Cheque Bounce Cases Cannot Be Allowed To Degenerate Into 'Interminable Litigation': Kerala High Court

The Kerala High Court has observed that proceedings in cheque dishonour cases cannot be allowed to "degenerate into interminable litigation", while dealing with a complaint instituted in 2004 that remained pending for more than two decades. Justice C.S. Dias made the observation while dismissing a petition filed by the accused seeking to stay and quash the prosecution and directing the Trial Court to dispose of the complaint within two months. “The object of Chapter XVII of the Negotiable...

“Banks Are Dealing With Public Money”: Karnataka High Court Calls for Strict Adherence To RBI Guidelines

The Karnataka High Court recently observed that banks dealing with public money must exercise utmost caution while conducting their business and strictly follow RBI guidelines and internal circulars. The court warned that departures from prescribed procedures can adversely affect a bank's financial operations, create chaos in the banking system, and ultimately impact the country's economy. A Division Bench of Justice D.K. Singh and Justice T.M. Nadaf made the observation while setting aside...

Notice Returned As 'Unclaimed' At Correct Address Suffices For Deemed Service: Kerala High Court

A cheque demand notice returned with the postal endorsement "unclaimed" is sufficient to satisfy the statutory requirement of notice in a cheque dishonour case, the Kerala High Court has held. Justice A Badharudeen, allowing an appeal against an acquittal recorded by a magistrate's court in Kozhikode, held that when a demand notice is issued to the drawer's correct address, its return with the endorsement "unclaimed" would amount to deemed acceptance unless the accused proves otherwise. The...

Compromise In Commercial Disputes Warrants Closure Of 138 NI Act Proceedings: Punjab & Haryana High Court

The Punjab and Haryana High Court has compounded an offence under Section 138 of the Negotiable Instruments Act in a matter between Sunil Kumar and Mukesh Sharma after finding that the parties had voluntarily settled their dispute and the complainant had received the entire settlement amount in full and final satisfaction of his claim. A Bench of Justice Subhas Mehla held that continuation of proceedings in such commercial disputes serves no useful purpose once the settlement is acted upon and...

SARFAESI Auction Timelines Are Mandatory, Not Directory; Unjustified Deviation Vitiates Sale: Supreme Court

The Supreme Court on Tuesday set aside a SARFAESI auction sale of a mortgaged property after finding that the successful bidder paid the balance sale consideration five days after the deadline fixed for payment and that there was no written agreement extending the time. Holding that the lapse constituted a "material irregularity going to the root of the matter," the court quashed the sale. A bench of Justice Dipankar Datta and Justice Augustine George Masih observed that the auction purchaser...

Evidence Of Person Without Direct Knowledge Insufficient In Cheque Bounce Case: Kerala High Court

The Kerala High Court has observed that a complainant in a cheque dishonour case cannot rely on evidence from a person who lacks direct knowledge of the transaction and execution of the cheque to prove those facts. “Indubitably such evidence shall be given by the person, who had direct knowledge regarding the transaction and execution of the cheque and the evidence of a person, who does not know the same is insufficient to prove the transaction and the execution of the cheque.” Justice A....

Calcutta High Court Holds No Title Passed Under Tenancy Created After SARFAESI Notice

The Calcutta High Court on Tuesday set aside a trial court order directing parties to maintain status quo in a tenancy dispute over a property. It held that a tenancy created after issuance of a demand notice under the SARFAESI Act could not confer any rights on the tenant. A Division Bench of Justice Sabyasachi Bhattacharyya and Justice Supratim Bhattacharya held that the tenancy relied upon by Julien Educational Trust had been created years after issuance of the demand notice and without any...

Bombay High Court Rules Section 18 SARFAESI Pre-Deposit Mandatory, Bars Complete Waiver By DRAT

On 8 June, the Bombay High Court held that borrowers cannot bypass the mandatory pre-deposit requirement under Section 18 of the SARFAESI Act while challenging orders of the Debts Recovery Tribunal, including orders refusing to condone delay, and reiterated that the statute permits only limited reduction of the deposit and not complete waiver. Justices Manish Pitale and Shreeram V Shirsat allowed writ petitions filed by HDFC Bank and auction purchaser Aloukik Construwell LLP and set aside...

OTS Rejection Is Substantive Order, Pre-Deposit Mandatory Under SARFAESI: Calcutta High Court

The Calcutta High Court on 20 May held that rejection of a borrower's plea seeking implementation of a One Time Settlement (OTS) scheme constitutes a substantive adjudication affecting debt liability and not a mere procedural order. Justice Om Narayan Rai observed that any direction requiring a bank to implement an OTS scheme would amount to alteration of the borrower's outstanding liability. He held: “A direction to the bank to implement a scheme for one time settlement in support of a...

SARFAESI Sale Certificates Not Liable To Stamp Duty Upon Issuance: Kerala High Court [Full Bench]

The Kerala High Court has recently held that a sale certificate issued pursuant to an auction sale under the SARFAESI Act is not liable to stamp duty merely upon its issuance. The Court also held that a Registering Officer cannot refuse to file a copy of such certificate on the ground that it is unstamped. A Full Bench comprising Justices Sathish Ninan, T.R. Ravi and M.A. Abdul Hakhim answered a reference arising from conflicting Division Bench decisions on the issue. “It has been held that...

Magistrate Cannot Refer Parties To Mediation In SARFAESI Proceedings Under Section 14: Kerala High Court

The Kerala High Court has set aside an order referring a SARFAESI proceeding to mediation, holding that the role performed by a Magistrate in such proceedings is purely ministerial and does not involve any adjudicatory process. Justice P.V. Balakrishnan observed that a Chief Judicial Magistrate or Additional Chief Judicial Magistrate exercising powers under the SARFAESI Act does not perform any quasi-judicial function and has no discretion in the matter. “It cannot be disputed that the power...

Unauthenticated Alteration In Cheque Date Renders It Void: Kerala High Court

The Kerala High Court has recently held that an alteration in the date of a cheque that is not authenticated by the drawer's full signature amounts to a material alteration and renders the cheque void, while upholding an acquittal in a cheque dishonour case. Justice A. Badharudeen held: “When there is alteration of the date in the cheque which is not authenticated by putting the full signature of the drawer on the place of alteration, the same operates as a material alteration and the same...