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Home / Know the Law / SARFAESI, Debt...

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SARFAESI, Debt Recovery &

Banking Laws : Recent Important
Decisions
Pragati Aggarwal 12 July 2020 8:13 PM

1. Telangana State Southern Power Distribution Co. Ltd vs M/S

Srigdhaa Beverages

(Delivered by Supreme Court on 01.06.2020)

Brief Facts

Respondent – auction purchaser of the property of M/s.

SB Beverages Private Limited failed to pay its dues,

resulting in the auction by Syndicate Bank (Secured

WEBINARS + MORE
Creditor) under SARFAESI Act

Whether the liability towards previous electricity dues of

the last owner could be mulled on to the respondent.

Also Read - Right To Information Act, 2005: All You Need [Full Video]
[Download Notes]
To Know
"Prosecution For
Offences
Ratio:
Including "Perjury"
Under Section 195
Electricity dues, where they are statutory in character Cr.PC By Justice V
under the Electricity Act and as per the terms & Ramkumar"

conditions of supply, cannot be waived in view of the

LAW + MORE

provisions of the Act itself more speciZcally u/s 56 of FIRMS

the Electricity Act, 2003 (in pari materia with Section 24

of the Electricity Act, 1910), and cannot partake the

character of dues of purely contractual nature.

Child As A
Also Read - Section 69A IT Act, Shreya Singhal Judgment
Consumer –
And Blocking Of 59 Apps Perspectives From
Law And
Where, as in cases of the E-auction notice in question, the Behaviour

existence of electricity dues, whether quantiZed or not, has

LATEST + MORE

been speciZcally mentioned as a liability of the purchaser NEWS

and the sale is on "AS IS WHERE IS, WHATEVER THERE IS

AND WITHOUT RECOURSE BASIS", there can be no doubt 1 Elghar

Parishad
that the liability to pay electricity dues exists on the Case:
Mumbai
respondent
Special
Court
Also Read - 25 Important Decisions On SpeciZc Rejects
Performance Of Contract Gautam
Navlakha's
Plea For
Click here to read the judgment
Default Bail

2. Pandurang Ganpati Chaugale vs. Vishwasrao Patil Murgud 2 IBC

Ordinance
Sahakari Bank Ltd Suspending
Insolvency
(Delivered by Supreme Court on 05.05.2020) Process
Applicable
Brief facts: To Pending
Applications
The court framed the following questions With Respect
To Defaults
Arising On Or
Whether co​operative banks both at the State level and
After March
multi​State level are 'banks' for applicability of the 25: NCLT
[Read Order]
SARFAESI Act?

Whether provisions of Section 2(c) (iva) of the 3 Honour

Killing:
SARFAESI Act on account of inclusion of multi​-state co​- Bombay HC
operative banks and notiZcation dated 28.1.2003 Grants Bail
To Man
notifying cooperative banks in the State are ultra vires Accused Of
Killing Own
Also Read - Section 37 NDPS Act : Principles For Grant Of Daughter For
Marrying
Bail For Offences Involving Commercial Quantities
Against His
Wishes
Ratio [Read Order]

The co​operative banks under the State legislation and

multi​-state co​operative banks are 'banks' under section

4 SARFAESI,
Debt
Recovery &
2(1)(c) of SARFAESI. The recovery is an essential part of Banking
banking; as such, the recovery procedure prescribed Laws :
Recent
under section 13 of the SARFAESI Act, is applicable.
Important
Decisions
The Parliament has legislative competence under Entry

45 of List I of the Seventh Schedule of the Constitution

5 Supreme
Court Weekly
of India to provide additional procedures for recovery
Round Up
under section 13 of the SARFAESI with respect to co​-

operative banks. The provisions of Section 2(1)(c)(iva),

6 "No
Prosecution
of SARFAESI, adding 'a multi​-state co​operative bank' is
Qua The
not ultra vires. Offence Of
Coopearative banks have to act under Banking Unlawful
Possession
Regulation Act with respect to banking business. Of Arms
Without
Click here to read the judgment Previous
Sanction
3. K. Virupaksha vs. The State Of Karnataka From DM :
Delhi CBI
(delivered by Supreme Court on 03.03.2020) Court
Acquits
Brief facts Former Chief
Secretary Of
Nagaland
Complainant Zled complaint in Court of the Principal
[Read
Civil Judge (Junior Division) and JMFC alleging that Judgment]

Ohcers of bank in connivance with auction purchaser

had caused wrongful loss to Complainant. 7 The Reading

List Project :
FIR was registered against Appellants for alleged Must-Read
Books For
offences punishable under Sections 511, 109, 34, 120-B,
Law
406, 409, 420, 405, 417 and 426 of Code Students &
Lawyers
Ratio

The sanction of loan, creation of mortgage and the

8 Fearing
Threat To
Life, UP Cop
manner in which the sanctioned loan was to be released
Arrested For
were all contractual matters between the parties. Allegedly
Tipping Off
The Petitioner after dismissal of the application before
Vikas Dubey
the DRT Zled the impugned complaint which appears to Moves SC
be an intimidatory tactic and an afterthought which was For
Protection
an abuse of the process of law.

