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BankDRT:: Debts Recovery Tribunal ( DRT, DRT Auctions, DRT Act, DRT Rules) SRFAESI Act
BIS News
A Debts Recovery Tribunal cannot return an application back to Bank, when it has no jurisdiction.



Borrowers in soup as Banks to become Bassel-II complaint



Fund diversion may become criminal offence



Supreme Court over turns orders of Debts Recovery Appellate Tribunal / Debts Recovery Tribunal (DRAT/ DRT). Says falling interest rates should be taken note off. Grants only 9% interest pendent lite.



Banks claims before Debts Recovery Tribunal (DRT) & under SRFAESI Act stumped! Supreme Court holds statutory dues under State Laws have precedence over bank claims.



In capacity to pay cannot be a ground to seek waiver of predeposit of debt under Section 21 of DRT Act :: DRAT Delhi




Valuation of Assets tightened for Coop Banks.

The Reserve Bank of India has issued guidelines on valuation of assets as well as empanelment of valuers by cooperative Banks. While the new instructions are aimed at ensuring fair valuation of assets for the bank at the time of lending, it may spoil the party for some loan touts who were getting astronomical valuations for dud assets.

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CMM need not hear the owner of asset.

Under SRFAESI Act Banks can take physical possession of their secured assets with the help of the Chief Metropolitan Magistrate (CMM) or the District Magistrate (DM). But are the CMM/ DM required to give a notice to the borrower or hear him before passing their orders? The answer is no.

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Non compliance with illegal orders is not contempt.

When an order passed by an authority is set aside, all proceedings initiated for non compliance with that order becomes redundant. Non compliance with an illegal order is not contempt.

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New Office bearers take charge of The Debts Recovery Tribunal Bar Association, Chandigarh (DRTBA)

The Debts Recovery Tribunal Bar Association, Chandigarh (DRTBA) has got a new set of Office bearers. In a solemn ceremony held at the premises of DRT-I, Chandigarh the office bearers took their oaths.

Read more ....


    MORE NEWS
  1. CMM need not hear the owner of asset.
  1. Can there be pre-deposit even if no debt has been determined?
  1. Bank Officers should carefully examine the title deeds being deposited by borrowers :: DRT-2 Chennai.
  1. Non compliance with illegal orders is not contempt.
  1. Bank must produce original title deed for claiming equitable mortgage on the property.
  1. Debts Recovery Tribunals cannot use their discretionary powers to reduce interest pendende lite.
  1. Merely denying banks accounts is of no use
  1. DRTs can fix rate of interest.
  1. Borrower is deemed to have signed the documents after reading and understanding the document.
  1. Bank is entitled to claim only agreed rate of interest.
  1. Financial jurisdiction of DRT does not change with the change of amount adjudicated.
  1. Where the bank has suppressed material evidence it is not entitled for any relief
  1. Allegations of embezzlement should not be made loosely
  1. Presence of a Notary Public is satisfactory
  1. Limitation for enforcing foreign judgments is three years.
  1. The DRT must adjudicate the claim of the applicant only.
  1. Limitation for enforcing foreign judgments before DRTs is 3 years.
  1. Employee-Directors cum guarantors are liable for repayment of the whole of the loan amount
  1. DRTs cannot adjudicate any claim of the bank.
  1. Auction purchasers beware -Auction Notice under SRFAESI Act should contain mandatory details
  1. Every act of Bank under SRFAESI Act gives raise to an fresh cause of action.
  1. Recovery Officer cannot impound passport.
  1. Guarantors are co-extensively responsible.
  1. Objection cannot be raised for the first time before DRAT.
  1. Litigant cannot be made to suffer due to negligence of his counsel.
  1. Guarantors have no say to seek priority of recovery.
  1. When documents are challenged, DRT must seek expert evidence.
  1. Don’t go for fishing expedition in DRAT.
  1. In BIFR proceedings, Guarantors cannot seek better protection than the principle borrower.
  1. Guarantors are not protected under provisions of SICA
  1. To challenge an Auction – follow the procedure
  1. A compromise deed should be a proper document
  1. A few transactions does not convert a NPA into PA
  1. DRAT Allahabad :: Unless stated, all RBI Circulars are enforceable.
  1. When jurisdiction is challenged, the same should be decided first.
  1. Unless rejected, the proposal submitted by the borrower is deemed to be under consideration of the Bank.
  1. Conscious absenteeism from proceeding before DRT uncondonable
  1. A few transactions does not convert a NPA into PA
  1. When the borrower does not deserve even sympathy
  1. Indian Evidence Act not applicable to DRTs
  1. DRTs fume at pleas for cross examination as delaying tactic.
  1. Commissioners are to protect interests of secured creditors
  1. Uncontested claim of a Bank results in full amount being decreed.
  1. Auctions below upset price are not permitted.
  1. Basic right of borrowers under SRFAESIA- to file a representation against seizure notice.
  1. First right of a defendant under SRFAESIA- to be replied to by the Bank.
  1. Banks can club all their claims against a person in a single application before the DRT.
  1. Debt Recovery Tribunal ( DRT ) need not frame issues for cases before them.
  1. Jurisdiction of High Courts over DRATs depends on the cause of action
  1. The Debt Recovery Tribunals should hear the parties.
  1. Adjournments before DRTs should be a rarity.
  1. DRTs cannot be expected to grant adjournments merely for the asking.
  1. Has the Government unjustly sided the banks with SRFAESIA ?
  1. MARDIA ne SRFAESIA ko Mardia ?
  1. Auction & Sale of Properties by Public Financial Instititutions should be in the best interest of the Institution.
  1. Receivers who do not act in the best interest of the properties placed in their hands can be prosecuted.
  1. Recovery Officer of a DRT is bound by Schedule II of the Income Tax Act
  1. The Recovery Officer of a DRT cannot arrest a lady defaulter.
  1. Powers of DRTs are limited where Companies are under liquidation.
  1. The DRT Commissioner has right of way over the Official Liquidator
  1. Plural remedies no longer applicable even to pending proceedings
  1. Multiple transactions does not amount to plural remedies
  1. Consumer Court are not forums over DRTs
  1. Proceedings can go on in Consumer Court as well as in DRT
  1. Tribunals cannot pass Garnishee orders on parties who do not have dispute with the Banks
  1. Auction of properties, should be above board.
  1. SRFAESI - needs securitisation
  1. Jurisdiction Issue should be settled first
  1. Banking Ombudsman & DRT Act are different and Exclusive – Proceedings between two parties based on the same facts can go on simultaneously before the two forums.
  1. Tribunals are important mechanism for the administration of justice -SC
  1. Cross Examination of Witnesses in Tribunal not compulsory
  1. DRATs are under jurisdiction of multiple High Courts
  1. If there is no mention of the rate of interest in either the Loan Agreement or in the Promissory Note, then interest at 18% pa should be charged .
  1. Supreme Court reduces interest rate for litigation periods.
  1. Compromise must be given effect to if the borrower was made to act on it.
  1. A contract between a Bank and Borrower has to be enforced.
  1. Stay of recovery proceedings does not mean putting borrower back into possession of the assets.
  1. Without pre-deposit an appeal cannot be entertained : SC
  1. Can recovery proceedings be taken against a company which is before BIFR?
  1. Banks cannot recklessly exercise their powers under SRFAESI Act.
  1. Dues of a Government company are not dues of the Government.
  1. Liberal construction should be granted to beneficial statues: SC.
  1. There is no need to invoke SRFAESI Act if the Bank’s money can be recovered equally fast
  1. Auction of assets behind the back of Official Liquidator is fatal to an auction.
  1. SFC cannot proceed against the guarantors directly.
  1. Agricultural land cannot form security for SRFAESI Act.
  1. Guarantor wholly responsible for the due discharge of the loan: SC
  1. A Borrower has no say in the sale of NPAs.
  1. Employee Directors could become vicariously responsible for company loans
  1. Kerala High Court’s fresh approach on Securitisation proceedings.
  1. SC larger bench to decide on loans against leased Govt. land.
  1. Cannot take Bank’s money and go away.
  1. From debt to death - Recovery goons beat borrower to death.
  1. Admitted amount can be recovered without waiting for the Recovery Certificate.
  1. Disputes between Crown and Secured claimants needs adjudication.
  1. No harm if DRT accepts 2nd statement of defense in transferred matters.
  1. Revenue Recovery Act can be invoked to execute decrees: Kerala High Court
  1. A pending EP no bar to proceedings under SRFAESI Act
  1. A sad commentary on the functioning of the Debts Recovery Tribunal.
  1. Kolkata High Court strikes down willful defaulter tag
  1. OTS scheme can be directed where borrower is sincere.
  1. Co-op Banks out of DRT net
  1. High Court is not the Right Forum to challenge proceedings under SRFAESI Act.
  1. Re-auction is the only remedy for Irregular Auction.
  1. Recoveries can be made in terms of contract between the parties.
  1. An irregular auction cannot be sustained.
  1. Latches – detrimental to auction
  1. Asset can be sold below the Reserve price also.
  1. Sale below reserve price is not illegal.
  1. BankDRT Debate
  1. Debts Recovery Tribunal cannot ask the lessee to pay more than the indenture amount.
  1. Arraign all the parties to secure full justice.
  1. DRT cannot ask the lessee to pay more than the indenture amount.
  1. Appeal to DRT under SRFAESI Act to be charged as per DRT Rules:: SC
  1. BankDRT Debate
  1. Civil Courts cannot grant injunctions against Banks :: SC
  1. Borrowers free to pursue against the Lenders: SC
  1. Borrowers can pursue independent actions against the Lenders: SC
  1. Courts take a dim view of delaying tactics
  1. Costing of suits – Court fees should not be included.
  1. Proceedings before DRT is no bar for other proceedings to go on
  1. When setting aside a auction – sale, grant of interest to auction purchaser is the discretion of the Court.
  1. Hammer the best price out of auctions.
  1. SFC can initiate action till the assets are free.
  1. Lease hold land are not good titles of owner ship of land. Lending agencies should be careful.
  1. Recovery Officer cannot decide the properties to be attached and sold.
  1. Recovery Officer cannot attach State Funds with the RBI.
  1. Unreasonable delay in return of documents is a deficiency of service
  1. OTS is available only to pending cases.
  1. All that glitters is not diamonds. IT Department learns !
  1. No need to transfer a case to Debts Recovery Tribunal where a particular case was decreed before the issue of notification under the RDB Act
  1. No special clauses for tenants in DRT Act
  1. Guarantors can peruse Appellate Remedies on their own
  1. Workmen’s Dues before Debt Recovery Tribunal
  1. Death of a borrower will not effect proceedings intiated under SRFAESIA
  1. The Debt Recovery Tribunal cannot re-open, or re-examine, or re-call an order already passed by the High Court earlier.
  1. Small industrialists miss out CGTSI benefits due to poor awareness.
  1. Strong message from DRT Mumbai - Exercise Powers with Responsibility.
  1. Contempt proceedings - Limitation starts from the day the contemptuous act became known.
  1. Notice under SRFAESIA is of crucial importance.
  1. Limitation starts on the day the loan recall notice is issued.
  1. Civil Courts loose jurisdiction if value of Execution Petition reaches Rs. 10 lakhs.
  1. Tribunals should be slow & cautious while granting ad-interim ex-parte orders.
  1. Proceedings under SRFAESIA cannot take place when BIFR is seized of the issue.
  1. Jurisdiction of a Recovery Officer - cannot transgress that of the DRT.
  1. Mardia Hearing Starts – ex-parte stay given
  1. Workmen’s Dues before Debt Recovery Tribunal
  1. Where Claim is not opposed - no need to appoint a Receiver
  1. Claim will be decreed where defence admits the loan amount -
Do You Know???
Precondition for a complaint u/s 141 of the NI Act is that the accused person should have been in charge of, and responsible for the conduct of the business of the company.
Being a director of a company is not sufficient to make the person liable under Section 141 of the Act, unless the person was in charge of the day to day affairs if the company.


Where a person has any interest in a property under attachment or sale, or the property is under his possession, which should not be liable under recovery process, the person should file is objections before the Recovery Officer.
The Recovery Officer is competent to go into and decide all questions raised in respect of the property, including questions regarding right, title or interest in the property, notwithstanding provisions of any other law to the contrary.
An application /appeal against proceedings of the Recovery Officer is maintainable only after the applicant has filed his objections before the Recovery Officer.


A secured property being ancestral does not make any difference to the security and/or the mortgage. If the act of the borrower was intended to create a mortgage for securing a loan, then the mortgage is valid.
Unless a mortgage deed is discharged it cannot be said to have been satisfied and/or lapsed by mere signing of a new documents.
'Ever greening of account' by itself is not void or voidable.
The allegation that the Bank had got the security documents executed blank, by playing fraud cannot be believed by DRT unless it is backed with adequate particulars of fraud. Inaction on the part of the borrower in not challenging the alleged fraud after its disclosure also goes against him.
When the authority of the signatory is challenged the bank should produce proof in support of the authority of the signatory. If the same is not produced then the action of seizure of the assets under SRFAESI Act cannot be upheld.
Cause of action for the borrower arises on the issue of the notice u/s 13(4). The borrower need not wait until physical or symbolic possession is taken over by the Secured creditor.


The interest capitalises on failure of the borrower to pay the same within stipulated period. Therefore, the said practice cannot be objected.
Bank's action in not granting the finance to the borrower is not justiciable before the DRT. It is for the financial institution to consider the request for loan on various factors.
The fresh set of documents cannot be said to be without consideration for the simple reason that promise to pay earlier debt or even a time barred debts can be a good consideration.
The RDDBFI Act, 1993 and the SRFAESI Act, 2002 are procedural laws. There cannot be election of remedies since the remedies are different. The bank is free to use both the remedies simultaneously or one after the another.


Additional evidence can be called upon only when primary evidence has already been laid. Where even primary evidence has not been brought on record there is no question of bringing in additional evidence.
The onus is on the guarantor/owner of the asset to establish and lead evidence that the asset standing in his name does not belong to him, but belongs to some body else.
Where the value of primary mortgaged asset is so low that it cannot satisfy the decree, there is no question of priority of satisfaction. The Recovery Officer must proceed against all the available assets simultaneously.


When a case is remanded back with directions, the directions have to be complied with scrupulously and unquestioningly.
Where the parties have joined issues and led evidence, the Recovery Officer has to investigate each of the issues.
The Recovery Officer cannot go into complicated issues of title of properties.
The powers of Recovery Officers are analogous with that of civil courts and he can investigate into the issues relating to title, possession and ownership.
Adjudication of civil courts prevails over that of the Recovery Officer. Hence it would be better if the Recovery Officer awaits the orders of the civil courts in such matters.


For arriving at financial jurisdiction of a DRT the averments made in the plaint have to been seen and not what is the defense.
The bank is entitled to claim interest for the period from the date the account is declared as NPA till the date of filing of the suit.
During trial the defense is free to raise objections on bank’s claim and only amounts proved as due would be allowed.


Personal liability cannot be fastened on a person for merely using Company’s letter heads to correspond with the bank in respect of company’s loan account/ dues. Corresponding with the bank as Managing Director of the company does make a person personally liable for the dues of the company.
Where the company/borrower has been closed for long, but the borrowers went out of the way to raise as much funds as possible to repay the dues, such a borrower is not a willful defaulter. No interest or costs can be allowed in respect of such a account.


If the defendants do not appear and contest the case, they are placed ex-parte and the matter decided as per statement of accounts produced by the bank.
Bank is entitled to claim only agreed rate of interest. Penal rate etc. not agreed to with the borrower cannot be claimed.


For challenging any auction sale it is necessary to make the auction purchasers a party to the case.
An auction sale cannot be challenged behind the back of auction purchaser. Auction purchaser has vested right in the property purchased by him.
Not mentioning the date on which the account was declared as NPA is not fatal to the Notice issued u/s 13(2) of the SRFAESI Act, particularly when the defendants were in the know of it.
Mentioning the date on which the account has been declared as NPA is not mandatory for the issue of a notice u/s 13(2) of the SRFAESI Act.


Documents produced before the DRT should be sufficiently stamped and duly registered. If they are under stamped and un registered they cannot be considered.


The Recovery Officer cannot order seizure of assets not mentioned in the Recovery Certificate.
Individual properties of a defendant cannot be attached when the Recovery Certificate was issued against him as a Kartha of a HUF.


A purchaser of mortgaged property for value without notice would still be subject to earlier mortgage to bank.


An appeal against proceedings under SRFAESI Act can be filed by any person. He need not be owner of the asset.
The orders passed by the CMM are not justifiable. DRT cannot adjudicate upon an order made by the CMM under the SRFAESI Act.


Where the notice u/s 13(2) is based on dues in a single account, there is no need to give break up of amount due.
When challenging a auction sale conducted under SRFAESI Act the allegation should be specific and pointed. A general allegation cannot be elaborated during arugment.


The Recovery Officer cannot go behind the Recovery Certificate and pass orders. If a property is shown in the Recovery Certificate as mortgaged, then the Recovery Officer has no option but to proceed against the property.
The remedy for party who claims that his assets/ property has been wrongly arraigned in the Recovery Certificate is to file an appeal to the DRT u/S 19(25) of the DRT Act.
Where title deed has not been deposited by the owner of the property, the onus is on the bank to prove that it was meant to used as a security.


Where an auction sale is to be assailed the first thing to be done is to file an application before the Recovery Officer under S. 60 or 61 of the II Schedule to the Income Tax Act. Only when some order has been passed by the RO on this application can an appeal be filed to the Presiding Officer.
Provision of Section 30 of the RDDBFI Act can be resorted to only if there is some order of the Recovery Officer which needs to be considered by the Presiding Officer. Suo-moto appeal against some activity of the Recovery Officer is not maintainable.
Unless and until there is some order passed by the Recovery Officer no appeal against his activities can be filed.


A Recovery Officer cannot examine an issue and pass a fresh order when he has already decided the issue on merits and had sought report on the existence of the machineries on the site.
Agreement between borrower and banker cannot bind third parties having dealings with the borrower.
A bank cannot take advantage of some defect or lapse in following some procedure between a borrower and third parties.


Mere confirmation of auction cannot be challenged without challenging the auction – sale conducted by the Recovery Officer.
Confirmation of auction sale can be challenged provided an application u/S 60 or 61 of the II Schedule of the IT Act had been filed before the Recovery Officer of the DRT.
The debtor should deposit the amounts before the Recovery Officer instead of depositing it at the Bank and seeking cancellation of the auction.


A Recovery Officer cannot pass an order which runs contrary to the order passed by the Presiding Officer of the Debts Recovery Tribunal.


Challenging valuation of a property when the sale itself has been confirmed is in fructuous.
Auction sale should be challenged in terms of Rule 60/ 61 of the Second Schedule of the Income Tax Act. It should be filed before the Recovery Officer itself and not any where else.
A technical error in filing an appeal should not be allowed to come in the way of defeating justice itself.


Where the bank has suppressed material evidence available on record, it is presumed to have done so deliberately.
Where suppression of material evidence is proved, then DRT is within its judicial discretion to dismiss the application.
Jurisdiction is an issue to be decided based upon pleadings. If according to pleadings the application comes within the jurisdiction of the DRT, then DRT will be within its rights to decide the case.
If the disputed amount falls less than Rs. 10 lakhs, the DRT will not loose jurisdiction of a case if the case originally was within the jurisdiction of the DRT.


Where deposit of title deed is not established relief against the said property cannot be allowed.
Interest on penal interest cannot be allowed.


Proceedings before DRT do not come within the meaning of the term ‘suit’ mentioned under SICA.
Guarantors cannot take benefit of S. 22 of SICA.


Where the documents filed by the bank appear to be in order and are supported by the affidavit of the Bank Officer, then the claim against the borrower is proved.


Whether the loan granted was adequate or not, and, or timely is a matter between the banker and the borrower. It is for the borrower to convince the bank about the need for more funds as well as safety of the funds.
DRTs have to go by the contracts reduced to writing between the parties.
Where the contract between the parties empower the secured to recall the loan facilities at any time, then it is for the borrower to convince the bank about its financial stability.


The bank does not need to take a permission from the Companies Court to proceed against a company.
Unless there is a specific order u/s 446 of the Companies Act, there is no bar operating against a bank from initiating a proceedings against a company before the DRT.
There is no need to seek BIFR’s permission to proceed against a company when the matter is not all pending before it.


Presence of a officer from the judiciary when breaking open seals etc would be ideal. But presence of a notary public also satisfactory.
Notary public is a senior officer with some magisterial powers and his presence during opening/ breaking up of seals is satisfactory.
Where the defendant persistently avoided being present at the time of opening of seals, only adverse inference can be drawn.
Allegations of embezzlement of hypothecated /seized goods should be backed up with adequate proof. Simple allegations cannot be accepted against officers who are not expected to do such specialized criminal acts.


Guidelines and instructions issued by the RBI are fully applicable to proceedings pending before the DRT.
Where the borrower has applied for settlement of loan account under the OTS Scheme of the RBI, it is the duty of the Bank to apply the guidelines and settle the account
Where more than one notification is simultaneously applicable, the one that is more beneficial to the borrower should be applied.
The bank is not eligible for any interim Recovery Certificate, where the borrower has already paid off the due amount as the guidelines.


It is not necessary that to be enforceable a mortgage deed should be a registered document.
Mortgage by deposit of title deed need not be by a registered document.


The operation of an express provision of a section in a Statute cannot be restricted by the chapter heading.
The aid of chapter heading can only be taken into account where there is ambiguity in the provision of a section.
Where the owner ship of the property under auction is itself a contentious issue, it is just and obligatory for the Tribunal to determine this issue at the first instance and the sale should be conducted only after ascertaining that the property belongs to the debtor.


Where the bank agrees to the change in the management of the borrower company and further seeks fresh set of guarantee documents from the new management, the earlier directors would deemed to have been discharged of their guarantees.
Where the bank alters surety terms without the consent of guarantors the signatories are immediately discharged of their liabilities under the earlier guarantees.
Where the guarantee documents were signed in their capacity as directors of the company and not in their personal capacity, the same cannot be enforced after resignation of the executors from the post of directors.


The Legal Representatives cannot dispute asset valuation if the principle defendant and not raised the issue.
The precondition for seeking setting aside an auction sale is pre-deposit of the debt amount.
A execution Proceeding cannot abate by reason of non bringing of Legal Representatives on record.


Non-production of sanction letter does not effect the claim of the bank.
Some minor contradiction in the dates and place of submission of title deeds does not effect claim over the properties as long as the Bank produces the documents from its custody. These contradiction in the witnesses may be due to lapse of time.
Take over and sale of hypothecated goods by the secured creditors through public auction or by private contract is not opposed to public policy. Seizure, of goods by hypothecate exercising right under the clause is not unlawful.


