Recent Judgments for Bankers

Vijay Power Generators Limited vs (1) Sumit Seth; (2) Tarun Engineering Syndicate  [DELHI HIGH COURT, 09 May 2014]

Sagar Builders and Developers and others vs State Bank of Patiala and another  [PUNJAB AND HARYANA HIGH COURT, 06 May 2014]

Shree Shyam Cotex Private Limited vs State Bank of Patiala and another  [PUNJAB AND HARYANA HIGH COURT, 06 May 2014]

Bank of Rajasthan Limited vs (1) Dr. Suryakant Sukhdeo Gite; (2) Gurubalaji Builders Through Partner Hiru Chimandas Gurusahani; (3) Vinod Boloomal Panjabi; (4) State of Maharashtra [BOMBAY HIGH COURT, 05 May 2014] Banking & Finance - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, s.34 - Code of Civil Procedure, 1908, O.7, r.11 (d) - Hypothecated property - Rights of bonafide purchaser - Proceeding was filed to challenge the order made by Civil Judge - Revision applicant/Bank had filed application as defendant under the provisions of O.7, r.11 (d) of CPC and had requested to reject the plaint - It was the case of Bank that there was bar of provision of s.34 of Act - It was contended that when the borrower became defaulter and applicant visited the flat they realized that the same flat was sold to instant buyer by the builder, developer - It was contended that as notice was issued u/s.13 (2) of Act on 14-7-2004, there was no possibility of selling the flat even by the borrower to the respondent No.1 after that day - It was contended that on 28-2-2005 by joining hands, the builder and borrower made correction deed - It was contended that as prior to date of correction deed, the notice was issued under the Act and as the said correction was not binding on applicant, in view of the transaction already made with applicant, the respondent No. 1 could not get any right under the sale deed executed in his favour - Applicant contended that in view of the provisions of the Act and particularly s.34 of Act, Civil Court's jurisdiction was barred - Application was rejected by Trial Court by holding that respondent No. 1 was not the borrower of applicant and in view of nature of relief claimed by the plaintiffs, the suit was tenable in Civil Court -Held, submissions made and the record show that flat was sold to borrower, respondent No. 3 by respondent No. 2, builder in the year 2002 and it was within the knowledge of the builder that the flat was mortgaged with the bank as the bank had directly made the payment to the builder - In view of the facts and circumstances, it could be said that it was not possible for the builder to sell the same flat to respondent No. 1 - After selling the same flat to respondent No. 1, the correction document was made by builder and the borrower - These transactions could not bind the applicant - In any case, when notice u/s.13 (2) of Act was issued by applicant, no such step could have been taken in respect of flat by the borrower - Purchaser could stand in the shoes of borrower only - It could not be said that in the instant matter, the Civil Court had jurisdiction - It was observed that when applicant would take measures under the provisions of the Act as provided under section 13 (4) of Act for recovery of loan amount, the remedy open to the person affected was to approach D.R.T. and not Civil Court - Jadish Singh Vs. Heeralal & Ors. 2013 Indlaw SC 720, relied on - In the instant matter, it could be said that in view of the facts and circumstances, the respondent No. 1 could not say that he had independent rights from that of the builder, respondent No. 2 or borrower, respondent No. 3 - Respondent No.1 ought to have made inquiry about the title before purchasing flat - It could be said that it was difficult for the respondent No. 1 to prove that he had no knowledge about previous transaction - HC had no hesitation to hold that the Civil Court had committed error in rejecting the application filed by applicant - Revision allowed.

