Proper Valuation Needed Before Fixing SARFAESI Auction Reserve Price: DRAT Kolkata

The Debts Recovery Appellate Tribunal (DRAT) at Kolkata has held that an e-auction cannot be invalidated solely because the reserve price is below the distress value, emphasising that proper valuation and due process are the governing requirements. A coram of Chairperson Justice Anil Kumar Srivastava observed, “In case, proper valuation has not been made and the reserve price is fixed taking into consideration the inaccurate valuation report, the intending buyer may not come forward treating...

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...

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...

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...

Borrower Who Ignored Private Treaty Sale Notice Cannot Later Question Lack Of Written Terms: DRAT Chennai

The Debts Recovery Appellate Tribunal at Chennai has held that a borrower who neglects to respond to notice of a proposed private treaty sale, despite having knowledge of it, cannot later challenge the sale as invalid for want of written terms of the private treaty.The tribunal was dealing with cross-appeals filed by ICICI Bank and the auction purchaser challenging the order of the Debts Recovery Tribunal, Chennai, dated February 18, 2013, which had set aside the sale of secured property....

Pendente Lite Interest Is In Court's Discretion, Contractual Rate Not Mandatory: DRAT Mumbai

The Debts Recovery Appellate Tribunal (DRAT) at Mumbai recently reiterated that pendente lite interest (interest pending litigation) need not always follow the contractual rate and can be reduced in appropriate cases based on judicial discretion exercised by the tribunal. Chairperson Justice G. Chandrasekharan made the observation while deciding cross-appeals arising from a recovery proceeding before the DRT, Aurangabad, in which recovery of Rs. 10,12,68,365 together with interest had been...

Refund Of Auction Amount Does Not Bar Auction Purchaser From Challenging DRT Order Under SARFAESI: DRAT Allahabad

The Debts Recovery Appellate Tribunal (DRAT) at Allahabad has held that a refund of the auction amount to a purchaser after a SARFAESI auction does not render the appeal infructuous, and the auction purchaser retains the right to challenge an order allowing the borrowers to redeem the secured property after the sale. The observation was made by Chairperson Justice R.D. Khare while allowing an appeal filed by an auction purchaser against the order dated September 11, 2019, passed by the Debts...

Omission Of NPA Date In SARFAESI Demand Notice Is Technical Error, Recovery Action Not Invalid: DRAT Chennai

The Debts Recovery Appellate Tribunal at Chennai has observed that mere omission to mention the date of classification of a loan account as a Non-Performing Asset (NPA) in a demand notice issued under the SARFAESI Act is only a technical lapse and does not invalidate the recovery proceedings initiated by the bank. Chairperson Justice G. Chandrasekharan observed, “Mere omission to mention the date of classification of account as NPA in the Demand Notice, is only a technical error by oversight....

DRAT Chennai Sets Aside Exemption From SARFAESI Action Granted After Bank Did Not Deny Agricultural Land Claim

The Debt Recovery Appellate Tribunal (DRAT) at Chennai has set aside an order of the Debt Recovery Tribunal-II, Chennai, which had granted exemption from recovery under the SARFAESI Act after accepting the borrower's claim that the secured asset was agricultural land. The appellate tribunal examined whether the tribunal below was justified in allowing the plea mainly because the bank had not specifically denied the exemption claim. In that context, the tribunal presided over by Chairperson...

Interest Loss Not Ground For Condonation Of Delay: DRAT Kolkata Rejects ASREC Appeal Filed After 910 Days

The Debts Recovery Appellate Tribunal at Kolkata has refused to condone a delay of 910 days in filing an appeal, holding that the explanation offered by the appellant did not disclose sufficient cause to justify condonation of such an inordinate delay. The tribunal also observed that delay cannot be condoned merely on the ground that the claimants were deprived of interest during the period of delay. The observations were made by Chairperson Justice Anil Kumar Srivastava while deciding an...

Educational Institutions Should Not Be Shut Down For Debt Recovery When Other Options Exist: DRAT Kolkata

The Debts Recovery Appellate Tribunal (DRAT) at Kolkata has recently observed that educational institutions should not be shut down or their management taken over by secured creditors when other lawful modes of recovery are available, while partly allowing an appeal filed by Kotak Mahindra Bank against an interim order passed by the Debts Recovery Tribunal, Kolkata.Chairperson Justice Anil Kumar Srivastava observed, “Educational Institutions are not to be shut down or their Management should...

Bank Cannot Attach Deposits Pending Recovery Proceedings Without Show Cause Notice Under RDB Act: DRAT Chennai

The Debts Recovery Appellate Tribunal (DRAT), Chennai has held that a bank cannot attach or exercise lien over deposits during the pendency of recovery proceedings unless the procedure prescribed under the Recovery of Debts and Bankruptcy Act is followed. It also ruled that such relief cannot be granted when the original application does not contain a specific prayer seeking recovery against the concerned party. Interim directions, the tribunal said, cannot travel beyond the scope of the main...