There is no need for the Bank to elect between RDDBFI Act and SRFAESI Act to proceed against the Borrower. It can invoke provisions of both the acts simultaneously.
There is no bar on a bank in proceeding against a Borrower under provisions of SRFAESI Act even as their application is pending before the DRT.


If the books of accounts maintained by the Bank in the normal course of banking shows financial transaction it is sufficient proof of disbursal of monies.
Banks can bring in additional documents at a latter stage of the hearing in support of their application for a Recovery Certificate.


The legal heirs cannot be discharged of their liabilities merely because they have relinquished their share in the assets/ properties of their predecessor-in-interest.
If the trust itself resolves to stand as a guarantor and deposits the title deeds for creation of equitable mortgage, the mortgage cannot be assailed on the ground that the land belongs to a trust.
Capitalisation of periodically charged interest is permissible under law.


A decree passed by a civil court for the recovery of debts by a bank can be admitted by the DRT if the gross amount, including interests and costs to be recovered comes within the financial jurisdiction of the DRT.
Interests can be allowed from the date of the suit till the date of realization and not from any earlier date.


Where the claim application goes uncontested, the Debts Recovery Tribunal will allow whole of the claim made by the Bank.


If uncontested, the Debts Recovery Tribunal will allow whole of the claim of the bank.


Guarantor/ Certificate debtor cannot seek stay of recovery proceedings against a particular property until action against some other property has been completed.
The Recovery Officer of a DRT is not barred from proceeding against the house occupied by the Guarantor/ Certificate debtor.
The Recovery Officer of the DRT is not bound to investigate occupancy status of a house against which he desires to proceed.


The DRTs have the powers to fix rate of interest during the period the case was pending before it and till the time of collection of the suit amount
Merely denying applicant bank’s statement of accounts does not serve any purpose. The defendants should produce their alternative account statement before the DRTs.
No irregularity is committed if the bank enhances credit limit even after issuing loan recall notices.
Allegation of signing of blank documents is a mere sham and no one can believe.


Application u/s 31 of RDB Act does not require to hear the parties. It is execution of an order in which the parties have had their full say.
A Recovery Certificate u/s 31-A of the RDB Act is different from a Recovery Certificate u/s 19(22) of the same Act.


Though the Tribunal has powers to summon and enforce the attendance of any witness and examining him on oath, but the Act does not contain any provision which makes it mandatory for the witness to be examined before the Tribunal.
The RDDBFI Act is a latter Act and thus prevails over the Companies Act. The former is a special Act whereas the latter is a general Act.
The Bank cannot be faulted for non disbursal for the complete sanctioned funds where there is evident waste, non utilization and mis-utilization of sanctioned funds.


The actions of the Authorised officer under SRFAESI Act does not directly relate to debt but to asset. Therefore the DRT under whose jurisdiction the asset is located also has jurisdiction to hear the matter even though the loan account may be under the jurisdiction of another DRT.
Where two Banks claim charge on the same property, all things being equal, then the Bank that dealt with the borrower first in point of time will have first charge on the property.
Where two banks produce title deed to the one and the same property, and both claim that the title deed produced by them is original, then the onus is on the banks to establish that the title deed produced by them is original.


Tribunal cannot give any direction to banks for settling the dues with the borrowers underbank.
If the Tribunal uses its discretion powers for slashing interest then it must be for sound reasons.
Where the borrower’s business has been closed down, and where there is no proof that the borrower has been engaged in any other business activity, and particularly where the borrowers have acknowledged their debts and sought waiver of penal interests it would be fit case to grant reduced rates of interests.
In garnishee orders directing tenant of the borrower to pay the rents directly to the bank, the tenant cannot be asked to pay anything more than the lease agreement between the borrower and the tenant.


The DRT cannot adjudicate and decide disputes between the defendants.
Where the defendants do not show any plan for the repayment of the debts due to the Bank, appointment of Receiver is a necessity
A receiver with the assistance of a proper council may be in the interest of all the parties concerned.
The cost of servicing the office of the receiver will be borne by the applicant bank and debited to the account of the borrower.


Where the defendants have been set ex-parte, the DRT has to go by the books of accounts produced by the applicant.
Where the accounts have been filed in terms of Bankers books of Evidence Act, and the defendants have not rebutted it, Recovery Certificate will have to be issued in terms of the claim and evidence produced.


Where the rate of interest charged and periodicity of rests are not in accordance with the RBI guidelines, the DRT must determine the correct amount payable rather than dismissing the claim of the Bank.


First appeal to DRT under SRFAESI Act is treated as an application and as such there is no provision for condonation of delay in such matters.
Set off for the period spend in perusing remedies before the High court cannot be granted in matters relating to first appeal under SRFAESI Act.
Where the Bank had acted merely as a collecting agent and not as LC issuing bank, it is not responsible for non receipt of payments from over-seas buyers. Unless the Bank had acted negligently or irresponsibly it cannot be help responsible for non receipt of payments.
Borrowers must pay the contractual rate of interest even though it may be excessive.
There is no reason to disbelieve the valuation report unless it can be shown that the valuation arrived at was erroneous and the property fetched higher prices.


Parties before a DRT cannot seek cross examination of a witnesses as a matter of right.
Party seeking cross examination of a witness should prove to the DRT that there exists sufficient grounds for which cross examination is necessary
An application for cross examination should be filed only after pleadings are complete.
The DRT has to record reasons for its decision on the application seeking cross examination of witnesses.
Where an issue can be proved by alternative route, cross examination of witnesses can be denied.


A person claiming tenancy must back it up with proper document to show tenant – owner relationship in the premises.
Possession should be backed by legal right. Being in possession would not be sufficient to clothe a person with any legal right to prevent take over of the mortgaged property by the secured creditors.


Security deposit made by the bank as license fee for premises taken on rent/lease does not come within the meaning of “debt” and cannot be heard by Debts Recovery Tribunal.
When the DRT has no jurisdiction to hear the case and has wrongly received the plain, the same must be returned to the applicant for being filed in the proper forum


When an document is found to be inadequately stamped or not stamped the court is not bound to send document for impounding. It is for the party filing the document to request the document to send it for impounding.
There must be proper explanation as to how a document was traced and produced before the DRAT which could not be produced before the DRT.
DRT is to be guided by the principles of Natural Justice and not by strict provisions of CPC. Therefore DRT can allow the party to produce the original documents without following rigid CPC provisions.



Notice under SRFAESI Act is to be given only to the borrower and not a guarantor.
When an legal hire claims rights/ privileges available to the original deceased person under a particular Act, then he must comply with other mandatory provisions under that Act.


Where the defendant has not admitted liability it is the duty of the bank to establish its claim by all documentary evidence.
The DRT cannot decree bank’s claim if no documentary proof was produced challenging an affidavit disclaiming any liability by the defendant.


No presumption exists under law to presume that notice has been served on the defendants when the summons are returned with the remarks “left”.
Even if a presumption of deemed service is drawn, it is a rebuttal one.
Substituted service by way of paper publication should be in a widely circulated paper.


A cooperative Bank is a Bank within the meaning of SRFAESI Act.
Provisions of the SRFAESI Act are available to Cooperative Banks.


When a Registered post is returned with the remark “unclaimed” the presumption drawn, unless rebutted is that the notice has been served on the addressee.
Seeking condonation of delay is not a matter of right. Every day’s delay has to be explained.
Where a litigant sleeps over each of the opportunities that came to his way to agitate against the order, but approaches the court only when execution proceedings have commenced, does so only with the malafide intention of delaying the proceedings.


Every bank is expected to take a minimum amount of due diligence to check for frauds and forgery. Not discharging its role in checking the instrument and holding the presenting bank only for it is not acceptable.
Where contributory negligence has been established the other party cannot be held accountable.


Where the guarantor has revoked his guarantee by a letter, his liability cannot be more than six months from the date of revocation of his guarantee.
Where there is substitution of contract the original guarantor is absolved of his liabilities.
The limitation for filing an claim against a guarantor who has resigned/ revoked his guarantee is 3 years from the date the revocation comes into effect.


A cause action to approach the DRT may not arise on the mere issue of a notice u/s 13(2) of the SRFAESI Act.
Possession contemplated under Sec. 13 (4) (a) of the SRFAESI Act cannot be other than the actual possession i.e. physical possession of the property.
The period of limitation for filing an appeal to DRT starts from the date of actual possession and not symbolic possession


The DRTs can correct any time mistakes which are clerical or arithmetical in nature, or those that arise from any accidental slip or omission.
Parties need pay any court fees for seeking rectification of errors committed by DRTs.
No limitation period is applicable for seeking rectification of errors committed by DRTs.


An application for interim order can be filed either before the Presiding Officer or Recovery Officer of the DRT or before the DRAT.
The order passed on the interim application, if taken in appeal, cannot be subjected to payment of court-fee on ad-volerem basis.
An appeal can be quantified in terms of money only if the final order passed by the DRT is challenged.
Regular appeal is one which is filed against the final order, and a Miscellaneous Application is one which is filed against any interim order.
Fee to be charged on any Miscellaneous application is Rs. 250/- only.


Condonation of Delay cannot be as a matter of right.
Delay has to be satisfactorily explained while seeking its condonation.


In case of continuing guarantee, the limitation starts from day the demand was raised by the bank.
In case of continuing guarantee the limitation does not commence so long as the account is live and there is no refusal on the part of the guarantor to carry out the obligation.
A continuing guarantee can be revoked at any time as to future transactions.


Interim orders are not binding, and the final orders could be contrary to the interim orders, even though they may have been confirmed by the higher Courts.
In the absence of a contract to the contrary, in case of dishonour by the drawee or the acceptor of bills of exchange the drawer is liable to compensate the holder of a bill.
Where a transaction between the same parties is contained in more than one document, all the documents must be read and interpreted together and they have the same legal effect for all purposes as if they are part of one document.
The word “without recourse” cannot be read into a LC or Bill of Exchange unless it is there.


It is not unreasonable to grant an inspection for the second time, particularly when the last one was conducted some five years ago.
Though the borrower cannot be permitted inspect accounts all NPAs accounts maintained by the Bank, he can however be allowed to inspect his own accounts.
Where the parties are involved in more than one application, prayer made in one application cannot be made applicable in another application.


It would not be proper to strike off the name of a defendant merely on the submission that no cause of action has been made out against him.
Whether any cause of action is made out against a defendant or not can only be established by way of proper trial.


Where the defendant has consented to defray the bank of all expenses in connection with the guarantee, the bank would be entitled to re-imbursements of expenses in connection with the guarantees irrespective of the reasons.
Where the Bank could not discharge its obligation due to a injunction/stay order brought in by the defendants, the defendants should reimburse the bank of the expenses.


Where the relation ship between a bank and its borrower is also that of tenant and owner, and the disputes relates to both - payment of rents as well as repayment of loan- the two issues are intricately intertwined and has to be balanced.
The D.R.T. lacks jurisdiction to adjudicate rent disputes and Court of Small Causes lacks jurisdiction to try the claim of banks. Each issue has to be decided in accordance with law in the forums designated for them.
The DRT has to rightly defer execution of its orders till outcome of decision in matters relating to payment of rents by the bank to the defendant are decided in the civil courts.


An employee-director cum guarantor is responsible for dues of the company till the date of his resignation. He is not responsible for dues after his resignation.
Where a person has stood as a guarantor for the outstanding amounts of the borrowers, he is responsible for the full repayment of all the dues and just not limited to the extent of the assets mortgaged.


The DRT must adjudicate the claim of the applicant only.
A claim by a defendant for payments arising out of the sale of hypothecated goods cannot be decided by the DRT.
Any claim over proceeds arising out of sale of goods hypothecated with the judgment creditor should be made before the Recovery Officer of the DRT.


Where responsible Officers of the Bank have vouchsafed that original document are not available, and have satisfactorily explained the reasons for it, secondary evidences can be permitted.
Mere permission to introduce secondary evidence does not mean that they have been admitted as proved. They need to be proved in the first instance and then examined by the Presiding Officer of the Debts Recovery Tribunal.


Mere signatures on revival letters without corresponding documents to show liability to repay the loan cannot fasten claim on a person.
Persons against whom no demand notice was sent cannot be arraigned as defendant before the DRT.


It is the duty of the bank to see that the amounts being released by it are being utilized for the purpose for which they are being released.
Bank can legitimately stop releasing of further loan amount if it comes to the conclusion that amounts being disbursed are not being utilized for the purposes for which they are released.
Counter claim, based on loss suffered due to non release of full loan amount should be made within three years of date of release of loan amount.


In BIFR proceedings, stay is not automatic. It has to be granted.
When there is no stay orders from the BIFR, DRT can continue with the proceedings.


Written arguments are meant to assist the Courts in taking a decision. They cannot be a substitute for pleadings. What has not been prayed for in the pleading cannot be admitted through written arguments.
Every figure introduced in support of counter claim should be supported by facts and should be authenticated properly.
Were rebate is to be claimed from Government authorities, it is the onus of the borrower to produce the necessary documents before the authorities and claim the rebate. The bank cannot be held responsible in case the borrower does not make claim the rebates.
If the borrower gets rebate etc from the Government, it is the onus of the borrower to correctly report receipt such.


Section 13(9) of SRFAESI Act can come into play only if there is a consortium lending.
For operation of S. 13(9) of the SRFAESI Act, there must be a common interest in the secured assets.
Only if there is a binding agreement between the secured creditors can there be consortium lending.
Mere exchange of letters between the secured creditors cannot be treated as a binding agreement between them
Where the parties merely contemplated execution of formal documents but the same was not done, would amount a case of an executory and not executed contract and executory contract cannot be enforced.


Where the parties stood as guarantors separately and collectively for different transactions, then liability of each guarantor should be worked out individually as well as collectively.


The DRT has no jurisdiction to hear and deicide title to properties.
Where the DRT has already passed its final order, it cannot entertain any further applications in the case.


Had the bank taken even elementary precautions it could have detected that the documents being filed with it were forged and not the original.
By not getting the lien over the flat recorded with the Society’s Registers the bank has thrown the basic rules to be observed before making advance against the mortgage to the wind.
The bank is an unsecured creditor and cannot take over the flat under the SRFAESI Act. By taking over the flat it has done an illegal act and has to compensate the owner.


In a Original Application field before DRT by a Bank, an application by one defendant against another defendant should not be entertained by the DRT.
DRT is meant for expeditious adjudication of claims by banks. It is not meant to settle inter se disputes between the defendants or squabbles amongst themselves.
Where the bank supports the application of one set of defendants against the other, and objective is to safe guard the security, then such an application can still be considered.


The pendency of criminal proceedings under the NI Act cannot be a bar for proceedings before the DRT.
There is no correlation between a civil and a criminal proceedings. Proceedings before DRT is civil proceedings whereas one before the CMM is criminal proceedings.
The borrower would not be prejudiced in the criminal proceedings against him by the progress of the proceedings before the DRT.


For enforcing the recovery of dues ordered by a foreign Court, the period of limitation would be 3 years only as per Article 101 of the Limitation Act.
The limitation starts from the date of judgement and is not extendable based on any activity between the judgment creditor and judgment debtor.
The extended period of 12 years under Article 136 of the Limitation Act would be available only if the DRT had passed an judgment/ decree earlier and is required to be enforced.


The secured creditor can choose against whom to proceed. He can proceed only against the principal borrower or only against the guarantors, or only against some of the guarantors.
However, if the principal borrower is discharged, so are the guarantors.


Where the Bank is not interested in a property, it is not open for one defendant, to seek directions from the DRT, against another defendant not to dispose of the property.


Unless specifically revoked by an fresh order of AAFIR, all orders issued by the BIFR would be in force.
Where the BIFR has given consent to a Bank to proceed against a borrower, no fresh consent is required to continue the proceedings when the borrower files an appeal to the AAFIR.


The prayer seeking to bring legal hires on record includes prayer for setting aside abatement. There is no need to make a specific request /prayer seeking to aside abatement of a case.
Bringing legal hires on record at any stage of the proceedings is good for the case.
Prayers for condonation of delays in brining Legal Hires and Legal representatives on record should be liberally constructed.


Where the guarantor apprehends connivance between the bank and other defendants, the correct course of action would be make it as his defence before the DRT and seek discharge.
Forum of DRT and DRAT cannot be used to settle grievance between guarantors and other co-defendants.


Where the appellants are resourceful, waiver of pre deposit cannot be allowed.


Banks should be allowed to cure procedural defects where no prejudice would be caused to the defendants.
Mere technical irregularity in procedures, which are curable, should not be allowed to defeat the claims of banks and public institutions.


When seeking production of a witness for cross examination the defendants are not required to disclose their defence by giving preview of their questions to the applicant Bank's witness by providing him with ready questions.
No prejudice would be caused to the Bank if its officers are cross examined at the stand, and if the Bank's dealings are indeed transparent, then there is nothing to be worried about that any adverse outcome from such cross examination.
If the Tribunal desires that a particular point is required to be clarified then for that limited purpose, the party should be allowed to cross examine the witness to remove ambiguity which has cropped up in the pleadings.


When party to the proceedings dies and if cause of action survives, legal representatives and heirs of the deceased are to be brought on record within a period of 90 days. If that is not done the suit automatically abates.
Where one of legal representatives of the deceased borrower is already a party to the case then the case will not abate. Other legal representatives will be covered under Art 137 of the limitation Act and not under 120 and 121 of the Limitation Act.


For transfer and clubbing of two cases not only the parties have to be same, but even the documents and securities have also to be identical.
Where two cases are based on separate documents and totally separate cause of actions, and there is no pari-pasu charges either they cannot be clubbed together.


Where the Applications before the DRT is a simple money suit and not suit for redemption or foreclosure of mortgage within the meaning of Section 16 read with Order XXXIV of the Code of Civil Procedure it is not necessary to institute the case before the DRT having jurisdiction over the property.
A DRT will get jurisdiction to entertain an application even if part of the cause of action has arisen within its territorial jurisdiction.
Even though the defendants and the suit property are situated under the jurisdiction of a DRT different from the one where the case has been instituted, the claim application would still be maintainable as part of the cause of action which has arisen under the jurisdiction of the first Tribunal gives it the necessary jurisdiction.


It is in the interest of lessees claiming through the original defendant to participate in the proceedings before the DRT and establish that they have no liability towards the defendant or the claiming bank.
If the lessees claim they are not liable either to the original defendant or the claiming bank then they must establish their defense before the DRT rather than seeking premature release from the case.


There is no need to appoint an Court Commissioner to go into the accounts submitted by the Bank. The defence can lead evidence to disprove the statement of accounts submitted by the Bank.
statement of accounts submitted by the Bank are open for correction and the defence can always point mistakes or other ineligible levies.


The onus is on the appellant seeking waiver of pre-deposit of debt due to establish his in ability to make the deposit.
The DRAT cannot grant waiver from pre-deposit of debt due if the appellant has not lead any evidence, or annexed any document in support of his plea.


A borrower who does not come to the court with clean hands is not entitled for any discretionary reliefs.
Pre-deposit of 75% of the debt determined by the DRT is the norm and any deviation there from should only be an exception and not a rule.
Borrower seeking exemption or wavier from pre-depositing of debts due must produce full proofs of its resources and balance sheet to support its claim


The borrower do not get any vested right by the Recovery Officer consigning a Recovery Proceedings to records till compliance by the bank.
The Recovery Officer is not expected to pass lengthy speaking orders though it would be proper to give reasoning for any order.
Only the owner of the asset can file an application for stay of Recovery Proceedings and not other borrowers/ defendants.


An opportunity should be given to the parties produce documents relevant to the case.


Right to file an appeal under a statute has to be circumscribed by the conditions attached for filing such an appeal.
Pre-deposit of 75% of the debt determined by the DRT is a condition of appeal which must be as a matter of norm, and any deviation should only be an exception.
Borrowers seeking waiver of pre-deposit of debt must annex proper documents in support of their inability to pay the amount.


In matters of abatement, unless any specific Regulations have been framed by the DRTs, the limitation would be 3 years.
Standard of limitation of 90 days for abatement is not applicable to DRTs.


When a person signs and gives a blank document to another person, the presumption is that he gave it to the other person to fill it up and use it in the manner intended to be.
A person signing and giving a blank document to another person is responsible for all the entries made in that document and due payment of the amounts mentioned in that document.
Minor errors or calculation mistakes in the accounts furnished by the Bank does not invite criminal proceedings and/or negation of the entire claim amounts.


Parties must take care and circumspection in alleging bias against a Presiding Officer of DRT.
An order or judgment may be illegal or arbitrary, it may be good, bad or indifferent but that does not necessarily mean that it is tainted with bias.


Where the main appeal is still pending before the DRT, and the DRT is yet to adjudicate the claim, there is no question of any pre-deposit of debt by an appellant even though he might have admitted his liabiltiy.
There is no need to seek external assistance to interpret a provision which is plain, simple and straight forward in nature.


The DRT can vary the payment schedules even in matters settled by way of compromise between the parties.
Extension of time for payment under compromise deed is not available merely for the asking.
Party seeking to vary payment schedules must produce adequate proofs of grave hardships that prevents them for adhering to the agreed schedule.


Once it is found, that what the bank is claiming is not a debt due as defined in the RDB Act, the Tribunal is immediately denuded of its jurisdiction to decide such an issue.
Where the DRT has no jurisdiction, any adjudication or ascertainment of any amount due becomes a nullity.
For damages to come within the ambit of the term ‘debt’, it must have arisen during the course of business which the bank conducted with the respondent.


When the Bank is put under moratorium the borrower is deprived from day to day operations of his accounts putting him to hardship. In such circumstances it is not open to bank to charge higher rate of interests for the period.


Where the appeal is likely to be disposed off quickly the proceedings of the Recovery Officer can be stayed. In addition, the amount already deposited can be treated as sufficient pre-deposit of debt.


DRAT has the powers to waive off pre deposit of 75% of the debt amount.
Depending upon the facts of the case, ends of justice would be met if pre deposit of a nominal amount is ordered.


DRTs are not empowered to decide issues of right, title, mesne profits and other issues not covered under the RDB Act.


Where the defendants repeatedly seek time on one pretext or another it is a clear case of attempt to delay the proceedings.
Where the borrower applied for a certified copy of the order but did not complete the process of taking its delivery for a considerable length of time shows deliberate attempt to delay the proceedings.
DRT need allow prayer for cross examination of bank’s witnesses unless there are specific issues or points on which cross examination is to be conducted.


Once a Recovery Certificate has been issued the DRT can recall, modify and amend it in accordance with the Sections 26 and 27 of the RDDBFI Act.
The One Time Settlement Scheme formulated by the Reserve Bank of India can only be implemented in accordance with the procedure prescribed in it only and DRT cannot enforce it on the Bank.
It is not open for the DRT to impose its compromise formula on the bank when it is unwilling to accept it.


