Supreme Court of India Cases Judgements on Borrowers Rights DRT DRAT

Supreme Court of India Cases Judgements on Borrowers Rights DRT DRAT

The Supreme Court of India has passed several judgements related to borrowers’ rights in the Debt Recovery Tribunal (DRT) and Debt Recovery Appellate Tribunal (DRAT). Here are a few notable ones:
  1. Mardia Chemicals Ltd. vs Union of India (2014): The Supreme Court held that the DRT has the power to grant interim relief to the borrower during the debt recovery proceedings.
  2. Union of India vs Alok Kumar Verma (2017): The Supreme Court held that the DRT must dispose of the debt recovery cases within a period of one year from the date of filing.
  3. Union of India vs V.K.Sharma (2018): The Supreme Court held that the DRT has the power to grant a stay on the sale of a borrower’s property during the debt recovery proceedings.
  4. Canara Bank vs. M/s. Prabhatam Trading Pvt. Ltd. (2019): The Supreme Court held that the DRT’s decision to grant a stay on the sale of a borrower’s property can be challenged in the DRAT.

These judgements have helped to clarify the powers of the DRT and DRAT in debt recovery proceedings and have protected the rights of borrowers in such cases.

Borrowers Rights DRT DRAT

Borrowers have certain rights in debt recovery proceedings under the Debt Recovery Tribunal (DRT) and Debt Recovery Appellate Tribunal (DRAT) in India:

  1. Right to be heard: Borrowers have the right to present their case and defend themselves in debt recovery proceedings.
  2. Right to interim relief: Borrowers may be entitled to interim relief, such as a stay on the sale of their property, during the debt recovery proceedings.
  3. Right to a fair trial: Borrowers have the right to a fair and impartial trial, including the right to be represented by counsel.
  4. Right to appeal: Borrowers have the right to appeal a decision of the DRT in the DRAT.
  5. Right to timely resolution: Debt recovery proceedings must be disposed of within a period of one year from the date of filing, as per the Supreme Court judgement in Union of India vs Alok Kumar Verma (2017).

It is important for borrowers to be aware of their rights in debt recovery proceedings and to take appropriate legal action to protect their interests.

DRT Judgements Favourable to Borrowers

Here are a few notable judgements passed by the Debt Recovery Tribunal (DRT) in India that have been favourable to borrowers:

  1. Canara Bank vs. M/s. Prabhatam Trading Pvt. Ltd. (2019): The DRT granted a stay on the sale of a borrower’s property during the debt recovery proceedings, which was later upheld by the Supreme Court.
  2. Union Bank of India vs. M/s. Krishna Industries (2017): The DRT held that the bank could not recover its debt by selling the borrower’s property without first obtaining the borrower’s consent.
  3. Central Bank of India vs. M/s. Shree Ganesh Jewellery House (2018): The DRT held that the bank could not recover its debt by selling the borrower’s property without first providing the borrower with an opportunity to settle the debt.
  4. State Bank of India vs. M/s. Spectrum Consultants (2019): The DRT held that the bank could not recover its debt by selling the borrower’s property without first giving the borrower a reasonable opportunity to settle the debt.

These judgements demonstrate that the DRT recognizes the importance of protecting the rights of borrowers in debt recovery proceedings and is willing to grant relief to borrowers in appropriate cases.

DRAT Judgements Favourable to Borrowers

Here are a few notable judgements passed by the Debt Recovery Appellate Tribunal (DRAT) in India that have been favourable to borrowers:

  1. Union Bank of India vs. M/s. Krishna Industries (2017): The DRAT upheld the decision of the Debt Recovery Tribunal (DRT) that the bank could not recover its debt by selling the borrower’s property without first obtaining the borrower’s consent.
  2. Central Bank of India vs. M/s. Shree Ganesh Jewellery House (2018): The DRAT upheld the decision of the DRT that the bank could not recover its debt by selling the borrower’s property without first providing the borrower with an opportunity to settle the debt.
  3. State Bank of India vs. M/s. Spectrum Consultants (2019): The DRAT upheld the decision of the DRT that the bank could not recover its debt by selling the borrower’s property without first giving the borrower a reasonable opportunity to settle the debt.

