High Court
Calcutta High Court Quashes Criminal Case Against SBI Officials, Says Dispute Was Purely Civil
On 17 June, the Calcutta High Court held that criminal proceedings cannot be used to pressurise parties in disputes that are essentially civil in nature and must disclose the essential ingredients of the alleged offences before a Magistrate can take cognisance. Justice Ajoy Kumar Mukherjee quashed criminal proceedings initiated against two State Bank of India officials who had been accused of offences under Sections 120B, 420, 409, 467, 468 and 471 of the IPC in connection with the auction sale...
NTA Committee's Approval Not Needed Before SARFAESI Action Against Property Of Person With Disability: Kerala HC
The Kerala High Court has held that a secured creditor proceeding under the SARFAESI Act is not required to obtain prior permission from the Local Level Committee constituted under the National Trust Act before proceeding against property in which a ward (a person with specified disabilities) has an interest. Justice P.V. Balakrishnan made the observation while dismissing a writ petition challenging SARFAESI proceedings initiated by Canara Bank against secured assets in which the second...
Calcutta High Court Holds Prepayment And Contractual Charges Form Part Of 'Debt' Under RDB Act
The Calcutta High Court on 10 June held that prepayment charges, commitment charges and processing fees arising from a lending transaction constitute “debt” under Section 2(g) of the Recovery of Debts and Bankruptcy Act, 1993, and remain recoverable unless waived or extinguished, even after repayment of principal and interest. Justice Rai Chattopadhyay dismissed a writ petition filed by Maan Steel and Power Ltd challenging Indian Bank's refusal to release Fixed Deposit Receipts (FDRs) and issue...
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...