken in Good Faith

Contents: Statutory text Who is protected Good faith Application Related sections Sources

Section 32 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) protects specified institutions and officers against suits, prosecutions and other legal proceedings for acts or omissions carried out in good faith under the Act. The provision forms part of Chapter VI (Miscellaneous).

Section 32 - Statutory provision

No suit, prosecution or other legal proceedings shall lie against the Reserve Bank or the Central Registry or any secured creditor or any of its officers for anything done or omitted to be done in good faith under this Act.

This reflects the text following the substitution made by section 24 of Act 44 of 2016, effective from 1 September 2016. The original wording referred to any secured creditor or any of his officers or manager exercising rights of the secured creditor or borrower; that historical wording should not be treated as the present text.

Who receives protection under Section 32?

The provision expressly names the following persons or bodies:

Reserve Bank: the Reserve Bank of India (RBI), which exercises regulatory functions under the Act.
Central Registry: the statutory registry associated with registration of securitisation, reconstruction and security interests, administered through CERSAI.
Secured creditor: a person or institution falling within the definition in Section 2(1)(zd) of the Act, subject to the applicable statutory wording.
Officers of a secured creditor: officers covered by the wording of Section 32 when acting within its statutory conditions.

Meaning and limits of good-faith protection

The critical condition is that the act or omission must be done in good faith under the SARFAESI Act. The protection is not an unconditional exemption from the Act or from judicial scrutiny. Whether the statutory protection applies to a particular dispute depends on the nature of the conduct, the authority exercised, the statutory requirements and the facts established.

In particular, Section 32 should not be read as permitting a secured creditor to ignore mandatory statutory procedures. The legality of measures taken to enforce security interests may be challenged through remedies available under the Act, including, where applicable, an application under Section 17 to the Debts Recovery Tribunal. The existence of an immunity provision and the availability of statutory review are distinct questions.

How Section 32 operates in practice

Actions such as issuing statutory notices, taking enforcement measures, recording security interests or performing regulatory functions may raise a Section 32 issue if a suit, prosecution or other legal proceeding is brought against a person covered by the section. The relevant inquiry is not simply whether the action occurred during recovery proceedings, but whether the person was covered and the act or omission was genuinely undertaken in good faith under the statute.

Allegations of mala fides, actions outside statutory authority, procedural non-compliance or conduct unrelated to functions under the Act require assessment under the applicable law and evidence; Section 32 does not automatically resolve such disputes.

Section 32 should be read alongside Section 31 (statutory exclusions), Section 33 (offences by companies) and Sections 34 and 35 (civil-court jurisdiction and overriding effect). These provisions perform different functions and should not be conflated with the good-faith protection in Section 32.

Official references

Consult India Code for the consolidated SARFAESI Act and definitions, the Gazette of India for amendments and notifications, RBI for applicable regulatory materials, and CERSAI for Central Registry information. The statutory wording applicable on the date of the relevant conduct should be checked when considering a particular case.