Legal Reference Library

The Chhattisgarh High Court, in Manik Mehta vs. UCO Bank, has observed that even when the secured asset belongs to the guarantor, the borrower can also prefer an appeal to the Debt Recovery Tribunal (DRT). In the present case, the Debts Recovery Appellate Tribunal (DRAT) has found that under Section 17 of the Act, 2002, any person (including the borrower), aggrieved by any of the measures referred to in sub-section (4) of Section 13 may prefer an appeal to the DRT, however, in the instant case, the property of the guarantor having been auctioned, the borrower is not an aggrieved party. The DRAT had upheld the DRT order, which held that the borrower for whose credit facility the property was mortgaged has the right to challenge the recovery proceedings since the mortgager has the right to proceed against the principal borrower to realize the money that he had to pay to liquidate the dues of the principal borrower. Setting aside the DRAT order, Justice Prashant Kumar Mishra observe...

In Ashoke Kumar vs PNB, the Hon'ble Allahabad HC while quashing the proceedings initiated post notice under Section 13(4) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 as the said notice was issued without duly informing the debtor about the auction of property and subsequent sale. Justice Mahesh Chandra Tripathi was hearing a petition filed by one Ashok Kumar who sought quashing of an order by the Debt Recovery Appellate Tribunal(DRAT) dated March 6, 2013 wherein an appeal against the order of the Debt Recovery Tribunal(DRT) was dismissed. According to the order, the petitioner was serving in Punjab National Bank,Varanasi. During his service period, he took a housing loan of Rs.10 lacs in 2007 for construction of a house and deposited title deed of a property in his village in Varanasi as security. Then the petitioner defaulted in payment of instalments. Consequently, Ashok Kumar’s loan account was declared as ‘No...

High Court of Bombay HDFC BANK LTD. v. ASHAPURA MINECHEM LTD. Amendment application should be normally granted unless by virtue of amendment, nature of suit changed or prejudice caused to Defendant Petitioner is objecting to the Order passed by Chairperson of Debt Recovery Appellate Tribunal rejecting appeal preferred by Petitioner-original applicant challenging the Order passed by the Debut Recovery Tribunal rejecting application seeking leave to amend the pleadings. Application tendered by the original applicant has been turned down by the Debt Recovery Tribunal by Order dated 6 October 2016, mainly on the ground that the proposed amendment under which the recovery of additional amount is claimed does not relate back to the date of presentation of original-application. Adverse order passed by Debt Recovery Tribunal was subject matter before Appellate Court where appeal has also been rejected. It is the case of Petitioner that, proposed amendment thus relates to the sub...

SARFAESI Act; Eskays Construction Pvt. Ltd. Vs. Soma Papers & Industries Ltd. [Bombay High Court, 30-11-2016] Contents Borrower Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Sick Industrial Companies (Special Provisions) Act, 1985 Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 18. Appeal to Appellate Tribunal Narayan Chandra Ghosh v. UCO Bank, (2011) 4 SCC 548 R.G. Dalpatrai and Co. Vs Bank of Baroda, Writ Petition (L) No.2361 of 2014 decided on 9th October, 2014 General Manager, Sri Siddeshwara Cooperative Bank Ltd. v. Ikbal & Ors., (2013) 10 SCC 83 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 18 – Appeal to Appellate Tribunal – DRAT has no power or jurisdiction to reduce the deposit amount to less than 25% – Unless the debt due is secured, the borrower cannot be all...

Reiterating the dictum laid down in in Axis bank vs. SBS Organics Private Limited, the Supreme Court in KUMAR ALUMINIUM LTD. VS. ASSET RECONSTRUCTION COMPANY INDIA has set aside a Delhi High Court Judgment which had refused to interfere with DRAT order which turned down the prayer for refund of the amount deposited in compliance of the requirement of the second proviso to section 18(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for maintaining an appeal. In Axis Bank case, the Apex Court had held that the partial deposit before the Debt Recovery Appellate Tribunal (DRAT) as a pre-condition for considering the appeal on merits in terms of Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), is neither a secured asset, nor a secured debt, and hence refundable to the appellant on disposal of appeal. Remitting back the case to DRAT, the Bench...

