#Third-Party Rights

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.

Bombay High Court reaffirms that commercial disputes involving fraud and third-party rights are arbitrable unless they satisfy the strict non-arbitrability thresholds established in A. Ayyasamy and Vidya Drolia. The Court set aside the arbitrator’s order, restoring arbitration proceedings and reinforcing the pro-arbitration stance under Section 16 of the Arbitration and Conciliation Act 1996.

The Kerala High Court has ruled that a third party with a legitimate interest in property, even if not a borrower or guarantor, can invoke Section 17 of the SARFAESI Act to challenge a bank’s recovery action. The sale of the property must be stayed until the appellant obtains a certified copy of the DRT’s order, ensuring procedural fairness and preventing irreversible harm before legal redress is complete.

The Bombay High Court ruled that an insurer cannot deny third-party compensation merely on allegations of a driver’s invalid license if it fails to prove the claim through proper evidence. This reinforces the statutory obligation under Section 147 of the Motor Vehicles Act, ensuring victims are protected regardless of policy breaches between insurer and insured, and places the burden squarely on the insurer to substantiate defenses.

The Allahabad High Court has ruled that authorities under the U.P. Ceiling Act must examine third-party claims arising from registered Wills on their substantive merits, not dismiss them for procedural irregularities like mutation delays. This reinforces natural justice in land ceiling proceedings and protects inheritors from arbitrary deprivation of property rights based on technicalities.

The Gauhati High Court ruled that while Section 63 of the RFCTLARR Act bars civil courts from adjudicating direct land acquisition disputes, they retain jurisdiction over related disputes such as the validity of partition deeds. The Court directed expedited disposal of the title suit to prevent prejudice to landless petitioners, clarifying the scope of judicial intervention in compensation matters.

The Bombay High Court ruled that third-party buyers with registered sale agreements hold superior rights over a developer's lien under Section 17 of the Arbitration and Conciliation Act. The court directed possession of flats to be handed over to buyers upon deposit of the balance consideration, reinforcing that arbitration interim measures cannot override duly executed property transfers. This decision impacts developers, flat purchasers, and arbitration proceedings involving real estate disputes.

Bombay High Court holds that rights under a registered PAAA cannot be extinguished by consent terms in a suit where the PAAA holder is not a party.

Bombay High Court holds that third parties, including auction purchasers, cannot be compelled to make mandatory pre-deposits under Section 18 of SARFAESI Act unless they are borrowers or guarantors.

Madhya Pradesh High Court clarifies that any person in possession claiming independent title may file objections under Order 21 Rule 97 CPC before dispossession, rejecting the notion that remedy exists only post-eviction.