Plea In Kerala High Court Challenges Tribunal Reforms Act, Appointments Of DRT Ernakulam Presiding Officer & DRAT Chennai Chairperson

A petition has been moved before the Kerala High Court challenging the appointments of Retired Justice G. Chandrasekharan as the chairperson of the Debts Recovery Appellate Tribunal, Chennai and Retired District Judge, Su Williahm, as presiding officer of the Debts Recovery Tribunal, Ernakulam.The plea states that the two appointments were not in accordance with the directions laid down by the Supreme Court in Rojer Mathew v South Indian Bank Ltd., mandating selection of tribunal members to...

Time Spent In DRT Recovery Proceedings Cannot Be Excluded U/S 14 Of Limitation Act: NCLAT

The National Company Law Appellate Tribunal (NCLAT) held that the benefit of section 14 of the Limitation Act cannot be extended to the creditor who had initiated recovery proceedings before the Debt Recovery Tribunal (DRT) under the Recovery of Debt and Bankruptcy Act, 1993. The Tribunal held that the benefit under section 14 of the Act can be given only when the forum before which the proceedings were initiated lacked jurisdiction or suffered from a defect of similar nature. A bench...

Mere Registration Of FIR Or Pendency Of Proceedings Before DRT Does Not Bar Reference To Arbitration: Bombay High Court

The Bombay High Court bench of Justice Advait M. Sethna has held that the disputes between Mangal Credit and Fincorp Limited and Ulka Chandrshekhar Nair are arbitrable under the Arbitration and Conciliation Act, 1996 (Arbitration Act) even though allegations of fraud and forgery were raised and a criminal was filed in which no progress has been made. The Court further held that “Merely because the Respondent has chosen to attack the Mortgage Deeds which contain the arbitration clause...

DRT Cannot Reject Consolidated Plea By Tenants Under SARFAESI Act: Kerala High Court

The Kerala High Court has held that the Debts Recovery Tribunal (DRT) cannot reject a consolidated plea by tenants under the SARFAESI Act.The petition was filed, challenging an order passed by the registrar of the DRT 1, Ernakulam. By that order, it declined to register the application preferred by the petitioners against the notice of dispossession served by the Advocate Commissioner. The application was rejected, citing the reason that a consolidated securitisation application was filed...

DRT Recovery Certificate Confers Financial Creditor Status And Gives Rise To Fresh Cause Of Action: NCLAT Chennai

The company appeals were filed by the personal guarantors of the corporate debtor, challenging the order admitting the Insolvency Resolution Process (IRP) against them u/s 95 of the IBC, 2016. The issues before the Ld. NCLAT were whether the demand notice was properly served and whether the initiation of the proceedings was barred by the limitation. Background of the Case The corporate debtor availed the loan facility from the financial creditor and the appellants were the...

Writ Jurisdiction Cannot Be Invoked When Party Has Already Approached DRT Under SARFAESI Act: Delhi High Court

The Delhi High Court has dismissed a petition while upholding that if a borrower has already approached the Debt Recovery Tribunal (DRT) under the SARFAESI Act, for a one-time settlement, a writ seeking the same relief under Article 226 of the Constitution is not maintainable. Background of the Case The petitioner has availed the credit facilities from the consortium of banks, i.e., Punjab National Bank, Indian Bank, and UCO Bank. Later on, the account of the petitioner was declared...

S. 11 SARFAESI Act | DRT Can't Decide Disputes Between Banks Over Secured Assets; Must Be Referred To Arbitration : Supreme Court

In a significant ruling under the SARFAESI Act, 2002 (“Act”), the Supreme Court today (May 23) held that inter-creditor disputes (between secured creditors) must be resolved through arbitration under Section 11 of the Act read with the Arbitration & Conciliation Act, 1996 (“Arbitration Act”). Unlike the Arbitration and Conciliation Act, which requires a written agreement for reference, Section 11 of the Act creates a statutory mandate for arbitration, eliminating the need for any such...

Order Of DRT Setting Aside NPA Classification Does Not Negate Existence Of Financial Debt Or Occurrence Of Default: NCLT Delhi

The National Company Law Tribunal (NCLT), New Delhi bench of Shri Manni Sankariah Shanmuga Sundaram (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member), held that an order of Debt Recovery Tribunal (DRT) setting aside NPA classification does not negate existence of financial debt or occurrence of default, which are the two primary factors for admitting a Section 7 petition under the Insolvency & Bankruptcy Code (“the code”) . Background Facts: The Applicant, M/S Encore ...

Initiation Of Recovery Proceedings Before DRT Does Not Preclude Financial Creditor From Filing Application U/S 7 Of IBC: NCLAT

The NCLAT New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that initiation of recovery proceedings before the DRT does not prohibit financial creditors from filing an application under section 7 of the code. Brief Facts: The present appeal has been filed by suspended director of the corporate debtor against an order passed by the Adjudicating Authority by which an application under section 7...

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...