Handing over possession of property should be in accordance with the Proclamation of Sale. If the Proclamation of Sale stated that the land would be handed over "as is where is and whatever basis" then it is the onus of the auction purchaser to take over the property in what ever condition it is available.
The clause, "as is where is and whatever basis" is a sufficient notice to an intending purchaser both in law and otherwise of a possibility of the property being encumbered or defective. Having purchased the property in those circumstances the auction purchaser cannot seek to correct his possession.
When the bank has offered to sell the property on "as is where is and whatever basis" it cannot change it place the auction purchaser in possession of the property, if necessary with police help.
DRT cannot adjudicate the right and title of owners of the property. This dispute has to be settled in appropriate forum.


An employee director standing as a guarantor is equally responsible for the due repayment of the loans taken by the principle borrower.
DRT is fully within its powers to seek full disclosures of personal assets of a guarantor.


Liability under a ‘Letter of Comfort’ would depend upon the nature of language used in the document.
If in the ‘Letter of Comfort’ the signatory unequivocally binds himself for the due repayments of the debts of the borrower, and the parties have acted upon it for a considerable period of time, and have expended large sums of money based on it, then he becomes a guarantor to the loans.
Whether or not the liability of a guarantor can be fastened under a letter of comfort will have to decided by the Debts Recovery Tribunal based on evidence led by the parties.


Service of a demand letter and its receipt by a person does not constitute a cause of action against the person.
A person cannot be arraigned as a defendant if the plaint/ bank does not allege the existence of any legal nexus between itself and that person.
Where a plain reading of a claim petition does not disclose any cause of action as against a person it would therefore be frivolous and a time wasting exercise to allow the claim petition to be prosecuted against that person.


As member of consortium of lenders the bank was bound by the CDR scheme formulated for the revival of the borrower company.
Individual banks cannot be allowed to institute their own recovery proceedings as the CDR scheme will become ineffectual and the company will never be able to be revived.


The CDR Committee is a high powered committee consisting of financial experts whose decision on revival of an industry cannot be interfered with by the Debts Recovery Tribunal.
All consortium members should respect the scheme formulated by the CDR committee as it is in the interest of all the members as well as the industry.
A member of the consortium cannot be allowed to scuttle the CDR scheme as interests of all other members would be put to jeopardy. Every member should make a honest attempt to revive the industry rather than demand that it be closed and the plant and machinery be sold off.
Bank in its usual course of business owed a fiduciary duty to its constituents, and to render every assistance to enhance the progress of trade, commerce and industry in the country.


A person claiming to have singed loan/ guarantee documents cannot claim himself to be a stranger to the borrower- bank transaction even though he might singed only blank documents.
Where the bank is unable to produce the original title deed of a property, then it has no claim or lien over the property as equitable mortgage.


Issuance of notice to a dead person is a nullity, even if the notice was delivered at the correct address and to the legal heir of the addressee.
All actions taken in pursuance of the notice to a dead person, including auction of the secured assets is a nullity and has to be set aside.


Recovery Officer does not have powers to restrict the movement of any debtor. The Recovery Officer cannot order impounding of any debtor’s passport.
The Recovery Officer can demand reasonable security for the debtor to be present before him when ever required.
When the order is set aside, then action initiated for non compliance of that order automatically seizes to have any effect.


No direction can be issued to financial institution to enter into an OTS with the borrower. The borrower cannot claim a vested right for OTS.
Guidelines issued by Reserve Bank of India on classifying accounts as NPA and on offering OTS are purely executive instructions having no statutory force. These instructions do not create any vested rights in favour of the borrowers.


Every act of Bank under SRFAESI Act gives raise to an cause of action to the borrower to file an appeal to the Tribunal. The limitation starts from the date of raise cause of action and not from just date of possession or notice. A borrower may not be aggrieved by the Notice of possession but may be aggrieved by the valuation, or auction notice etc.
The publication of possession notice in newspapers subsequent to date of possession s not does not suffer from any illegality or infirmity.
The auction notice should mandatorily contain the details mentioned in the Rules. Absence of details makes the notice invalid.
If notice is held to be illegal then auction pursuant to the notice cannot be sustained and has to fall through.
Once possession of the secured asset is taken over by the bank restoring it back to the borrower does not arise till pendency of appeal. Only after adjudication of appeal can be decided whether possession can be restored back to the borrower.


The Evidence Act is not applicable to proceedings before the Debts Recovery Tribunals. No order/ judgment of the DRT can be set aside for not following the Indian Evidence Act if Principles of Natural Justice was other wise followed.
Tribunals as a rule are required to follow only Principles of Natural justice.
A stranger’s evidence to a document has no meaning.


Execution of a guarantee should be a conscious act to stand as a surety and not merely signing of a document. Where a signatory establishes that he merely signed a document with the intention not to part with it, but by some fraudulent means it was used as a instrument of guarantee then it is no deed of guarantee.
Where a person signs a guarantee deed as a director of the borrower company he cannot be held personally liable for the dues of the company. His liability cannot exceed his share in the company.


Creation of equitable mortgage with the deposit of title deed has to be a conscious and intentional act on the part of the owner of the asset which has to be unambiguously proved by the bank.
The power of attorney based on which an equitable mortgage is said to have been created is a vital document and should be produced by the bank in original.


Unless there is cogent reasons the Debts Recovery Tribunals cannot use their discretionary powers to reduce interest pendende lite.
Supreme Court’s decision in Ravindra’s case does not give Debts Recovery Tribunals blanket powers to reduce interest rates in each and every case.
As a thumb rule, in commercial transactions, contractual rates of interest should be granted unless there are other mitigating circumstances.


Where the auction-sale and subsequent confirmation and delivery of possession is carried on in such undue haste so as to preclude other serious contenders from making any effective bid leaves an impression that the entire auction process was carried on with an motive to benefit one particular person over other.
Reserve price is only an indicative price and the sale need not be confirmed at that price.
A confirmed sale should not be aside unless fraud or other grave malpractice is alleged.
Every auction participant /intending bidder is an interested party and has the right to question the process of auction.
Level playing field should be provided to every bidder


It is the responsibilities of both the parties to adhere to terms of compromise strictly.
Where the terms of compromise so provided that the capital will be defrayed first interest will be calculated on the monthly reducing balance only.


Seizure of assets in excess of requirement for the recovery of the amount due is violation of the provisions of the SRFAESI Act.
Only so much portion of the secured assets should be attached or seized as is sufficient to recover the dues.
Mindless exercise of powers under SRFAESI Act creates panic amongst borrowers and calls for penal action against the officers.


Unless stated specifically to the contrary, the liability of a guarantor is co-extensive with that of the principal borrower.
If the guarantee documents are silent, it is presumed that the guarantor’s liability is coextensive with that of the principal borrower.


Law of limitation may harshly affect a particular party but it has to be applied with all its rigor when the statute so prescribes and the Courts have no power to extend the period of limitation on equitable grounds.
Reasons for delay has to be properly explained. Delay cannot be condoned just out of benevolence.
As a Rule, improper advice of advocate be accepted as a sufficient cause for delays.


Delays in filing of appeal by Government Units is result of the procedures that they have to follow and not because there are latches.
Delay can be condoned if the explanation is reasonable and there have been no latches.


Amounts misappropriated by fraud etc come within the meaning of “debt” defined in the RDDBI Act.
There is no need to issue any directions to the Bank to file original documents as the defendants who has misappropriated the funds wouldn’t have executed any.
Where the claim of the bank is based on frauds committed by the defendants, the defendant would be free to rebut claims of the banks with his own submissions.


Applications seeking amendments to written statement of defence cannot be allowed when the matter is ready for trial.
Counter claim cannot be allowed once evidences have been filed.
The correct time to seek copies of statement of account is at the threshold stage itself, and not when the case is going up for trial.
Belated seeking of fresh documents and raising of fresh grounds is an attempt to only delay the proceedings.


DRTs can issue a Recovery Certificate for the Recovery of the debt determined by the civil courts upto 12 from the date of the decree.
The limitation available to seek execution of a decree is 12 years from the date of final decree.
Where there is specific article applicable to a situation, there is no need for the DRTs to apply the residuary article.


The Recovery Officer has no powers to investigate and adjudicate upon the correctness of a Recovery Certificate issued by the Presiding Officer of a Debts Recovery Tribunal.
The Presiding Officer of a Debts Recovery Tribunal cannot delegate any powers to the Recovery Officer to go into the competency of the bank to seek a Recovery Certificate.
Once a Recovery Certificate is issued, the Recovery Officer is bound to proceed to recover the amounts in terms of the Recovery Certificate.


The DRTs do not have the powers to determine any other issue other than adjudication of debt between the parties.
Where a financial institution terminated the lease deed and sought re-transfer of assets back to itself, the financial institution must seek appropriate civil remedies and not take recourse to the forum of DRTs.
The DRTs must not utilize the powers under Section 19 to determine civil disputes between the parties.


The liability of sureties/ guarantors is co-extensive with that of the principal debtors.
A surety /guarantor cannot insist that a Bank should proceed against the principal debtor or any particular debtor before proceeding against himself.
Bank is free to proceed against any of the defendants/ judgement debtors of its choice.
Bank is free to drop proceedings against any of the defendants at its discretion.


Where the appeal is against an order of the DRT rejecting an prayer for cross examination of a witnesses, there is no question of pre-deposit of debt claimed by the bank.
The provision relating to pre-deposit of debt would be attracted only when an order of determination of liability is challenged.


DRT must base its decision on judicious considerations only and not on presumptions and conjectures.
Where the document produced by the defendant is challenged and denigrated as being forged, views of expert should be taken rather than accept what the bank says.


Where BIFR has specifically permitted the lenders to continue with the proceeding instituted against the principal borrower, the guarantors cannot seek a stay on the proceedings against them. The liability of the guarantors are co-extensive vis-a-vis principal borrower.


DRAT is an appellate authority constituted to hear appeals against orders passed by DRTs. They have no original jurisdiction to hear and pass orders for the first time.
A party who has not participated in the proceedings before the Recovery Officer or the DRT cannot come before DRAT for the first time.


The DRATs have the powers to reduce or waive off the requirement of pre-deposit of a portion of the debt due before entertaining an appeal.
To waive off or reduce the amount of pre-deposit of debt, the Act requires the DRATs to record the reasons therefore.
It is the duty of appellant to satisfy the DRAT that he is unable to pay the pre-deposit of debt due, or certain other mitigating factors which requires the DRATs to exercise their discretion to reduce or waive off the requirement of pre-deposit.
Where the appellant does not show any grounds for reduction or waiver off the pre-deposit of debt due, the DRAT cannot suo-moto exercise its discretion in favour of the borrower.


The aim of imposition of costs is to defray the opposite party of the expenses incurred due to delays or vexatious litigations of another party.
It is not proper for the DRT to direct that costs be deposited with itself.


Where an application raises a mixed question of law and facts it cannot be dismissed merely as not being the right stage. The parties should be permitted to lead evidences and file their replies.
Where a question of limitation is raised the parties should be given a opportunity to lead evidence and submit replies thereto.
When a case is remanded back to the DRT on a limited issue, the parties cannot raise new or additional or any other ground other than for what it has been remanded back.


Prayer for appointment of Receiver cannot be dismissed if it involves important points. Where the applicant alleges forgery etc. and seeks stock taking of secured/hypothecated goods, it must be granted.


Where the Bank did not oppose the facts mentioned in the application when it was filed before the DRT, they can oppose it before the DRAT for the first time.
An borrower should not be made to suffer because of the omissions and commissions of his counsel.
Where a borrower has been less vigilant than he has been, ends of justice will be met if some exemplary costs are imposed but he should be allowed to present his side of the case before the DRT.


Where the signatures are disputed it is necessary to get them examined with the help of experts.
The judges must not venture to examine and compare the signatures between those of disputed and admitted ones.


Provision of Section 10 of the Code of Civil Procedure cannot be applied, and need not be applied to the proceedings before the DRT to stay the proceedings in Debts Recovery Tribunal on the basis that a previously instituted suit is pending before the Civil Court between the same parties.


There is nothing wrong in setting aside an ex-parte order if the counsels had reported no instructions but the parties were otherwise not negligent.


Where the borrow who has not filed his written statement for prolonged period, and when cornered alleges that he has not been supplied with a copy of paper book is not a diligent litigant. He cannot be allowed to burden and inconvenience the Bank.


Mere intention to participate at an auction does not give a person the locus standi to become an intervener or an interested party.
No legal injury can be claimed if the Bank refuses to answer questions on the status of the property put up for auctions.


For seeking cross examination of a witness, reasons must be stated.


The nature of cross examination and the persons to be cross examined should be indicated in the application seeking cross examination of witnesses.


Where more than secured creditor lays claims to the same assets then any order passed by the DRT would effect the other creditors as well and they become interested parties to the case.
It is not necessary that unless an order is directed against him, another secured creditor cannot be affected.


Where there is discrepancy in the affidavit filed by the Bank’s witnesses then the borrower should be allowed to cross examine the witnesses to arrive at the truth.
Where the borrowers have denied the execution and existence of certain documents claimed by he bank then the borrowers should be allowed to cross examine the witnesses.


The ex-parte order need not be set aside where the defendant/ borrower had full knowledge of the proceedings before the DRT but did not deliberately participate in the proceedings.


Brief:Banks cannot be directed to enter into One Time Settlement with the borrower.
Where the borrow has concealed facts from the DRT, sold of parts of the mortgaged properties without consent of the bank and generally bought time to delay repayment of debt is necessarily a willful defaulter.


Where the bank has failed to produce proof to substantiate its stand, or oppose the submissions made by the borrower, then the submissions made by the borrower has to be accepted.
If a particular piece of evidence or document is not available on the date of argument, time should be sought to produce the same. Not seeking time to produce the same leads to the presumption that the document/ evidence does not exist.



Auction purchaser can take possession of the property subject to any subsisting tenancy.
A tenant cannot be dispossessed by the use of force. He can be dispossessed only by the due process of law.
The auction purchaser can take only symbolic possession of the asset and not actual possession where tenants are living.


Any act in excess of recitals in a Power of Attorney would be non enforceable as against the executor of the document.



Mere acceptance of a conditional cheque for lesser amount does not make the acceptor bound by the conditions stipulated in the letter forwarding the cheque.
A smaller payment by the debtor would be towards discharge of the larger amount due rather extinction of the balance amount due.


Application by parties seeking to implead themselves before the DRT in order to establish their share in the family property is not maintainable.
appellants, to decide the share before D.R.T. is not at all sustainable.


A mortgagor falsely representing himself to be competent to mortgage an asset will be bound by the mortgage after he attains competency.
A possessory title can also be mortgaged.
The mortgage of a possessory title will get converted into equitable mortgage on the day the mortgagor gets title to the asset.


As the provisions of SRFAESI Act are very harsh and stringed, they must be scrupulously followed in letter and sprit to protect the interests of the borrow.
It is mandatory for the Bank to publish the notice in two leading news papers of the locality, one of which should be in vernacular. Non publication of the notice as mandated vitiates proceedings initiated under the SRFAESI Act.


Guarantors obligation to pay the bank is co-extensive with that of the principle borrowers.
The bank has every right to attach and appropriate guarantors amount kept in ‘no-lien’ account in the bank.


Bank has to explain why it deviated from its normal practice of accepting written guarantees and accepted an oral guarantee before the obligation can be fastened on the guarantor.
Bank as suitor has to establish its claim through documentary evidence. Claim cannot be held to have been proved in the absence of proper documentary evidence.


Where the ex-parte decree is set aside, and the auction purchaser turns out be the judgment/decree holder himself, then the property can be restored back to the judgment debtor.
An auction purchaser has to seek possession of the property within one year of confirmation of the sale. Thereafter he has to move a suit seeking possession of the property.
Where the auction purchasers were in the know of the proceedings and pending litigations, they cannot be said to be bonafide purchasers without knowledge.
Where the auction purchasers participated in the auction when the case was still pending, they had purchased the property subject to the outcome of the case. No special protection can be given to such auction purchasers.


Where breach of any provision or RBI’s instruction is cited as a ground for opposing creation of the security, the onus is on the borrower to prove it.
If there is any irregularity in the creation of the security, it would not vitiate the security itself.
Where the conduct of the guarantor/ defendant has been such as to make the bank believe that the security is for the due repayment of the loan, and the guarantor did nothing to dispel the belief, and on the contrary did deposit the security with the bank, it is presumed that the security is for the due repayment of the loan.


Only the applicant can change/amend the pleadings.
Where the SFC has taken over the industrial concern and become its ‘deemed owner’, the cause title must suitably amended to reflect the current status of the principal borrower.


Where person is neither the principal borrower, nor a guarantor, nor is he a participant in the auction proceedings, he cannot be an interested party


Where the bills of exchange have been discounted by the drawer, and are latter dishonored by the drawee, the bank is entitled to recover the amount from the drawer.
It is not the responsibility of the Bank to recover the amount from the drawee.


One DRT cannot stay the orders passed by another DRT.
When two banks claim one and the same property as their security, remedies have to be worked out either before the DRT or before the Recovery Officer.


Where proceedings u/s 13(4) of the SRFAESI Act initiated by the Bank has been set aside, costs should have been permitted.
It is not fair to require the borrower to pay court fees every time he has to challenge every act of the Bank.
There is no provision for refund of costs under the RDDBFI Act.


Even though a partnership firm does not have a legal entity, the assets brought in by the partners becomes the property of the partnership firm and cannot be attached for the individual dues of a partner.
The property of a firm has to be first utilized for discharging the debts of the firm and only if there is any surplus share of each partners shall be made in payment of their personal debts.
Bank is not entitled to attach properties /share of an individual in a partnership firm.


It is incorrect to say that nothing survives in an appeal where the authorised officer has auctioned off the assets.
The SRFAESI Act allows the borrower to approach the DRT when the bank auctions off the security interests.


Unless the prior auction is set aside, a new auction purchaser cannot enter the pricture.
Unless the previous auction purchaser is put on Notice, negotiations with new or subsequent offer cannot be carried on.


Liability based upon the promissory note has to be claimed within a period of three years from date of execution.
Claim based on security can be claimed upto 12 years.
Where an document turns out to be forged, the entire proceedings become vitiated and reliance cannot be placed on the earlier document even though it was orginal.


Where the deed or assignment under which an substitution of an applicant is being sought is itself questioned, it will call for deduction of evidence.


The continuing guarantee is a guarantee which extends to a series of transactions.
A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
When there is no revocation of the continuing guarantee, then it is in full force till discharge of the debt


O.T.S. means in simplicitor, is inclusive of all costs and claims.
Unless specifically stated, the party is not required to pay anything extra over and above the agreed amount.


SRFAESI Act does not prohibit a banker from splitting up the securities for the purpose of sales.
A borrower should not be made to suffer multiple litigations just because the bank decides to split up securities and take out separate proceedings.
Where the borrower has not denied his liabilities to the bank, but only the extend of his liabilities, no harm would be committed if the sale of the security is confirmed. The borrower can peruse his remedies before the DRT.


Where the proceedings between the same parties based on the same cause of action has reached finality in a foreign court, the same would be hit by the principles of res-judicata in India.
An Indian Court can admit a case which has already been taken cognizance of by a foreign Court, provided the case is still pending in that foreign Court.


Auction purchasers are not required to make any pre-deposit of amount for filing appeal to the DRAT.
Pre-deposit for filing an appeal to DRAT is only from the borrowers and guarantors, and not from others.
Purchaser of mortgaged property does become a borrower or debtor of the Bank.


DRT is not bound by the code of civil procedure, but by Principles of Natural Justice.
For reasons to be recorded, a DRT can condone delay in filing written statement of defence even beyond 90 days of service of summons.
Suitable costs should be imposed on the Party seeking condonation of delay to deter seeking condonation just for the asking, and to compensate the other party for the inconvenience caused.


Agreement of continuing guarantee does not increase the period of limitation available to the bank.
An agreement contrary to the provisions of the statue cannot be enforced even though the guarantor had voluntarily signed it.
There can be no estoppel against the statute.
The surety is discharged if there is any variation in the contract without surety’s consent.


The DRTs have power to entertain applications and condone delay if they are otherwise satisfied with the reasons for delay.
On and from the appointed date, all cases pending before the civil courts are deemed to have been transferred to Debts Recovery Tribunals.
The transfer of cases to the Debt Recovery Tribunal is automatic. It is a duty cast on the civil courts to transfer the cases to Debts Recovery Tribunal.
The Bank or the parties are not required to move any application seeking to transfer the cases to Debts Recovery Tribunal.
On and from the appointed day, the civil Courts loose all jurisdiction to hear and pass orders on Bank suits involving claims of Rs. 10 lakhs and above.


A Bank guarantee is an independent contract between a Bank and its party and the Courts should refrain from going into the terms of the contract.
Once the terms of the contract are met, the bank guarantee is enforceable. No additional act has to be performed by the parties outside the contract.


Where the right of a mortgagor to mortgage a property is challenged, and the person challenging the mortgage produces a claim anti dating the date of creating an mortgage, the Court must carefully examine the rival claims.
Where the mortgagor does not produce the original title deeds for creating equitable mortgage, it is for the Bank to ensure all possible precautions including issue of public notices inviting objections to creation of mortgage against the property, filing of police complaint as well taking encumbrance certificates.
A purchasers for value, who has taken all precautions that a prudent man can take before buying a property will have a right against any subsisting equitable mortagage which is not disclosed by the process of normal diligence.


When a Bank substitutes a contract with a new one, the old one need not be enforced.
Gurantors appearing in the old contract but not appearing in the new contract are not liable to answer Bank's claim.


In compliance with the terms of Bank-Guarantee given by it, a bank has to make payments on due dates or on demand irrespective of the fact whether or not the unit to which it has issued guarantee exists or not, or has been taken over by another entity on the day the bank is required to make the payment.
Where an industrial unit has been taken over by a new entity, and the terms of take over required the new unit to be bound by all the terms of contract entered into by the old unit, the new unit must indemnify the bank for all the payments made by it under an guarantee given to the old unit.
Where in compliance with the agreement with the former borrower the Bank is required to make some payments, it is bound to recover it from the person who takes over the business of the borrower, lock stock and barrel.


An order restraining recovery proceedings against a Industrial Company issued by BIFR under provisions of SICA does not cover guarantors of the loans.
Banks are free to proceed against the guarantors of the loans to the company even though they cannot proceed against the company in terms of the stay granted by the BIFR u/s 22 of SICA.


A deed of guarantee executed for the benefit of the principal debtor will stand good and can be enforced even though it might have been executed non – contemporaneously.
A guarantee agreement executed subsequent to the sanction of the loan is a valid contract if it was made for the benefit of the principal borrower.
It is not necessary for the guarantor to execute the guarantee documents on the same day or prior to the date of sanction of the loan.