Entertaining the complaint and allowing the

investigation to continue, would amount to permitting लाइव लॉ + MORE

the jurisdictional police to redo the process which would िहं दी

be in the nature of reviewing the order passed by the

Single Judge and the Division Bench in the writ

proceedings by the High Court and the orders passed by

the competent Court under the SARFAESI Act which सुप्रीम कोटर् ने पाटीर् इन
पसर्न को रिजस्टार से
was neither desirable nor permissible and the banking
वीिडयो कॉन्फ्रेंिसं ग के
system could not be allowed to be held to ransom by माध्यम से संवाद करने

such intimidation. की अनुमित दी,

सकुर्लर, SOP जारी

Click here to read the judgment

4. Union Bank of India Vs Rajat Infrastructure Pvt. Ltd.

(delivered by Supreme Court on 02.03.2020)

िवकास दु बे को पुिलस
की छापेमारी की खबर
Brief Facts
दे ने के आरोपी यूपी
पुिलसकमीर् ने अपनी
SLP Zled against the order of High Court holding that no
जान का खतरा बताते
pre-deposit is required for entertaining an appeal before हुए सुप्रीम कोटर् में
DRAT as mandated by S. 18 of SARFAESI. यािचका दािखल की

Respondent – guarantor and mortgager – objected to

the sale of the secured asset on the ground that it is for

a low amount and there is collusion between the

ohcers of the Bank and the auction purchaser. जम्मू और कश्मीर

Order of DRAT challenged before HC and HC held that हाईकोटर् ने यूटी में िहन्दी
को आिधकािरक भाषा
no pre-deposit is required for the reason under the
घोिषत करने की
impugned order, no decree has been passed or liability यािचका पर नोिटस
जारी िकया
Zxed.

Ratio

The Court, while relying on the case of Narayan Chandra

Ghosh vs. UCO Bank & Ors., held that DRAT Cannot एडवोकेट एसके ढींगरा
की एससी पिरसर में
Entertain An Appeal U/s 18 SARFAESI Act Without
मौत पर एससीबीए ने
Insisting On Pre- Deposit. एससी िचिकत्सा एवं
सुरक्षा स्टाफ़ की
On the Contention of Respondent that he is not a आलोचना की; CJI से

borrower, the court held that a guarantor or a mortgagor, पिरसर में िचिकत्सा
सुिवधाओं में कमी को
who has mortgaged its property to secure the
दू र करने का आग्रह
repayment of the loan, stands on the same footing as a िकया

borrower and if he wants to Zle an appeal, he must

comply with the terms of Section 18 of the SARFAESI
Act.

" िवकास दु बे का घर
Click here to read the judgment
ढहाना प्रितशोध की
कारर्वाई" : इलाहाबाद
5. Standard Chartered Bank Vs MSTC Limited
हाईकोटर् में स्वतंत्र जांच
की मांग वाली यािचका
(Delivered by Supreme Court on 21.01.2020)
दािखल

Brief Facts
+ MORE
INTERNATIONAL
SCB Zled an IA seeking a decree on admission against

MSTC in recovery proceedings pending before the DRT 1 US Supreme

Court Rules
Mumbai which was allowed. Against
MSTC Appeal against the above Decree before DRAT Absolute
Immunity For
and Review Petition before DRT. President
Rule 5A of the DRT Rules prescribes a 30 day limitation From
Investigation;
period for Zling of a review application and MSTC Zled Allows
its Review Application with a delay of 28 days. Access To
Trump's Tax
Subsequently, the Appeal was withdrawn by MSTC and Records
MSTC instituted an application to condone the delay in

Zling of the Review Application. 2 Harvard, MIT

Sue US Govt
DRT dismissed the application for condonation of delay Challenging
holding that it did not have the power to condone delay Rules Asking
International
in Zling of a review applications under the RDB Act. Students To
MSTC challenged the Order of DRT by Zling a writ Leave If
Their
petition before the Bombay High Court which was Universities
allowed on 3 May 2019. SCB challenged the High Offer Only
Online
Court's decision before the Supreme Court.
Courses

Ratio
3 US Supreme
Court
SC held that the Tribunal does not have the power to
Upholds
condone delay in Zling of a review application. 'Religious &
Moral'
Section 5 of the Limitation Act and its provision to Exemptions
Granted To
condone delay by Debts Recovery Tribunal u/s 24 of 'Contraceptive
RDB Act apply only to review petitions and not to the Mandate'
[Read
original applications Zled under Section 19 of RDB Act Judgment]
and not to review petitions.

