#SARFAESI Act

The Chhattisgarh High Court held that a District Magistrate's role under Section 14 of the SARFAESI Act is strictly ministerial and does not extend to adjudicating third-party rights or title disputes arising from subsequent sales. The court set aside the DM's order rejecting the secured creditor's application on the ground of a subsequent sale, directing fresh disposal within 30 days.

Rajasthan HC holds police must provide assistance for Section 14 SARFAESI orders without levying charges under Section 46 Rajasthan Police Act.

Calcutta High Court quashed eviction orders under SARFAESI Act Section 14 where an HFC sought possession for a Rs 16.56 lakh debt, below the Rs 20 lakh jurisdictional floor for NBFCs/HFCs. The court ruled the Magistrate lacked jurisdiction, directing restoration of possession within 15 days and affirming the threshold as a mandatory precondition for enforcement.

Under SARFAESI Act Section 14, a District Magistrate may only verify mortgage validity and statutory compliance; it cannot decide borrower objections. This ruling clarifies DM limits, protects banks' enforcement rights, and defines the scope of secured asset proceedings.

The Supreme Court quashed a SARFAESI Act sale certificate for procedural violations, emphasizing that secured creditors must strictly observe notice, judicial restraint and transparency requirements to protect borrowers from defective auctions.

The court ruled that a secured creditor in a SARFAESI auction must disclose known material encumbrances like unearned increase (UEI) charges, holding that an 'as is where is' clause does not override this statutory duty. Indian Bank was directed to pay UEI charges for four auctioned plots, with conveyance deeds to follow within four weeks. The ruling safeguards auction purchasers from hidden liabilities and mandates transparency in distressed asset sales.

NCLAT rules that a personal guarantor filing a Section 94 application after a SARFAESI possession notice has been issued, and enjoying a two-year interim moratorium, constitutes abuse of process to frustrate secured creditor recovery. The ruling clarifies that the IBC moratorium for guarantors does not override SARFAESI enforcement once possession proceedings have commenced.

The Delhi High Court held that a SARFAESI auction sale becomes final upon full payment within the Rule 9(4) period, extinguishing the borrower's redemption right irrespective of pending sale certificate registration before the DRT. The ruling secures auction purchasers' rights and clarifies that procedural delays in registration cannot reopen redemption.

A bank qualifies as a ‘bank’ under the SARFAESI Act and can enforce its provisions even when the loan was originated by an NBFC not classified as a financial institution. This extends SARFAESI recovery powers to assigned secured debts, affecting banks acquiring such loans and the borrowers whose loans are transferred.

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.

When a bank lawfully assigns a life-insurance policy to secure a loan under the SARFAESI Act, the insurer cannot be held liable for alleged deficiencies in surrender processing. The NCDRC ordered the bank to release the surrender proceeds with interest, clarifying that insurer obligations end upon valid assignment and protecting lenders and consumers in similar arrangements.

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.

The Jharkhand High Court ordered the bank to pay 6% per annum interest on the Rs 30.90 million e-auction refund, finding that keeping the money without a sale certificate constituted unjust enrichment and that the bank’s undertaking was void for duress. The ruling strengthens restitution duties for banks under the SARFAESI Act and protects auction bidders.

Karnataka High Court ruled that when Section 17 of the SARFAESI Act offers an effective remedy, parties cannot approach the High Court under Article 226 for the same dispute. This safeguards the specialised bank-recovery framework and prevents parallel constitutional challenges, affecting banks and borrowers in enforcement proceedings.

The Bombay High Court held that purchasers of assets auctioned under the SARFAESI Act have locus standi to file a writ petition for possession, directing state authorities to enforce the magistrate’s order. The decision empowers auction buyers to obtain physical possession directly, without relying on the secured creditor’s enforcement.