#debt recovery

The Madhya Pradesh High Court quashed a writ court’s direction to the Debt Recovery Tribunal to expedite SARFAESI proceedings, ruling that such a directive oversteps jurisdiction when borrowers retain the statutory remedy under Section 17(6) of the SARFAESI Act. The decision reinforces that writ jurisdiction cannot be used to fast-track recovery actions, preserving the borrower’s right to challenge dues before the DRT or appellate tribunal.

The Uttarakhand High Court ruled that the third proviso of Section 18(1) SARFAESI Act applies only to borrowers, so a non-borrower cannot be forced to deposit 25 % of the debt to file an appeal. This removes an unlawful pre-deposit condition for third-party appellants and clarifies the filing fee structure for all SARFAESI appeals.

The Supreme Court ruled that the exemption under Section 60(1)(ccc) of the Recovery of Debts and Bankruptcy Act applies only to the personal guarantor who is the judgment-debtor, not to his legal heirs. It also held that a failure to serve notice under Order XXI Rule 22 does not invalidate the auction of the secured property.

Allahabad High Court clarifies that the 45-day limitation period under Section 17 of the SARFAESI Act begins from the issuance of the sale certificate, not the auction date. This ruling sets aside orders by the Debts Recovery Tribunal and Appellate Tribunal, remanding the case for fresh consideration on merits, impacting borrowers and secured creditors in debt recovery proceedings.

Bombay High Court clarifies that a society must deposit the petitioner's full share of the corpus fund, including accumulated 6% interest from the due date, under a DRAT order. The ruling rejects the society's attempt to limit deposit to the first installment, reinforcing strict compliance with tribunal directives in property disputes.

Madhya Pradesh High Court reinforces that Section 14 SARFAESI Act applications are administrative in nature, requiring no borrower notice. District authorities must dispose of such applications within 10 days, failing which secured creditors face undue delays in debt recovery.

The Kerala High Court has ruled that banks may allow borrowers to clear SARFAESI-triggered arrears in structured installments, provided they continue regular EMIs, effectively suspending coercive recovery actions. This sets a precedent for judicial intervention in debt restructuring where borrowers demonstrate willingness to repay, balancing creditor rights with borrower dignity under Article 21.

Rajasthan High Court holds that failure to deposit 25% of the bid amount on the auction date under SARFAESI Act extinguishes the auction purchaser's rights, even if amended Section 13(8) applies. The ruling underscores strict compliance with deposit timelines in secured asset auctions, impacting lenders, borrowers, and bidders.

The Kerala High Court has ruled that cooperative banks cannot auction entire mortgaged properties to recover dues - sale officers must determine and sell only the minimum portion sufficient to cover the debt, interest, and expenses, and must first fix a reserve price. This protects borrowers from disproportionate asset loss and enforces statutory safeguards under cooperative law.

The Bombay High Court ruled that a prolonged vacancy in the DRAT Chairperson’s office cannot be used to nullify interim protection granted to compliant appellants who have fully discharged pre-deposit obligations. This upholds the principle that procedural delays caused by administrative failure must not prejudice parties acting in good faith, reinforcing natural justice in debt recovery appeals.

In the absence of a specified repayment location, the HP High Court ruled that the debtor must pay at the creditor’s residence, making Shimla the proper jurisdiction for recovery. This clarifies a critical default rule under Section 16 of the Indian Contract Act, impacting lenders and borrowers nationwide where loan agreements lack payment terms.

Gauhati HC clarifies that interest under Section 16 of the MSME Act must be calculated monthly at three times the RBI rate prevailing at the end of each month, not a fixed rate from the appointed day. The ruling eliminates the need for prior conciliation for repeated claims, strengthening MSMEs' recovery rights against delayed payments.

Calcutta High Court rules that a challenge to an auction sale under the RDDB Act is non-maintainable without compliance with the statutory deposit requirement under Rule 60 of the Income Tax Act’s Second Schedule. The court upheld the auction’s validity and directed possession transfer to the buyer within 60 days, reinforcing procedural compliance in debt recovery proceedings.

After a SICA rehabilitation scheme collapses, creditors may claim pendente lite interest from the date of suit filing at the contractual rate, with all recoveries first applied to interest before principal. This clarifies the repayment hierarchy for banks and financial institutions pursuing legacy debt recovery under the now-repealed SICA framework, reinforcing contractual rights in insolvency aftermaths.

MP High Court rules that banks cannot initiate SARFAESI enforcement without strict adherence to statutory procedures, especially when court orders mandate status quo. The judgment underscores that arbitrary actions-including delayed disclosures, contradictory NPA dates, and mechanical OTS rejections-violate due process and threaten essential healthcare services reliant on financed diagnostic equipment.