Khoday India Limited and another vs Rakesh Gupta  [DELHI HIGH COURT, 01 May 2014]

State Bank of India, Represented by its Manager, Gulbarga vs (1) Thimmyya S/o Yallappa Naganur; (2) State of Karnataka, through Principal Secretary to Government Law and Justice & Human Rights Department, Bangalore  [KARNATAKA HIGH COURT, 24 Apr 2014] Banking & Finance - Practice & Procedure - Legal Services Authorities (Amendment) Act, 2002 - Legal Services Authorities Act, 1987, ss. 2(1)(e), 22A, 22C - State Bank of India Act, 1955 - Public utility service - Declaration - Respondent no. 1 filed petition before Single Judge - Single Judge allowed the petitions and held that Govt. which controls service only was empowered u/s. 22A of the Act to declare that service as a public utility service - Hence instant appeals challenging correctness of said view - Whether impugned order passed by Single Judge was sustainable -Held, appellant was one of public sector Banks and service provided by public sector Banks could not be construed as service provided by Central Govt. - It was relevant to state that appellant was constituted under a parliamentary enactment, The Bank was a body corporate and was managed by Central Board of Directors and guided by Central Govt., in law, appellant could not be equated to Central Govt., even if any service was provided by Govt. company or a Govt. Controlled Company, it could not be said that service was provided by Govt. - Govt. and Govt. owned companies were not same in law - State was well within its power u/s. 22A of the Act in declaring service provided by Banking and Financial Institutions in State to be public utility service - Notification issued by Govt. was accordingly valid - In view of publication of notification in official Gazette, intention of State Govt. was obviously to declare service to be public utility service - However, notification could have been more appropriately worded conforming to language employed in s. 22A of the Act - Impugned order of Single Judge was unsustainable in law and was accordingly set aside - Appeals allowed.

(1) Savita Bhagwantrao Patil; (2) Chaitanya Bhagwantrao Patil vs (1) Shyam Pukhraj Asopa; (2) Manager/Managing Director, Abhinandan Co-operative Bank Limited  [BOMBAY HIGH COURT, 24 Apr 2014] Banking & Finance - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, s.34 - Suit of dispossession - Decreed - Maintainability - Suit was filed (i) for relief of declaration that the Sale Deed executed by the plaintiff in favour of defendant no. 1 was void and - (ii) To restrain the defendants from dispossessing the plaintiffs on the basis of the said Sale Deed - Later relief (iii) was in effect to restrain the Bank from realising it's non-performing assets under Act - Preliminary issue was raised before Trial Court objecting jurisdiction of the Court to entertain and try the suit - Trial Court framed the preliminary issue and heard the parties - Trial Court refused to entertain the suit for seeking the relief (ii) of injunction for want of jurisdiction but directed the parties to proceed further in view of prayer cl. (i) regarding declaration sought - As the Bank had already initiated proceedings under Act, the Civil Court refused to entertain prayer for injunction by well-reasoned order - First Appellate Court affirmed the order passed by Trial Court - Whether the Courts below were right in holding that the suit claiming the consequential relief of injunction restraining the respondents/defendants from dispossessing the appellants / plaintiffs from the suit property was barred by the provisions of s. 34 of Act -Held, if remedy was made available statutorily, it should be exhausted first before the Civil Court of ordinary jurisdiction could be approached upon afore-emphasized grounds - Conclusion was that when the remedy was specifically made available and specific remedy of injunction was carved out of the ordinary jurisdiction of the Civil Court under the special statute, such statutory remedy had to be exhausted first by the parties in accordance with special statutory provisions and then only the aggrieved party might approach the Civil Court if there was violation of fundamental judicial procedure or if process of law was abused by the statutory forum/Tribunal or that it acted in violation of the provisions of the Statute - That being the position, if, in view of averment in the plaint, the plaintiffs had statutory remedy, the plaintiffs should first approach the statutory forum for an order of injunctive reliefs available under the Statute against the respondents including the Bank concerned - Hence, no interference was required in the impugned judgments and orders in the facts and circumstances of the case - Substantial question was answered accordingly - Appeal dismissed.