The Supreme Court in Axis bank vs. SBS Organics Private Limited has held that the partial deposit before the Debt Recovery Appellate Tribunal (DRAT) as a pre-condition for considering the appeal on merits in terms of Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), is neither a secured asset, nor a secured debt, and hence refundable to the appellant on disposal of appeal. Apex Court Bench comprising of Justices Kurian Joseph and R.F. Nariman made this observation while dismissing an appeal filed by Axis Bank against the Gujarat High Court Judgment wherein it was held that the deposit made before DRAT is refundable to the appellant therein. Section 18 of the SARFAESI Act states that, for the Tribunal to ‘entertain’ the appeal, the aggrieved person has to make a deposit of fifty per cent of the amount of debt due from him as claimed by the secured creditors or determined by the DRT, whichever is less. T...

The debt recovery tribunal and the appellate tribunal "misdirected themselves" by pursuing the grandchildren of a guarantor when there was no evidence that they had inherited the estate of the guarantor, the Delhi High Court stated last week in the case, Rohini Kanoi vs Allahabad Bank. In this case, a firm took loan from Allahabad Bank which was not repaid. The bank took the firm and the guarantors to the tribunal. Since one guarantor had died, his grandchildren were also made parties by the tribunal. They challenged their impleadment, that too after ten years. The high court stated that the tribunal could not make the grandchildren suffer the trial on a "bald assertion", after a long delay, that the bank had learnt that they had inherited the estate of the guarantor.

Baleshwar Dayal Jaiswal Vs. Bank of India & Ors, Dated on AUGUST 05, 2015. [Civil Appeal No.5924 of 2015 arising out of SLP (C) No.27674 of 2011] [Civil Appeal No.5925 of 2015 arising out of SLP (C) No.36316 of 2011] [Civil Appeal No.5926 of 2015 arising out of SLP (C) No.38436 of 2012] [Civil Appeal No.5927 of 2015 arising out of SLP (C) No.5789 of 2013] Judgment Details Baleshwar Dayal Jaiswal Vs. Bank of India & Ors. [Civil Appeal No.5924 of 2015 arising out of SLP (C) No.27674 of 2011] [Civil Appeal No.5925 of 2015 arising out of SLP (C) No.36316 of 2011] [Civil Appeal No.5926 of 2015 arising out of SLP (C) No.38436 of 2012] [Civil Appeal No.5927 of 2015 arising out of SLP (C) No.5789 of 2013] ADARSH KUMAR GOEL, J. 1. Leave granted. 2. The question in this batch of appeals is whether the Appellate Tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("the SARFAESI Act") has...

The debt recovery appellate tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act has the power to condone delay in filing petitions, the Supreme Court ruled last week in the judgment, Baleshwar Dayal vs Bank of India. The debt recovery law provided for 45 days as limitation, while SARFAESI provided for only 30 days. But the laws are complementary and the debt recovery mechanism is part of the SARFAES scheme, the judgment said. The contrary view held by the Madhya Pradesh High Court was incorrect and that court was directed to reconsider its judgment. Several other appeals involving the same question were also remanded to respective courts and tribunals for reconsideration.

Standard Chartered Bank Vs. Dharminder Bhohi and others [Civil Appeal No. 8486 of 2013 arising out of S.L.P. (C) No. 12292 of 2012] Dipak Misra, J. 1. Leave granted. 2. The present appeal depicts a factual score where this Court is constrained to say that delay in disposal of the application by the Debts Recovery Tribunal and the appeal by Debt Recovery Appellate Tribunal have the effect potentiality of creating a corrosion in the economic spine of the country. It exposits a factual expose' which is not only perplexing but usher in a sense of puzzlement which in the ultimate eventuate compels one to ask: "How long can the financial institutions would suffer such procrastination? How far the public interest be put to hazard because of small, and sometimes contrived individual interest? To what extent the defaulters are given protection in the name of balancing the stringent powers vested on the banks and the statutory safegurards prescribed in favour of loanees? Even...