[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...

Moratorium On Insolvency And Bankruptcy Code, 2016: Is It A Cure-All Or Only Help A Few

On 17.05.2020, the Finance Minister of India while announcing the fifth tranche of the stimulus/relief packages to mitigate the consequences of COVID-19 on the Indian Economy, also announced that there will be no fresh insolvency filings under the Insolvency and Bankruptcy Code, 2016 ("IBC"). The Finance Minister informed that an ordinance will be brought to this effect. Undoubtedly, the business across the country requires relief but an absolute embargo upon the fresh insolvency filings...

Cooperative Banks Under SARFAESI Act : Analysis Of Constitution Bench Judgment

Recently a Constitution Bench of the Hon'ble Supreme Court comprising Hon'ble Mr. Justice Arun Mishra, Hon'ble Justice Indira Banerjee, Hon'ble Mr. Justice Vineet Saran, Hon'ble Mr. Justice M.R. Shah and Hon'ble Mr. Justice Aniruddha Bose dealt with a batch of matters in Pandurang Ganpati Chaugule v. Vishwasrao PatilMurgud Sahakari Bank Limited (Civil Appeal No. 5674 of 2009, decided on05.05.2020) decided the following issues:Whether 'co­operative banks', which are co­operative societies...

Cooperative Banks Must Comply With Banking Regulation Act And Other Laws Related To Banking: SC [Read Judgment]

The Supreme Court has held that the co­operative banks cannot carry on any activity without compliance of the provisions of the Banking Regulation Act, 1949 and any other legislation applicable to such banks relatable to 'Banking' One of the issues considered by the Constitution bench in Pandurang Ganpati Chaugule and others vs Vishwasrao Patil Murgud Sahakari Bank Limited was whether 'banking company' as defined in Section 5(c) of the BR Act, 1949 covers co­operative banks registered under the...