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...

State's Failure To Promptly Execute Section 14 SARFAESI Order Defeats Purpose Of Law: Punjab & Haryana High Court

The Punjab and Haryana High Court has recently observed that failure of state authorities to implement orders passed under Section 14 of the SARFAESI Act, which empowers the District Magistrate to assist secured creditors in taking physical possession of secured assets, defeats the statutory mandate of expeditious enforcement of security interests and undermines binding judicial precedents, observing that such inaction paralyses the statutory mechanism. Allowing a writ petition filed by IIFL...

Bank Cannot Enforce Mortgage After Underlying Sale Deed Held Void, DRAT Kolkata Sets Aside DRT Hyderabad Order

The Debts Recovery Appellate Tribunal (DRAT) at Kolkata has recently set aside an order of the Debts Recovery Tribunal-II, Hyderabad, which had dismissed a securitisation challenge filed by subsequent purchaser Mirza Sardar Baig, ruling that Indian Overseas Bank could not enforce a mortgage based on an earlier sale deed that was later declared null and void by a civil court. The Appellate Tribunal held that the bank could not enforce any security interest once the sale deed on the basis of...

DRT Has No Inherent Power To Refund Court Fee In Section 17 SARFAESI Proceedings: Karnataka High Court

The Karnataka High Court has recently held that the Debts Recovery Tribunal (DRT) has no inherent power to refund court fees paid in proceedings under Section 17 of the SARFAESI Act in the absence of an express statutory provision, even if the proceedings become infructuous due to settlement between the parties, ruling that courts cannot order the refund of a statutory levy unless authorized by law.Emphasising that court fees are governed strictly by statute, the Division Bench of Chief Justice...

No Need To Produce Trust Deed If Debt Assigned To ARC Through Valid Assignment Agreement: DRAT Kolkata

The Debts Recovery Appellate Tribunal (DRAT) at Kolkata has recently held that when a debt is assigned to an Asset Reconstruction Company through a valid assignment agreement, production of a Trust Deed cannot be insisted upon where the assignment itself is not based on a trust deed. Chairperson Justice Anil Kumar Srivastava observed: “Accordingly, when the registration, under Section 3 of the Act, was done to become an Asset Reconstruction Company and the assignment was made on the basis of...