Recovery of Debts Due to Banks and Financial Institutions Act, 1993

Bharat Steel Tubes Ltd. had borrowed money from Punjab National Bank and entered into a one‑time settlement, paying only part of the amount. It later engaged Assets Care Enterprises Ltd. (ACE) to pay the balance, and ACE assigned its rights to IFCI Ltd. IFCI invoked the SARFAESI Act to enforce security and sought aucti…

The Bank of India advanced a loan secured by equitable mortgages on several properties, the title deeds of which were deposited with the bank. After the borrowers defaulted, the bank invoked the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and aucti…

The Union Bank of India (financial creditor) granted loans to R.K. Infratel Ltd. (corporate debtor), which defaulted on 30‑09‑2014, leading to the account being classified as an NPA. The bank filed a recovery suit under the 1993 Recovery of Debts Act and, later, an application under Section 7 of the Insolvency and Bank…

Punjab National Bank (PNB) filed a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) against Jailaxmi Sugar Products Pvt Ltd, alleging default and seeking initiation of a corporate insolvency resolution process (CIRP). The Debt Recovery Tribunal (DRT) issued a certificate of recovery on 1 November 20…

Kotak Mahindra Bank (the appellant) sought initiation of a Corporate Insolvency Resolution Process (CIRP) against Prasad Properties and Investments Pvt. Ltd. (the corporate debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The corporate debtor had stood as guarantor for loans to three borrower …

The Supreme Court examined whether a Company Court or an Official Liquidator can control the sale of secured assets by a secured creditor under the SARFAESI Act when the borrower is a company under winding up. Pegasus Assets Reconstruction Ltd, the secured creditor, sought to enforce its security over the land of Harya…

The Supreme Court considered whether a secured creditor, Kotak Mahindra Bank, could file a winding‑up petition under the Companies Act, 1956 after obtaining a decree and recovery certificate from the Debts Recovery Tribunal. The petitioners argued that Sections 17, 18 and 34 of the Recovery of Debts Act barred the wind…

Madras Petrochem Ltd. and another filed appeals challenging a Delhi High Court order that stayed the winding‑up of the company before the BIFR. The core dispute was whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) overrides the Sick Industri…

The Central Bank of India granted a Rs 10 crore project loan to advertising firm Ad Bureau for post‑production of a movie, which later defaulted and was classified as an NPA. After a one‑time settlement and issuance of a No‑Dues Certificate, the bank erroneously reported the firm as a wilful defaulter to RBI, causing l…

Canara Bank had granted a term loan secured by mortgage of property belonging to a partnership firm and a guarantor. The Debt Recovery Tribunal (DRT) passed an ex‑parte decree against the guarantor and the firm, which the guarantor unsuccessfully tried to set aside. Fifteen years later the guarantor’s successors filed …

The Supreme Court examined the constitutional validity of the amendment to Section 2(1)(o) of the SARFAESI Act, which altered the definition of a non‑performing asset (NPA) to allow different regulators to prescribe classification guidelines for their respective creditors. The petitioners argued that this amounted to c…

Agarwal Tracom Pvt. Ltd. purchased assets of a defaulting borrower at a public auction conducted by Punjab National Bank (PNB) under the SARFAESI Act. After failing to pay subsequent installments, the bank forfeited Agarwal's deposit pursuant to Rule 9(5) of the Security Interest (Enforcement) Rules, 2002. Agarwal chal…

KSL & Industries Ltd. appealed against a Delhi High Court order that set aside a Debt Recovery Tribunal decision allowing the appellant to recover Rs. 25.26 crore from M/s. Arihant Threads Ltd. The dispute centered on whether the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) – specifically Section 22,…

United Bank of India (the appellant) issued notices under Sections 13(2) and 13(4) of the SARFAESI Act and obtained an order under Section 14 against guarantor Satyawati Tondon, without first taking action against the borrower, Pawan Color Lab. The guarantor filed a writ petition under Article 226 seeking an injunction…

Union Bank of India extended a term loan to Mahaveer Construction, a proprietorship firm, and obtained a guarantee from Surana Metals Ltd, a corporate entity. After the loan was declared a non‑performing asset on 30‑01‑2010, the bank filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) in Fe…

