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Supreme Court Rules on Tenant Rights vs. Bank’s SARFAESI Powers

8Aug

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Rules on Tenant Rights vs. Bank’s SARFAESI Powers

The Supreme Court held that tenants claiming rights under unregistered agreements cannot override SARFAESI proceedings. Relying on Bajarang Shyamsunder Agarwal, it ruled that oral/unregistered tenancies cannot extend beyond one year post-Section 13(2) notice. The Court emphasized that tenants must prove prior lawful possession with documentary evidence and barred High Courts from interfering under Article 227 when statutory remedies under SARFAESI exist. The judgment reaffirms the primacy of secured creditors' rights over unsubstantiated tenancy claims. Facts Of The Case: The case involved a dispute between PNB Housing Finance Limited (Appellant) and Sh. Manoj Saha (1st Respondent) over the possession of a secured asset—a 450 sq. ft. space in Kolkata. The 1st Respondent claimed to be a t...

Supreme Court Clarifies: Partners Liable for Bounced Cheques Even If Firm Isn’t Named

The Supreme Court ruled that in cases under Section 138 of the Negotiable Instruments Act, a partnership firm need not be separately arraigned as an accused if its partners are prosecuted. The notice to partners constitutes notice to the firm, as partners are jointly and severally liable. The Court clarified that unlike companies, partnership firms lack a separate legal identity, making partners directly liable. The judgment distinguishes between vicarious liability (for companies) and joint liability (for firms), upholding the complaint’s validity despite the firm’s omission. The High Court’s order quashing the complaint was set aside. Facts Of The Case: The appellant, Dhansingh Prabhu, advanced a loan of ₹21 lakh to the respondents, Chandrasekar and another, who were partners of the fi...

Supreme Court Says Depositors First, Banks Later in NSEL Scam Case: MPID Act Overrides SARFAESI

The Supreme Court ruled that the Maharashtra Protection of Investors and Depositors (MPID) Act 1999 prevails over the SARFAESI Act, 2002 and Recovery of Debts Act 1993, denying secured creditors priority over assets attached under MPID. It also held that properties attached under MPID remain outside IBC moratorium, ensuring depositor claims take precedence over insolvency proceedings. The judgment reaffirms state legislative competence under List-II (State List) and upholds federalism by preventing central laws from overriding state-enacted investor protection measures. Facts Of The Case: The case arose from the 2013 National Spot Exchange Limited (NSEL) scam, where around 13,000 investors lost approximately ₹5,600 crores due to payment defaults by trading members. NSEL, a commodit...