Click here to read the judgment

4 [Breaking]
Enrica Lexie
Case:
6. Trans Asian Industries vs. Jammu & Kashmir Bank Ltd Permanent
Court Of
(Delivered by Delhi High Court on 28.02.2020) Arbitration
Holds Italy
Brief Facts Liable To
Compensate
India; Asks
WP was Zled challenging the order of CMM wherein it
India To
was directed that the order appointing Receivers shall Drop
stand extended for another three months, on the ground Prosecution
Against
that u/s 14 of the SARFAESI Act, 2002, the CMM has to Marines
appoint the Receiver within a maximum period of 60
+ MORE
ENVIRONMENT
days from the date of the Zling of the application and

beyond the said period, no orders for appointing

Receivers or extending their power can be passed.

1 NGT
State
Directs

Pollution
Ratio Control
Board &
Collector To
After a period of 60 days, CMM does not lose the power
Submit
to give effect to orders extending the term of Receivers, Action Taken
Report
or to substitute a Receiver already appointed.
Against
Dumping Of
Click here to read the judgment Municipal
Solid Waste
7. Rahul Chaudhary vs. Andhra Bank delivered by Delhi High In Wular
Court on 17.01.2020 Lake [Read
Order]
Brief Facts

Writ Petition Zled against the order of CMM appointing

2 Consider
Giving Wide
Publicity To
the Advocate as receiver to take possession of the
Draft EIA
secured assets NotiZcation
2020 :
Ratio Karnataka
HC To
Central Govt
Delhi High Court held that there is no bar on the

appointment of an Advocate as a 'Receiver' under the

provisions of the SARFAESI Act.

3 Situation
Lonar Lake
At

Pathetic, It
Section 14 (1A) in fact conferred discretion on the Occurred
Because Of
DM/CMM to appoint their subordinate ohcers as Callous
receivers. Therefore, it didn't bar the appointment of Indifference
Of
Advocates as such.
Authorities
Responsible
Click here to read judgment For
Conservation
8. Iib Home Finance Ltd vs State Of Maharashtra delivered by of the Lake:
Bombay HC
Bombay High Court on 05.03.2020

Brief Facts
4 Assam Oil &
Gas Leak:
DM, Aurangabad refused to entertain S. 14 SARFAESI NGT Defers
Direction To
Application Zled by the bank on the ground that he does Deposit Rs.25
not possess the authority u/s 14 of the SARFAESI Act Cr Till
Formulation
and the authority vests with Chief Judicial Magistrate. Of
Disbursement
Ratio Plan After OIL
Assures
The jurisdiction of the Chief Metropolitan Magistrate Liability Will
Be
and/or District Magistrate is concurrent.
Discharged
[Read Order]

The use of the word, "or" in S.14 signiZes that the Chief

Metropolitan Magistrate and the District Magistrate JOB UPDATES

both can exercise powers u/s 14 of the SARFAESI Act.

1. Dean (Law)
Vacancy At
Click here to read judgment
Mangalayatan
University
9. L and T Housing Finance Ltd. vs The State of Maharashtra

delivered by Bombay High Court on 09.01.2020

2. Legal
Research
Brief Facts
Associate
Vacancy At GNLU
Whether Section 243 of the Maharashtra Land Revenue

Code, 1966 permits Collector or an Ohcer under the

3. Law Ohcer
jurisdiction of the Collector appointed by the Collector Vacancy At Baba
as the authorized Ohcer under Section 14 of the Farid University
Of Health
SARFAESI Act, 2002 to take physical possession of a
Sciences
secured asset can demand processing

fee/administrative costs/Setu fee to take possession of 4. Associate

the secured asset mortgaged to a Bank or a Znancial (Drafting)
Vacancy At NLUD
institution which is entitled to take action under

SARFAESI Act, 2002.