Vijay Power Generators Limited vs Annai Engineering Works and another  [DELHI HIGH COURT, 22 Apr 2014] Criminal - Banking & Finance - Practice & Procedure - Negotiable Instruments Act, 1881, s. 138 - Cheque bounce - Acquittal - Sustainability - Respondent accused issued cheques to appellant complainant for consideration - When cheques were presented for payment to bank were dishonoured with remarks 'Account already closed'/'Not arranged for' - Appellant complainant filed complainant against respondent u/s. 138 of the Act - Trial Court dismissed the complainants against respondent - Hence instant appeals - Whether the order of Trial Court was sustainable -Held, respondent failed to discharge statutory onus placed on him to prove that the cheques in question were without consideration - Evidence produced by appellant proved that sum of Rs.6,71,326/- was due to appellant - Hence, impugned orders was set aside - Respondent was convicted u/s. 138 of the Act and was sentenced and imposed fine - In default of payment of fine respondent should undergo imprisonment for 6 months - Appeals disposed of.

Vasu P. Shetty vs Hotel Vandana Palace and others  [SUPREME COURT OF INDIA, 22 Apr 2014] Banking & Finance - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, s. 18 - Default in repayment of loan - Auction sale - Challenged - Respondent borrower took loan from Bank - Payment was defaulted and bank took action under provisions of the SARFAESI Act - Bank took formal possession of mortgaged property which was given as surety for due discharge of loan, said property was put to sale - Appellant was highest bidder which resulted in issuance of sale certificate - Respondent challenged said sale by filing application before Tribunal Which was dismissed - Respondent filed petition before HC - Single Judge dismissed the petition - Appeal against order of Single Judge was filed before DB - DB set aside sale of the property - Hence instant appeals - Whether there could be waiver of mandatory condition and whether this waiver should be discerned -Held, borrower tried to thwart earlier attempts of bank in selling property - When first notice was issued, respondent filed writ petition - Further bid of appellant which was accepted was in sum of Rs.2.16 crores and after second auction when Bank requested borrower to accept bid of Rs.2.25 crores giving its reasons and borrower instead of doing so took initiative resulting in OTS but defaulted therein, it indicated that borrower was at fault in not adhering to OTS, by no logic it should be deduced there from that Bank was relieved from its obligation not to follow mandatory procedure contained in Rules, while taking fresh steps for disposal of property - Conduct should not be taken as waiver to mandatory condition of 30 days' notice for auction as well as other requirements and for examining plea of waiver, borrower had waived aforesaid mandatory requirement when property was put to sale, Court did not find, nor it was suggested that even slightest move on part of borrower in this regard which might amount to waiver either express or implied - On contrary, when notice was published, borrower immediately filed petition and challenged auction notice - Thus, its conduct, far from waiving aforesaid requirement, was to confront bank by questioning its validity - It was different matter that it had to withdraw said petition in view of availability of alternate remedy - Immediately, it filed application u/s. 18 of the SARFAESI Act - There was, thus, not even iota of material suggesting any waiver on part of borrower - Moment it was found that mandatory requirement of Rules had not been waived by borrower, consequences in law have to follow - Further, appellant had no answer to many other infirmities pointed out by HC and therefore, instant appeals lack merit - Appeals dismissed.

Directorate of Small Savings and Lotteries Govt. of (NCT Delhi) vs Nirmal Lotteries and another  [DELHI HIGH COURT, 21 Apr 2014]

(1) Mukesh Golcha S/o Mulchand Golcha; (2) Zonal Manager Union Bank of India, Patna; (3) Regional Manager Central Bank of India , Patna; (4) Chief Manager, Central Bank of India, Patna vs (1) Kishore Kumar Sharma S/o Late Madheshwar Prasad Sharma; (2) Meena Devi W/o Kishore Kumar Sharma; (3) Sangeeta Kumari W/o Rajesh Kumar Sharma; (4) Anjana Kumar D/o Late Ram Keshwar Prasad Singh; (5) Zonal Manager Union Bank of India, Patna; (6) Regional Manager Union Bank of India, Patna; (7) Senior Legal Officer Union Bank of India, Patna; (8) Senior Debt Recovery Manager Union Bank of India, Patna; (9) Branch Manager Union Bank of India, Patna; (10) Union of India Through the Secretary Finance Department, New Delhi  [PATNA HIGH COURT, 18 Apr 2014]

