Case Laws-SARFAESI-High Courts

Whether CMM in exercise of jurisdiction under Section 14 of SARFAESI Act could entertain an application under Section 340 CrPC at the instance of third party and pass an order staying its earlier order? – Cholamandalam Investment and Finance Company Ltd. Vs. Sh Mahesh Taneja and Ors. – Delhi High Court

Hon’ble Delhi High Court held that:

(i) Before passing such an order the CMM or District Magistrate is not even obliged to give notice or afford any hearing to the borrower. This itself shows that the function to be performed by the Magistrate under Section 14 of the SARFAESI Act is ministerial and not adjudicatory.
(ii) It will not be within the purview of the Magistrate’s jurisdiction under Section 14 of the SARFAESI Act to entertain any objection either of the borrower or of any third party questioning the exercise of powers under the said provision.
(iii) The power under Section 340 CrPC read with Section 195(1)(b) CrPC can be exercised only where someone fabricates false evidence or gives false statement in the judicial proceedings, and not in other proceedings. This becomes evident from the reading of Sections 193, 199, 204 and 209 of the Indian Penal Code which have been referred to in Section 195(1)(b) CrPC.

Whether CMM in exercise of jurisdiction under Section 14 of SARFAESI Act could entertain an application under Section 340 CrPC at the instance of third party and pass an order staying its earlier order? – Cholamandalam Investment and Finance Company Ltd. Vs. Sh Mahesh Taneja and Ors. – Delhi High Court Read Post »

Whether District Consumer Commission under provision of Consumer Protection Act, 2019 has jurisdiction to stay auction under SARFAESI – Union Bank of India Vs. Rajesh Kumar Agrawal and Anr. – Orissa High Court

Hon’ble Orissa High Court held that:

(i) There cannot be any iota of doubt that the expression “other authority” under Section 34 will encompass the “Consumer Commissions”.
(ii) If the provisions of Section 35 of SARFAESI Act read with Section 37 thereof is juxtaposed with Section 100 of the Consumer Protection Act, 2019 the irresistible conclusion is that any action that is taken or contemplated under the SARFAESI Act or RDDB Act has to be governed by the SARFAESI Act or RDDB Act alone and all other laws save and except those as find mentioned in Section 37 of SARFAESI Act have to yield to the same.
(iii) The maxim “ignoratia juris no excusat” applies in equal measure to all including the Consumer Commissions. The least that can be expected from the President and the Members of the District Commissions that before passing any order relating to any alleged violation vis-à-vis the provisions of any Special Act they will test the propositions claiming the reliefs on the touchstone of law governing the field which would enable them not to embark upon a journey which will lead to avoidable litigation and denude the faith of the common man in the fairness and effectiveness of the redressal mechanism and which will also not render otiose, the intent of the legislature in enacting Special Statues.

Whether District Consumer Commission under provision of Consumer Protection Act, 2019 has jurisdiction to stay auction under SARFAESI – Union Bank of India Vs. Rajesh Kumar Agrawal and Anr. – Orissa High Court Read Post »

The applicability of interim moratorium under Section 96 of IBC, 2016, on the proceedings initiated by a Bank under SARFAESI Act, cannot be excluded merely because the bank has taken possession prior to commencement of the proceedings against Personal Guarantor under the IBC, 2016 – Sanjay Dhingra Vs. IDBI Bank Ltd. and Ors. – Delhi High Court

Hon’ble Delhi High Court held that after commencement of the insolvency proceedings under the IBC, 2016, against the petitioner, in his capacity as a personal guarantor with respect to default of a loan account, the interim moratorium shall be applicable to all the debts, including the debt owed by the petitioner to the respondent-bank, in his capacity as a personal guarantor, for which property in question was mortgaged by the petitioner, against which SARFAESI proceedings have been initiated by the bank.

The Hon’ble Court also held that judgment of Kerala High Court in the case of Jeny Thankachan Vs. Union of India and Ors. (2023) ibclaw.in 918 HC does not apply to the facts and circumstances of the present case.

The applicability of interim moratorium under Section 96 of IBC, 2016, on the proceedings initiated by a Bank under SARFAESI Act, cannot be excluded merely because the bank has taken possession prior to commencement of the proceedings against Personal Guarantor under the IBC, 2016 – Sanjay Dhingra Vs. IDBI Bank Ltd. and Ors. – Delhi High Court Read Post »

High Court allows Ex-Director of Corporate Debtor to inspect of the record available with Resolution Professional – Shantanu Prakash Vs. State Bank of India and Ors. – Delhi High Court

In this case, SCNs issued by Bank to ex-director of Corporate Debtor for reporting of Fraud, however, complete documents, on the basis of which SCNs have been issued have not been provided.

