Securitization of Financial Assets: A Potent Panacea To Non-performing Assets

With burgeoning of globalization & liberalization, there has been a paradigmatic shift in the role banks and other financial institutions in shaping Indian Economy. Banks & Financial institutions constitute the bedrock of any economy and, for any economy to realize its acme it must have a bolstered banking sector. Albeit in recent times perhaps just after the beginning of this millennium until the devastating financial crisis of 2008 and thereafter, banking sector has been grappled with...

Tracing The Formation Of The Insolvency And Bankruptcy Code 2016 And What Makes It A Game-Changer

Members of a company have the option of limiting their liabilities, hence it has always been one of the most preferred forms of conducting business. A company is a registered association having perpetual succession, a separate legal entity, common seal whose shares are transferable having limited liability. In order to comprehend the Insolvency and Bankruptcy Code 2016 effectively and to analyse its implementation critically, it is important to understand the pre-existing legal framework...

Interim Order In Writ Petition Challenging SARFAESI Proceedings Should Generally Not Be Passed Without Hearing Secured Creditors: Supreme Court

The Supreme Court has observed that interim orders in writ petitions challenging SARFAESI proceedings should generally not be passed without hearing the secured creditor.Interim orders defeat the very purpose of expeditious recovery of public money, said the bench comprising Justices L. Nageswara Rao, Hemant Gupta and Ajay Rastogi. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters, the court said.The court noted that,...

[SARFAESI] Time Limit Stipulation For District Magistrates To Deliver Possession Of Secured Asset Is Not Mandatory: Supreme Court [Read Judgment]

The Supreme Court has held that time limit stipulation in Section 14 of the SARFAESI Act mandating the District Magistrate to deliver possession of a secured asset, is directory and not mandatory and that the inability to take possession within time limit does not render the District Magistrate Functus Officio.The bench comprising Justices L. Nageswara Rao, Hemant Gupta and Ajay Rastogi upheld a judgment of Division Bench of Kerala High Court which held that Section 14 of the Securitisation and...

Rate Of Interest For Pendente Lite And Future Period

This article is primarily in relation to the Original Applications (OAs) filed by banks and Financial Institutions (FIs) in Debt Recovery Tribunals (DRTs) under the provisions of Recovery of Debt and Bankruptcy Act, 1993 (RDB Act, 1993) Pendente Lite period means the period from the date of filing of the suit upto the date of judgment. Future period means the period from the date of judgment upto the date of realisation of the decretal amount. Nowadays banks and FIs are filing OAs...

Can Banks Continue SARFAESI Proceedings With Respect To Loan Accounts Declared As NPA Prior To Lockdown? Kerala HC Seeks Response From Centre,State [Read Order]

The Kerala High Court has sought response from the Central Government about the banks' plea seeking permission to continue SARFAESI proceedings with respect to loan accounts which were declared as NPA prior to the declaration of lockdownThe Full bench comprising the Chief Justice S. Manikumar, Justices CT Ravikumar and Shaji P. Chaly was considering an application filed by State Bank of India and Canara Bank who sought a clarification whether they can continue with SARFAESI proceedings which...

RBI's Fair Practices Code For Asset Reconstruction Companies – A Respite Or Woe

Recently Reserve Bank of India (RBI) has advised Asset Reconstruction Companies (ARCs) to adopt 'Fair Practices Code' so as to ensure transparency and fairness in their operation and issued guidelines on 16th July 2020. Most of the guidelines issued are practically already in use of ARCs in one form or the other, as the actions and non-actions are always the subject matter of judicial review. Our present study is confined mainly to the following two aspects, which have been...

Tribunal Rules 2020 : Plea In Uttarakhand HC Challenging Eligibility Criteria For Appointments To Presiding Officer Of DRT

A writ petition under Article 226 of the Constitution of India has been filed in the High Court of Uttarakhand challenging the Government's notification changing the qualification criteria for appointment to the post of Presiding Officer of Debt Recovery Tribunal (DRT) which now allows only persons who have served as a District Judge to be eligible for appointment to the post. This is a change to the earlier practice of inviting applications from advocates qualified to be a District...

Madras HC Passes Interim Order Allowing Advocates To Apply To Post Of DRT Presiding Officer [Read Order]

The Madras High Court has permitted lawyers to apply for the post of Presiding Officer of the Debt Recovery Tribunal, as notified vacant by the Central Government on June 23. The interim relief has been granted by a bench of Chief Justice AP Sahi and Justice Senthilkumar Ramamoorthy in two writ petitions challenging the constitutional validity of the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020. ...

SARFAESI, Debt Recovery & Banking Laws : Recent Important Decisions

1. Telangana State Southern Power Distribution Co. Ltd vs M/S Srigdhaa Beverages(Delivered by Supreme Court on 01.06.2020) Brief Facts Respondent – auction purchaser of the property of M/s. SB Beverages Private Limited failed to pay its dues, resulting in the auction by Syndicate Bank (Secured Creditor) under SARFAESI Act Whether the liability towards previous electricity dues of the last owner could be mulled on to the respondent. Ratio: Electricity dues,...

Delhi HC Directs Centre To File Report On Steps Taken To Ensure Proper Functioning of DRTs and DRAT During Pandemic [Read Order]

Delhi High Court has directed the Central Government to submit a status report indicating the steps that are being taken by it for ensuring the proper functioning of the DRAT and DRTs during this present pandemic situation. The Single Bench of Justice Navin Chawla has directed the Ministry of Finance and the Ministry of Information Technology & Electronics to submit status reports within one week. The order has come in a plea seeking additional online links for Debt...

Broader Implications Of The Supreme Court 's Pandurang Judgment On Co-operative Banks

In a judgment pronounced by a five judge bench in the case of Pandurang Ganpati Chaugule v. Vishwasrao Patil Murgud Sahakari Bank Limited("Pandurang"), the apex court has ruled that Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI") is, in fact, applicable to Co-operative Banks. Apart from the obvious effect of opening up SARFAESI benefits to such Co-operative Banks attempting to affect recovery, there are broader...