Devi Ispat Limited and another vs State Bank of India and others  [SUPREME COURT OF INDIA, 16 Apr 2014] Banking & Finance - Practice & Procedure - SARFAESI Act, 2002 - Statutory Remedy - Petitioner had availed of credit facilities from the respondent (SBI) with an overall limit of Rs. 29.5 crores - This credit facility was enhanced from time to time to Rs. 68.5 crores and petitioner sought a further enhancement to Rs. 93 crores but that was not sanctioned - Respondent informed appellant that its cash credit account was irregular inasmuch as the outstanding was about Rs.11.7 crores against the permissible limit of Rs. 5.6 crores - Petitioner was also informed that it was not servicing the interest of cash credit, Foreign Currency Non- Resident Bank Account etc. - It was also informed that appellant's account was heading for becoming a non-performing asset (NPA) and petitioner was requested to regularize all its accounts by 14-1-2013 failing which there would be no alternative but to call up the advance - Respondent then issued a notice to petitioner u/s. 13(2) of Act on 28-1-2013 demanding payment of the outstanding liabilities due to the extent of about Rs. 17.9 crores, $ 1.11 crores (of the FCNB account ) and interest - Petitioner filed a writ petition challenging, inter alia, the declaration of its being an NPA and for setting aside the previous letters issued by the respondent - Single Judge dismissed it and held that petitioner had an alternate statutory remedy u/s. 13(3A) of Act to make a representation against the letter issued u/s. 13(2) of Act thereof - DB upheld the order of the Single Judge - Hence, instant appeal - Whether order of the Single Judge as affirmed by the DB could be upheld -Held, firstly petitioner had an alternate remedy to make a representation to the respondent under the provisions of s. 13(3A) of Act - Secondly, petitioner did in fact make a representation to the respondent u/s. 13(3A) of Act and that representation was rejected on 2-4-2013 during the pendency of the intra court appeal - Thirdly, respondent had taken possession of the secured assets of petitioner u/s.13(4) of Act - On the facts on record and the statutory remedy having been availed of, SC see no reason to interfere with the impugned order passed by the HC - Petition dismissed.

Bhagwati Mahila Khadi Gram Udyog Sansthan and another vs District Magistrate, Haridwar and others  [UTTARAKHAND HIGH COURT, 15 Apr 2014]