The Delhi Development Authority (DDA) had allotted a plot to Sarita Vihar Club under a lease that gave DDA a pre‑emptive right to purchase and required Lieutenant Governor’s consent for any mortgage. The Club mortgaged the plot to Corporation Bank without such consent, defaulted on the loan and the Bank sought recovery…

The Oriental Bank of Commerce appealed an order of the Recovery Officer under Section 30 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, but filed the appeal 31 days after the prescribed 30‑day period. The Debts Recovery Tribunal condoned the delay by invoking Section 5 of the Limitation Act…

The Supreme Court examined whether a Chief Judicial Magistrate (CJM) in non‑metropolitan areas could entertain a secured creditor's application under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for taking possession of secured ass…

Indiabulls Housing Finance Ltd (appellant) sought to enforce loan recovery against Deccan Chronicle Holdings Ltd and others under the SARFAESI Act after the original lender, Indiabulls Financial Services Ltd (IBFSL), merged into Indiabulls Housing Finance. The High Court held that SARFAESI could not be invoked because …

The borrowers defaulted on a loan secured by a mortgage over land in Navi Mumbai, prompting Union Bank of India to initiate SARFAESI proceedings and eventually conduct a public auction. The appellant, CELIR LLP, was the highest bidder, paid the full bid amount, and received a sale confirmation, but the bank withheld th…

The appellants borrowed money from the respondent, securing the loan with seven immovable properties. Their loan account was declared a non‑performing asset and the parties’ contract contained an arbitration clause, leading the respondent to initiate arbitration while also issuing notices under Section 13 of the SARFAE…

The appellant, Reliance Asset Reconstruction Company Ltd., was assigned the loan of Hotel Poonja International Pvt. Ltd. (the corporate debtor) after the latter defaulted on a Rs.40 lakh term loan and was declared a non‑performing asset in 1993. A settlement was reached in 2001, a recovery certificate was issued by the…

The Supreme Court examined a series of criminal complaints filed by borrower Prakash Kumar Bajaj against senior officials of Punjab National Bank Housing Finance Ltd. after the bank invoked the SARFAESI Act to recover a defaulted housing loan. The borrower, having settled the loan through a one‑time settlement, repeate…

The Industrial Development Bank of India (IDBI), as a secured creditor, sought to enforce its charge over imported machinery that had been stored in a private bonded warehouse and remained unpaid of customs duty. The company was wound up on 1 December 2003, and the Official Liquidator applied for possession of the good…

The society Common Cause filed a public‑interest writ petition under Article 32 seeking directions to the Union Government to adopt its suggestions for curbing non‑performing assets (NPAs) and to convert the Serious Fraud Investigation Office (SFIO) into a statutory body with adequate powers. The Union Government conte…

The Supreme Court considered appeals by Bank of Rajasthan challenging the High Court's order that two civil suits filed by VCK Shares & Stock Broking Services be removed from the High Court's file. The bank had obtained a recovery certificate from the Debt Recovery Tribunal (DRT) under Section 19 of the Recovery of Deb…

The Supreme Court examined whether the New Okhla Industrial Development Authority (NOIDA), as the lessor in a 90‑year lease of land for a residential project, could be treated as a financial creditor under the Insolvency and Bankruptcy Code, 2016. The Court held that the lease does not qualify as a financial lease unde…

The appellants, South Indian Bank Ltd. and others, appealed against the Kerala High Court’s orders allowing borrowers to defer loan repayment under the SARFAESI Act. The borrowers had filed writ petitions under Article 226 challenging notices issued under Sections 13(2) and 13(4) of the SARFAESI Act, even though the De…

The Asset Reconstruction Company (India) Ltd., a consortium of lenders, filed a Section 7 application before the NCLT seeking initiation of corporate insolvency proceedings against Corporate Power Ltd. after the latter defaulted on its loans. The NCLT admitted the application, relying on entries in the debtor's balance…

The Supreme Court of India addressed two interconnected issues: whether landlord-tenant disputes governed by the Transfer of Property Act, 1882 are arbitrable, and the scope of judicial review under Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. The case arose from a tenancy agreement containing an ar…

The corporate debtor Veer Gurjar Aluminium Industries defaulted on its loans on 08 July 2011. The financial creditor, JM Financial Assets Reconstruction Company, filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) in March 2018 to initiate a corporate insolvency resolution process, stating …

