Borrower Consent Mandatory For SARFAESI Sale At Reserve Price: Andhra Pradesh High Court

The Andhra Pradesh High Court has recently held that a bank cannot confirm the sale of a secured asset in a SARFAESI auction when the highest bid matches the reserve price unless the borrower consents. “The sale of the secured asset in the auction exactly at the reserve price cannot be confirmed by the Authorised Officer without the consent of the borrower,” the Court held. A Division Bench of Justice Cheekati Manavendranath Roy and Justice V. Gopala Krishna Rao dismissed writ petitions filed...

Banks 'Casual' In Granting Big Loans, Small Borrowers Face 'Borderline Harassment': Supreme Court

The Supreme Court on Tuesday criticised banks for what it described as a casual approach in sanctioning large loans to bigger entities while subjecting ordinary borrowers seeking small personal loans to stringent conditions and tedious procedures that may, in some cases, amount to “borderline harassment." A Bench of Justices Ahsanuddin Amanullah and R. Mahadevan clarified that it was not advocating any easing of lending norms, saying those matters were best left to the Reserve Bank of India and...

Proof Of Cheque Execution Under NI Act Triggers Presumption Unless Rebutted: Kerala High Court

The Kerala High Court on Monday, 18 May, held that once a complainant proves the transaction and execution of a cheque in a prosecution under Section 138 of the Negotiable Instruments Act, the statutory presumptions under Sections 118 and 139 operate in the complainant's favour unless rebutted by the accused. Justice A. Badharudeen set aside a Trial Court judgment acquitting Jayapal, the accused in a cheque dishonour case involving Rs. 3 lakh and convicted him under Section 138 of the NI Act....

Bombay High Court Finds Prolonged Detention In Cheque Bounce Case “Shockingly Disproportionate”

The Bombay High Court on 5 May held that prolonged incarceration of a cheque bounce convict solely for non-payment of compensation is ex-facie unreasonable, excessively harsh and "shockingly disproportionate". A Bench of Justice N.J. Jamadar modified the default sentence imposed on Cyrus Noshirwan Kartak, the Director of Mintaur Engineering Private Limited in 17 cheque dishonour cases to the period already undergone and directed his release. He observed:“Default sentence is...

Mortgage Suit Transferred From Civil Court To DRT Does Not Become Money Recovery Proceeding: Calcutta High Court

The Calcutta High Court has recently held that a mortgage suit does not become a simple money recovery proceeding merely because it is transferred from a civil court to the Debt Recovery Tribunal, holding that the lender's security interest and the borrower's equity of redemption continue to subsist. Justice Ajoy Kumar Mukherjee made the observation while allowing UCO Bank's challenge to orders of the Debt Recovery Tribunal and Debt Recovery Appellate Tribunal that had held the bank's SARFAESI...

Telangana HC Upholds Sale of Mortgaged Property, Says 30-Day SARFAESI Notice Period Runs From First Valid Service

The Telangana High Court has upheld the auction sale of a mortgaged property by Bank of India, holding that the 30-day statutory period for an auction sale must be counted from the first valid service of the sale notice, not from a later supplementary communication. Explaining its reasoning, the Division Bench of Justices Moushumi Bhattacharya and Gadi Praveen Kumar observed: “Acceptance of the borrower's contention would result in uncertainty and enable manipulation of timelines, thereby...

Section 138 Case Not Maintainable Against Director Once Liquidator Takes Control: Delhi High Court

The Delhi High Court on 4 May quashed cheque bounce proceedings against a director of P.R.J Enterprises Limited, holding that once a Provisional Liquidator is appointed and takes control of the company's affairs, the directors lose authority over its bank accounts and cannot be prosecuted under Section 138 of the Negotiable Instruments Act. Justice Vikas Mahajan observed that the petitioner-director could not be fastened with criminal liability since he was divested of control over the...

NSEL Case: Bombay High Court Allows SBI's SARFAESI Action Despite MPID Attachment

The Bombay High Court on Friday allowed State Bank of India (SBI) to proceed against secured assets attached in the National Spot Exchange Ltd. (NSEL) scam proceedings under the SARFAESI Act, holding that the bank's rights as a secured creditor cannot be lightly defeated. Setting aside a March 8, 2023 order of the Maharashtra Protection of Interests of Depositors (MPID) special court, a Division Bench of Justices A.S. Gadkari and Kamal Khata held that SBI's earlier failure to deposit amounts...

Civil Courts Cannot Grant Injunctions Against SARFAESI Action: Karnataka High Court

The Karnataka High Court has set aside a Commercial Court order that had stopped lenders from taking action under the SARFAESI Act, holding that such directions cannot be issued by civil courts. Referring to Section 34 of the SARFAESI Act, which bars courts from granting injunctions in such matters, the Court said: “A plain reading of the said section indicates that it proscribes any Civil Court from issuing any injunction not only with respect to the action taken, but also to an action that...

Karnataka High Court Holds KPIDFE Act, Like MPID, Has Priority Over SARFAESI Claims

The Karnataka High Court has held that secured creditors cannot claim priority under the SARFAESI Act over properties attached under the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004 (KPIDFE Act), and such attachment would prevail in determining the priority of claims. A coram of Justice Lalitha Kanneganti dismissed a writ petition filed by Canara Bank challenging the refusal of the Sub-Registrar to register a sale certificate issued in favour of an...

Part Payments Cannot Halt SARFAESI Proceedings Once Initiated Even If Dues Fall Below 20%: Bombay HC

The Bombay High Court has recently clarified that the 20% benchmark under the SARFAESI framework operates at the threshold stage, and once that requirement is satisfied and action is initiated, subsequent payments by the borrower do not affect the creditor's right to continue enforcement. “A proper reading of Section 31(j) of Securitisation Act makes it clear that the moment the amount due exceeds 20% of the principal amount and interest thereon, the secured creditor like the respondent No.1...

DRAT Can Recall Appeal Dismissed For Pre-Deposit Non-Compliance: Patna High Court

The Patna High Court has recently held that the Debts Recovery Appellate Tribunal (DRAT), in exercise of its review powers under Section 22(2) of the Recovery of Debts and Bankruptcy Act, 1993, can recall an appeal dismissed for non-compliance with the pre-deposit requirement. "Once such dismissal falls within the category contemplated under Section 22(2)(g), the Tribunal cannot be said to be denuded of its jurisdiction to recall or set aside the same. The reasoning adopted by the learned...