Unjustified For Bank To Proceed Against Property Based On Prior Settled Mortgage, When No New Mortgage Was Created: Kerala High Court

The Kerala High Court has observed that it was not appropriate to proceed against the property of a guarantor who has not created mortgage over the property as collateral, merely because the guarantor had previously acted as a surety in another mortgage that has already been settled.In the case before the high court, the petitioner company mortgaged its property to avail itself of a credit facility for an LLP, and that mortgage was settled, and dues were cleared, but the bank did not return its...

Proceedings Under SARFAESI Act And RDDB Act Are Complimentary, Can Continue Parallelly: Delhi High Court

The High Court of Delhi has held that proceedings under SARFAESI Act and RDDB Act are complimentary to each other and both the proceedings can continue parallelly. The bench of Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora held that since both the proceedings are complimentary, there would be no application of principle of election of remedies and the secured creditor can avail both the remedies together. Facts The Petitioner availed a loan for an amount...

Debt Recovery | Extension Of Interim Relief At The Time Of Remand Subject To Prima Facie Finding In Petitioner's Favor: Delhi High Court

A Division Bench of the Delhi High Court recently held that an interim order granted by the Debts Recovery Appellate Tribunal ("DRAT") during the pendency of appeal was not required to be extended in pursuance of remand, without a prima facie finding on the need for such an order. The Bench, comprising Justices Vibhu Bakhru and Amit Mahajan, dismissed the present writ petition and dispelled petitioner-Deco’s contention that the interim order in its favor ought to have been...

Supreme Court Affirms Mandatory E-Filing In DRTs & DRATs, Says Other Courts Should Replicate It

In a plea filed by the Madhya Pradesh High Court Bar Association, the Supreme Court affirmed mandatory e-filing in Debts Recovery Tribunals (DRTs) and Debts Recovery Appellate Tribunals (DRATs). The court, while remarking that other Courts and Tribunals should also replicate the model of mandatory e-filing, also passed certain directions to make e-filing more accessible for everyone. The bench comprising CJI DY Chandrachud, Justice PS Narasimha, and Justice JB Pardiwala, through its...

Though Borrower Can File Civil Suit Despite The Remedy Of Counter Claim In DRT, In Light Of Section 8 Of The A&C Act, Bombay High Court Refers The Parties To Arbitration

The Bombay High Court has reiterated that the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) bars the jurisdiction of the Civil Court only in respect of the applications filed by banks/ financial institutions for recovery of debt, however, it does not bar the jurisdiction of the Civil Court to try a suit filed by the borrower. The bench of Justice Bharati Dangre remarked that even though a remedy is available to the borrower to file a counterclaim in the application filed by the...

Determination Of Debt/ Adjudication Of Liability, Under SARFAESI, No Need To Refer To Arbitration: Delhi High Court

The Delhi High Court has ruled that the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act) or the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) do not lay down an omnibus bar to arbitration. In each case, the Court would have to consider the nature of the dispute and determine whether the said statutes require the dispute to be tried exclusively by the Debt Recovery Tribunals...

Borrower Has To Pre-deposit 50% Of Which Amount In Appeal Before DRAT U/S 18 SARFAESI Act? Supreme Court Explains

While calculating the amount to be deposited as predeposit under Section 18 of the SARFAESI Act, 50% of which amount the borrower is required to deposit as pre-deposit? The Supreme Court has explained in a judgment delivered on Thursday (5 Jan 2023).The bench of Justices M R Shah and B V Nagarathna held as follows:Whatever amount is mentioned in the notice under Section 13(2) of the SARFAESI Act, in case steps taken under Section 13(2)/13(4) against the secured assets are under challenge before...

DRT Can Impose Cost But Not Other Stringent Conditions While Restoring Application U/S 22(2)(g) RDB Act: Madhya Pradesh HC

The Madhya Pradesh High Court recently set aside an order of the Debt Recovery Tribunal, whereby an application for restoration under Section 22(2)(g) of the Recovery of Debts and Bankruptcy Act was allowed subject to fulfilling certain conditions.The division bench comprising Justice Sujoy Paul and Justice P.C. Gupta observed that there was no enabling provision under the Act which vested the Tribunal with the power to impose conditions that it did while restoring the application under Section...

[Debt Recovery] Service Of Summons Mandatory, Not Dispensed With Party Entering Appearance By Filing Vakalatnama: Bombay High Court

Observing that serving of summons is a mandatory procedural requirement in a debt recovery application, the Bombay High Court held that the appearance of an Advocate and filing of a Vakalatnama does not do away with the requirement to serve summons. "Service of summons is a mandatory procedural requirement and is not dispensed with merely on account of the party entering appearance by filing a Vakalatnama", the court held. Justices K. R. Shriram and A. S. Doctor were dealing with a...

OTS Proposal Is An 'Acknowledgement Of Debt' Under Section 18 Of Limitation Act: NCLAT Delhi

The National Company Law Appellate Tribunal ("NCLAT"), New Delhi Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal filed in Tejas Khandhar v Bank of Baroda, has held that a One Time Settlement (OTS) proposal falls within the definition of 'acknowledgement of debt' under Section 18 of the Limitation Act, 1963. Background Facts Bank of Baroda ("Financial Creditor/Respondent") had extended financial...

Pendency Of Proceedings Before DRT, SARFAESI Or Other Fora-Not A Bar For Initiating CIRP: NCLAT Chennai

The National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Kanthi Narahari (Technical Member), while adjudicating an appeal in Mr. Amar Vora v City Union Bank Ltd, has held that a petition can be moved under Section 7, 9, or 10 of Insolvency and Bankruptcy Code, 2016 ("IBC"), even when proceedings with respect to the same debt are pending before the Debt Recovery Tribunal; or SARFAESI Act 2002; or Prohibition of Benami...

Centre Clears Appointments Of Chairpersons In All Five 'Debt Recovery Appellate Tribunals' (DRATs)

The Appointments Committee of the Cabinet has approved the proposal of the Department of Financial Services for the appointment of Chairpersons in all the Fiver DRATs [Debts Recovery Appellate Tribunals].The following persons have been appointed as chairpersons in the salary of Rs.2,50,000/- (fixed) p.m., for a period of 04 years, or till attaining the age of 70 years, or until further orders, whichever is the earliest:1. DRAT, AllahabadJustice Rajesh Dayal Khare, Former Judge, High Court of...