Small Cash Loan Not Unenforceable Solely Due To Lack Of Agreement, ITR Disclosure: Calcutta High Court

The Calcutta High Court has recently held that the absence of a written loan agreement or disclosure of a modest cash loan in Income Tax Returns (ITRs) does not automatically make the debt unenforceable.Justice Uday Kumar observed that such omissions may weaken a lender's case in large, unexplained commercial transactions. However, they cannot automatically invalidate every small hand loan.“While the lack of written loan agreements or ITR entries substantiating cash advance can severely dent a...

Delhi High Court Dismisses Retired DRT Presiding Officer's Review Plea Against Suspension

The Delhi High Court has dismissed a retired judicial officer's review petition challenging its earlier judgment rejecting his plea against suspension and disciplinary proceedings as Presiding Officer of the Debts Recovery Tribunal-II (DRT), Chandigarh. A bench of Justice Vivek Chaudhary and Justice Tejas Karia held that M.M. Dhonchak had failed to establish any error apparent on the face of the record warranting review. Dhonchak was suspended in February 2024 following complaints by the DRT...

Borrowers Cannot Bypass SARFAESI Pre-Deposit Requirement By Challenging Original NPA Classification: Karnataka High Court

The Karnataka High Court has recently ruled that borrowers cannot use a fresh writ petition to circumvent the statutory pre-deposit requirement for appeal under the SARFAESI Act. The bench held that borrowers cannot reopen recovery proceedings by challenging the original classification of their loan accounts as non-performing assets (NPAs) after their statutory appeal fails for non-compliance with the pre-deposit requirement.A division bench of Chief Justice Vibhu Bakhru and Justice K.S....

Auction Purchaser Cannot Seek Interest Through Writ After NCDRC Rejects Claim: Karnataka High Court

The Karnataka High Court on 29 September held that an auction purchaser cannot claim interest from a bank for delayed delivery of possession when the National Consumer Disputes Redressal Commission (NCDRC) has already ruled that the delay did not result from any wilful default or deficiency in service by the bank. A Single Judge Bench of Justice Sachin Shankar Magadum dismissed a writ petition filed by G. Mahimaiah seeking interest at 12% per annum from the State Bank of India, formerly State...

Disputed Title Deed's Genuineness Can Be Decided By Civil Court Despite SARFAESI Proceedings: Calcutta High Court

On October 8, the Calcutta High Court has held that the bar on civil court jurisdiction under the Section 34 of the SARFAESI Act does not automatically prevent a civil suit seeking adjudication of a disputed title deed, particularly where the genuineness of the document forms the foundation of the claimant's ownership. The Court observed that the Debt Recovery Tribunal's jurisdiction cannot be extended to determining substantive disputes concerning the validity or genuineness of title...

Cheque For Time-Barred Debt Can Still Invite Prosecution If Dishonoured: Kerala High Court

The Kerala High Court has recently held that issuing a cheque towards repayment of a time-barred debt is not legally prohibited and its dishonour can attract prosecution under Section 138 of the Negotiable Instruments Act, 1881.“When a cheque is issued towards a time-barred debt by reviving the period of limitation, merely for the reason that the cheque was issued towards a time-barred debt does not make a prosecution under Section 138 of the NI Act impermissible,” Justice A. Badharudeen...

SARFAESI Possession Orders Must Be Kept On Hold For 45 Days If DRT Challenge Is Planned: Madras High Court

The Madras High Court has held that an order authorising a secured creditor to take possession of a borrower's secured property must be kept in abeyance for 45 days if the creditor is informed that steps are being taken to challenge the order before the Debts Recovery Tribunal (DRT).“We are therefore of the view that an order passed under Section 14 of the SARFAESI Act will have to be kept in abeyance for a period of 45 days when it is brought to the notice of the secured creditor that steps are...

Depositor's Apprehension Of Recovery Can't Justify Impleadment In Creditor's Writ: Madras High Court

The Madras High Court on 8 October held that a depositor's apprehension that proceedings concerning mortgaged properties may affect his eventual recovery cannot, by itself, justify his impleadment in a writ petition filed by a secured creditor. Justice K. Govindarajan Thilakavadi made the observation while dismissing K. Karunanithi's application to join a writ petition filed by Axis Bank challenging proceedings under the Tamil Nadu Protection of Interests of Depositors (in Financial...

DRT Sale Certificate Does Not Require Compulsory Registration: Madhya Pradesh High Court

The Madhya Pradesh High Court has held that a sale certificate issued in favour of a successful auction purchaser in proceedings before the Debt Recovery Tribunal (DRT) does not require compulsory registration. A Single-Judge Bench comprising Justice Sandeep N. Bhatt allowed Sukh Sagar Agro Industries' petition challenging the refusal to file/record its sale certificate in Book No. I. Sukh Sagar Agro had purchased the property in an auction conducted by the Recovery Officer, DRT-Jabalpur, who...

SARFAESI | Secured Creditor's Prior Charge Over Property Takes Precedence Over State VAT Charge: Gujarat High Court

The Gujarat High Court has reiterated that a secured creditor's charge over a property will take precedence over a subsequent charge created by the State VAT Department. The court applied the principle to a property purchased by auction purchasers in proceedings under the SARFAESI Act.The court relied on its earlier rulings, as well as the Supreme Court's judgment in Punjab National Bank v. Union of India.A division bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed, “once...

Accused Must Be Heard Before Condoning Delay In Cheque Bounce Complaint: Allahabad High Court

The Allahabad High Court has recently held that an application seeking condonation of delay in filing a complaint under the Negotiable Instruments Act, 1881 (NI Act) cannot be decided without hearing the accused.The Court said Section 142(1)(a) governs cognizance, while Section 142(1)(b) prescribes the limitation for filing the complaint, hence, the proviso allowing delayed cognizance cannot be read separately and the accused must be heard on condonation.Justice Brij Raj Singh made the...

Cheque Number Discrepancy Must Be Examined At Trial, Not Quashing Stage: Karnataka High Court

The Karnataka High Court on 28 September held that a discrepancy in the cheque number mentioned in a Section 138 Negotiable Instruments Act complaint and the complainant's subsequent police statement is a factual issue that cannot be decided at the stage of quashing the prosecution. Justice Suraj Govindaraj dismissed Umesh K.G.'s petition seeking to quash the proceedings initiated by Bharathi H.N. over an alleged failure to honour a cheque for Rs. 40 lakh. The Bench observed: “The discrepancy...