5. Associate
Professor (Law)
Ratio
Vacancy At
Pondicherry
In discharge of duty under Section 14 of the SARFAESI
University
Act, neither the Collector nor an Ohcer authorized by

the Collector to take possession of his secured asset, + VIEW MORE

can require the applicant to deposit any processing

fee/administrative fee/Setu fee/costs.

Click here to read judgment

Newsletters
10. IFCI Ltd Vs Lucknow Municipal Corporation delivered by
Directly in
Allahabad High Court on 29.04.2020
your
Mailbox
Brief Facts:
Enter Your Email
Lucknow Nagar Nigam leased out the property to
SUBMIT
Uptron India Ltd. which was further mortgaged by

Uptron to the Appellants.

On default, SARFAESI action was taken and the property

was put to auction.

The Lessor, aggrieved by the auction sale Zled a Writ

Petition whereby, the Appellants were restrained from

conZrming sale proceedings.

Lucknow Nagar Nigam terminated the lease.

Present writ Zled.

Ratio

"Borrower" would cover any person or institution who

claims any right in the secured asset as legal

heir/successor/representative/assignee/attorney of

"borrower" or "guarantor" and would also cover "any

person" who by virtue of lawful agreement enters into

the shoes of "borrower" or "guarantor". Expression

"borrower" would also cover any person who is covered

under Section 13 (4) (d) of the Act of 2002. As such, a

person who is not in the category, as stated, would not

be considered as "borrower".

Person who is covered under the expression 'borrower'

and "a person" who is covered under Section 13 (4) (d)

of the Act of 2002 being "a person" aggrieved by the

measures adopted by the secured creditor under

Section 13(4) of the Act of 2002, can approach to the

appellate forum provided under Section 17 of the Act of

2002.

Lucknow Nagar Nigam neither the borrower not "any

person" u/s 13(4)d and therefore cannot appeal u/s 17.

Click here to read judgment

11. Shakuntala Devi Jan Kalyan Samiti vs. State of U.P.

delivered by Allahabad High Court on 28.01.2020

Brief Facts

WP Zled against the order of CJM.

Ratio

Since in the statute itself there is no provision for giving

opportunity of hearing in an action under Section 14 of

the Act, the High Court cannot provide such opportunity

of hearing to the writ petitioner.

It is settled position in law that the Court ought to

decide matters on the basis of law as it exists and

declare the same instead on the basis of what law

should be.

Click here to read judgment

12. Krishna Enterprise vs. Axis Bank Ltd delivered by Hon'ble

Calcutta High Court on 06.03.2020

Brief Facts

S. 17 SARFAESI Application partly allowed and demand

notice was quashed and the bank was asked to hand

over the possession.

On Appeal by the Bank in DRAT, the order of DRT was

stayed.

WP Zled on ground that neither SARFAESI nor DRT Act

empower the Appellate Tribunal to pass an order of

stay.

Ratio

The substantive powers which have been conferred

upon the Appellate Tribunal by Section 20 and section

22 of the Act of 1993 by necessary implication also

includes the power to stay the order appealed against to

meet the ends of justice.

If the Appellate Tribunal does not have the power to

stay the order appealed against, the entire purpose of

the appeal may be defeated if ultimately the order

passed by the Tribunal is set aside.

Click here to read judgment

13. Travancore Devaswom Board vs The Deputy Examiner

delivered by Kerala High Court on 19.05.2020

Brief Facts

Registration of a sale carried out under SARFAESI was

denied by the Sub Registrar, after noticing entry of a

statutory charge relating to value added tax in the tax

receipt produced along with the sale certiZcate for

registration.

Question - Whether a secured creditor can claim priority

for sale and payment over statutory charge holders, due

under State enactment.

Ratio

The provisions of SARFAESI Act and RDB Act (Section

26E of the SARFAESI Act and of Section 31B of the RDB

Act) containing provisions commencing with non-

obstante clauses and giving speciZc priority to secured

creditors even over the taxes due from the

Governments, will prevail over the Kerala Value Added

Tax Act, 2003.

A secured creditor in whose favour a security interest

has been created thus has priority in sale and payment

over all other statutory charge holders.

Click here to read judgment

14. Sanjeev Tiwari vs State Of Uttarakhand delivered by

Uttarakhand High Court on 05.06.2020

Brief Facts

Bank proceeded under SARFAESI.

Application Zled by borrower u/s 156 (3) of CrPC to

open an investigation into alleged possession of the

plant without notice.

Rejected on the ground that no criminal action can be

taken once, SARFAESI proceedings have begun and