Tag: Financial Institutions

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...
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No Redemption After Auction Notice: Supreme Court Major Ruling on Bank Loan Recovery
10Nov By The Legal ChamberNo Comments
Supreme Court

No Redemption After Auction Notice: Supreme Court Major Ruling on Bank Loan Recovery

This Supreme Court judgment clarifies that the right of redemption of a mortgagor under Section 13(8) of the SARFAESI Act is extinguished upon the publication of the notice of sale, as per the 2016 amendment. The Court held that this amended provision is retrospective in operation and overrides the general right of redemption under the Transfer of Property Act, 1882. The ruling emphasizes that only a single composite notice of sale is required under the SARFAESI Rules, irrespective of the mode of transfer adopted by the secured creditor. Facts Of The Case: The borrowers, M/s KPK Oils and Proteins India Pvt. Ltd. and its guarantors, availed credit facilities from the respondent Bank in January 2016, creating an equitable mortgage over various properties. After the loan account was classif...
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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...
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SARFAESI Act’s Section 11: Supreme Court Affirms Mandatory Arbitration for Financial Institutions
11Jun By The Legal ChamberNo Comments
Supreme Court

SARFAESI Act’s Section 11: Supreme Court Affirms Mandatory Arbitration for Financial Institutions

The Supreme Court, in Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd., ruled that Section 11 of the SARFAESI Act is mandatory, requiring inter-se disputes between banks and financial institutions concerning secured assets to be resolved through arbitration. No explicit arbitration agreement is needed; the provision legally mandates it, thereby divesting DRT of jurisdiction in such matters. Facts Of The Case: In the case of Bank of India vs. M/s Sri Nangli Rice Mills Pvt. Ltd. & Ors., the core dispute involved the priority of charge over secured assets (stocks of paddy and rice) belonging to a common borrower, M/s Sri Nangli Rice Mills Pvt. Ltd., between two public sector banks: Bank of India (appellant) and Punjab National Bank (respondent). Both banks had extended credit facil...
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