State Bank of India (SBI) sought recovery of a loan from a corporate debtor whose managing director, V. Ramakrishnan, had also given a personal guarantee. After the corporate debtor defaulted, SBI invoked SARFAESI provisions and the debtor filed an insolvency petition under the Insolvency and Bankruptcy Code (IBC) 2016…

The Supreme Court considered a dispute arising out of a corporate insolvency resolution process involving Avani Towers (the corporate debtor), Energy Properties (the ostensible owner of a 10.19‑acre land), and Victory Iron Works (a licensee of a 10,000 sq ft portion). The corporate debtor had financed the purchase of t…

Kotak Mahindra Bank sought recovery of a loan defaulted since 1986, invoking the SARFAESI Act after the debt had been assigned to it. The borrower, Narendra Jayantilal Trivedi, repeatedly filed various applications and a writ petition to stall the bank's recovery proceedings, which the Debt Recovery Tribunal and the Hi…

The Official Liquidator of a company in liquidation challenged the setting aside of an auction and sale of the company's assets that had been conducted by a Recovery Officer under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (ROB Act). The Company Judge of the High Court had intervened, nulli…

The borrowers Vishwa Bharati Vidya Mandir and St. Ann’s Education Society obtained large loans from Saraswat Co‑operative Bank, which were classified as NPA in 2013. The bank issued a notice under Section 13(2) of the SARFAESI Act and later assigned the NPA account to Phoenix ARC Private Ltd. After the borrowers failed…

The appellant, who claimed to be a tenant of a flat mortgaged by the borrower to Central Bank of India, sought to stay the bank’s possession of the secured asset under the SARFAESI Act. The bank had issued a notice under Section 13(2) of the SARFAESI Act and obtained an order under Section 14 for physical possession. T…

The dispute arose from an auction sale of two immovable properties attached under a recovery certificate issued by IndusInd Bank. The judgment debtor (borrower) filed an application under Rule 60 of the Second Schedule of the Income Tax Act, 1961, depositing the amount specified in the sale proclamation along with pena…

Canara Bank filed an original application before a Debt Recovery Tribunal (DRT) for recovery of a large sum. The respondents filed interim applications seeking production of banking documents, which the DRT rejected, deeming them a delay tactic. The respondents approached the High Court under Article 226, and the Singl…

Bank of Rajasthan Ltd. (now part of ICICI Bank) granted a term loan and overdraft facility to VCK Shares & Stock Broking Services Ltd., which defaulted. The bank sought recovery of the debt before the Debts Recovery Tribunal (DRT) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act). …

The petitioner, Nitin Gunwant Shah, claimed to be a monthly tenant of a flat in Mumbai based on a 1989 "Leave and Licence" agreement and sought a declaration to that effect. The Indian Bank, holding a mortgage over the same property, obtained a decree for recovery of dues and sought to sell the flat, also asking the co…

The petitioners challenged the constitutional validity of sections 95 to 100 of the Insolvency and Bankruptcy Code, 2016, alleging violations of Articles 14 and 21 and the denial of a hearing before a resolution professional is appointed. They argued that the resolution professional’s powers to seek information and the…

The Bank of Baroda had granted a loan to the partnership firm Global Packaging, which issued three cheques that were later dishonoured for insufficient funds. A complaint under Section 138 read with Section 141 of the Negotiable Instruments Act was filed against the authorised signatory Simaiya Hariramani and his partn…

Petitioner Pratibha Ramesh Patel filed a writ petition under Article 32 of the Constitution challenging the constitutionality of sections 2, 12 and 15(a) of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012, which incorporated cooperative societies within the SARFAESI regime. The sam…

The appellants purchased a mortgaged property at a public auction conducted by a Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act). The auction was later set aside by the Debt Recovery Appellate Tribunal on the ground that the appellants were not bona‑fide purchas…

The State Bank of Patiala had advanced a term loan of Rs.8 lakh to Mukesh Jain, who defaulted and the bank invoked the SARFAESI Act, issuing a notice under Section 13(2). Jain challenged the SARFAESI proceedings by filing a civil suit, prompting the bank to move an application under Order VII Rule 11 of the CPC asserti…