Hon’ble High Court held that it is settled law that fair procedure and the Principles of Natural Justice require that the requisite documents, which form the basis of a SCN, ought to be provided to the concerned party in order to enable such party to submit a proper reply to answer all the allegations raised against it. No party can be expected to respond to a SCN in an effective manner, in the absence of the underlying documents, which form the basis of the said SCN.

Further, Hon’ble High Court directs that the petitioner shall be allowed inspection of the records of the company, as available with the lead bank, i.e., SBI. Since, record of the company is also stated to be in the possession of the RP, it is directed that the petitioner shall also be allowed to inspect of the record of the company, as available with the RP. Upon inspection of the record of the company, the petitioner shall state the specific documents that are required from the record of the company, that form the basis of the SCNs.

High Court allows Ex-Director of Corporate Debtor to inspect of the record available with Resolution Professional – Shantanu Prakash Vs. State Bank of India and Ors. – Delhi High Court Read Post »

The process of acquisition under Section 5 of SARFAESI Act, 2002 is independent of Section 13(4) read with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 – G. R. Associates and Ors. Vs. Reserve Bank of India and Ors. – Calcutta High Court

Hon’ble High Court held that:

(i) ‘Financial asset’ is a concept far more comprehensive than ‘secured asset’.
(ii) The entire provisions of Rule 8 pertain to the sale of immovable secured assets and do not have any connection with the assignment of the debt with its ancillaries, which forms the financial asset.
(iii) Clause (a) of Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 provides, as a method of transfer, obtaining quotations from “the persons dealing with similar secured assets or otherwise interested in buying such assets”. The persons spoken of therein are not necessarily restricted to ARCs, who are specifically equipped to undertake recovery proceedings in lieu of the Bank upon acquisition of financial assets, but the clause hints at persons who deal with assets similar to the secured assets which come up for transfer and/or who are otherwise interested in buying such encumbered/unencumbered assets.
(iv) An acquisition under Section 5 by ARC of the financial assets stands on a different paradigm than a much lesser transfer under Section 13(4), read with Rule 8(5).

The process of acquisition under Section 5 of SARFAESI Act, 2002 is independent of Section 13(4) read with Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 – G. R. Associates and Ors. Vs. Reserve Bank of India and Ors. – Calcutta High Court Read Post »

If an Authorised Officer of a Bank/Institution has to face criminal charges, for acting in accordance with law, then it is clearly an abuse of the process of law and such proceeding should not be allowed to continue in the interest of justice – Bank of Baroda and Ors. Vs. Jainex Metalliks Ltd. – Calcutta High Court

Hon’ble Calcutta High Court quashes the criminal proceedings under Section 120B/403/409/418/420/380/500/384/511 of the Indian Penal Code (IPC) against Bank officials of a Nationalized Bank, who acted in accordance with law in their official capacity on behalf of the Bank.

If an Authorised Officer of a Bank/Institution has to face criminal charges, for acting in accordance with law, then it is clearly an abuse of the process of law and such proceeding should not be allowed to continue in the interest of justice – Bank of Baroda and Ors. Vs. Jainex Metalliks Ltd. – Calcutta High Court Read Post »

To establish Right and Interests under Section 13(7) of SARFAESI Act, 2002 for the residual money, Writ under Article 226 is not a proper proceeding – Trishila Chetry @ Trishna Chetry Vs. The State of Assam and 8 Ors. – Gauhati High Court

The provisions contained in Section 13(7) of the SARFAESI Act, 2002 has made it clear that the residue of the money is to be paid to the person entitled to in accordance with his rights and interests. Thus, to receive any part of the residual amount, a person has to establish his rights and interest. The writ proceeding under Article 226 of the Constitution of India is not a proper proceeding to establish the petitioner’s right and interests in so far as the residual amount is concerned as the petitioner has to establish such rights and interest.

To establish Right and Interests under Section 13(7) of SARFAESI Act, 2002 for the residual money, Writ under Article 226 is not a proper proceeding – Trishila Chetry @ Trishna Chetry Vs. The State of Assam and 8 Ors. – Gauhati High Court Read Post »

There is no provision in law to grant time for filing objection if any certificate debtor is interested to raise any objection and to resist execution of any certificate, he may prefer objection and in that circumstances, Recovery Officer is under obligation to decide objections – Shriram Plast and Ors. Vs. Recovery Officer Debts Recovery Tribunal and Anr. – Madhya Pradesh High Court

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There is no provision in law to grant time for filing objection if any certificate debtor is interested to raise any objection and to resist execution of any certificate, he may prefer objection and in that circumstances, Recovery Officer is under obligation to decide objections – Shriram Plast and Ors. Vs. Recovery Officer Debts Recovery Tribunal and Anr. – Madhya Pradesh High Court Read Post »

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