Once the existence of a Power of Attorney is established presumption is that the same was subsisting on the date of getting the loan. Only contrary is required to be proved.
The original power of attorney will always be with the party. Therefore it is not correct to expect the Bank to produce the same.
It is for the defendant to produce the deed of cancellation of the power of attorney.
The duty is heavily cast upon the defendant alone to establish and prove that the loan was given by the bank after having full knowledge about the cancellation of power of attorney. Unless this burden is discharged the defendant wholly responsible for actions taken on the basis of the Power of Attorney executed.


Where the balance of convenience is in favour of secured creditor, and the DRT is satisfied with the existence of a situation of possible impairment to the secured assets, it can order appointment of a Receiver.
Where the intention of the borrower is not to pay the secured creditor, the DRT can order appointment of Receiver/ Commissioner to protect the interests of the secured creditor.


The SRFAESI Act makes it mandatory for separate notices to guarantors also.
Even though the man behind principle borrower and the guarantor company may be one and the same person, yet a separate notice to the guarantor is mandatory.


Condonation of delay is a matter of discretion of the Court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is not the criterion. Acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory.
Once the lower Court accepts an explanation as sufficient to condone delays, the Superior Court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse.


It is true that only the court that passes an order can examine it and set it aside. But after the RDBI Act came into existence the civil courts cannot examine an order if the suit amount is more than Rs. 10 lakhs. Hence DRT will have to examine such decrees.
DRT is empowered to examine a decree passed by a civil court, and if necessary, set it aside on merits.


If the Bank sends notices and summons to the address from where the borrower was corresponding then the service is proper.
The onus is on the borrower to keep the bank informed of the correct mailing address. The bank cannot be expected to know by itself the correct mailing address of the borrower other than one given by him.


The guarantor has no right to restrain a bank from proceedings against his properties until remedies against the principle debtor has been exhausted.
The liability of the guarantor is coextensive with that of the principle borrower.
The DRT and DRAT have right to stipulate the rate of interest in the interest of justice.


Where operative part of the compromise deed bears the signature of the parties it is deemed that same was signed after understanding its implications.


When a case has been heard and disposed of by higher forums the DRT cannot pass any other order much less a conditional stay order.
When a matter has already been taken to higher forum and decided, it is not open to the party to go the lower forum and file a fresh application on the same issue.


Claim based on a insurance policy is a not a debt and cannot be agitated before the DRT.
The DRT has the power to fix rates of interest on debts determined as due.


The DRTs and DRATs have the power to fix rate of interest for the period when the case was instituted till its payment.


Pre suit amount attracts interest at RBI rates.
Court fees cannot form part of suit amount.
voluntary insurance premia paid by the bank cannot form the suit amount and levied on the borrower.


Pre suit amount attracts interest at RBI rates.
Court fees cannot form part of suit amount.
voluntary insurance premia paid by the bank cannot form the suit amount and levied on the borrower.


There is no need for cross examination of witnesses where only points of law are to investigated.
Whether the larger or shorter limitation under mortgage decree or personal guarantee would be applicable is a question of fact and law which does not need cross examination of witnesses.


The party too is equally responsible if it fails to ascertain as to why their counsel absented from the case.
A party cannot plead that it was unaware of the absence of its counsel for over long period of time. It should have ascertained the position.


Where the borrower wishes to file an appeal against the auction of the assets, he must do so within 30 days of the auction after depositing the due amount.


Directions for compliance issued by the DRT must be scrupulously followed.
The submission that some confusion lead to non compliance with the directions of the DRT cannot be accepted, particularly when the counsel was present when the directions were issued.


A representation under SRFAFESI Act should be made to the authorized officer.
Writing letter to some authority in the bank is not representation within the meaning of SRFAESI Act. It must be addressed to the authorized officer.
When the bank was not represented before the High Court, it was the duty of the guarantor to put the Bank on Notice about any orders that the High Court might have passed.


When a person signs and delivers a blank document, it is presumed that he intended that the document be filed up latter.
A suit based on signed promissory note can be decreed irrespective of any submissions to the contrary its execution was irregular.


The RDDBFI Act and the SRAFESI Act are two independents Acts and filing of appeal is governed by the provisions in the respective Acts.
Where there reasons for delay has not been satisfactorily explained the prayer for condonation for delay is liable to be rejected.
Under the SRFAESI Act the DRATs do not have any power to extend the period of limitation for filing an appeal against the order of the DRT.


The party too is equally responsible if it fails to ascertain as to why their counsel absented from the case.
A party cannot plead that it was unaware of the absence of its counsel for over long period of time. It should have ascertained the position.



If despite repeated time being granted the bank is unable to clarify its position the appeal needs to be dismissed.
Dismissal of an appeal for not taking a stand and/or clarifying an position on a issue does not amount to dismissal for default and cannot be reviewed.


Where the bank has filed an application before the BIFR seeking permission to proceed against the borrower-company, and the same is pending, the DRT cannot proceed in such matters.
DRTs can proceed to hear cases against companies where there is no specific stay order granted by the BIFR.


Person claiming to be bonafide purchaser without notice should substantiate his stand.
A person claiming himself to be a bonafide purchaser without notice, and who had also been arraigned as an defendant before the DRT, must necessarily make pre-deposit of debt for filing an appeal.


If some documents are there in the custody a party the same can be or should be considered for the proper adjudication of the case on the principle of natural justice.
Documents can be accepted at a later stage also during the pendency of the proceedings, if those documents are considered to be vital for the purpose of coming to the just decision in the litigation and for ends of justice


Amounts paid to a borrower on forged Demand Drafts is an ‘debt’ within the meaning of RDB Act.
Even though the Bank’s own employee had forged the Demand Drafts and benefited from it, the borrower into whose account the amount were transferred has to repay the bank.
Pendency of criminal complaints against the forger of Demand Drafts has nothing to do with proceedings before the DRT.


Suit for declaration, injunction and specific performance arising out of debt cannot be entertained and decided by the Tribunal constituted under RDDBFI Act.
Suit for damages cannot be transferred to the DRT.
Proceedings before DRT cannot be stayed because of pending Civil and Criminal Cases against the bank filed by the borrower.


A compromise should be drafted properly in order to show that both the parties agreed to abide by it.
A compromise deed must bear the signature of both the parties to show that they had agreed to the terms and conditions therein.


When there is written contract between the bank the borrower, and the contract is not contrary to the provisions prescribed by they RBI, there is nothing wrong in charging interest at contractual rate of interest and compounding it at periodical rests.
Principles of promissory estoppel cannot be applied when there is one sided letters from the Borrower and the there no corresponding letter from the side of the Bank.
What was not pleaded before the DRT cannot be argued before the DRAT.


Where the borrower/ judgment debtor has deliberately delayed and dragged the case, they must suffer its consequence.
No procedural arguments can be entertained from a borrower who has resiled from the compromise /settlement entered into earlier.


A person claiming to be a tenant of the borrower must get a suitable order from the court of competent jurisdiction and not seek an order from the DRT.
The DRT and the Recovery Officer do not have any powers under the RDDBI Act to decide tenancy and ownership issues.
Right of possession of auction purchaser should be insisted first and the object should move the appropriate court for


When defendants deny their signatures, it is for the courts to take a decision whether an expert advise should be taken in the matter.
When experts differ in their opinion, the courts must form their opinion.
The courts cannot compare signatures themselves.
When parties disagree with an opinion, they must take immediate steps in the matter.


Sufficient ground for setting aside ex-parte judgment is to be established by the person who claims that he had no knowledge of the proceedings which resulted in ex-parte judgment.
The appellant must file the affidavit of the person through whom he claims to have come to know about the ex-parte judgment.
An ex-parte judgment cannot be set aside where the facts and evidence clearly point that the defendant had knowledge of the case.


The secured creditor is not obliged to first proceed against the principle borrower and only then proceed against the guarantor.
Where the affidavit filed by the bank officer has not been discredited, there is no need to call for an expert to examine documents claimed to have been before the deponent.


For seeking amendments after commencement of trials, it should be shown that that inspite of due diligence amendment sought could not have been sought earlier.
Rulings can be cited at the time of arguments and need not be specifically placed in the pleadings.


The Tribunal is empowered to decide the application of the banks and financial institution on the basis of affidavits.
The Presiding Officer can himself compare and examine the admitted and questioned signatures.


A mortgagor simpliciter is responsible only to the extent of the mortgage. He cannot be held personally liable for the dues.
When an error in statement of accounts is found, the amount cannot be simply deducted. The source of the error has to be traced, and there after the accounts has to be recalculated after deducting interest on the said amount.
The DRT can fix rates of interest where the bank documents are at variance on the issue.
Where loan has been sanctioned against pledged articles, the bank has to first proceed against the pledged articles, and only thereafter against the guarantors/ mortgagors.
Where no action has been taken against pledged articles the bank is duty bound to explain it.
Where an allegation has not been denied, it is to be construed as true and it is the discretion of the DRT to admit any evidence to the contrary or not.


An Garnishee order should be sought only if the security available is not sufficient to meet the requirement of loan repayment.
The application seeking an Garnishee Order must have all the ingredients mentioned in Order XXXIX, Rules 1 and 2 of the CPC.
When siphoning of funds is alleged, it must be explained what is going to happen to the funds.
Use of funds, as and when it becomes available, in the business of the borrower, does not amount to siphoning off of funds.


If the borrower was dead on the date of paper publication it cannot be construed as Notice either on the borrower on the legal heirs.


Knowledge of one of the partners about the proceedings is construed as knowledge of all the partners.
Negotiations for compromise settlement cannot extend limitation.


Decision Dated 31-07-2006 R.A. NO. 522 OF 2005, DECIDED ON 31st JULY, 2006 by Debts Recovery Appellate Tribunal, Allahabad


If the borrower shifts his residence, the onus is on the borrower to keep the bank informed about such shifting.
Even if there is any technical flaw in the service of the notice by the Tribunals the ex-parte judgment cannot be set aside when the appellants had full knowledge about the proceeding.


The DRT should not dismiss the suit as a whole on the grounds of limitation. Where personal liability is barred by limitation then mortgage decree should be explored.
Mere enhancement of the loan amounts does not make the guarantee void. Guarantee remains valid for the original contracted amount.
It cannot be accepted that an educated and learned person would sign blank documents.


No appeal can lie against an order of DRT restoring an application. A Review is the only remedy.
Review can be maintained only if some new facts have come to light which were not known at the time of arguments despite due diligence, or some evidence could not be produced, or due to some mistake or error apparent on the face of record or for any other sufficient reason.


Whether or not there has been misjoinder of parties can be decided only after pleadings have been completed.
It is not proper to order for deletion of names of parties even before they had filed their written statement of defenses.


There is no need to give any individual notice to the borrowers when the case was transferred to the DRTs with their knowledge.
Ex-parte order cannot be set aside where the borrowers did not participate in the proceedings despite being in the know of it.


Unless the Circulars issued by the Reserve Bank of India specifically mentions that they are outside Sec. 21 or 35 of the Banking Regulation Act it must be construed to have been issued within four corners of the Banking Regulation Act.
A NPA cannot become a PA merely if a few transactions are carried out in it.
When the compromise settlement/proposal is with the Bank’s officials, and the proposals has not been turned down, it is deemed to be under consideration of the Bank.


Simultaneous proceedings under SRFAESI Act and RDBFI Act not permissible.
When an application is pending before DRT, the Bank cannot initiate proceedings under SRFAESI Act.
Bank has to first withdraw its case from the DRT before initiating case under the SRFAESI Act.


The party breaching a compromise cannot claim benefit of any clause under it.
When compromise is challenged all aspects including jurisdiction of the court recording the compromise must be examined.


Seeking cross examination is not a matter of right before the DRTs
The person seeking cross examination needs to establish that the same is essential to his defence.
Allegations that the blank documents were signed and handed over to the Bank official cannot be accepted. It is an attempt to delay the proceedings.


Appeals can be filed against Interlocutory Orders of the DRTs.
Whether or not cross examination should be permitted is the subjective satisfaction of the Presiding Officer alone. Provisions of Sections 60, 137, 138 of Evidence Act are not applicable.
Grounds must be shown which are proper and justifiable to the satisfaction of the DRT so that it can permit cross-examination.
When dismissing an application seeking to cross examine Bank’s witness and then to file an counter affidavit, the DRT must give an opportunity to the borrowers to file a counter.


There is a strong presumption that notices were properly served when all the defendants reside at one and the same address and one of them causes appearances and participates in the proceedings.
When all the defendants reside under the same roof and one of them participates in the proceedings, the presumption is that all the defendants were in know of the proceedings.
Even if the DRT has committed some technical irregularity in the proceedings, the same would not assist the defendants in restoring the application if the defendants had knowledge of the proceedings but willfully absented themselves from the proceedings.
An ex-parte decree can not be set aside on the ground of irregularity in the service of summons, if the defendant had knowledge of the proceedings


Jurisdiction of DRT to hear a claim application has to be decided when a suit arising from the same cause of action is pending a civil court.
Publication of Notices in a News Paper as the only step taken to serve notices is not a good service, particularly when addresses of the defendants were known to the Bank.
Whether the News paper in which summons were published has a good circulation in the area where the defendants reside is a point that should be kept in mind for considering due service.


An application for setting aside a sale filed beyond the mandatory 30 days period should not be admitted, particularly if it is not accompanied with the requisite deposits.
Sec. 29 of the RDDBFI Act grants some discretion to the Recovery Officer who may accept an belated application seeking setting aside a sale, provided such discretion even, if applicable, must be with adequate reasons.
Under the Income Tax Act the territorial jurisdiction of the auctioning officer is very limited where as under the RDDBFI Act the jurisdiction of the Recovery Officer is very wide. Therefore some discretion has been permitted to the Recovery Officer in accepting bid money and the balance money with modification of the rules and also with discretion of as far as practicable.


If cross examination is required by either of the parties and the witnesses can be produced, then the evidence should not be relied on the basis of affidavit alone.


Where the main borrower does not contest the claim of the bank it amounts to admittance to the claim of the bank.
Guarantor's defence is limited where the main borrower has admitted to the claim of the bank.
If the records of the DRT are not complete, the DRAT is left with not alternative but to remand the case bank to DRT for necessary compliance.


Where the instrument presented by a account holder turns out to be forged, the account holder cannot be proceeded against unless they have got themselves unduly enriched.
The amount under a forged document /instrument cannot be treated as ‘debt’ within the meaning of RDB Act.


When goods are pledged with the Bank, and it is in their lock and key, it is the responsibility of the Bank for its safe custody.
Any allegation of fraud, forgery, replacement of pledged goods should be backed by police case and necessary action.
Where there is no allegation of locks and seals being broken, and the keys were in the custody of the Bank, the presumption is that the goods pledged were what they were purported to be.


In an appeal against a purely interlocutory order in a pending proceeding before the D.R.T., then fees as prescribed under Rule 8 (2) of the D.R.A.T. (Procedure)Rules is inapplicable. The fees payable in the Memo of Appeal against an interlocutory order shall be the fee prescribed for the purpose of application before the D.R.Ts. and D.R.A.Ts. i.e. Rs. 10/- before amendment and Rs. 250/- after amendment.


Where the party had been acting mischievously to evade the legal process, it deservers no sympathy at the hands of the Courts.
Poverty cannot be ground for not participating in the legal process. The party must seek legal assistance from the Court.
Limitation must be explained on day to day basis. Non explanation of delays in preferring appeal is fatal.


The Presiding Officer does not have powers to fix rates of interest for periods before the date on which an application is field in the DRT.
Where the Bank has not filed separate statement of accounts in respect of interest and capital portion, any amount deposited should be construed to have been deposited in respect of the claim amount and shall be deductible from the capital portion.
Non disbursal of the sanctioned amount and non cooperative attitude of the Bank towards the borrowers can be ground for reduction of interest, but it cannot be a ground for reduction of claim amount.


Even though no Recovery Certificate has been issued, the Presiding Officer can order sale of properties as long as the amount recovered is within the liability admitted by the borrower, particularly when the decree of compromise has not been complied with.
Section 19(18)(e) of the RDB Act read with Rule 12 (5) of the Debts Recovery Tribunal (Procedure) Rules, 1993 permits the Presiding Officer to order sale of properties under jurisdiction of another DRT as well as during pendency of an application.
The whole motto behind the enactment of the RDDBFI Act is to recover the public money and in such process of recovery, principle of natural justice and equity should prevail. As such admitted amounts can be recovered without having to wait for the entire proceedings to end.
Such sale process has not gone beyond the admitted dues of the bank. In that case the appellants are just buying time and creating troubles to satisfy even the admitted dues of the respondent-bank. Thus I do not find any force in this appeal, hence the same is rejected.


As the guidelines issued by the RBI are under the Banking Regulations Act they some binding effect on the financial institutions. Violations of these guidelines gives some right to the borrowers.
It is true that a rehabilitation package depends upon a number of factors. But a Bank cannot sit over the package endlessly without taking any decision.
Deposit of margin money is only after sanction of rehabilitation package. Where no rehabilitation package was sanctioned, there was no question of deposit of margin money.
Where the Bank endlessly kept the borrower waiting in expectation of the rehabilitation package which it did not sanction, the Bank must suffer its consequences.


Auction once made cannot be set aside lightly.
Non publication of the proclamation in the local language does not vitiate the auction sale if bidders have been present and the reserve price has been met.
Where the judgment debtor has not deposited the requisite amount, he cannot seek to set aide the sale already conducted.


Bank is not bound to forward the invoices for collection from the overseas buyer, even though the C&F value was not declared at the time of customs clearance of the goods.
It is the responsibility of the exporter to produce all the necessary documents so that the Bank can negotiate the bills with the importer. I
If there is any deficiency of the documents it is for the exporter to supply the same so that the Bank can negotiate it. If the importer cancels the order for the delay the responsibility is that of the exporter and not the banker.


Normally, dematerialization requires to be completed within 15 days from the date of receipt of the application. Any dealy in initiating the process is deficiency in service.
If there is any negligence in dematerialization of a account by a Bank, the NSLD, is required to pay the amount to the applicant and thereafter, recover the same from the Bank.


A proposed/prospective borrower is a ‘consumer’ under the Consumer Protection Act, 1986 in as much the bank would recover interest as consideration for the loan granted.
The Bank was the implementing agency of the Prime Minister Rojgar Yojana. As per the scheme, loan was to be disbursed on the basis of the recommendations made by the concerned Manager of the District Industries Centre. As there was delay in disbursal of the loan despite compliance with the scheme there was ‘deficiency in service’.


Where the cheque was wrongfully dishonored, compensation should be in proportion to the damages suffered. Where no damage was suffered by the complainant, no damages can be allowed.
Punitive costs for deficiency of service should be borne by the Bank officers, dividing it proportionately where there are more than one functionary is involved.
Decision of NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI dated 05-12-2006 in the matter of Bihar State Sugar Corpn. Ltd. V/s State Bank of India


Delays in communicating and corresponding between two Banks cannot be considered to be in a normal course and cannot be fastened to the account holder. It is the responsibility of the Bank to properly communicate with their partners, and the account holder cannot not be put to loss on account of such miss correspondence.
It is the responsibility of the account holder to ascertain and make himself conversant with the implications of premature withdrawal of fixed deposits. This responsibility cannot be shifted to the Bank.


Mere pendency of criminal proceedings cannot operate as a bar for the continuation of proceedings under the Consumer Protection Act to determine if there was any deficiency of service on the part of the Bank resulting in the loss of articles kept in the locker. Criminal proceedings have no relevance for enforcement of civil liberties.
Whenever a locker is broken open, it is mandatory for the Bank to prepare an inventory of the articles found therein, as per procedure prescribed by the RBI. If such a inventory is not prepared there is deficiency of service and the claim made by the hirer of the locker is to be believed, if other facts support it
There is nothing wrong in keeping jewellery of their children in the locker of elders/parents. This does not amount to subletting of the locker.


Where loss of cheque was intimated to the account holder well within the limitation period, the liability of the Bank would be limited to deficiency of service and not the value of cheque.
The correct course of action on the part of the drawee is to file a suit for recovery of the cheque amount from the drawer.


Where loss of cheque was intimated to the account holder well within the limitation period, the liability of the Bank would be limited to deficiency of service and not the value of cheque.
The Branch Manager, Indian Bank v. Shri. K. Swamanna:: Decision dated 17-07-2006 in Reverse Petition No. 104 of 2005 by National Consumer Disputes Redressal Commission, New Delhi.


Once the title of collateral security is in dispute, it cannot be said that the bank was unjustified in any manner in refusing the release of the sanctioned loan.


A Banker, in exercise of its lien under Section 171 of the Contract Act, cannot straightway appropriate the money deposited by a guarantor in FDR without any bailment and without informing the guarantor.
Money does not come within the meaning of the word ‘goods’ as defined u /S. 171 of the Contract Act r/w S. 2(7) of the Sale of Goods Act, 1930 and thus cannot be bailed out.


Banking - mistake of the bank in debiting the account – bank cannot charge interest on that amount for its own mistake.


The onus is on the complainant to prove that there was deficiency of service on the part of the Bank. The letter of communication was addressed to the Zonal office, instead of to the Branch. Therefore there was a delay of receipt of communication by the Bank. The delay in receipt of communication by the Bank cannot be held against the Bank. If the Bank acts, bonafide, and with reasonable speed on receipt of the communication, it cannot be held to be a deficiency of service.


Where the loan amount stood repaid, the Bank should return the documents immediately. Unjust and reasonable dealy in the return of the documents is a deficiency of service on the part of the Bank. The Bank ought to have returned the doucments within a reasonable time.


The onus is on the complainant to show sufficient causes which prevented him from filing the complaint within the prescribed of limitation. The Commissin should be slow in exercising its powers under Section 24A(2) of the Consumer Protection Act, 1986, for condoning delays in filing of complaints. The necessity for recording reasons while condoning delays is for this reason, so as put the Commission on guard while condoning delays


The complainant learnt that her husband had opened a account jointly in her name. The husband had opened the account and was operating it without her permission. It was held that the complainant cannot be held to be aggrieved by the Bank allowing the husaband to open and operate the account. The wife has no locus-standi to approach the Forum with the complaint.


Compensation claimed should have some bearing to the sufferings. Excessive claims against the Bank is abuse of the process of Consumer Protection Act and is liable to be dismissed with costs.


Complainant opened a joint account along with his wife. The complainant had opened the account without taking his wife's permission. The stopping of operation of such a account by the Bank did not amount to deficiency in service.


Where the draft issued by the Bank was defective, compensation would be related to the events surrounding that particular draft only. The compensation claimed should not be linked to events that are too remote to cause of action being shown.


In a case under the negotiable instrument the accused need not disprove the prosecution case completely. Merely creating a probability of doubt of probability is sufficient.
In a case under the NI Act, the onus on the defendants is not onerous and is comparable to that of civil case.


Where non service of notice/ summons has been raised it is necessary to examine the entire evidence and come to a positive conclusion whether or not service has been effected.
It is necessary that the entire evidence on record must be discussed to arrive at a finding whether or not party was served.


