Case Laws-SARFAESI DRB Acts

DRT does not have the jurisdiction to grant a declaration with respect to the mortgage deed or the sale deed | Jurisdiction to declare a sale deed or a mortgage deed being illegal is vested with the civil court under Section 9 of the Code of Civil Procedure – Central Bank of India and Anr. Vs. Smt. Prabha Jain and Ors. – Supreme Court

January 28, 2025 / 90 minutes of reading

The Hon’ble Supreme Court held that:

(i) The SARFAESI Act has not been enacted for providing a mechanism for adjudicating upon the validity of documents or to determine questions of title finally. The DRT does not have the jurisdiction to grant a declaration with respect to the mortgage deed or the sale deed as sought by the Plaintiff.
(ii) The jurisdiction to declare a sale deed or a mortgage deed being illegal is vested with the civil court under Section 9 of the Code of Civil Procedure. Therefore, the civil Court has the jurisdiction to finally adjudicate upon the first two reliefs.
(iii) The DRT is not permitted to examine the validity of the earlier sale deed, whereafter the mortgage was executed in favour of the Bank.

DRT does not have the jurisdiction to grant a declaration with respect to the mortgage deed or the sale deed | Jurisdiction to declare a sale deed or a mortgage deed being illegal is vested with the civil court under Section 9 of the Code of Civil Procedure – Central Bank of India and Anr. Vs. Smt. Prabha Jain and Ors. – Supreme Court Read Post »

Whether the provisions under Sec. 13 (3A) of SARFAESI Act, 2002 to send a reply to the objections raised by Borrower within a week is directory or mandatory? – Bank of Baroda Vs. E-star Infotech Ltd. and Anr. – DRAT Mumbai

January 24, 2025 / 2 minutes of reading

The Hon’ble DRAT Mumbai held that the scheme of the SARFAESI Act makes it amply clear that the creditor is required to consider such representation of the borrower within the stipulated time before proceeding to resort to any measures under Section 13(4) of the SARFAESI Act. Since there is a blatant violation of the provisions, the SARFAESI action has to fail going by the maxim sublato fundamento cadit opus which translates to “remove the foundation and structure falls”.

Whether the provisions under Sec. 13 (3A) of SARFAESI Act, 2002 to send a reply to the objections raised by Borrower within a week is directory or mandatory? – Bank of Baroda Vs. E-star Infotech Ltd. and Anr. – DRAT Mumbai Read Post »

High Court directs Collector/ District Magistrate to conclude the proceeding under Section 14 of the SARFAESI Act, 2002 within 30 days from the next date fixed – Tata Capital Housing Finance Ltd. Vs. State of Chhattisgarh and Ors. – Chhattisgarh High Court

January 24, 2025 / 6 minutes of reading

The procedure under Section 14 of the SARFAESI Act, 2002 was commenced in the month of January, 2023. However, despite the fact that from January, 2023 though several months period has elapsed, the proceeding under Section 14 of the SARFAESI Act has not been concluded by Collector/ District Magistrate.

High Court directs Collector/ District Magistrate to conclude the proceeding under Section 14 of the SARFAESI Act, 2002 within 30 days from the next date fixed – Tata Capital Housing Finance Ltd. Vs. State of Chhattisgarh and Ors. – Chhattisgarh High Court Read Post »

Can the District Magistrate issue a notice to the Borrower for disposing of an application u/s 14 of SARFAESI Act, 2002, filed by a Bank – ICICI Home Finance Company Ltd. Vs. State of Chhattisgarh and Ors. – Chhattisgarh High Court

January 23, 2025 / 6 minutes of reading

In this case, the Bank an application under Section 14 of the SARFAESI Act, 2002 before District Magistrate. District Magistrate issued a notice to borrower. The Bank filed writ petition seeking a direction towards the District Magistrate to withdraw the decision of issuing the notice to the borrower and to proceed in accordance with Section 14 of the SARFAESI Act, 2002, assisting in providing rightful possession of the mortgaged property to the petitioner bank within the stipulated period of 30 days as prescribed under the Act of 2002.

Can the District Magistrate issue a notice to the Borrower for disposing of an application u/s 14 of SARFAESI Act, 2002, filed by a Bank – ICICI Home Finance Company Ltd. Vs. State of Chhattisgarh and Ors. – Chhattisgarh High Court Read Post »

A finding by Wilful Defaulter Committee (WDC) should not simply rely on a Transaction Audit Report (TAR), which unacceptable by the NCLT? – Ankit Bhuwalka Erstwhile Director of Bhuwalka Steel Industries Ltd. Vs. IDBI Bank Ltd. and Anr. – Bombay High Court

January 21, 2025 / 38 minutes of reading

The Hon’ble Bombay High Court held that:

(i) It is safe to accept that the basis of issuance of the SCN was primarily the findings in the Transaction Audit Report (TAR), which were observed by the NCLT to be mere assumptions. Considering the grave consequences that follow a finding by the Wilful Defaulter Committee (WDC), the degree of proof required and expected to have been relied upon by the WDC should be much higher and not simply based on a TAR which itself was unacceptable to the NCLT.

(ii) Even if the Petitioner is presumed to have access to documents in the proceedings before the NCLT, he is justified in seeking documents in the conduct of WDC proceedings.

