There Can Be Simultaneous Proceedings Under SARFAESI And Arbitration Act For Recovery Of Loan Arrears: Delhi HC [Read Order]

The Delhi High Court, on Thursday, held that arbitration and SARFAESI proceedings can be resorted to simultaneously for recovery of loan arrears."As the SARFAESI Act and the Arbitration /Debt Recovery Act are held to be complementary in nature and the doctrine of election has been held to be not applicable, it cannot be said that if a party has invoked one remedy, it is debarred from invoking the other during the pendency of the first one. Under the SARFAESI Act, specially under Section 13...

DRT Has No Power To Condone Delay In Filing Appeal: SC [Read Judgment]

The Supreme Court, in International Asset Reconstruction Company Of India Ltd vs The Official Liquidator Of Aldrich Pharmaceuticals Ltd And Others, has held that the prescribed period of 30 days under Section 30(1) of the Recovery of Debts and Bankruptcy (RDB) Act, 1993, for preferring an appeal against the order of the recovery officer cannot be condoned by application of Section 5 of the Limitation Act.In the instant case, an appeal was preferred by the aggrieved against the order of recovery...

SARFAESI: Allahabad HC Refuses To Entertain Borrower’s Loan Default Due To Demonetisation, GST [Read Judgment]

The Allahabad High Court has dismissed a writ petition challenging recovery proceedings initiated against a borrower firm, which challenged recovery proceedings on the ground that due to demonetisation and imposition of GST, it suffered loss in business and could not pay loan installments to the bank.The bench comprising Justice Bharati Sapru and Justice Siddharth passed the above order in a petition filed by LED bulb manufacturing firm, M/S Kanika Swami of Meerut.The issue before the division...

There Can Be Simultaneous Proceedings Under SARFAESI And Arbitration Act For Recovery Of Loan Arrears [Read Judgment]

The Supreme Court has held that NBFC is entitled to initiate both arbitration proceedings and SARFAESI proceedings with respect to a loan account, and that the ‘doctrine of election’ was not attracted in such a scenario. It was further clarified that there was no illegality  in an Non-Banking Financial Company(NBFC) invoking SARFAESI Act for recovery of loan arrears with respect to an account classified as Non-Performing Asset(NPA) before the NBFC got notified under the Act. It was also...

Borrower Can Prefer Appeal To DRT Even If Mortgaged Property Belongs To Guarantor: Chhattisgarh HC [Read Judgment]

It is nowhere provided that when secured asset belongs to the guarantor, only the guarantor can prefer an appeal and not the borrower, the court said.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...

Allahabad HC Quashes DRAT Order, Cancels Auction Sale Under SARFAESI Act As Debtor Was Not Informed [Read Judgment]

The Allahabad High Court has quashed 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...

DRT Allows Banks To Recover Rs.6,203 Cr From Vijay Mallya, His Firms [Read Order]

Mallya’s claim of banks coercing him to execute guarantee can add a bit of humour value in this otherwise serious claim for recovery of thousands of Crores of public money, the Tribunal said.The Debt Recovery Tribunal (DRT), Karnataka, has allowed banks to recover Rs.6,203 crore from Vijay Mallya, Kingfisher Airlines and associated companies.Presiding Officer K Srinivasan also held that service tax charge over schedule properties shall be receivable only after satisfaction of all claims of...

Appeal Before DRT Maintainable Even If Amount Involved Is Less Than Rs 10 Lakh: SC [Read Judgment]

The Supreme Court in State Bank of Patiala vs. Mukesh Jain, has held that the Debt Recovery Tribunal (DRT) has jurisdiction to entertain an appeal as per Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, even if the amount involved is less than Rs 10 lakh.A bench comprising Justice Anil R Dave and Justice L Nageswara Rao, however, clarified that appellate jurisdiction need not be misunderstood with the original jurisdiction of...

Partial deposit before DRAT under Section 18 of SARFAESI Act refundable, reiterates SC [Read Judgment]

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,...

Partial Deposit before DRAT is neither a secured asset, nor a secured debt; It is refundable to the appellant after disposal of Appeal: SC [Read Judgment]

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...

Provisions of SICA prevail over the provision for recovery of debts under RDDB Act : Supreme Court [Read the Judgment]

A three judge benchof the Supreme Court, consisting of Chief Justice of India HL Dattu, Justice Bobde and Justice Sapre pronounced that "the provisions of SICA, in particular Section 22, shall prevail over the provision for the recovery of debts in the RDDB Act."The appeal had first come up before the Bench of Justice Thakker and Justice Altamas Kabir, who had a difference of opinion regarding interpretation of Section 34 of the...

SARFAESI Amendment 2004 Unconstitutional: Gujarat HC

The Gujarat High Court delivered an important judgment, wherein it held unconstitutional an amendment in securitization laws and restored the Reserve Bank of India (RBI) as the watchdog of banks and non-banking financial institutes across the country as far as their non-performing assets (NPA) period was concerned. A division bench of Chief Justice Bhaskar Bhattachrya and Justice J B Pardiwala has ruled that a 2004 amendment in the Securitization and Reconstruction of Financial Assets and...