Where the borrower has admitted the factum of taking the loan, then the burden of proof shifts on to the defendants.
An document presented under the Banker’s book of evidence Act has to admitted as proved unless the defendants disproves it.


Where the loan amount was to be paid through EMI cheques, the limitation starts on the date the last cheque was to paid.
Where the defendants do not contest the claim of the bank, then the whole claim amount should be allowed.


If the petitioner had already approached the High Court earlier, he must enclose copies of earlier WPs and explain the circumstances that has changed since the last time
Where the Writ Petitioner has suppressed facts he is not entitled for any relief.


The period of limitation cannot be extended by a confirmation of balance executed after the limitation period has expired.
The period of limitation cannot be extended by a transaction in the account after expiry of the limitation.


There is no need to issue any Writ where no prejudice was caused to the borrower by the following of a particular procedure.
An issue which was not raised before the trial court and where no issues were framed cannot be raised before the High Court.


When accounts are disputed it is the duty of the bank to have produced the proper accounts and ledgers and proved its claim.
When an issue has been decided once between the same parties then the principles of res-judicata will apply.


Appeal against an notice under SRFAESI Act lies to the DRT. Therefore Writ cannot be maintained in such matters.
When an alternative and efficacious remedy is available a Writ cannot be maintained.


The Court have no discretion to grant different rate of interest than the contractual rate of interest from the date it is due and payable to the date it is actually paid.
In case of commercial loans of the Banks, Section 34 of the Civil Procedure Code is to be applied in the context of circulars/directions issued by the Reserve Bank of India under Sections 21 and 35-A of the Act.


A duty is cast on the executing court to get a correct valuation of property before drawing up the proclamation of sale.
There is no need to put the entire asset on auction when only a small portion of the asset can satisfy the entire decretal amount.


Company Act must yield to SRFAESI Act.
SRFAESI Act over rides the Company Act except in so far as it relates to labor claims.


Where the issues for consideration and examination relates to investigation as to whether the provisions prescribed under the SRFFAESI Act have been followed or not, only the Debts Recovery Tribunal has the jurisdiction.
The High Court cannot examine the procedural irregularities that might have been committed during an auction. The Debts Recovery Tribunal is the right forum.


It is the inherent jurisdiction of the Debts Recovery Appellate Tribunal to demand pre-deposit of a percentage of debts due. This cannot be interfered through a Writ.


Where the borrowers are seeking only time for repayment of the dues, the same can be granted.


The High Courts can direct the DRTs to hear prayers by specific dates, and till such time the matter is decided, the Bank should not take any coercive steps.


The RDDBI Act supercedes the Companies Act.
The District Magistrate cannot execute any order of the Official Liquidator which interferes with the orders of the Recovery Officer.


Rejection of an OTS application without assigning any reasons, particularly when a Writ is pending on the issue is arbitrary.
Where the applicant complies with the provisions of OTS, the same should be given.


A cooperative Bank is not a Bank within the meaning of RDB Act.
A submission made before the MRTP Commission that it was a 'banking company,' does not estopp an cooperative Bank from saying now that it is not a 'banking company' within the meaning of S. 5(c) of the Banking Regulation Act, 1949. There cannot be estoppel against a statute.


On a case being transferred from the civil court, the Debts Recovery Tribunal may continue with the proceedings from any stage it may deem fit, or denovo.
On a receipt of a case from civil Court, the Debts Recovery Tribunal may, unless grave prejudice would be caused to the opposite site, or would involve a situation in the nature of changing the character of the case itself, permit a party to file second statement of defence.
The cross examination and recording of evidence done before the civil courts will stand.


There is no need to invoke provisions of SRFAESI Act against the guarantors when the property of the principle borrower is sufficient to defray the entire dues of the bank.
The banks cannot recklessly exercise their powers under SRFAESI Act and seize any property without any reference to the value of the property required to repay the debts.


High Court is not the forum for settlement of facts, particularly when an alternative remedy in the form of Debts Recovery Tribunal is available.
Settlement between the parties should be made before the appropriate forum.


An auction purchaser cannot withhold deposit of bid amount for any reason.


Writ jurisdiction is not the right forum to seek enforcement of contractual obligations between an auction purchaser and the bank. Appropriate forum should be used.


The Debts Recovery Tribunal are judicial bodies with full powers to investigate all allegations of fraud etc. between a bank and a borrower.
A counter claim against a bank should necessarily be tried in the DRT.


Once the offer was made by the Bank for one time settlement and was availed by the borrowers, equity and fair play would require that the borrowers are not denied the benefit accruing on account of this scheme.
The courts should not act as hindrance in the amicable settlement of disputes between a borrower and a banker.


Where the notice has been issued under SRFAESI Act, the High Court cannot examine the facts of notice.
For challenging a notice issued under SRFAESI Act, the borrower must follow the statutory remedies provided in the Act.


No defensible rights accrue to person by merely being the highest bidder.
Where there were material irregularities the auction cannot be confirmed.


Issues which had been raised and decided earlier cannot be raised at the time of execution.
Principles of resjudicata will apply where the borrower has already raised similar issues.


When the petitioner has not paid even a single penny to the respondent bank towards the loan amount, he is not entitled for any discretionary relief.


There is no cause of action against an employee director who has since resigned from the borrower company and has been substituted by another person.
Where the borrower company has adequately secured the dues of the bank there is no need to arraign an employee director as a defendant particularly when he has resigned from the borrower company and has been substituted by another person.


A person does not get any locus to file a Writ against a bank merely because he has entered into a contract with the borrower to sell the mortgaged property to him.
The bank is not bound to accept a offer from a person merely because he has entered into a contract with the borrower over the mortgaged property.


Where the Bank is unable to provide credible explanation to its actions, then the court can presume that what has been done was improper.
An account cannot be declared as Non Performing without following any procedure.
Gross difference in valuation report should be properly explained. Otherwise it could be presumed to be a fake report.
The court may assist a borrower who has intention to pay his dues and regularize the accounts.
Where the Bank officers are unable to explain their actions presumption of fraud and collusion to defraud a borrower can be drawn.


Wife cannot file a Writ petition on behalf of her husband challenging a notice under SRFAESI Act.


Where the borrower is simply seeking time for paying up his dues the same can be granted.


A guarantor is equally liable for the due repayment of the loans given.
Unless guarantor gives a security for the due payment of the loan it not possible to prevent the bank from proceeding against the properties mortgaged by the guarantor.


No need to issue any Writ where no steps have been taken by the Bank to enforce its notice.


The Bank should explain the nature of each of the expenses sought to be claimed from the borrower. It should be reasonable.


The borrower should strictly follow the entire term of the compromise deed including liability to pay interest.
Where there are extenuating circumstances and the borrower has shown genuine intent to repay the amounts due, the High Court may allow the borrower some more time.


When borrowers have acted upon the compromise petition and implemented their part of the agreement, the bank is bound to implement its part of the agreement, and issue No- Due- Certificate and return the documents.
It is not the fault of the borrower that the bank has not presented the cheques towards the installments on the due dates.


Where the borrower has shown no interest in settlement of his account the Writ cannot survive.


No Writ can be invoked against Kangra Central Cooperative Bank Limited as it is neither an instrumentality nor an authority of the State within the meaning of Article 12 of the Constitution.


It is premature to interfere with the auction proceedings which is yet to be confirmed by the Debts Recovery Tribunal.
There is no need to stay the auction proceedings where the borrower would not be prejudiced by it.


Where the borrowers shows a lax attitude towards settlement of the debt then he cannot have any indulgence.


Where judgment debtor claims that over payment has occurred, it is his onus to produce enough proofs to substantiate it.


Guidelines for One Time Settlement issued by the Reserve Bank of India do not have any statutory flavor creating rights and duties between the parties, which could be enforced by remedy of a writ in the nature of mandamus.


The civil courts are ousted of their jurisdiction to execute even their own orders if the amount exceeds Rs. 10 lakhs.


Limitation for initiating proceedings under SRFAESI Act is 12 years from the date the amount became due.


DRT directed to restore the application where the borrower had subsequently complied with its orders.


By inviting the borrower for talks for amicable settlement of debts due a genuine expectation is created in the minds of the borrower that as the matter is being settled mutually the orders of the court need not be implemented immediately.
Time spent in talks for compromise need to be set off as a genuine belief is created in the minds of the borrower that the case can be settled by compromise.


The bank should consider and pass a speaking order on the representations made by the borrower for One Time Settlement of his debts.


One Time Settlement Scheme announced by the Reserve Bank of India do not have any statutory flavor.
One Time Settlement Scheme is for only once and not every time at the fancy of the borrower. Once settled it must be adhered to.
A Writ of Mandamus cannot be issued in contractual matters like between a Bank and its borrower.


The High Court refused to interfere where the amount to be recovered was huge, where no compromise had been reached, and the agreed amount has not been deposited.


Approaching the High Court instead of using the statutory remedy of filing an appeal to the DRT under the SRFAESI Act is a misuse of the process of the Court.


Whether the transactions between the bank and the company were authorized or not is the sole jurisdiction of the Debts Recovery Tribunal and cannot be gone into in Writ jurisdiction.
Disputes inter-see directors of a company cannot be gone into in a Writ Petition. It has to be filed before a court of competent jurisdiction.


Whether or not a proceeding initiated by a Bank is time barred or not has to be decided by the Debts Recovery Tribunal and not in Writ Jurisdiction.


Where the borrower alleges that the bank has refused accept the amount tendered as per the directions of the Court, the borrower must substantiate it and produce the cheque in the Court.
Mere allegation that the bank has not accepted the cheque would not be sufficient to substantiate that the borrower did tender the amount and bank refused to accept the same.


If the borrower files an representation against a notice u/s 13(2) of the SRFAESI Act, the bank must reply to it within a week.


Proceedings initiated by a Bank under SRFAESI Act should be challenged before the Debts Recovery Tribunal and not by way of Writ.


Where a compromise has been reached between the Bank and the borrower before confirmation of the auction, the auction cannot be confirmed.
The person at whose instance the auction is set aside is liable to pay full costs of the auction and also costs to the auction purchaser.
When an auction is set aside, the auction purchaser is entitled for refund of his amount along with interest.


Where the borrower has not established his bonafides in repaying the amount he forfeits his right to be heard


When a property is sold on deferred payment basis the auction purchaser becomes a loanee of the seller for the balance amount.


The legislature has the right to amend a procedural law with retrospective effect.
Goods purchased by an agriculturists is not exempted under the ‘Haryana Relief of Agricultural Indebtedness Act, 1989’.
Tractor comes within the meaning of the term of “goods” of the ‘Haryana Relief of Agricultural Indebtedness Act, 1989’ hence not covered under the exempted category.


Instead of filing a Writ Petition statutory remedies of filing an appeal to the Debts Recovery Tribunal should be followed.


Once it is established that Hundee and RR have been received in the Bank, the Bank should pay the Hundee amount irrespective of the fact whether it was able to collect it from the person to whom it released it.


Writ jurisdiction should not be used as a tool to by-pass the procedure prescribed in the SRFAESI Act.


Not producing copies of the earlier order passed by the High Court between the same parties is misuse of the process of the Court.
An order of the High Court cannot be challenged through the Writ jurisdiction of the High Court.


Where the borrower does not even pay the minimum as directed by the Court he cannot be granted benefit of Writ Jurisdiction.


A para wise reply is sufficient to show that the points raised by the borrower in his reply to notice under Section 13(2) of the SRFAESI Act was considered. The bank officer need pass an order like judicial officers.
Reply to a notice issued under Section 13(2) of the SRFAESI Act are matters relating to facts which cannot be gone into in a Writ Petition.
There is no bar for invoking provisions of SRFAESI Act during pendency of an application before the Debts Recovery Tribunal.


There is no bar on a bank from invoking provisions of SRFAESI Act even as their application before the Debts Recovery Tribunal is pending.


Where no reasons have been given for seeking additional records the same cannot be allowed.
A clear explanation is necessary as to why the additional records could not be sought at the time of leading evidence or during cross examination of the Bank’s witnesses.


The question of constitutional validity of the provisions of the SRFAESI Act cannot be re-opened before the High Courts on any ground.
DRTs have the jurisdiction to entertain an application contemplated under section 17 of the SRFAESI Act even in respect of the debt of less than Rs.10 lacs.
An application under section 17(1) of the SRFAESI Act would be maintainable on payment of a fixed court fee of Rs.250/- till the rules are made in terms of Section 17(1) of the Act.
It is mandatory for the bank or the financial institution as the case may be, to withdraw its application made to the Debts Recovery Tribunal if it wishes to proceed against the borrower under provisons of the SRFAESI Act.


Auction Purchaser cannot challenge the conditions of pre-deposit of 75% of debts due for making an appeal.

An auction purchaser is stranger to the case.


A SFC cannot act as a private money lender
To classify defaulters on the basis of those in whose case notices were issued and those in whose case no notices were issued is arbitrary.
To impose a different set of conditions on those whose assets were put on sale but could not be sold and those whose assets were not put on sale, while both of them are same class of defaulters is arbitrary.


A person cannot be said to have been represented before a Court merely because some advocate stood up and spoke for him.
Unless the advocate had the authority under a singed Vakalatnama he could not have represented an defendant.


A letter of credit when it expressly says so, the bank has no alternative to pay the amount on demand by the beneficiary.


Unless there is material defect or fraud, an auction cannot be set aside.
Latches on the part of complainant makes it impossible to unsettled third party interest for value.
To annual an auction, statutory provisions should be followed.


The Debts Recovery Tribunals and Appellate Tribunals are not Civil Courts and do not have powers of a civil court.
When the a Debt Recovery Tribunal or Appellate Tribunal comes to a conclusion that it has no jurisdiction in a matter it can pass no further orders. It must dismiss the application.
When a Debt Recovery Tribunal or Appellate Tribunal comes to a conclusion that it has no jurisdiction in a matter it must dismiss the application. The application cannot be returned for being presented in a Court of appropriate jurisdiction.


The moment the auction purchaser deposits the entire bid amount and the sale is confirmed in his favor, right, title and interests in the property vests in him.
Once the sale is confirmed in favor of the auction purchaser the judgment debtor has no right in the property and cannot redeem it even if no sale certificate has been issued.
Issue of sale Certificate is a ministerial job and not a judicial job. Non issuance of Sale Certificate does not alter the character of a property which has been confirmed in favor of auction purchaser.


Writ jurisdiction of the High court can be invoked where the impugned order is ex-facie without jurisdiction or beyond the provisions of the DRT Act and in some exceptional cases where it is violative of principles of natural justice or basic rule of law.
The DRT Act envisages a hierarchy of appeals which cannot be derailed by taking recourse of to Writ jurisdiction.
It cannot be said that appellate remedy is onerous where DRAT has not been approached at all, and waiver of the pre-deposit sought.


Forty-five days' period of limitation prescribed under section 17(1) of the SRFAESI Act starts running from the date when symbolic possession is taken or from the date when actual possession is taken as there is no dichotomy between the two.
The provision of section 5 of the Limitation Act is applicable to the proceedings under section 17(1) of the SRFAESI Act.


The High Court need not entertain the Writ as there is statutory and equally efficacious remedy available under the SRAFAESI Act.


SRFAESI Act has overriding effect on all other Acts.
If measures taken by the secured creditor come in conflict with any other law, then provisions of SRFAESI Act have overriding effect.
DRT has wide powers u/s 17 of SRFAESI Act to render complete justice. Borrower can raise all his grievance at this stage.
Third parties can approach the DRT against actions taken by the secured creditors under SRFAESI Act.
SRFAESI Act presumes that the liability of borrower to repay bank has already crystallized before proceedings were initated.
Under SRFAESI Act, Bank’s interest in an asset is created the moment it grants a loan against the asset.
SRAFAESI Act does not create any dichotomy between symbolic and actual possession of the assets.
When considering an application from an Bank for assistance, the DMM is not required to apply his mind as to whether the person whom he is dispossessing is a ‘tenant’ or has a prior sale agreement or any other right in the secured assets.
All shortcomings and deviations from the procedures prescribed in the SRFAESI Act can be raised at the time of filing an appeal to the DRT. They cannot be raised prior to that point of time.


Financial Institutions, like MSFC have remedies for recovery of their dues under the RDB Act as well as their parent Act.
Where a financial institution have remedies to recover their dues by other modes, the Court cannot compel them to transfer their case to particular forum.


Directions cannot be issued directing a public financial institution to sell an asset to any particular person at a particular price even though it may have been the highest bid.
Assets with public financial institutions are to safeguard public funds. They should be utilized to recover full due amount and not just any amount.


Jurisdiction of the High Court in matters covered by the Debt Recovery Tribunal - an agent who had given an under taking to the High Court to perform certain acts when the High Court was seized of the matter, continues to be answerable to the High Court, not withstanding the fact that the suit has already been transfered to the Debt Recovery Tribunal.
Transfer of the suit from the High Court to the Debt Reovery Tribunal does not absolve an agent of his responsiblity for the acts of ommission and commission which he committed during the period the suit was with the High Court.


Where the defence admit having taken loan from the borrower, the borrower is entitled to the recovery the loan amount.
Cause of action starts on the day the loan recall notice is issued. Institution of the suit within three years from the date issue of recall notice is within the limitation Act.
As HP State Industrial Development Corporation is not notified under S. 4-A of the Companies Act, it need not go before the Debt Recovery Tribunal.


In a Writ Petition questions under the SRFAESI Act cannot be looked into on merits.


Civil courts in Kerala do not have jurisdiction over Cooperative Banks functioning under Kerala Co-operative Societies Act, 1969.


Crown debts have prior claims over that of secured creditor


Alienation of assets by borrower/ defendants can be declared as void or subject to claim of the Bank even though these assets might not have been specifically mortgaged to the Bank.


There is no ground to entertain a Writ where the borrower does not make any submissions on the amount / installment he has been asked to pay as being either excessive or that he is unable to pay.


Pendent elite contractual rate of interest will have to be granted where the defendant /borrower did not contest the rate of interest charged by the bank.
In case of commercial transactions future rate of interest should be anything between 6% and the contractual rate.


In view of S. 34 of the SRFAESI Act it is not open for a civil court to stay proceedings before the DRT or the authorised officer of a Bank even though the very question of mortagage is before them.


Where the orginal order granting time to the borrower was not opposed or challenged, extending the same cannot be entertained in a Writ Appeal.
A Writ appeal cannot be entertained against an descretionary order passed by a Judge. The correct course would be to move an application before the Judge for amendment to the order.


An auction can be set aside when the interests of the bank as well as that of the defaulter/ borrower's assets needs to be protected.
It is necessary to grant some incentives so that borrower can repay his dues.
When the sale is set aside for no fault of the auction purchaser, then not only he is entitled for refund of his amount, but also compensation.


It is for Bank to take a decision as to whether it is profitable for it to go for a settlement or recover whatever it can from sale of the properties.
If the property is sold in auction, the State dues should be cleared first.


A borrower cannot challenge or dispute the claims made by secured creditor in terms of the consent decree passed earlier.


Where the borrower is willing to discharge his dues to the bank, an opportunity can be given to the borrower so that he can repay the debts.


Sale of pledged goods is a normal banking activity. Such sales are not conducted by the Banks as agents of the borrowers/pledgors but in exercise of their statutory power under the 1949 Act.
Though Banks are prohibited from indulging in any trading activity, but S. 8 makes an exception which covers issues like sale of pledged goods.


The decree holder being a Bank is more interested in its money rather than property. Therefore, if the borrower/debtor is prepared to pay the amounts due, the bank should return the property back to the borrower. Some time can be given.


There is no illegality if provisions of SRFAESI Act is invoked even as the Execution Petition is pending before the civil Court.
Where the borrower has deliberately prolonged the litigation, he does not deserve even benefit of intalments.


The proceedings for execution of a decree, and the proceedings initiated under the Revenue Recovery Act are independent of each other


Whether a secured creditor has right against a mortgaged property or the crown has a right against the same property can be decided in a suit. The issue cannot be decided by way of a Writ.


Remedy against proceedings under Securitisation Act is under S. 17 of the said Act.
Forum for challenging action under the Securitisation Act is before the Debts Recovery Tribunal, and not High Court under Writ jurisdiction.


Considering the fact the borrower has already deposited some amount, the bank should consider his OTS application.


When a document having material implications is sought to be introduced for the first time through an affidavit, the respondents/ defendants should be allowed to cross examine the witness of the Bank.


State Financial Corporation can proceed against all or any of the properties mortgaged or hypothecated to it either by the borrower and guarantor for recovery of their dues.
Speedy remedy is available not only against the surety, but against the borrower as well.
It is for the State Financial Corporation to decide the property against which it desires to proceed.


Where there is delay in filing an application the court can assume jurisdiction in the matter only after the delay has been condoned. If there is no application for condonation of delay the judge cannot assume jurisdiction of the case in which there is a delay.
It is not the responsibility of the bank to locate the borrower’s new addresses. It is the responsibility of the borrower to keep the banker informed of his addresses.
Where one of the defendants, who happens to be the father of the borrower, was in the know of the proceedings, the borrower cannot say he was unaware of the proceedings.


Where the loan has to be repaid in installments, the limitation starts to run from the date the default occurs and not from the date the loan documents were executed.


The High Court should not entertain a Writ when alternative remedy by way of filing an appeal to DRT is available.
For initiating proceeding under SRFAESI Act, the Bank need not withdraw their appeal pending before the DRT.
The bank can proceed simultaneously under RDDBFI Act as well as under SRFAESI Act.


The Recovery Officer of a Debts Recovery Tribunal does not have the powers to issue notice to the Reserve Bank of India for deduction and remittance to him of amounts from the Consolidated Fund of a State, or the Contingency Fund of a State.
The provisions of S. 28 of the RDB Act does not over ride the provisions of the Constitutions of India.
Funds can be withdrawn from the Consolidated Fund of a State or the Contingency Fund of the State only as per procedure prescribed by the Constitution and no other way. Order of the Recovery Officer for attachment and/or deductions of amounts from the Funds is ultra vires the Constitution.
In cases where a sub-ordinate Court assumes jurisdiction where there exists none, or over steps or crosses the limits of jurisdiction, or acts in flagrant disregard for the Rules etc., the High Courts can intervene even though an alternative appellate remedy exists.


The Debts Recovery Tribunal will not have jurisdiction to entertain a claim of bank against one if its employees who is said to be due to it for having defrauded the amount in collusion with some others.


It is not unreasonable or harsh to ask for suitable securities where the fact of a loan having been taken is admitted.
Every case of leave to defend has to be considered on its own facts and the trial court is the best judge to decide the terms and conditions to be imposed for the same.


Once BIFR is seized of a matter all kinds of debts of a company will be covered under Section 22 whether or not the debt has been noted in the scheme.
Decree holder seeking to enforce a decree against a company under consideration of BIFR must take its permission.


