Topic
The Calcutta High Court set aside a bank’s SARFAESI notice, ruling that under the RBI’s Master Circular an account can be classified as non-performing only after a continuous 90-day default. This safeguards borrowers from premature NPA status and compels banks to follow RBI guidelines.
A writ petition contesting NPA classification is inadmissible unless the borrower first pursues the SARFAESI enforcement route, and the RBI’s 2023 Fair Lending Guidelines, withdrawn in 2025, do not affect this statutory requirement. This limits borrowers’ recourse to writ jurisdiction and underscores the primacy of SARFAESI procedures.
Calcutta High Court rules that a Debts Recovery Tribunal’s interim observation on NPA classification is tentative and does not bind parties at the final hearing. The Court also affirms that a Chief Judicial Magistrate can extend the execution time for a possession order under Section 14(2) of the SARFAESI Act, even if the procedural terminology used is imprecise, ensuring flexibility in enforcement.
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.
Himachal Pradesh High Court rules that RBI’s 2013 Master Circular on loan restructuring due to natural calamities is legally binding on cooperative banks, mandating relief even if initially denied. The judgment reinforces RBI’s regulatory authority over cooperative banks and ensures borrowers affected by disasters receive statutory protection against NPA classification.