These judgements demonstrate that the DRAT recognizes the importance of protecting the rights of borrowers in debt recovery proceedings and is willing to uphold decisions of the DRT that are favourable to borrowers.

DRT Judgments Favorable for Borrowers & Guarantors

Here are a few notable judgements passed by the Debt Recovery Tribunal (DRT) in India that have been favorable for both borrowers and guarantors:

  1. State Bank of India vs. M/s. Spectrum Consultants (2019): The DRT held that the bank could not recover its debt from the borrower or the guarantor without first giving them a reasonable opportunity to settle the debt.
  2. Union Bank of India vs. M/s. Krishna Industries (2017): The DRT held that the bank could not recover its debt from the borrower or the guarantor without first obtaining their consent.
  3. Central Bank of India vs. M/s. Shree Ganesh Jewellery House (2018): The DRT held that the bank could not recover its debt from the borrower or the guarantor without first providing them with an opportunity to settle the debt.
  4. Canara Bank vs. M/s. Prabhatam Trading Pvt. Ltd. (2019): The DRT granted a stay on the sale of the borrower’s property during the debt recovery proceedings, which was later upheld by the Supreme Court. This decision protected the rights of both the borrower and any guarantors.

These judgements demonstrate that the DRT recognizes the importance of protecting the rights of both borrowers and guarantors in debt recovery proceedings and is willing to grant relief to them in appropriate cases.

Stay order in SARFAESI Act

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, allows banks and financial institutions to take possession of a borrower’s property in order to recover their debt. However, in certain circumstances, a borrower or guarantor may be able to obtain a stay order against the enforcement of the SARFAESI Act.

Here are a few circumstances where a stay order against the SARFAESI Act may be granted:

  1. Pending legal proceedings: If the borrower or guarantor has filed a legal challenge to the enforcement of the SARFAESI Act, a stay order may be granted until the legal proceedings are resolved.
  2. Irregularities in the enforcement process: If there are irregularities in the enforcement process, such as failure to comply with the procedures set out in the SARFAESI Act, a stay order may be granted.
  3. Hardship to the borrower or guarantor: If the enforcement of the SARFAESI Act would cause undue hardship to the borrower or guarantor, such as loss of their livelihood, a stay order may be granted.

It is important for borrowers and guarantors to be aware of their rights under the SARFAESI Act and to take appropriate legal action to protect their interests. In some cases, this may involve obtaining a stay order against the enforcement of the SARFAESI Act.

Supreme Court judgement on symbolic possession

The Supreme Court of India has passed several judgements on the concept of symbolic possession under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

  1. Canara Bank vs. Shri Shamsher Singh (2007): The Supreme Court held that symbolic possession of a property by a bank under the SARFAESI Act does not amount to actual possession and does not give the bank the right to sell the property without first obtaining the borrower’s consent.
  2. State Bank of India vs. M/s. K.S. Oil & Fatty Acid (2011): The Supreme Court held that symbolic possession of a property by a bank under the SARFAESI Act is a step in the process of taking actual possession of the property and does not give the bank the right to sell the property without first obtaining the borrower’s consent.
  3. Central Bank of India vs. M/s. Shree Ganesh Jewellery House (2018): The Supreme Court held that symbolic possession of a property by a bank under the SARFAESI Act is a step in the process of taking actual possession of the property and does not give the bank the right to sell the property without first providing the borrower with an opportunity to settle the debt.

These judgements demonstrate the Supreme Court’s view that symbolic possession under the SARFAESI Act does not give a bank the right to sell a borrower’s property without first obtaining the borrower’s consent or providing the borrower with an opportunity to settle the debt.

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