BIFR must consider the scheme proposed by the party that has vital stake in rehabilitation of the company.
BIFR can consider rehabilitation schemes proposed by other parties without impleading them as parties in the case.


When a defaulter submits that he has no means to pay but takes treatment form five star hospitals, lives in one palatial bungalow after another and leads a luxurious life at the cost of others his conduct is deceitful.
The Courts must make a distinction between those persons, who take loan for certain exigencies and are willing to pay but due to poor financial conditions are unable pay and from those who are out to exploit others and have no intention to pay and live life of riches at the cost of others.


An auction sale cannot be confirmed where an objection against the same has been lodged.
Where genuineness and authenticity of the title deeds is in question the same needs to be examined by DRT


Under RBI’s circular dated 13th July, 2005 for the resolution of NPA accounts, only a Bank, or NBFC or an FI can acquire the assets. Therefore the secured creditor is under no obligation to invite borrower to negotiate the sale of the assets.
The borrower need to be aggrieved by the transfer of assets from one secured to another. The assets buyer is only stepping into the shoes of the secured creditor and the net NPA of the borrower remains the same.
The relationship between a banker and a borrower is a contractual relationship. Such relationship cannot be adjudicated through the medium of a Writ.
No one has a right to seek One Time Settlement Scheme (OTS) or seek a direction to the Bank to grant a OTS to the borrower.


The jurisdictions under RDB Act and the Companies Act are mutually exclusive and proceedings under both the Act can proceed simultaneously.
The DRT cannot hear any issue relating to winding up of a Company.
Under the Companies Act the only question that is considered is whether the Company comes within the ambit of the Companies Court. Recovery of Debts by Banks is not considered.


One time settlement scheme is applicable and available to only those case which are still pending. Cases once settled/decreed will not be covered by the scheme.
The circulars issued by the Bank are directory in nature and do not have the status of guidelines issued in terms of Section 21 of Banking Regulations Act, 1949.


One time settlement schme is available only for pending cases.


One time settlement schme is available only for pending cases.


There is no need to appoint a receiver, where the defendants are not opposing the take over of the property.


The DRAT has powers to condone delay if it is satisfied with the reasons explained by the appellant.
Unless fresh grounds are given there is no need to interfere with the orders of the DRT rejecting request for cross examination of the witnesses.
The 2nd proviso to Section 18 (1) of the SRFAESI Act stipulates pre-deposit of 50% due as claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever is less, and in absence of a determination by the Tribunal, the person has to deposit 50% of the amount claimed by the secured creditor, subject to waiver under 3rd proviso to Section 18 (1).


The period of limitation for invoking the SRFAESI Act is 12 years
The rights of third parties, and purchasers without notice over properties claimed as secured assets by banks can be decided by the Debts Recovery Tribunal.


Held: The funds available with the Official Liquidator are meant for disbursment amongst innocent investors only.
The Income Tax authorities have no claim over the funds available with the Official liquidator, much less for recovering Capital Gains Tax against the defaulters.
If at all the Income Tax Authorities need to recover any amount towards the Capital Gains Tax, they must procede against the owners of the defaulting company and not lay claim over the amounts lying with the official liquidator, which are mean for distribution amongst innocent investors.


Where the lender had filed a police complainant alledging cheating etc., the Magistrate cannot close the case without hearing the compalainant.
It is the duty of the police to investigate the role played by each of the directors (the accused) at time of commission of the offence and prosecute them in accordance with law.
The Magistrate should supply the complainant a copy of the police report and hear them out before passing his orders.



Costing : It was held that claim by the Bank based on mortagaged deed is not a money suit based on negotiable instrument, but a "loan" based on mortagage.
A suit based on a mortgage would fall under Rule 3(2)(b) of the Legal Practitioner's Rules, 1973 and as such advocates fees should be calculated on these provisions.



Writ jurisdiction of High Courts over Debts Recovery Tribunal is an judicial jurisdiction and not an administrative one. The Tribunals are under judicial suprintendence of the High Courts.
Where there is a failure of the principles of natural justice, the same cannot be cured by the availablity of appellate remedy. The High Courts can interfere in the interest of justice.
The Debts Recovery Tribunals should provide sufficient oppertunity for the respondents to submit their objections.
The Tribunals cannot appoint an Receiver without assigning any reasons for the same.
Appointing an Receiver without according sufficient oppertunity to the respondent for puting up their objections is abuse of power.


Where reliance is placed on undated documents, oral arguments can be led in to establish the date of its execution.
Where date of execution of a document is apparent or admitted between two dates during which the limitation cannot be said to have set in, then the exact date of its execution is immaterial.


Where the judgment debtor has past history of attempting to defeat the orders of the court it becomes important to secure the interests of the judgment creditor.


SRFAESI Act empowers the bank to proceed simultaneously against the borrowers as well as the guarantors.
It is the onus of the borrower to maintain a match between the dues of the bank and the security provided to cover it.


The SFC has right to sell the assets of its borrowers to recover its dues.
When an auction purchaser does not comply with the terms of auction, the SFC has the right to withdraw the offer of sale and resell the property.


It is the right of the borrower to file a representation against Notice issued to him under SRFAESI Act and the Bank is under a corresponding duty to consider the objection fairly, reasonably and on merits.


A Debt Recovery Tribunal can adjudicate and decide the question of mortagage in accordance with the procedure laid down under Section 22 of the Act r/w relevant provisions of Chapter IV of the Transfer of Property Act.


After establishment of a Debt Recovery Tribunal, the High Court cannot re-open its earlier order before transferring a case to the Tribunal.
In a transferred suit, the Debt Recovery Tribunal cannot re-open, or re-examine, or re-call an order already passed by the High Court earlier.


When the bank is unable to sell the property at the reserve price it may sell it below the reserve price.


The Bank cannot invoke provisions of SRFAESI Act when the A.P. Co-operative Tribunal at Hyderabad for seized of the matter on remand orders of the High Court.
When the lowers courts were seized of the matter on the orders of the High Court, invoking provisions of SRFAESI Act amounts to negating the orders of the High Court.


So long as the plaint discloses some cause of action which requires determination by the Court, mere fact that in the opinion of the Judge the plaintiff may not succeed cannot be a ground for rejection of the plaint.
Whether the proceedings initiated by the Bank under SRFAESI Act would be hit by principles of res-judicata if an earlier suit had been dismissed for default needs examination by the lower courts.


Where the Official Liquidator is custodian of an assets, it is mandatory to put him on notice.
Auction of assets behind the back of Official Liquidator is fatal to an auction.


When the issues are not properly framed it deprives the borrower from leading the evidence as well.
Where the borrower has alleged that because of collusion and fraud between the bank and the dealer the tractor was never delivered to him it becomes incumbent on the courts to go into the issue as repayment of the loan is linked to delivery of tractor to the borrower.


Agricultural land cannot form security for the purposes of SRFAESI Act.
The onus is on the borrower to prove that the land is agricultural, and in case of composite lands, the area which is agricultural and which is not.
Merely because the land is capable of being used for agricultural purposes does not make it agricultural.
Land which has not been tilled or sowed cannot be agricultural.


A person who takes advantage of Bank’s mistake and utilizes the excess amount wrongly credited into his account is liable to return the entire amount along interest and other charges.


An application for restoration comes within the ambit of S. 151 of the CPC as such the courts have ample powers to extend the period of limitation.


In respect of commercial transactions, permitting payment of decretal amounts in installments is ruled out.
Banks are commercial organizations there interest for the period of litigation as well as future interest should be allowed, particularly when the amount taken is for commercial purposes.
Costs permitted should be as per rules only.


It is the prerogative of the Court to dispense with the production of Certified copies of the impugned order.
Condonaton of delay in filing appeal will have to be for a justifiable reasons only.


The properties that could be attached by the Recovery Officer for the purpose of sale in order to recover the amount of debt specified in the certificate are required to be stated and specified in the certificate issued by the Presiding Officer of the Tribunal (Para 53).
The Recovery Officer himself cannot decide which of the properties could be attached and sold (Para 53).
In a lease hold land the agreement is between the Company and the Government. The Bank cannot deposit the land cost and become the owner of the land (Para 61).
It is not open to the parties to confer, by their agreement, jurisdiction on a Court which it does not possess (Para 59).


The Debt Recovery Tribunals are competent to hear claims opposing liability of any particular property.
The Debt Recovery Tribunal need not follow the procedure prescribed in S. 21of the Civil Procedure Code while hear an application challenging the liability of any property for being attached.


After establishment of the DRT, suits valued at Rs. 10 lakhs and above should be transferred to the DRTs.

The Civil Courts can retain the Counter Claim and transfer the claim of the Bank to the DRT.

The Civil Court can try the Counter Claim.

Proceedings before the Civil Court and DRT can go on simultaneously.




Agreement between a banker and a borrower is a contract which has to be followed between them.
Cases between a bank and a borrower has to be referred to an arbitrator if the contract between them so mandates.


Unless the order staying the recovery proceedings specifically says so, the bank is not required to put the borrower back in possession of the house.
A contempt petition is not maintainable unless there is gross and willful disobedience of orders of the Court.


High Court is not the right forum for enforcement of an auction under SRFAESI Act.


The High Court need not interfere with auction sale under SRAFAESI Act since alternative remedy is available under S. 17 of the Act.


The Bank should give a reasoned decision on an application filed by the borrower for an one time settlement scheme.


Where the borrower is prepared to deposit the due amount then One Time Settlement Scheme involving waiver of interest component can be considered.


A Writ cannot be filed seeking modification of an order passed on an earlier Writ.


Even though SRFAESI Act has been enacted for the purpose of speedy recovery of debts due to banks, but it is time consuming. Therefore, when the borrower has voluntarily come forward to pay up the entire due and seeks some time, the same should be granted.
At auctions the properties are sold away at throw away prices and the bankers have to once again file normal suits to recover the balance amount from the borrowers. Thus if the borrower is offering to repay the entire amount in installment, there is no need to sell the property.


If the borrower does not dispute his liability to bank and desires to pay the same in installments, the same can be granted and the proceedings stayed.


Where the borrower is not disputing his liability but is only seeking time, the same can be granted and the auction set aside.


The title of the Official Liquidator cannot be better than that of the owner of the property.


The Bank is only interested in recovering its money and if the petitioner is ready and willing to clear off the outstanding dues, there is no reason as to why the petitioner's property should be put to auction.


If the post of Presiding Officer Debts Recovery Officer is lying vacant then the borrower should approach the Debts Recovery Appellate Tribunal.


Where the borrower is prepared to deposit the due amount in installments, and the bank has no objection thereto, recovery proceedings can be kept in abeyance to enable the borrower to repay the amounts.


Where neither a copy of the Recovery Certificate was attached, nor a copy of the latest demand notice, the Writ is premature.


Availability of alternative remedy is not a bar for maintaining a writ. Since the petitioners are willing to deposit the due amount, possession can be stayed.


Where the auction purchaser is ready to deposit the balance amount, time can be granted.


Writ against notice u/s 13(2) of the SRFAESI Act is premature.


Since the petitioner is not disputing his dues the auction proceedings can be stayed if he pays the dues by the day stipulated by the Court.


If the objective of SRFAESI Act can be achieved by a mode that does not require auctioning of the property of the borrower then it must be adopted, after all the bank is interested only in the money and not the property.


Where the borrower is prepared to deposit the entire due amount, and the bank does not have any objection thereto, the delay can be condoned and the borrower can be heard on mertis.


Any person aggrieved by the action of the bank u/s 13(2) of SRFAESI Act can approach the DRT. Even if the relationship between the bank and the petitioner does not happen to be that of a creditor and a debtor he can approach the DRT.


The High Court can order repayment of due amount in installments if the lender has no objection to the proposal of the borrower to so pay.


here is no need to auction the properties where the borrower is prepared repay the dues.
The bank is concerned only with the recovery of its dues. If the amount can be paid against some time being granted, then it should be granted.


Where the borrower simply asks for time to repay his debt, the same can be granted.


Bank can recover the debts due in terms of the contract between itself and the parties. If the contract so provides, then the Bank can proceed to recover the debt due from the guarantor without first proceeding against the principal borrower.


If a part is aggrieved by an order of the Debts Recovery Tribunal dismissing an application for default, or an ex-parte decision, the party must file an appeal as provided in the RDB Act.
Filing an Writ Petition in the High Court seeking directions to the Debts Recovery Tribunal for restoring an application, or not to continue with the proceedings till the application for restoration is disposed off is not correct procedure.


Provisions of the Transfer of Property Act (TPA) cannot claim primacy over provisions of the Banking Regulations Act (BRA) and the Companies Act. Once a special enactment is available recourse to TPA cannot be taken to.
The Banking Regulations Act does not permit a bank to either purchase or deal in non performing assets or deal in securities.
Section 35A of the Banking Regulations Act does not empower the RBI to permit Banks to trade in debts.
Transaction in NPA and debts is speculative in nature and cannot form part of a banking activity.
Sale of NPA by a Bank to another is not recovery of outstanding loan but essentially trading in debts.
Transfer of NPA by a Bank terminates the contract of the Bank with the customer, while the NPA acquiring Bank does not have any contract with the customer and thus involves the concept of novation.
Proceedings before a Company Court cannot be equated with proceedings of a civil suit before a civil Court and the application by an NPA acquiring Bank for substitution cannot be considered and dealt with as if the dispute was between two private litigants.


Where the civil dispute has already been amicably settled between the borrow and the Bank there is no point in pressing the criminal case.


The party who was proceeded against ex-parte should not be allowed to make the other party suffer costs of the litigation.
Even presuming it was advocate’s default, it was the party that had appointed him and the opposite party should not be made to suffer because of it.


S. 29 of the SFC Act is not available when Board for Industrial and Financial Reconstruction (BIFR) is seized of a matter.
SFC can invoke provisions of S. 29 of the SFC Act with BIFR’s permission.


State Financial Corporation cannot proceed against the property of the guarantor under S. 29 of the SFC Act.
Section 29 of the SFC Act can be invoked only against the property of the company.
SFC can proceed against the properties of the guarantors under s. 31 of the Act.


Proceedings under SRFAESI Act does not survive where the account has since been regularized and the borrower is prepared to all the dues as and when they become due.


When the cheques were returned with the endorsement that account was closed it was necessary to demand adequate security from the defendants.
When the earlier cheques were returned because the account was closed there was no point in depositing the other cheques for the same account. Not depositing the cheques does not prevent the claimant from filing a summary recovery suit.


When the petitioner is ready and willing to deposit an amount equivalent to the valuation of the flat the Bank should accept the amount and to discharge the property.


There is clear distinction between secured assets and borrower.
Bank has every right to proceed against the secured assets irrespective of the fact whether it is in the hands of borrower or some third person.
It is not necessary to establish a relationship of borrower and secured creditor to proceed against a secured asset.


The courts have discretionary powers to grant interest pendente lite and till realization. Such discretion has to be exercised properly, reasonably and on sound legal principles and not arbitrarily.
Falling interest rates in the market should also be taken note off while granting interest pendente lite.


If the State Act so provides, charges created by State Acts, like Sales Tax Act etc. will have primacy over the Debt Recovery Tribunal Act.
If the State Act so provides, charges created by State Acts, like Sales Tax Act etc. will have primacy over the (SRFAESI) Act Debt Recovery Tribunal Act.


Limitation starts from the day the bank communicates with its constituent.


No interest need be paid on a lost cheque, when the account from which the cheque was issued did not have balance to honour the cheque if presented.


S. 154(2A) of the Maharashtra Co-operative Societies Act, 1960 is a mandatory provision and an appeal should accompany with 50% of the amounts mentioned in the Recovery Certificate.
Where pre deposit of 50% of the total dues mentioned in the Recovery Certificate was a precondition for considering an appeal, the same is mandatory and no appeal can be entertained without pre-deposit.


The statute would not be considered in such a manner so as to encourage defaulters and discourage those who abide by the law.


It is not open for the High Court to go behind the orders of the executing court and alter the execution order.
Fixed Deposits from funds received as gratuity and retirement benefits continue to have the flavor of retirement benefits and cannot be attached for executing a decree.


Non production of true copy of the order even when it was available at hand is a serious lapse which should be penalized.
Despite lapses an opportunity can be accorded to cross examine witnesses and lead evidence, subject to payment of appropriate costs.


Bank cannot be treated as a trustee for every kind of money held by it.
Limitation will start on the date the right to sue accrues.


When the suit is indivisible amongst the various defendants, it is not possible to set aside the decree in respect of only some of them.
When reverting a decree back to lower court, the entire suit will have to be reverted to the lower court in respect of all the parties. I cannot be broken into parts as only against those who had participated in the proceedings and those who had not, and so on and so forth.
Bank need not file separate appeals against a decree in respect of each of the defendants .


Availability of alternative remedy does not bar High Courts from entertaining Writs against volition of Principles of Natural Justice.


Keeping in view the back ground in which the Debt Relief Scheme for the Borrowers in the State of Jammu & Kashmir, 1997 was formulated, liberal construction should be adopted to include activities which are allied to commercial activities, like Diary.
The non appearance of the borrower could be because of the small amounts involved. The can be decided without waiting for their written statements.


Harmonious construction of S. 34(2) the RDDB Act and S. 22 of SICA requires RDDB Act to prevail over SICA.
As S. 34(2) of the RDDB Act says that the provisions of the Act are in addition to those of SICA. Therefore S. 22 of the SICA will prevail first.


Not all demands can be taken under SRFAESI Act


High Court should not pass substantive orders during interlocutory proceedings.
Amounts deposited under courts orders can be refunded only with the interest actually accrued during the period of deposit. Bank cannot be asked to pay interest that has not accrued.


A bidder does not acquire any vested rights in a property merely because his bid was accepted and he had deposited the monies.
The courts can set aside a sale even if there is no allegation of fraud or wrong doings but in its opinion a better price could be obtained for the property.
The successful bidder of the previous auction has the right to improve his offer and match that of the new bidder.
The courts can compensate the previous successful bidder for the loss of his time and money, and disappointment due to missing out on a good bargain.


Where there is conflict between two acts, the act enacted latter will prevail over the former.
If two Acts have the same obstinate clauses, and both are special Acts as well, then the dominant purposes of the Acts have to be compared. The one that most closely meets with the issues will prevail irrespective of their date of enactment.
The Special Courts (Trial of Offences Relating to Transactions in Securities) Act,1992 will prevail over the Recovery of Debts Due to Banks and Financial Institutions Act 1993.
Banks and FIs can move the Special Courts under Section 11(2)(b) of the Special Courts (Trial of Offences Relating to Transactions in Securities) Act,1992 to claim all its dues from the notified person instead of moving the Debts Recovery Tribunal.


A bank is constructively liable for the acts of fraud committed by its employee and an investor cannot be hardship on that account.
Even when the bank employee has acted dishonestly and fraudulently against the interest of the Bank, the Bank is bound by the acts of the employee.


Once a party has been made a respondent, it is mandatory to hear him out.
Not hearing a party and passing an order in a case is fatal to the decisions


It is not proper for the High Court to re-open cases where the orders have attained finality.
There is nothing wrong in reviving a sick industry, but it should not be at the cost of the interests of the Bank.


Non issue of notice to judgment debtor before auction of the property is a irreparable remedy. The auction has to be set aside.
The property to be auctioned should be valued as per procedure and a proclamation should be drawn up. The proclamation should be duly published. Unless these are complied the auction cannot be sustained.


Even though right to property is not a fundamental right the Courts should be slow in dispossessing a person, even one calming adverse possession.
There is distinct juristic difference between an industrial concern and its director/ guarantor, and both are not one.
S. 29 of the SFC Act is against the industrial concern, and S. 31 of the Act is against the industrial oncern as well as surety.
An SFC can opt between S. 29 or 31 of the SFC Act to recover its dues.
A guarantee should ordinarily be enforced through appropriate legal procedure.


Where the order of the lower court was based entirely on wrong premise, the judgment has to be set aside.


Guarantor wholly responsible for the due discharge of the loan.
A private undertaking to bank, to stand as guarantee to a loan, supercedes the provisions of the Indian Contract Act.
Section 130 of the Indian Contract Act is superceded by an private agreement to stand as an guarantor issued to the bank.


A Writ can be issued only if any statutory law has been violated, or any subordinate court or authority has transgressed his jurisdiction.
RBI’s OTS guidelines are purely executive instructions and have no statutory force.
RBI’s guidelines do not create any right in favour of the borrowers to seek their enforcement through a Writ.
In order to avail relief under the RBI guidelines, the eligibility criteria must be strictly fulfilled.


A criminal act is not only between the parties concerned but also against the Society as a whole.
An accuse can compromise a case with a complainant only if it is covered under Section 320 of the IPC. If the kind of offence is not covered under the provision, the accused cannot compromise the case with the complainant.
However in view of S. 147 of the Negotiable Instruments Act, offences falling under it are compoundable and the complainant and the accused can compromise the case between themselves.


Letter of allotment land, though not a registered instrument, creates interest in the land allotted.
Though allotment letter is not a title deed but it is a assignable interest on the basis of which large number of banks advance loans.


By a mere act of lawful seizure the Government does not acquire any higher rights over the goods pledged with a Bank (a pawnee)
The Govenrment is required to compensate the secured creditor if it seized and sold off goods pledged with the pawnee (the secured creditor) on defaults being made by the pawnor.
The workmen are also unsecured creditors if there is no liquidation proceedings under way.


When seeking partition of assets the person holding larger share of the assets can seek to buy the shares of the other co-sharers.
Sale once confirmed cannot be reopened merely because of receipt of higher offer.


Delay in filing an application for amendmentment to the original written statement of defence cannot be a ground for disallowing it.
At the time of permitting amendment to the suit, the courts should not go into merits o the amendments.
The point that the courts should examine when allowing (or not allowing) amendments to an original application is to see whether such amendment would be necessary for decision of the real controversy between the parties in the suit.


Where the balance of bid amount was not deposited as per the terms of auction, the auction is a complete nullity.


Cooperative Banks are not Banks within the meaning of DRT Act.
The State Legislature are competent to enact and implement the State Cooperative Act.
Coperative Banks are not covered under the DRTs.
The Registrar can hear and adjudicate claims of cooperative Banks against its borrowers.


Where the bank did not give any indication that compromise had broken down and the borrower continued to act in the belief that compromise was in force, then the provisions of compromise must be given effect to even though there were some delays in its time schedule.


Auction sale of pledged goods by scheduled banks is a "transaction" within the meaning of Kerala General Sales Tax Act, 1963 which takes place in the course of banking business and makes a Bank ‘dealer’ in respect of the goods sold.