(iii) Article 19(1)(g) of the Constitution of India is attracted as the moment a person is declared as wilful defaulter. A Fundamental right under Article 19 or 21 can be enforced even against persons other than State or its instrumentalities.

A finding by Wilful Defaulter Committee (WDC) should not simply rely on a Transaction Audit Report (TAR), which unacceptable by the NCLT? – Ankit Bhuwalka Erstwhile Director of Bhuwalka Steel Industries Ltd. Vs. IDBI Bank Ltd. and Anr. – Bombay High Court Read Post »

Money due to a Bank by a Proprietorship concern cannot be recovered from the bank account of Partnership firm, even if such sole proprietor is one of the partners in such firm – Mukesh Kumar Bansal Vs. Central Bank of India and Anr. – Delhi High Court

January 18, 2025 / 16 minutes of reading

The Hon’ble Delhi High Court held that:

(i) Being banker, the bank has certainly access to the details of all its accounts but that would not mean that it can freeze somebody’s account in such arbitrary and whimsical manner, while acting itself as a judge, that too in its own cause.
(ii) The bank muddled up in applying principle of set off as enumerated under Section 171 of Indian Contract Act, 1872, which is not attracted keeping in mind the peculiar facts of the case in hand.
(iii) Though ideally, the petition should have been filed by the firm but the fact that it has been filed by one of the partners does not mean that the case has to be discarded, more so, when there is found to be clear-cut violation of law.

Money due to a Bank by a Proprietorship concern cannot be recovered from the bank account of Partnership firm, even if such sole proprietor is one of the partners in such firm – Mukesh Kumar Bansal Vs. Central Bank of India and Anr. – Delhi High Court Read Post »

Raviputram Oil Mills and Ors. Vs. Authorized Officer, UCO Bank and Anr. – DRAT Allahabad

January 17, 2025 / 1 minute of reading

Raviputram Oil Mills and Ors. Vs. Authorized Officer, UCO Bank and Anr. – DRAT Allahabad Read Post »

Sameer Bahadur Vs. Piramal Capital Housing and Finance Ltd. (Formerly known as Dewan Housing Finance Corporation Ltd.) – DRAT Delhi

January 17, 2025 / 1 minute of reading

Sameer Bahadur Vs. Piramal Capital Housing and Finance Ltd. (Formerly known as Dewan Housing Finance Corporation Ltd.) – DRAT Delhi Read Post »

No bar under the law for simultaneous proceeding both under the Negotiable Instrument Act, 1881 (NI Act) and under the SARFAESI Act, 2002 in respect of the same transaction and the question of enrichment in such circumstances does not arise – Madhusudan Garai Vs. State of West Bengal and Anr. – Calcutta High Court

January 17, 2025 / 16 minutes of reading

Hon’ble Calcutta High Court held that a proceeding under section 138 of the N.I. Act is not a proceeding so called for realization of arrear amount or for recovery of money. Section 138 deals with punishment for dishonor of cheque for insufficiency of fund etc, whereas the object of a proceeding under the SARFAESI Act is to ensure that dues of secured creditors including banks finanical institutions are recovered from the default borrower without any obstruction or without intervention of courts or tribunals. Accordingly there is no bar under the law for simultaneous proceeding both under the N.I. Act and under the SARFAESI Act in respect of the same transaction and the question of enrichment in such circumstances does not arise at all.

No bar under the law for simultaneous proceeding both under the Negotiable Instrument Act, 1881 (NI Act) and under the SARFAESI Act, 2002 in respect of the same transaction and the question of enrichment in such circumstances does not arise – Madhusudan Garai Vs. State of West Bengal and Anr. – Calcutta High Court Read Post »

Is jurisdictional monetary threshold of Rs. 20 lakh applicable to an NBFC that is a Financial Institution (FI) under the SARFAESI Act, 2002, and has invoked the SARFAESI Act as a Secured Creditor? | Is writ maintainable when the questions of jurisdiction raised? – Gupta Hardware Store and Ors. Vs. Union of India and Ors. – Himachal Pradesh High Court

January 17, 2025 / 26 minutes of reading

A Division Bench of the Hon’ble Himachal Pradesh High Court held that:

(i) When the questions of jurisdiction are raised to the maintainability of any proceedings or pure questions of law arise with respect to existence, exercise of power by any authority/Tribunal created under a statute, then alternate remedy is no bar and is rendered a mere technicality. The writ Court can extend the large arms of its jurisdiction and powers to address and undo the wrong or illegal usurpation of powers by any statutory authority.
(ii) The notification issued under Section 2(1)(m)(iv) of the SARFAESI Act would not only apply, but bind the financial company, therefore, once these respondents seek to enforce the claim under the SARFAESI Act, as such, they are bound by the Notification dated 12.02.2021.

Is jurisdictional monetary threshold of Rs. 20 lakh applicable to an NBFC that is a Financial Institution (FI) under the SARFAESI Act, 2002, and has invoked the SARFAESI Act as a Secured Creditor? | Is writ maintainable when the questions of jurisdiction raised? – Gupta Hardware Store and Ors. Vs. Union of India and Ors. – Himachal Pradesh High Court Read Post »