Tag: Mortgage

Can a Creditor Attach Property Already Sold? Supreme Court Clarifies the Law
18Feb By The Legal ChamberNo Comments
Supreme Court

Can a Creditor Attach Property Already Sold? Supreme Court Clarifies the Law

In this judgment, the Supreme Court held that attachment before judgment under Order XXXVIII Rule 5 CPC cannot apply to property transferred prior to a suit, as the remedy for challenging such a transfer lies exclusively under Section 53 of the Transfer of Property Act. It clarified that claim proceedings cannot substitute a substantive inquiry into fraudulent transfers. Facts Of The Case: The dispute originated from a sale agreement dated May 10, 2002, between the original appellant, L.K. Prabhu, and the third defendant, V. Ramananda Prabhu, who acknowledged a liability of ₹17.25 lakhs. It was stipulated that upon default, the defendant would convey 5.100 cents of property with a building for ₹35 lakhs. On June 28, 2004, following further payments, a registered sale de...
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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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Supreme Court Rules: Bank’s Illegal Mortgage Voids Multi-Crore Property Auction
21Nov By The Legal ChamberNo Comments
Supreme Court

Supreme Court Rules: Bank’s Illegal Mortgage Voids Multi-Crore Property Auction

The Supreme Court quashed the e-auction sale as the proclamation violated Rule 53 of the Income Tax Act's Second Schedule, applicable via the RDDB Act. It failed to disclose material encumbrances, specifically DDA's claim for unearned increase. The Court held the sale was void, applying principles of restitution to refund the auction purchaser with interest. Facts Of The Case: The Delhi Development Authority (DDA) allotted a plot to Sarita Vihar Club on a leasehold basis. The club mortgaged the plot to Corporation Bank without obtaining the mandatory prior written consent from the Lieutenant Governor, as required by the lease deed. When the club defaulted on its loan, the Bank initiated recovery proceedings. The Debt Recovery Tribunal (DRT) ordered the sale of the plot. Despite DDA's obj...
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Supreme Court Quashes FIR in Property Dispute, Calls it “Abuse of Process of Law”
6Nov By The Legal ChamberNo Comments
Supreme Court

Supreme Court Quashes FIR in Property Dispute, Calls it “Abuse of Process of Law”

The Supreme Court quashed the criminal proceedings, holding that the continuation thereof amounted to an abuse of the process of law. The allegations, arising from a civil dispute over a loan and its guarantee, did not constitute a criminal offense, especially after the withdrawal of an earlier complaint on the same cause of action. Facts Of The Case: This case originated from an FIR registered against the appellant, Bhawana Jain, under Sections 406, 420, 504, and 506 of the IPC. The dispute concerned a plot purchased jointly by her deceased husband and the complainant, Respondent No. 2. After a mutual partition, the husband mortgaged his share to secure a bank loan, with the appellant acting as a guarantor. Following her husband's death in 2016, the complainant filed a private complaint...
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Supreme Court : Sale Deeds Executed After Property Power of Attorney Revoked Are Invalid
10Jun By The Legal ChamberNo Comments
Supreme Court

Supreme Court : Sale Deeds Executed After Property Power of Attorney Revoked Are Invalid

The Supreme Court clarified that an unregistered agreement to sell or power of attorney does not confer title or interest in immovable property. The Court emphasized that property transfer requires a registered deed of conveyance. It also ruled that a plaint cannot be rejected entirely under Order VII Rule 11 CPC if even one distinct cause of action is triable. Facts Of The Case: Vinod Infra Developers Ltd. (appellant) claimed ownership of agricultural land and obtained a loan of Rs. 7.5 crores from Mahaveer Lunia (Respondent No. 1) in May 2014. The appellant's Board of Directors authorized their Managing Director and Respondent No. 1 to sell the property. Subsequently, an unregistered power of attorney and agreement to sell were executed in favor of Respondent No. 1 on May 24, 2014.In A...
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