SARFAESI | Borrower Must Tender Entire Dues Before Auction Notice, Not Wait For Sale Certificate To Redeem Property: Allahabad HC

The Allahabad High Court has held that a borrower seeking to prevent the secured creditor from transferring a secured asset under Section 13(8) of the SARFAESI Act, 2002, must tender the entire dues before publication of the public auction notice. The date on which the sale certificate is subsequently issued is not decisive. What matters is whether the borrower tendered the entire dues within the period prescribed under the provision. Section 13(8), in the form reproduced before the Court,...

NI Act | ₹2,000 Notes Not In Circulation When Loan Advanced Not Enough To Rebut Claim Of Debt: Karnataka HC

The Karnataka High Court has dismissed a criminal revision petition challenging a conviction under Section 138 of the Negotiable Instruments Act, 1881. The court observed that the complainant's statement about advancing a loan in ₹2,000 denomination notes in October 2016 was not enough, by itself, to rebut the statutory presumption in his favour.A single-judge bench of Justice Geetha K.B. was hearing a petition filed by K. Venkataswamy challenging his conviction. The trial court had convicted...

RBI-Directed Account Closure No Defence In Cheque Dishonour Cases With Low Funds: Delhi High Court

The Delhi High Court on 30 October held that an accused cannot escape liability under Section 138 of the Negotiable Instruments Act, 1881, merely because the bank closed the account on the Reserve Bank of India's (RBI) instructions, when the account lacked sufficient funds to honour the cheques. Justice Mini Pushkarna dismissed petitions filed by CH Lekh Raj Educational and Charitable Trust and others challenging a Trial Court order rejecting their application to summon bank officials as...

MP High Court Pulls Up Secured Creditor For Failing To Preserve Possession Of Property Taken Over Under SARFAESI Act

The Madhya Pradesh High Court has criticised a secured creditor for failing to preserve possession of a property taken over under the SARFAESI Act, 2002, observing that its negligence had forced the authorities to repeat the entire process of taking possession. "It is painful to note that due to lackluster approach and negligent approach taken by the Authority of Secured Creditor by not preserving the possession of the property, which is already taken over, again entire machinery is required to...

Mortgagee Bank Entitled To Claim Share In Auction Proceeds Under Section 73 CPC: Gujarat High Court

The Gujarat High Court on 26 October held that a mortgagee bank that consents to the sale of a mortgaged property in recovery proceedings can claim a share in the sale proceeds under Section 73 of the Code of Civil Procedure (CPC), even if the property has already been sold. A Bench comprising Justices A.S. Supehia and Nisha M. Thakore set aside an order of the Debts Recovery Appellate Tribunal (DRAT), Mumbai, which had rejected South Indian Bank's claim to the auction proceeds of a property...

Can Banks Be Charged For Police Aid To Take Possession Of Secured Assets? Rajasthan High Court Explains

The Rajasthan High Court has held that police assistance required to help banks take possession of secured assets under the SARFAESI Act must be provided without charging the banks. A Division Bench of Justices Vinit Kumar Mathur and Chandra Shekhar Sharma held that police assistance required to implement orders under Section 14 of the SARFAESI Act is a statutory obligation of the State. It cannot be treated as a commercial service merely because the proceedings arise from a loan transaction...

Cheque Bounce Compensation Cannot Be Recovered Through Separate Civil Suit: Gujarat High Court

Compensation awarded in cheque dishonour cases under Section 138 of the Negotiable Instruments Act cannot be recovered through a separate civil suit, the Gujarat High Court has ruled, holding that the law provides a procedure for recovering such amounts.Justice Maulik J Shelat rejected a plea to amend a pending recovery suit to include compensation awarded in the criminal proceedings, interest and legal expenses incurred by the complainant.The dispute arose from a recovery suit filed in 2014...

Small Cash Loan Not Unenforceable Solely Due To Lack Of Agreement, ITR Disclosure: Calcutta High Court

The Calcutta High Court has recently held that the absence of a written loan agreement or disclosure of a modest cash loan in Income Tax Returns (ITRs) does not automatically make the debt unenforceable.Justice Uday Kumar observed that such omissions may weaken a lender's case in large, unexplained commercial transactions. However, they cannot automatically invalidate every small hand loan.“While the lack of written loan agreements or ITR entries substantiating cash advance can severely dent a...

Delhi High Court Dismisses Retired DRT Presiding Officer's Review Plea Against Suspension

The Delhi High Court has dismissed a retired judicial officer's review petition challenging its earlier judgment rejecting his plea against suspension and disciplinary proceedings as Presiding Officer of the Debts Recovery Tribunal-II (DRT), Chandigarh. A bench of Justice Vivek Chaudhary and Justice Tejas Karia held that M.M. Dhonchak had failed to establish any error apparent on the face of the record warranting review. Dhonchak was suspended in February 2024 following complaints by the DRT...

Borrowers Cannot Bypass SARFAESI Pre-Deposit Requirement By Challenging Original NPA Classification: Karnataka High Court

The Karnataka High Court has recently ruled that borrowers cannot use a fresh writ petition to circumvent the statutory pre-deposit requirement for appeal under the SARFAESI Act. The bench held that borrowers cannot reopen recovery proceedings by challenging the original classification of their loan accounts as non-performing assets (NPAs) after their statutory appeal fails for non-compliance with the pre-deposit requirement.A division bench of Chief Justice Vibhu Bakhru and Justice K.S....

Auction Purchaser Cannot Seek Interest Through Writ After NCDRC Rejects Claim: Karnataka High Court

The Karnataka High Court on 29 September held that an auction purchaser cannot claim interest from a bank for delayed delivery of possession when the National Consumer Disputes Redressal Commission (NCDRC) has already ruled that the delay did not result from any wilful default or deficiency in service by the bank. A Single Judge Bench of Justice Sachin Shankar Magadum dismissed a writ petition filed by G. Mahimaiah seeking interest at 12% per annum from the State Bank of India, formerly State...

Disputed Title Deed's Genuineness Can Be Decided By Civil Court Despite SARFAESI Proceedings: Calcutta High Court

On October 8, the Calcutta High Court has held that the bar on civil court jurisdiction under the Section 34 of the SARFAESI Act does not automatically prevent a civil suit seeking adjudication of a disputed title deed, particularly where the genuineness of the document forms the foundation of the claimant's ownership. The Court observed that the Debt Recovery Tribunal's jurisdiction cannot be extended to determining substantive disputes concerning the validity or genuineness of title...