Topic
Kerala High Court dismisses a writ petition challenging DRT orders, ruling that fraud allegations require evidence and must be adjudicated before the Debt Recovery Appellate Tribunal (DRAT) under the RDB Act. The court reaffirms that bypassing the statutory appeal mechanism is impermissible, even in cases of alleged fraud.
The Supreme Court ruled that a recovery certificate issued by the Debt Recovery Tribunal under the RDB Act does not qualify as a 'decree or order' under Section 9(2) of the Presidency Towns Insolvency Act, 1909. This strict interpretation bars creditors from initiating insolvency proceedings based solely on recovery certificates, reinforcing the need for a formal decree or order for insolvency notices.
Bombay High Court rules that the Prevention of Money Laundering Act (PMLA) prevails over the SARFAESI Act and RDB Act, denying secured creditors priority over attached proceeds of crime. Creditors must approach the Special Court under Section 8(8) of PMLA for relief, reinforcing the Act's overriding confiscatory regime.
The NCDRC has ruled that a bank paying premiums for fire insurance on hypothecated assets qualifies as a consumer under the Consumer Protection Act, 1986, entitling it to indemnity even when the borrower is under liquidation. This clarifies that banks are not mere financial intermediaries in insurance transactions and can assert direct rights against insurers, reshaping recovery strategies in distressed loan portfolios.
The Punjab & Haryana High Court ruled that procedural delays in filing a written statement cannot justify automatic striking off of defenses under the RDB Act without affording the defendant a hearing. The Court emphasized that Section 19(5A) mandates adherence to natural justice, ensuring defendants are heard before any ex parte decree is passed, reinforcing fairness in debt recovery proceedings.
Bombay High Court holds that multi-state co-operative banks may opt for arbitration under MSCS Act instead of RDB Act or SARFAESI proceedings, affirming statutory choice and non-obstante clause validity.