Cheque Not Legally Enforceable For Full Amount If Part Payment Not Endorsed: Kerala High Court

The Kerala High Court has held that a cheque presented for its full value despite prior part payments without endorsement does not represent a legally enforceable debt, while upholding an acquittal in a cheque dishonour case. Justice A. Badharudeen, while dismissing an appeal filed by complainant Danikutti Philip, held, "However, when part payment(s) is/are made and the indorsement mandated under Section 56 of the NI Act failed to be recorded, presenting the cheque for the whole sum, of which a...

Non-Signatory To Cheque From Joint Account Cannot Be Prosecuted Under NI Act: Madras High Court

The Madras High Court on 3 March held that a joint account holder cannot be prosecuted under Section 138 of the Negotiable Instruments Act unless they have signed the cheque in question. Justice G. K. Ilanthiraiyan quashed cheque dishonour proceedings against G. Revathi, a co-accused, pending before the Judicial Magistrate, Puducherry, while directing that the trial continue against the other accused. He held: “In the case on hand, admittedly the second respondent herein alone signed the...

Proper Valuation Needed Before Fixing SARFAESI Auction Reserve Price: DRAT Kolkata

The Debts Recovery Appellate Tribunal (DRAT) at Kolkata has held that an e-auction cannot be invalidated solely because the reserve price is below the distress value, emphasising that proper valuation and due process are the governing requirements. A coram of Chairperson Justice Anil Kumar Srivastava observed, “In case, proper valuation has not been made and the reserve price is fixed taking into consideration the inaccurate valuation report, the intending buyer may not come forward treating...

Auction Purchaser Rights Not Absolute Under SARFAESI; Must Yield Where Sale Is Illegal: Supreme Court

The Supreme Court on Wednesday (April 1) held that the rights of a bona fide auction purchaser are not absolute and must yield where the sale process is legally flawed, as it dismissed appeals filed by auction purchasers and the Central Bank of India and upheld a Madras High Court judgment setting aside a SARFAESI auction sale.A bench of Justices Dipankar Datta and Satish Chandra Sharma affirmed the High Court's April 12, 2023 ruling, which had annulled the auction after finding that the...

Centre Appoints Justice Sudhir Kumar Jain as DRAT Delhi Chairperson

The Central Government has approved the appointment of Justice Sudhir Kumar Jain, a Member of the National Consumer Disputes Redressal Commission and former Delhi High Court judge, as Chairperson of the Debts Recovery Appellate Tribunal (DRAT), Delhi. The competent authority has cleared his appointment for a tenure of five years from the date of assumption of charge, or until he attains the age of 70 years, or until further orders, whichever is earlier. According to a communication issued by...

Delhi High Court Quashes Fraud Tag On Reliance Commercial Finance Ex-CEO As SCN Was Not Served

The Delhi High Court on Monday set aside an order declaring a former key official of Reliance Commercial Finance Limited as “fraud” in connection with loans worth over Rs 16,455 crore after noting that the show cause notice issued to him had not been served. A division bench of Justice Prathiba M Singh and Justice Madhu Jain passed the order. The petition was filed by Devang Pravin Mody challenging the Reserve Bank of India's Master Directions on Fraud Risk Management dated July 15, 2024,...

Andhra Pradesh High Court Dismisses Plea To Stall SARFAESI Proceedings, Bars Piecemeal Litigation

The Andhra Pradesh High Court has dismissed a writ petition seeking to stall recovery proceedings under the SARFAESI Act, holding that a litigant cannot raise pleas in a piecemeal manner and terming the petition a “misadventure.” A Division Bench of Justice Lisa Gill and Justice Ninala Jayasurya noted that the petitioner had executed a gift deed in 2006 in favour of his son. The deed, initially without acceptance, was later accepted before the son availed a loan from South Indian Bank, for...

NBFCs With Assets Over ₹100 Crore Can Invoke SARFAESI Act: Allahabad High Court

On 24 March, the Allahabad High Court held that non-banking financial companies (NBFCs) with assets of Rs. 100 crore or more qualify as financial institutions under the SARFAESI Act, 2002 and can enforce security interest in secured debts. A Bench comprising Justices Ajit Kumar and Swarupama Chaturvedi referring to the Ministry of Finance notification dated 24 February 2020, observed: “With the plain reading of the notification, it is clear that through the above notification the Central...

DRT Cannot Condone Delay Beyond 45 Days In Pleas Challenging SARFAESI Recovery Measures: Karnataka High Court

Recently, the Karnataka High Court held that the Debt Recovery Tribunal (DRT) cannot condone delays beyond the 45-day limit for filing applications under Section 17 of the SARFAESI Act, which allows borrowers to challenge a bank's recovery actions before the tribunal. The court clarified that Section 5 of the Limitation Act, 1963, which permits courts to excuse in case of sufficient cause, does not apply to such proceedings. The single-judge bench of Justice Lalitha Kanneganti observed...

SARFAESI, RDB And PMLA Must Be Reconciled; Recovery Laws Cannot Prevail Over PMLA: Bombay High Court

The Bombay High Court at Nagpur recently held that the provisions of the SARFAESI Act and the Recovery of Debts and Bankruptcy Act do not override the Prevention of Money Laundering Act, observing that the statutes operate in different fields and must be interpreted so as to reconcile their provisions without defeating the object of the PMLA.A division bench of Justices M. S. Jawalkar and Nandesh S. Deshpande held, “The objective of the legislation in PMLA being distinct from the purposes of two...

Right Of Redemption Ends Once Auction Notice Is Published Under SARFAESI: Bombay High Court

The Bombay High Court on Tuesday reiterated that once an auction notice is published under the SARFAESI Act, the borrower's right of redemption stands extinguished and the Debt Recovery Tribunal cannot set aside the auction sale in a manner that effectively permits redemption. The Court observed that passing such an order in the teeth of Section 13(8) of the Act and binding Supreme Court precedents constitutes a jurisdictional error. Relying on the precedents, the court reiterated that...

Kerala High Court Sets Aside Banking Ombudsman Order For Failing To Give Reasoned Decision

The Kerala High Court recently set aside an order passed by the Banking Ombudsman rejecting a borrower's complaint over increase in interest rate on a gold loan from 14.5% to 17%, holding that the authority failed to pass a reasoned order despite a specific direction from the Court. A single bench of Justice Harisankar V. Menon was considering a writ petition filed by the borrowers, challenging the Ombudsman's order. The petitioners contended that the rate of interest was increased by the bank...