Tag: Financial Assets

SARFAESI Act vs EPF Act: Supreme Court Says Provident Fund Charge Prevails Over Bank
9Feb By The Legal ChamberNo Comments
Supreme Court

SARFAESI Act vs EPF Act: Supreme Court Says Provident Fund Charge Prevails Over Bank

This Supreme Court judgment interprets the interplay between the priority of secured creditors under Section 26E of the SARFAESI Act and the statutory first charge for provident fund dues under Section 11(2) of the EPF & MP Act. The Supreme Court held that the statutory first charge for provident fund contributions overrides the priority granted to secured creditors, even under a non-obstante clause in a later enactment. Facts Of The Case: The appellant, Jalgaon District Central Co-operative Bank Ltd., is a secured creditor which had advanced loans to a co-operative sugar society, secured by a mortgage and hypothecation of the society's assets. The sugar factory became defunct, leading to loan defaults. The bank initiated recovery under the SARFAESI Act, took possession o...
Read More
Supreme Court Says :Withdrawing a Case from Supreme Court Has a Cost: No Second Chance
13Nov By The Legal ChamberNo Comments
Supreme Court

Supreme Court Says :Withdrawing a Case from Supreme Court Has a Cost: No Second Chance

This Supreme Court judgement reaffirms that if a Special Leave Petition under Article 136 of the Constitution is unconditionally withdrawn without seeking liberty to file a fresh one, a second SLP challenging the same order is not maintainable. This principle, drawn from Order XXIII Rule 1 of the CPC, is grounded in public policy to prevent bench-hunting and ensure litigation finality. An appeal against an order merely dismissing a review petition is also not maintainable. Facts Of The Case: The appellant, Satheesh V.K., was a borrower who had defaulted on a loan from the Federal Bank, leading the bank to classify the account as a Non-Performing Asset (NPA) and initiate recovery under the SARFAESI Act. Challenging this action, Satheesh filed a writ petition in the Kerala High Cou...
Read More
SBI Wins Case: Supreme Court Rules OTS Application Invalid Without Upfront Payment
5Nov By The Legal ChamberNo Comments
Supreme Court

SBI Wins Case: Supreme Court Rules OTS Application Invalid Without Upfront Payment

The Supreme Court held that a borrower's failure to comply with the mandatory upfront payment requirement under a One-Time Settlement (OTS) scheme renders the application incomplete and not entitled to processing. The Court further ruled that, in judicial review, an administrative order of rejection can be upheld on an alternative legal ground apparent from the record, provided the affected party is granted a fair opportunity to respond. Facts Of The Case: The respondent, Tanya Energy Enterprises, availed credit facilities from the State Bank of India (SBI) by mortgaging seven properties but subsequently defaulted on its repayment obligations. After its account was classified as a non-performing asset, SBI initiated recovery proceedings under the SARFAESI Act. A prior One-Time Settlement...
Read More
Who Gets Paid First? Supreme Court Reopens Case on Priority Between Employee Provident Fund and Secured Lenders
30Sep By The Legal ChamberNo Comments
Supreme Court

Who Gets Paid First? Supreme Court Reopens Case on Priority Between Employee Provident Fund and Secured Lenders

The Supreme Court remanded the matter to the High Court to determine the priority of charges between the EPFO, under Section 11(2) of the Employees' Provident Fund Act, 1952, and secured creditors, including Axis Bank, under Section 35 of the SARFAESI Act, 2002. The core legal issue for fresh adjudication is the conflict between the statutory first charge of EPFO dues and the primacy claimed by secured creditors. Facts Of The Case: M/s Acropetal Technologies Pvt. Ltd. defaulted on its Employees' Provident Fund (EPF) dues from July 2013. The EPFO determined a liability and, upon learning the company's properties were to be auctioned by various banks, invoked its priority under the EPF Act. The EPFO specifically asserted a first charge over the 'Attibele property' being auctioned by Axis B...
Read More
Supreme Court Judgment: Banks Can Classify MSME Loans as NPA Without Prior “Stress Identification”
25Aug By The Legal ChamberNo Comments
Supreme Court

Supreme Court Judgment: Banks Can Classify MSME Loans as NPA Without Prior “Stress Identification”

The Supreme Court held that the obligation to identify incipient stress under the MSME Rehabilitation Framework is not a mandatory precondition for a bank to classify an account as an NPA or issue a demand notice under the SARFAESI Act. The benefit of the Framework must be actively claimed by the MSME borrower in response to a notice under Section 13(2), supported by an affidavit, which then obligates the bank to consider the claim and pause recovery actions. Facts Of The Case: An MSME-registered enterprise, Shri Swami Samarth Construction & Finance Solution, had availed a loan from NKGSB Co-operative Bank. Upon defaulting on repayments, its account was classified as a Non-Performing Asset (NPA). The bank's authorized officer subsequently issued a demand notice under Section 13(2) of...
Read More