For the purpose of jurisdiction of a High Court, the cause of action claimed must be integral to the disputes/ issues involved. Remote and peripheral causes connected give jurisdiction to a high court.
Even if a small fraction of the cause of action arises within the jurisdiction of the Court, the Court would have territorial jurisdiction to entertain the suit/petition. Nevertheless it must be a 'part of cause of action', nothing less than that.


Simultaneous Proceedings can go on before Banking Ombudsman as well as before the Debts Recovery Tribunal.
Recommendations of Technical Committee cannot be enforced by the Banking Ombudsman.
The Banking Ombudsman has no jurisdiction to compel a Bank to make further advances which as a prudent banker it might not find feasible.
Banking Ombudsman cannot interfere with the agreement regarding repayment schedule or increase the period of moratorium of the loan.


Banks should not use strong arms tactics and muscleman to recovery their dues.
Banks must use procedure established by law to recovery their dues.


Quoting higher bid price without depositing the bid amount does not make the bid successful.


When a mandatory provision is not complied with and when the delay is not properly, satisfactorily and convincingly explained, the court cannot condone the delay, only on the sympathetic ground.
It is well-considered principle of law that the delay cannot be condoned without assigning any reasonable, satisfactory, sufficient and proper reason.


What can be sold in the auction is the right, title and interest of the judgment-debtor in the property.
Using of a premises for business purpose would not automatically lead to the conclusion that the premises belonged to the judgement debtor firm.
Right of a creditor in the judgement debtor'S firm, or if the transferring partner ceases to be a partner thereof, then the balance in respect of the remaining partners, or if the firm itself is dissolved then the rights of the respective partner of dissolved partnership is required to be worked out in an independent proceeding before recovery can be effected.
A distinction exists between the right of a partner to sell a property during subsistence of the partnership and the right of an erstwhile partner to sell the property of the firm after it stood dissolved.


The lender/Bank is not required to elect between taking action under SRFAESI Act and going before the DRT. The Bank can take action under SRFAESI Act as well as before DRT simultaneously.
The authorized officer of the Bank can take physical possession of the assets, and just not symbolic.
Fees payable for filing an application to DRT against notice u/S 13(2) of SRFAESI Act is as per the DRT (Procedure) Rules.


Compliance with the Interlocutory order does not mean acquiescence with it. A party can challenge all the orders in an single final appeal.
Lessee is legally not bound to pay anything more than what he had agreed to with the Lesser, who is a debtor of the Bank.


Civil courts cannot entertain plaints from borrowers and grant injunctions, of whatever nature, against Banks, when Bank’s claim against the borrower is already subject matter before Debts Recovery Tribunal.
All claims of borrowers against Banks can be heard by the Debts Recovery Tribunal as cross suits or counter claim.


Civil courts cannot entertain plaints from borrowers and grant injunctions, of whatever nature, against Banks, when Bank’s claim against the borrower is already subject matter before Debts Recovery Tribunal.
All claims of borrowers against Banks can be heard by the Debts Recovery Tribunal as cross suits or counter claim.


Dues of a Government company would not become the dues of the Government within the meaning of subsection (2) of Section 537 of the Companies Act.
Exercise of the powers of a Revenue Recovery Court by SFC officers does not convert an attachment into Government dues.
Ordinarily a charge should be registered in terms of Section 125 of the Act. If the charges are not registered, the same would be void against the liquidator or creditors.
Recovery proceedings can be initiated against a company, but after hearing the Official liquidator and workers claims.


Banking is business transaction between bank and customers. Such customers are consumers within the meaning of section 2(1)(d)(ii) of the Act.
In deciding matter connected with foreign exchange the court has to select a date which puts the plaintiff in the same position in which he would have been, had the defendant discharged his obligation when he ought to have done, bearing in mind that the rate of exchange is a fluctuating factor
The burden is on the complainant to show the rate of exchange prevalent on particular dates in order to assist the court to arrive at the indicative prices.


A document, as is well known, must primarily be construed on the basis of the terms and conditions contained therein. It is also trite that while construing a document the court shall not supply any words which the author thereof did not use.
It is one thing to say that the nature of a transaction would be judged by the terms and conditions together with the surrounding and/or attending circumstances in a case where the document suffers from some ambiguities but it is another thing to say that the court will take recourse to such a course, although no such ambiguity exists.
It would also be open to a banker to put forward a case that absolute and unequivocal bank guarantee should be read as a conditional one having regard to circumstances attending thereto. It is, to our mind, impermissible in law.


Where Notices are returned undelivered the question of ‘deemed service’ has to be decided with reference to facts of each case. No universal law can be applicable in such matters.
In interpreting a statute the court must adopt that construction which suppresses the mischief and advances the remedy.
Section 138 of the Act is intended to punish unscrupulous persons who purported to discharge their liability by issuing cheques without really intending to do so.
The complaint gets time barred, if it is not filed within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138 of the Act.
A payee may successively re-present a dishonoured cheque. But once a notice under Section 138 of the NI Act is received by the drawer of the cheque, the payee or the holder of the cheque forfeits his right to again present the cheque.


Writing off of NPA does not preclude a Bank from initiating and/or continuing recovery proceedings for the recovery of the bad debts.
Writing off of NPA is an internal accounting procedure of banks and it does not mean that the loans are not to be recovered. As securities against loans are already available, the Banks can proceed against the same as well as the guarantors.
Banks only need to intimate RBI appropriation of reserve for writing off of NPAs and no prior permission is required.


The principle of undue enrichment was not applicable to encashment of bank guarantees.
Court should not issue an order of injunction restraining encashment of Bank Guarantee on ground of breach of the main contract between the buyer and the seller
On a summary proceedings under Or. 37 of the CPC, leave to defend the suit should not be granted unless there are triable issues involved.


Unless a secured creditor specifically relinquishes his charge for the common good of all the creditors, it cannot be presumed that the charge on the mortgaged properties has been released.
Mere participation of the secured creditor in the proceedings of the Official Liquidator does not signify relinquishment of the charge over the secured assets.
A secured creditor is entitled to realize the amount due on a preferential basis notwithstanding the fact that an affidavit was filed indicating that it stands within the liquidation proceedings but subject to the reservation of its security being continued.


Sub- sections (6) to (11) of the RDB Act, which were introduced by the Amending Act of 2000, are merely enabling provisions, to enable to the DRTs to hear a counter claim filed by a respondent in a application filed by a Bank.
Sub- sections (6) to (11) of the RDB Act are no bar to a civil Court to try and decide a case filed independently by a borrower against a Bank.
Sections 17 and 18 bars a civil court from entertaining an application filed by a bank against a borrower. However, it is no bar for a borrower to file an suit against a bank which is independent of bank’s claim
Only S. 31 of the RDB Act envisages transfer of a pending suit to the DRT, which is applicable only to a suit filed by a Bank. It does not speak of transfer to pending suit which was filed by a borrower against a Bank.
Reliefs moulded by the Supreme Court, in peculiar facts and circumstances of a case, are not law laid down under Article 141 of the Constitution, but orders in exercise of its powers under Article 142. The law laid down should be followed and not the relief granted in a particular case.


Limitation under continuing guarantee will start to run on refusal of the guarantors to make payment to the bank.
Limitation will not start to run merely on the account becoming a NPA.
What can be recovered under continuing guarantee is what is legally recoverable against the principle debtor.


The company court has the power to impose conditions while granting leave under S. 446(1) of the Companies Act. The conditions should be for good and valid reasons and cannot affect the rights of third parties nor impose an obligation contrary to law.
Section 446(1) of the Companies Act does not attract Article 137 of the Limitation Act, 1963. In fact, Art 137 of the Limitation Act would be attracted only to items falling within the jurisdiction of the Civil Courts.
The object of S. 446 of the Companies Act is not to nullify all claims against a company, but to save the company from multiplicity of proceedings and to compel all claimaints to come within the control and supervision of the winding up court.
An application under Section 446(1) of the Companies Act seeking leave to proceed with the suit/proceeding is in the nature of an 'interlocutory application' and would not attract any limitation.
When an winding up proceedings is pending against a company, an order/decree passed by any Court against that company without leave of the company court is voidable at the instance of the Official Liquidator, but is not void ab-initio.


An application under Sections 31 and 32 of the SFC is not a decree or order of a civil court that is being executed. It was only on the basis of a legal fiction that the proceedings under Section 31 SFC Act are treated as akin to execution proceedings
For proceedings under the SFC Act there is neither a decree to be executed nor is there any decree holder or judgment debtor and therefore in a strict sense it cannot be said to be a case of execution of a decree. Article 136 of the Limitation Act has no application in the facts of the present case.


When the law in India is clear, settled and without any deviation whatsoever, there is no occasion to rely upon foreign case law.
In honoring a Bank guarantee, it is no function of a Bank nor of a Court to enquire in to the due performance under the terms of the guarantee. The Bank is obliged to make payment when the guarantee is called in, irrespective of any contractual dispute between the parties.
The Bank must honour the bank guarantee free from interference by the courts. Otherwise, trust in commerce internal and international would be irreparably damaged. It is only in exceptional cases that is to say in case of fraud or in case of irretrievable injustice, the court should interfere.
The right to recover the amount under the running bills has no relevance to the liability of the Bank under the guarantee. The liability of the Bank under Bank guarantee remains intact irrespective of the recovery of mobilisation advance or the non-payment under the running bills. The beneficiary is also not required to give any statement of accounts to the Bank or any one before invoking the bank guarantee.


The mortgagor’s right to redeem a property is extinguished only if the final decree in a suit for foreclosure specifically says so, or in the alternative, the mortgagor fails to pay all the amounts due before confirmation of the sale. Until then his right to redeem the property remains alive.
It is the right of the mortgagor to redeem the mortgage at any time before the confirmation of a sale made in pursuance of a final decree passed in a suit for sale.


Business is an activity, directed with a certain purpose, more often towards producing income or profit. Ownership of assets is merely an incident rather than a characteristic of business. Hence, the mere transfer of one or more species of assets does not necessarily bring about the transfer of the "ownership of the business”.
Whether the transferee had constructive notice of the charge has to be determined on the facts and circumstances of the case. There could be no fixed presumption as to the transferee having constructive notice of the charge against the property.
Save for exceptional circumstances, new reliefs, not argued or claimed before the High Court, cannot be prayed for before the Supreme Court.


No need to give any protection to an auction purchasers with notice of pending proceedings


SFC can invoke provisions of the SFC Act and proceed against the secured assets so long as it is free from any other proceedings.
Once the Official liquidator has taken possession of the assets, SFC has to proceed through the Official Liquidator and cannot stand outside the liquidation proceedings.
Only the official liquidator can be the representative of the workmen and the SFC will have to associate the Official liquidator with all proceedeings against the secured assets of a company.
The right to proceed against a secured asset is only a apparent right and no right is accrued or acquired as long as the rigtht has not been enforced.


For O. XXI r/w R. 106(3) of the CPC, the starting point of limitation is the date of the order and not the knowledge about the order.

Hardship and injustice could be an ground for interpretation of an statue, but not for extending limitation.

Dismissal of an application for default u/O XXI r/w R. 105 (2) it is presumed that the opposite parties are aware of the Order as they have already entered appearance in the case.


For rejecting an plaint under O. VII R. 11 CPC the entire pleading has to be taken into consideration to see if any cause of action exists.

Even if all other cause of actions are subsidary to the main action, it has to be ascertained if the subsidary cause of actions have independent existence. If yes, the plaint cannot be rejected.


Commercial documents must be construed in a manner as are understood in commercial parlance and must be made workable.
Where a compromise or arrangement is proposed between a company and its creditors or any class of them, the Courts are required to enforce the agreement. The court should ensure that the scheme is fair, just and reasonable and does not contravene public policy or any statutory provision.


The claims of the secured creditors are to be given priority over unsecured creditors but their claim would be pari passu with the workmen.
Where the nature of the relief, as originally sought, has become obsolete or unserviceable or a new form of relief will be more efficacious on account of developments subsequent to the suit or even during the appellate stage, it is but fair that the relief is moulded, varied or reshaped in the light of updated facts.
Where a cause of action is deficient but later events have made up the deficiency, the Court may, in order to avoid multiplicity of litigation, permit amendment and continue the proceeding, provided no prejudice is caused to the other side subject to statutory provisions.
Correctness of an equitable order may be judged upon taking into consideration the subsequent events.


Where a party to the suit does not appear in the witness-box and states his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise that the case set up by him is not correct.
A power of attorney holder cannot enter witness box and depose on behalf of his principle.
If a person cannot appear and depose before a Court, a commission for recording his evidence may be issued under the relevant provisions of the CPC.
Mere appearance of person’s name in the sale indenture by itself is not a conclusive proof that the person is co-owner of the property and has paid for its acquisition.
Payments made for the acquisition of the assets must be from provable independent sources of income and not from un-provable gifts and donations.


The manner and mode of sale, and the price at which the assets are to be sold are the sole discretion of the Company Court.
Atleast the first decision on the mode of sales and the price at which it should be sold should be by the company Court.


Recovery Certificate issueed before notification of a Tribunal are not effected. They need not be transferred to the Debt Recovery Tribunal.
Under the U.P. Public Moneys (Recovery of Dues) Act, 1972, it is mandatory to first sell off the assets of the principal debtor before proceeding against the gurantors.
Gurantors can be proceeded against only after the assets of the principle debtor has been sold off, and the debt amount still remains to be satisfied.


The one time settlement scheme of the RBI cannot be extended to cases which has already been decreed by the Courts.
Where the borrower was otherwise eligible for the one time settlement scheme, but could not be granted the benefit due to a Recovery Certificate already been issued by the Debts Recovery Tribunal, some relief can be granted in terms of interest and installments.


Garnishee proceedings has to be stopped where the third party raises objection as to his liability to the debtor.
Monies payable under Letter Of Credit cannot be said to be belonging to the debtor.


Territorial jurisdiction of the High Courts under SRAFAESIA - it is not defined. It has to be determined on the basis of pleadings in the Writ.A High Court gets jurisdiction even if part of the cause of auction has taken place within its territorial jurisdiction.
In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens.


Where the money is held by a person in trust, the money doesn’t belong to him even if he has mixed it up with that of his own.
The owner has lien over the monies held in trust by the third person, irrespective of the personal status of the third person.


Limitation for initiating contempt proceedings starts from the day the petitioners became aware of the contemptuous act of the respondents, particularly in cases where the petitioner did not have access to information relating to the act. Where the Court was made to pass an Compromise decree order on the basis of an undertaking given by the respondents, non-compliance with the provisions thereof amounts to contempt of the Court. Where the respondents gave a property as a security to a Court by withholding the information the same property has already been given as a security to another Court for executing another decree, then it amounts to contempt of the Court.


Executing Court cannot go into the validity of the decree. The validity of the decree should be decided by way of an appeal.
When a decree is in terms of an award/document then the terms of that document have to be looked at.


When an issue is before BIFR recovery proceedings against the company can be taken only with the permisson of BIFR.
Section 22(1) of SICA prohibits recovery against the industrial company only, there is no protection afforded to guarantors against recovery proceedings.


Financial Intuitions do not have unlimited funds at their disposal. They have to recover dues and give further loans to deserving borrowers. Non-payment of the installment by a defaulter may stand in the way of a deserving borrowers getting financial assistance.
A Corporation is not supposed to give loan and then to write if off as a bad debt and ultimately to go out of business. They have to recover the amounts due so that fresh loans can be given. In that way industrialization which is the intended object can be promoted.
Promoting industrialization does not serve public interest if it is at the cost of public funds. It may amount to transferring public money to private account.
In the name of fairness the lender alone cannot be shackled hand and foot.
Where the borrower has no genuine intention to repay and adopts pretexts and ploys to avoid payment, he cannot make the grievance that lender was not acting fairly, even if requisite procedures have been followed.
A Court cannot substitute its judgment for the judgment of administrative authorities. Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene.
The fairness required of the Corporations cannot be carried to the extent of disabling them from recovering what is due to them.
Sometimes it may not be possible to secure the best price by public auction when the bidders form cartel and depress the prices, or where the property to be sold is such that suitable bid may not be received at public auction. In such cases other modes may be adopted including calling for tenders. However, widest possible advertisement should be accorded to such auctions.
Indulgence shown to chronic defaulter would amount to flogging a dead horse without any conceivable results.


RBI directives have not only statutory flavor, any contravention thereof or any default in compliance therewith is punishable.
The court can act on assumption and accounts maintained by banks is in conformity with RBI directives
Banks should make an averment in the plaint that interest/compound interest has been charged at such rates, and capitalised at such periodical rests, as are permitted by the RBI.
The Bank should file a statement of account in court showing details and giving particulars of debit entries, and if debit entry relates to interest then setting out its rate and the period for which the interest has been charged.
Subject to voluntary contract between Bank and borrower and/or an established practice or usage interest on loans and advances may be charged on periodical rests and also capitalised on remaining unpaid amounts.
The principal sum actually advanced coupled with the interest on periodical rests so capitalised is capable of being adjudged as principal sum due on the date of the suit.
The Courts can award interest pendente lite and future interest at such rate and for such period which the Court may deem fit on the principle sum adjudged.


There is nothing wrong in borrowers expecting banks to settle the matter giving just and equitable relief, particularly when they deserve such relief and their offer is bonafide and reasonable.
Even if the proposal made by the borrower is not acceptable, the bank should make a counter proposal, particularly when the proposal is not turned down by any written communication.
When the offer made by the borrower is genuine and boanfide the bank must take a reasonable stand and settle the matter avoiding litigation so that it can recover the amount quickly.


Auction cannot be deemed to have been confirmed if the same is under appeal and the mortgagor can deemed the property by depositing the decretal amount.
The option to deposit the decretal amount and redeem the mortgage property is not available once the auction has been confirmed.


Section 29 of the State Financial Corporation Act are subordinate to Sections 529 and 529A of the Companies Act.
The State Financial Corporation should take prior permission of the Companies Court for staying outside the winding up proceedings.
The High Court is competent to impose conditions and restrictions for allowing an State Financial Corporation to stay outside the winding up proceedings so as to ensure the rights of the workmen are protected.


The company as well as the guarantors of the company are covered u/S. 22 of SICA. As such during operation of the section proceedings can be undertaken against the guarantors too.
Where the wordings of the legislature are clear and unambiguous it is not necessary to impute intentions of legislatures.


Even though there is no suggestion of fraud or malpractice the courts are not bound to accept the highest bid if in its opinion the price obtained is not adequate.
It is the duty of the court to ensure that the price obtained is the best price as it is the custodian for all the secured creditors, share holders, workers and other claimants.


Once BIFR accepts a case inquiry is deemed to have commenced.
A winding up proceedings can be stayed at any stage by an order of the BIFR.


The Crown debts have priority over that of the subjects only when the status of the two debts are one and the same.

An ordinary Crown debt cannot get precedence over that of a secured debt of a subject.

An ordinary claim of the Government has no precedence over the claim of a secured creditor, like a Bank.


When a mortgage is discharged, the documents have to be returned to the owner of the property.
It is not not necessary to for the parties to have challenged every part of the order/ judgment. The Appellate Courts can do complete justice by treating the appeal as whole not in bits and parts.


Bailee has the right to retain goods till he recovers his dues. If the dues are not paid, then the Bailee can retain such other goods as well which may come into his possession in future.


The Writ jurisdiction of the High Court cannot extend over mattes if the cause of action has not arisen within its territorial jurisdiction.


Any due to bank would be debt within the meaning of RDB Act and the DRT will have jurisdiction to hear the matter.


If the execution petition has been filed within time limit, it continues to remain pending even if the decree holder dies.
If the decree holder dies, the execution petition cannot be dismissed even for default. The Legal Hires should be given notice and time to be brought on record.


Mere framing of issues and posting a case for evidence cannot prevent a Court from examining the points raised in a plaint to decide an application under Order 7 Rule 11 C.P.C
When a claim is made under Letter of Credit the bank must pay if the documents are in order and the terms of credit are satisfied. It is not for the bank to examine whether the seller had actually shipped the goods or whether the goods conformed to the requirements of the contract. Any dispute between the buyer and the seller must be settled between themselves.
Bank cannot refuse to make payment under Letter of Credit unless clear case of fraud or irretrievable injury.


Even if the Bank has voilated some provision of the RBI guidelines, the same is enforceable against the signatory if it is lawful.
Lawful portions of a contract between a bank and its constituent can be enforced ignoring the unlawful portions.


A Bank is a juristic person and any officer working in it can be authorized to represent the Bank before the Court.
Whether the Bank officer was competent or not to sign the pleadings can be inferred from the proceedings itself.
The Bank can ex post facto ratify the pleadings of its officer. Whether bank has ratified the pleadings of its officer can be inferred from the proceedings
As far as possible, a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable.


The co-owners have the right to redeem the joint property against any stranger before the proceedings come to an end.
The auction purchaser-stranger to a jointly owned property will have to withdraw himself if any of the co-owners offer to redeem the property at a price determined by the court.


The Government or public authorities should make all attempts to obtain the best available price while disposing of public properties. They should not generally enter into private arrangements for the purpose.


The liability of the borrower to pay interest on the principal sum to include interest that became merged with the principal sum adjudged or principal sum as lent, is required to be authoritatively laid down by a Bench of five judges.


Where there has been a obvious and manifest illegality in the conduct of an auction, the courts cannot be mute and helpless spectator. The auction has to be set aside even if there is procedural defect in filing of the suit.
The courts should be vigilant to the bidders, and scrutinize them, particularly where there are other bidders with higher offers than the auction purchaser.
While setting aside an auction sale, it is not open to enlarge the scope of the remanding than permitting the re auction of the property.


It is not necessary to seek records of Departmental proceedings against an employee of the bank to establish that there was no equitable mortgage on the suit property.
Whether or not a equitable mortgage was created on the suit property can be established through cross examining witnesses and leading evidences.


A charge has a wider ambit and covers within it a mortgage as well.
When a first charge is created by operation of a law then it supercedes the claims created by virtue of mortgage.


Value of asset sold/auctioned is immaterial in execution matters for calculating the financial jurisdiction of the Court. The court which passed the original decree is competent to execute its orders irrespective of the value of the asset sold.
Sections 21 and 35-A of the Banking Regulation Act enable the Reserve bank of India to issue directives to other Banks in public interest and regulate the charging of interest on loans or advances made from time to time.
A bank which ignores the directive of the Reserve Bank of India is liable to be penalised under Section 47-A of the Act.
The universal banking practice is usually to charge interest with half-yearly rest but there is nothing to prevent the parties from agreeing to quarterly rest and such an agreement would be perfectly valid unless it is shown to be opposed to public policy.
If the Reserve Bank fixes the minimum and the maximum interest rates that banks can charge on loans/advances, the same cannot be termed to be unreasonable or excessive and would, in any case, amount to a 'special circumstance' within the meaning of the Explanation to Section 3(1) of the Mysore Act.
Section 21-A of the Banking Regulations Act would have no bearing on the jurisdiction of courts to give relief to an aggrieved party when it is established that the bank in a particular case has charged interest in excess of the limit prescribed by the Reserve Bank of India."
These circulars/directions having been issued under Sections 21/35-A of the Banking Regulation Act would have statutory flavour.