Maharaji Educational Trust borrowed Rs.75 crore from HUDCO and mortgaged six properties. It later exchanged 21 acres of one mortgaged property with Avas Parishad and entered into a sale agreement for the entire 63.45 acres (including the exchanged land) with SGS Constructions, which was subject to an interim injunction…

The plaintiff, Smt. Prabha Jain, inherited a one‑third share of a plot that was illegally partitioned and sold by her brother-in‑law; the buyer later mortgaged the plot to Central Bank of India, which took possession under the SARFAESI Act. Jain filed a civil suit seeking declaration that the sale deed and mortgage dee…

The Supreme Court examined a dispute arising from the public auction of Plot No.722, attached in a debt recovery proceeding against a partnership firm. Sadashiv Prasad Singh, the highest bidder, was confirmed as the purchaser, took possession and obtained mutation of the property. Harendar Singh, brother of the origina…

EIH Ltd. entered into a Technical Services Agreement with Balaji Hotels (BHEL) for operating a hotel, and paid Rs 15.21 crore as financial accommodation. BHEL later obtained financial assistance from IFCI and TFCI, which sold the hotel unit to Robust Hotels under SARFAESI proceedings despite an interim injunction that …

The Bank of Maharashtra obtained a recovery certificate against Paper and Pulp Conversions Ltd. and, through the Debt Recovery Tribunal (DRT), sold the company's movable assets, retaining a portion of the proceeds. The company was subsequently ordered to be wound up and an official liquidator was appointed. The workmen…

Bank of India filed a recovery suit under the RDDBFI Act and, after auctioning the mortgaged property, appointed Yadav Consultancy Services as Court Commissioner to safeguard the property. The bank later discharged the commissioner and was directed by the Recovery Officer to continue paying his security charges, which …

The Supreme Court examined whether the Appellate Tribunal under the SARFAESI Act could condone a delay in filing an appeal under Section 18(1). It held that Section 18(2) incorporates the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, including the proviso to Section 20(3) which …

The Court examined whether co‑operative banks, which are societies registered under State legislation, fall within the Union List entry 45 (banking) or the State List entry 32 (co‑operative societies) for the purposes of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,…

The appellant Bank (Dena Bank, now Bank of Baroda) filed a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) in 2018 to initiate a corporate insolvency resolution process against the corporate debtor, C. Shivakumar Reddy, after the debtor defaulted in 2013. The National Company Law Tribunal (NCLT) ad…

Deve Sugars Ltd. was ordered to be wound up and its assets were taken over by an Official Liquidator. The State Bank of Mysore sought to recover a debt under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and obtained leave from the Company Court (High Court, Madras) on 10 March 2000, subject t…

The appellant, Asset Reconstruction Company (India) Ltd., challenged the registration of a sale deed executed by S.P. Velayutham in favour of his son, arguing that the Sub‑Registrar had failed to verify that the power of attorney (PoA) presented did not authorize a sale. The High Court’s Division Bench set aside the Si…

The Supreme Court dealt with the sale of immovable property of Jay Electric Wire Corporation Ltd., a company under liquidation, which had been sold to the appellants for Rs. 2.50 crore in 2006. Secured creditors and the workmen's union challenged the sale, alleging procedural irregularities, unfair price, and the limit…

Eureka Forbes Ltd. granted a licence to two respondents to use its factory premises. When the licencees failed to pay fees, Eureka sold the stock in the premises, which was hypothecated to Allahabad Bank, without the bank's consent. The bank sued Eureka and the licencees for recovery of the hypothecated goods. The issu…

The Supreme Court examined a public interest writ petition challenging the effectiveness of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and its 2016 amendment, which aim to ensure speedy recovery of bank and financial institution dues through Debt Recovery Tribunals (DRTs) and Appellate Trib…

The Supreme Court examined whether a borrower can invoke Section 17(1) of the SARFAESI Act before the bank or financial institution takes actual physical possession of the secured asset. The dispute arose from Hindon Forge Pvt. Ltd. and others challenging a Full Bench of the Allahabad High Court that had held the remed…

Punjab and Sino Bank had granted cash credit facilities to Allied Beverage Company, which later became a non‑performing asset. The bank recovered the dues through the Debts Recovery Tribunal, which awarded interest at 18% per annum with monthly rests. The High Court modified this order, reducing the pendente lite and f…