Since a secured creditor claiming through a mortgage is outside the winding up proceedings it is not necessary to consolidate the proceedings for foreclosure of the mortgage to a single city. The proceedings can take place in the court having jurisdiction over the property.
It is not correct to view the expenses of the official liquidator as a reason for divesting a court with jurisdiction from proceeding against the company for enforcing the mortgage. `


A person whose case rests on false hood has no right to approach the Court. He can be thrown out at any stage of the proceedings.
It is the duty of every litigant to disclose full facts of the case. If he withholds any facts of the case then he has played fraud on the court.
The opposite party cannot be faulted for not detecting the fraud at the initial stage.


In an auction sale, the omission to consider the objections to the sale is not appealable. The auction can be opposed in the end wherein each of the objections can be raised.
Where the person opposing the auction says that the decretal amount is lying with some other court or authority, it is the duty of the executing court to get it. Order 21 Rule 23(2) enjoins upon the courts to consider each point of objection and pass an order on it.
The auction purchaser need to be heard only after confirmation of the sale. Not before that.
The application to set aside an auction is primarily against the decree-holder since he is a person at whose instance and benefit the execution proceedings were initiated and the sale was held to discharge his decree debt. It is his responsibility to explain to the court the procedure followed in service of notice or conducting the sale and to establish that they have been done properly, regularly and in accordance with the law.
It is not mandatory for the an auction purchaser to file a power of authority if he bids on behalf of a third person. It is of the sale officer to satisfy himself whether the participant is a real or proxy bidder and can be bound by the terms of the auction if the hammer falls in his favour.
Service of Notice on the judgment debtor is mandatory before taking any action on the property.


In addition to statement of accounts, evidence etc. tendered by the employees of the Banks and other supporting documents can provide corroborative evidence that the borrower had actually taken the loan amount.
The decision reached by the Trial court on the basis of evidence led before it should be respected.


No doubt the lenders have to act within the four corners of the Act, but they cannot be asked to revive and resurrect every sick industry irrespective of the cost involved. Fairness cannot be carried on to the extent of disabling a lender from recovering its amount.
The lenders too borrow money and have to pay interest. The fairness required of it must be tempered in the light of all these circumstances.
While exercising Writ jurisdiction the High Courts cannot sit as Appellate Authority over the acts and deeds of the lenders.
There are situations where there is more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred. Unless the action taken is too perverse and irrational, High Courts should not interfere with the administrative actions.


The Companies Act as well as SICA are special acts, but SICA will prevail over Companies Act as it was enacted latter in point of time.
"Proceedings" under SICA covers all actions of BIFR and just not legal proceedings.
When BIFR is seized of a matter State Financial Corporation cannot proceed under the SFC against the company.


The guarantor could be sued without the principal debtor being sued.
The very object of the guarantee would be defeated if the creditor is asked to postpone his remedies against the surety until he has exhausted remedies against the principal debtor.
There is nothing in law which provides a composite decree to be first executed only against the property.
The liability of guarantor is co-extensive with that of the principal debtor.
The court cannot construe a decree otherwise than its tenor. The executing court cannot go behind the decree.


On transfer of assets the SFC and its employees step into the shoes of the debtor and become trustees of the property. They are bound to exercise the same diligence which the debtor, as an ordinary prudent man would exercise.
Every act of the SFC should not only be reasonable, but be just and fair for the eye and any offer accepted must be competitive.
Section 29 does not exclude the application of the principles of natural justice. Before accepting the tender an opportunity should be given to the debtor if he is prepared to pay the amount himself.
The borrower is not bound by any unreasonable acts of the SFC and also that of any investment, improvements etc made by the third party auction purchaser claiming through the SFC.


The RBI has the necessary powers to issue directions to NBFCs for the protection of the interests of the investors.
So long as the exercise of power is broadly within the zone of reasonableness, the court would not substitute its judgment for that of legislature or its agent as to matters within their prudence and power. The court does not supplement the feel of the experts by its own values.


Arbitration proceedings may continue during the pendency of an inquiry pursuant to a reference made under SICA.


The banker-bailee whether it is gratuitous or for reward is bound to take the same care of the property entrusted to him as a reasonably prudent and careful man may fairly be expected to take of his own property of the like description.
Where the bank delivers the goods entrusted to it to the wrong person, whereby the true owner looses it, the liability of the bank is absolute.


NO NEED TO GIVE ANY PROTECTION TO AN AUCTION PURCHASERS WITH NOTICE OF PENDING PROCEEDINGS


Decision Dated 06-10-1989 by Supreme Court of India


The benefit of proceedings under the SFC Act is available only upto the stage of decree.
The SFC does not extend beyond the stage of decree obtained under it.
A decree under the SFC Act stands on par with decree obtained in any suit and no further. All further proceedings thereafter are under the normal laws.


In a suit for redemption, a mortgage other than a mortgage by conditional sale or an anomalous mortgage, the mortgagor has a right of redemption even after the sale has taken place pursuant to the final decree, but before the confirmation of such sale.
The right of redemption is an instance of a subsisting mortgage and it subsists so long as the mortgage itself subsists. The right of redemption can be extinguished as provided in S. 60, T.P. Act, and when it is alleged to have been extinguished by a decree, the decree should run strictly in accordance with the form prescribed for the purpose. Unless the equity of redemption is so extinguished, a second suit for redemption by the mortgagor, if filed within the period of limitation, is not therefore barred.


The Courts cannot interfere in an irrevocable commitment given by a Bank, either in the form of confirmed bank guarantee or irrevocable letter of credit except, if a case of fraud or apprehension of irretrievable injustice.
The commitments of the banks must be honoured free from interference by the courts.
The question of examining the prima facie case or balance of convenience does not arise if the court cannot interfere with the unconditional commitment made by a bank in the guarantees in question.
While making a payment under Letter of Credit the Bank need not go into the question as to whether the seller has actually shipped the goods or whether the goods conformed to the requirements of the contract. Any dispute between the seller and the buyer must be settled between themselves. The Courts can interfere only in cases of fraud and iretribule failure.
Under Letter of credit, so long as the customers makes an honest demand, the banks are bound to pay, and the banks will rarely, if ever, be in a position to know whether the demand is honest or not. At any rate they will not be able to prove it to be dishonest. So they will have to pay.
Performance guarantee stands on a similar footing to a letter of credit. A bank which gives a performance guarantee must honour that guarantee according to its terms. It is not concerned in the least with the relations between the supplier and the customer: nor with question whether the supplier has performed his contractual obligation or not; nor with the question whether supplier is in default or not. The bank must pay according to its guarantees, on demand if so stipulated, without proof or conditions. The only exception is when there is a clear fraud of which the bank has noticed.


GPA CANNOT ACT DEPOSE ON BEHALF OF PRINCIPLE


Mere delivery notice at a place will not give the High Court jurisdiction in the matter.
The High Courts should be slow in giving ad-interim exparte orders which have the tendency of granting the main relief itself.
Except in cases of exceptional emergency the High Court should not grant ad-interim without hearing the opposite party.


The Government or public authorities should make all attempts to obtain the best available price while disposing of public properties. They should not generally enter into private arrangements for the purpose.


The Government or public authorities should make all attempts to obtain the best available price while disposing of public properties. They should not generally enter into private arrangements for the purpose.


LIMITATION FOR ENFORCING CONTINUING GUARANTEE STARTS FROM THE DAY THE DEMAND WAS RAISED AGAINST THE GUARANTOR.


The Government or public authorities should make all attempts to obtain the best available price while disposing of public properties. They should not generally enter into private arrangements for the purpose.


The moment the deed of gift is signed by the both the parties, registered and delivered to the donee along with the things, the gift is complete.
If the gift is complete, necessary legal formalities for enforcing the gift can be completed after the death of the donor.


A pawnee's (Bailee’s) right cannot be extinguished by seizure of the pawned goods (even though the seizure may be legal and lawful) as the pledge of the goods was not meant to replace the liability under the cash credit agreement.
A Government claimaint is an unsecured creditor and cannot have any higher rights than the pawnee (bailee). The Government claimaint is entitled only to the surplus money after satisfaction of the pawnee's claim.


Any order infringing the right of the auction purchaser would be a 'judgment' capable of being challenged.
An auction cannot be set side merely because of some material irregularity unless the person challenging the same proves that such material irregularity has caused injury to him.


No person participating in an public auction develops any vested right merely by virtue of his bid being the highest.
Even if no fraud or irregularity is all edged, the judge confirming the auction needs to satisfy himself that the auction was held in the manner provided for and the price obtained for the property is adequate.
Once an auction is confirmed as provided for, no subsequent offer of higher prices vitiates auction.


The liability of the guarantor is co-extensive with that of the principal debtor and his liability cannot be deferred till the creditor has exhausted his remedies against the principal debtor.
It is the responsibility of the surety to see that the principal borrower pays.
Solvency of the principal is not a sufficient ground for restraining execution of the decree against the surety
The very object of the guarantee is defeated if the creditor is asked to postpone his remedies against the surety.


Banks can recover amounts paid by them by mistake.
Bank can however not correct mistake oh behalf of third parites.


This case was relied upon on the issue that even though a partnership firm does not have a legal entity, the assets brought in by the partners becomes the property of the partnership firm and cannot be attached for the individual dues of a partner.
The property of a firm has to be first utilized for discharging the debts of the firm and only if there is any surplus share of each partners shall be made in payment of their personal debts.
Bank is not entitled to attach properties /share of an individual in a partnership firm.


LIMITATION FOR ENFORCING CONTINUING GUARANTEE STARTS FROM THE DAY THE DEMAND WAS RAISED AGAINST THE GUARANTOR.


Where the party was allowed to pay in installments the pre-deposit of debt amount before filing an appeal, and by the time the last installment was paid the appeal had become time barred; the appellate authority should consider the reasons for delay in presenting the appeal as part of application for condonation of delay.


The Writ jurisdiction of the High Court will extend to orders passed by the Union of India even though the authority passing the order is located outside its territorial jurisdiction.
True Writ jurisdiction of the High Court extends only over such bodies which are permanently located within its territorial jurisdiction and functions there from, but the Union of India is an exception even though the authority passing the order is located in a place outside the jurisdiction of the High Court.


Procedure prescribed in the Evidence Act has no application to enquiries conducted by Tribunals.
The law requires that Tribunals should observe rules relating to Principles of natural justice, if they do so, their decision cannot be impeached on the ground that the procedure followed was not in accordance with what is followed in the civil courts.


The Government or public authorities should make all attempts to obtain the best available price while disposing of public properties. They should not generally enter into private arrangements for the purpose.


Non-payment of the auction price on the part of the auction purchaser renders the sale proceedings a complete nullity.
The provisions requiring the auction purchaser to deposit the purchase-money immediately and the balance within 15 days of the sale are mandatory. The Courts cannot extend the time limit for payment of money.
The inherent powers of the Court cannot be invoked to circumvent the mandatory provisions.


The Writ jurisdiction of the High Court extends only over such bodies which are permanently located within its territorial jurisdiction and functions therefrom.
A Tribunal permanently located and normally carrying on its activities outside the territorial limits of a High Court cannot be regarded as functioning within the jurisdiction of the High Court.
Even if the Tribunal exercises some jurisdiction within territorial limits of a High Court effecting the rights of parties therein it cannot be amenable to the jurisdiction of the High Court if it is not located within its territory.


Under the Recovery of Debts Due to Banks and Financial Institutions Act, it is not the District Judge who transfers cases to the Debt Recovery Tribunal ( DRT ), but the cases get automatically transferred to the DRT by virtue of operation of S. 31 of the Act.
On and form the appointed day, the cases that come within the jurisdiction of the Tribunal automatically get transferred to the Debt Recovery Tribunal ( DRT ).


Appeal is a creature of a statute. Conditions for filing of appeal are thus part of the appeal. Hence if pre-deposit is one of the conditions, then it is perfectly legal.
If alternative remedy is available, then it should be exercised.


On transfer of a case from the High Court to a Debt Recovery Tribunal ( DRT ), the Receiver appointed by the High Court will continue to function as a Receiver, subject to the directions of the DRT .
After constitution of a Debt Recovery Tribunal ( DRT ), the High seizes to have jurisdiction to issue orders/ directions to a Receiver.
The Debt Recovery Tribunal ( DRT ) has exclusive jurisdiction to appoint a Receiver in respect of the cases before it.


Debt Recovery Tribunals are not required to frame issues in cases before them.
A Debt Recovery Tribunal need not pronounce its decision on a preliminary issue unless it determines the Law, as per exception O. XIV R. (2)(2).


Multipile facilities granted to the same borrower does not amount to multipile cause of actions.


Debt includes pending decrees.
Application before Debt Recovery Tribunals based on Decrees passed by Civil Courts does not amount to second proceedings.
The Debt Recovery Tribunal need not follow the principles of natural justice while issuing a Recovery Certificate based on a decree passed by Civil Courts.
There is no need to direct the Debt Recovery Tribunal to follow Principle of Natural Justice where only one conclusion is possible in such cases.


The meaning of the word "debt" should be given widest possible amplitude.
Debt will cover any liability which is claimed as due from any person by a Bank.
Debt Recovery Tribunals are required to dispose off cases expediously. They cannot be expected to grant adjournments routinely


A Writ petition u/Art 226 & 227 of the Constitution of India cannot be maintained against Interlocutory orders of Debt Recovery Tribunal unless it is shown that such orders has resulted in grave miscarriage of justice.
Debt Recovery Tribunals are required to dispose off cases expediously. They cannot be expected to grant adjournments routinely


If the value of Execution Petitions pending before Civil Court exceeds Rs. 10 lakhs, then it cannot be executed by the Civil Courts. It has to be transferred to Debt Recovery Tribunal.
Civil Courts are barred from entertaining Execution Petitions if the value exceeds Rs. 10 lakhs.


Debt Recovery Tribunal's can record examination-in-chief through affidavits
Principles of Natural justice are not violated if evidence is recorded thorough affidavit as long as witnesses are permitted to be cross examined.


Suits transferred to the Debt Recovery Tribunal ( DRT ) are to be handled in the same way as any application filed originally before the DRT.
The pre-condition of predepositing 75% of the amount debt determined for making an appeal to the Debt Recovery Appellate Tribunal ( DRAT )is applicable to transferred suits also.


Even though alternative remedy is available, the High Court can admit an Writ Petition due to exigencies of the situation .
Where the factum of loan is admitted, minor discrepancies does not absolve the responsibility to repay the debt.
Unless it can be shown that there has been material difference to the defence due to the denial of the facility of cross examining the witnesses, there is no need to interfere with the orders of the Debt Recovery Tribunal (DRT ).


Debt Amount also includes future intersts.
A defendant who does not contest the case and lets witnesses presented by the Bank go uncontested cannot challenge the order of the lower Court in an appeal.
Banker's Book of Evidence Act is sufficient evidence.


Breach of an undertaking amounts to contempt in the same way as breach of an injunction.
An undertaking given to the court has exactly the same force as an order made by the court and breach of an undertaking amounts to contempt in the same way as breach of an injunction.
Even though the undertaking was given persons who were paid /employee Directors of the defaulting Company, yet by giving an undertaking they had committed a contempt of the Court and deserve to be punished.


Appointment of a Receiver by a Debt Recovery Tribunal ( DRT ) can be challenged before Debt Recovery Appellate Tribunal ( DRAT ).
There is no question of pre deposit of any amount for challenging the appointment of a Receiver by a DRT.
If a petitioner is aggrieved that the DRAT did not follow the directions of the High Court correctly, then the correct course of action would be to file an appropriate appeal instead of challenging the DRAT 's order in a revision application before the High Court


Letters Patent is not saved by the Recovery of Debts Due to Banks and Financial Institutions ( RDDBFI ) Act .
A order under Letters Patent staying proceedings before Debt Recovery Tribunal ( DRT ) is without jurisdiction.
A Debt Recovery Tribunal ( DRT ) has the exclusive jurisdiction to hear and decide claims of the Bank.


A Debt Recovery Tribunal (DRT) as well as Debt Recovery Appellate Tribunal (DRAT) are under the jurisdiction of all those High Courts within whose jurisdiction they exercise their powers.
A Debt Recovery Tribunal (DRT) as well as Debt Recovery Appellate Tribunal (DRAT) could be under the administrative jurisdiction of multiple High Courts.
A High Court gets its jurisdiction to examine an order of Debt Recovery Appellate Tribunal (DRAT) only if the cause of action has taken place within the jurisdiction of the High Court, and the Debt Recovery Tribunal too is within the jurisdiction of that High Court.
Since an Tribunal can hold its sitting at any place within its jurisdiction, mere sitting at a place doesn't give High Court jurisdiction. It is the cause of action that gives jurisdiction to the High Court.


Interests etc. levied on the credit card are with the due knowledge of the users. Hence not possible to raise the issue that the rate interest is illegal.
When payments made are irregular, the Bank is entitled for penal rate of interests.


Sale at an auction below the Upset Price is voilative of the proclamation.



This matter has come before us on a reference made by a Bench as in its opinion there was conflict of opinion in two Division Bench decisions of this Court rendered in Anupam Sari Centre v. Collector. 1999 (1) AWC 237 and M/s. Lal & Kumar v. State of U.P. AIR 1998 All 156: (1998 All W 987) and also Writ Petition No. 22507 of 1988 (M/s. R.K. Brothers v. Collector. Kanpur).


It was held, even before the amendment to Recovery of Debts Due to Banks and Financial Institutions ( RDDBFI ) Act that the Debt Recovery Tribunals ( DRT ) can hear counter claims against the Banks.

It is the duty of a DRT to decide what is legally due from the defendant.




High Courts have power to intervene if justice demands, even though alternative remedy exists.

The Banking Ombudsman Scheme is totally different from the DRT scheme.

No need to stay proceedings before the DRT merely because a reference has been made to the Banking Ombudsman.


Only Debt Recovery Tribunal ( DRT ) has the jurisdiction to entertain an execution petition if the value of the petition is Rs. 10 lakhs and above, irrespective of the value of the decree.
Value of the original decree is not material for financial jurisdiction of a Debt Recovery Tribunal ( DRT ). If the value of the Execution Petition increases beyond Rs. 10 lakhs, the jurisdiction of the Civil Court is ousted.


The DRT has exclusive jurisdiction to hear a lender’s claims even in matters where the High Court is seized of a company under liquidation.

The jurisdiction of the Company Courts is ousted in respect of matters where the debts relate to Banks and FIs.

The RO of the DRT has the exclusive jurisdiction to deal with the secured properties of Banks & FIs.

The RO of the DRT is responsible for recovery and payment of workmen’s dues, on pro-rata basis, and disbursal of the remainder to the others.


Claim of a Bank based on Letter of Credit, and Claim of a Company against a Insurance Company are two separate cause of actions. Can go on simultaneously before two separate forums.
Claim of a Bank based on Letter of Credit need not be merged with the claim of the borrower against a Insurance Company and transferred to High Court.
Debt Recovery Tribunals ( DRT ) have exclusive jurisdiction to try claims of Banks and Financial Institutions. Other Courts cannot hear such claims on any pretext.


The DRT Act is Constitutionally valid. DRTs and power conferred on them are within the limits of the Constitution of India.


Stay cannot be granted on some flimsy grounds.


"Appointed day" operates from the day a Debt Recovery Tribunal (DRT) is constituted for the area and not from the day the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI) came into force.

Bar of jurisdiction of civil Courts to hear cases involving claims of Banks operates from the "Appointed Day" and not from the day the RDDBFI Act came into force.




Mere exchange of letters between a Bank and party cannot be taken cognizance of Courts. A MOU between a Bank and a party should be a legally binding contract in terms of the Indian Contract Act to be enforceable.


The High Court should have directed the petitioner to approach the DRAT as the Recovery of Debts Due to Banks and Financial Institutions Act provides for a appellate remedy.


The jurisdiction of the Civil Courts are ousted from the date of establishment of the Debt Recovery Tribunal and not form the date the Act came into effect.


When a appeal is remanded back, it becomes a pending suit within the meaning of Section 31 of the Recovery of Debts Due to Banks and Financial Institutions Act.
All pending suits have to be transferred to the Debt Recovery Tribunal.


Whether a particular claim can be termed as "debt" will have to be ascertained on the basis on the averments made in the plaint.
Where the claim of the bank is essentially for the recovery of amount that is due to it, then it is a "debt" and the Debt Recovery Tribunal will have exclusive jurisdiction to try the mater.



Auctions should be strictly in accordance with the prescribed procedures and rules
The Receiver should act as per principles of natural justice and hear all the parties associated with the property. A public bodies should act in the best interest of the institution. Any action that benefits individuals should be explained. If a person acts fraudently to grab valuable property he shall bear the consequences of his actions.



Tribunals cannot pass orders in the nature of garnishee orders.


Interim & ad-interim orders are materially different.
No orders to be passed without hearing the defendant.
Ex-parte stays should strictly follow the 7 point check list before granting stays.


Debt Recovery Tribunals have excluseive jurisdiction to hear claims of Banks & Financial Institutions.
The jurisdiction of the Company Courts are ousted.
The Banks and FIs need not seek permision of the Company Courts to file applications before the Debt Recovery Tribunals against a company under liquidation.
The Recovery of Debts Due to Banks & Financial Institutions Act over rides the Companies Act
Recovery Officer is competent to decide workmen's due on prorata basis to the extent to liability of Banks and FI.


The UP Public Monies (Recovery of Dues) Act, 1972 is not saved by Section 32(2) of the RDDBFI Act 1984.
Proceedings for recovery of debts cannot be under taken under The UP Public Monies (Recovery of Dues) Act, 1972 .



A matter cannot be transferred from the Tribunal to a High Court merely because similar issues are pending before the High Court.
An area where the Tribunal's jurisdiction is exclusive, all the issues can be raised before it.


Only debtor’s share in a property can be sold.
Certificate holding Bank cannot take over a property jointly owned by the debtor without asking for a partition of the property


A drawer of Bill of exchange is primarily responsible in case of dishonor.
Rule 10 relating to plural remedies has been deleted. It effects even pending cases.


The receiver appointed by the Debt Recovery Tribunal has over riding rights over the official liquidator.
Bank need not take permission of the Company Judge for proceeding against a company under liquidation.
The Official liquidator should co-operate with the Receiver appointed by the Debt Recovery Tribunal.


Consumer Disputes Redressal Forum can hear a complaint of a person, against whom the DRT has passed an order of Recovery
The issue before the National Consumer Disputes Redressal Commission is different from the one before the Debt Recovery Tribunal
The Consumer Dispute Redressal Forums cannot hear complaints on the amounts decreed by the Debt Recovery Tribunals.


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