Allahabad Bank vs (1) Shivganga Tube Well, Nizamabad; (2) T. Janardhan Reddy S/o Rajeshwar Reddy; (3) G. Ram Reddy S/o Venkat Reddy; (4) T. Shantakumari W/o Janardhan Reddy; (5) S. Narayana S/o S. Kingayya; (6) S. Laxmibai W/o S. Narayana  [BOMBAY HIGH COURT, 09 Apr 2014] (A)Banking & Finance - Recovery of money from guarantors - Legality - Appellant/ Bank's suit for recovery of an amount of Rs. 27,76,137/- and for preliminary decree for sale of the mortgaged property for recovery of the said amount was decreed against the borrower/respondent/defendant No.1, but was dismissed against the guarantors i.e. respondent Nos. 2 to 6 - Hence instant appeal - Whether the respondent Nos. 2 to 6 executed guarantee-deed -Held, respondent Nos. 2 to 6 had denied all the averments of the appellant made in the suit - Respondent Nos. 2 to 6 denied that they had any knowledge about the loan transaction between the appellant and respondent - Respondents No. 2 to 6 further denied that they had, at any point of time, approached the appellant and agreed to stand as guarantors for the loan to be advanced to the respondent No. 1 - It was held by the Trial Court that respondents Nos. 2 to 4 had executed the agreement of mortgage while only respondent No. 6 had executed actual mortgage - Further certain contradictions between the statements of the plaintiff's witness as to who was present at the time of execution of the guarantee-deed were highlighted by Trial Court - Out of all the respondents, only respondent No. 3 entered the witness box - Trial Court, however, held that though the respondent No. 3 witness had admitted the signatures of himself in the cross-examination and also of respondent Nos. 2 to 5, their admissions would not be binding on the other respondents - Civil Judge, Senior Division, however, did not draw any adverse inference when the respondents who did not enter the witness box to deny the execution of those documents - Thus, findings of Trial Court in that regard unfortunately were perverse - Appeal allowed. (B) Banking & Finance - Recovery of money from guarantors - Legality - Whether the respondents No. 2 to 6 i.e. the original defendants No. 2 to 6 had mortgaged their respective immovable properties by deposit of title-deeds with the appellant/bank - Held, documents on record would show that the respondent Nos. 2 to 6 had intention to create the security for the repayment of the loan availed by the principal borrower - Therefore, respondent Nos. 2 to 6 showed their readiness to deposit the title-deeds by various agreements and affidavits and also by placing all the title verification certificate by the advocates, etc. and ultimately, they deposited the title-deeds with the appellant Bank at Hyderabad branch - Trial Court, however, differentiated between the 'agreement to mortgage' and to actually 'mortgage the immovable property' - Thus, it was sufficient to hold that the respondent Nos. 2 to 6 stood as guarantors and created mortgage of their property for repayment of the loan advanced to the principal borrower by depositing their title-deeds - Appeal allowed. (C) Banking & Finance - Indian Limitation Act, 1908, art.62 - Transfer of Property Act, 1882, s.96 - Recovery of money from guarantors - Legality - Whether the suit against the respondents No. 2 to 6 i.e. original defendants No. 2 to 6 was within limitation - Held, once it was concluded that the respondent Nos. 2 to 6 have created mortgage by deposit of title- deeds for the repayment of the loan amount, naturally the limitation in their case would be governed by the provisions of art. 62 of 1908 Act r/w. s.96 of 1882 Act - There could not be two opinions that the suit for enforcement of money secured by mortgage could be filed in case of a simple mortgage - Since the same provision would apply to a mortgage by deposit of title-deeds, the period of limitation would be twelve years from the date when the money becomes due - Therefore, no issue of limitation as such would arise in the instant case - Appeal allowed. (D) Banking & Finance - Recovery of money from guarantors - Legality -Whether the respondents No. 2 to 6 stood discharged due to any act of commission of omission by the officials of the appellant Bank and whether the plea could be taken during the hearing of the appeal - Held, HC pointed towards certain admissions given by the Bank officials which would show that once the hypothecated property was seized - However, upon part-payment towards the loan account, the same was released - It should, however, be noted that there were no pleadings at all in this regard on behalf of the respondent Nos. 2 to 6 - Therefore, suddenly on the basis of certain 'admissions' given by the witness that once the property was seized but lateron released, HC could not come to the conclusion that the appellant had done any act which was inconsistent with the rights of the surety or omitted to do its duty to the surety - Appeal allowed.

Baiju S/o Karunakaran vs (1) Sree Lekshmi Cashew Company, Represented by Its Managing Partner, Kollam; (2) P. Sundaran S/o T. M. Prabha; (3) Sreela W/o P. Sundaran  [KERALA HIGH COURT, 09 Apr 2014]

Rita Nath Sarkar W/o Indrajit Nath Sarkar vs (1) Branch Manager, Central Bank of India, Mumbai; (2) Subrata Kumar Nath S/o Jitendra Ch. Nath  [GAUHATI HIGH COURT, 07 Apr 2014] Banking & Finance - Civil Procedure - Code of Civil Procedure, 1908, O. 43 r. 1(d), O. 9 r. 13, s. 115 - Loan - Suit for recovery - Decreed - Legality - Respondent no. 1/ Nationalized Bank filed suit before Trial Court against petitioners no. 1 and 2 for recovery of money - Trial Court decreed the suit - Aggrieved petitioner filed appeal before Appellate Court - Appellate Court by impugned order dismissed appeal and affirmed order passed by Trial Court - Hence instant revision - Whether impugned order passed by Appellate Court was liable to set aside -Held, Appellate Court did not advert to aforesaid distinction in mind and instead devoted himself more to question as to whether decree passed by Trial Court on merits was good or bad and on appreciating evidence on record, dismissed appeal and upheld order - Impugned order suffered from apparent jurisdictional error and hence could not be upheld - It was liable to be set aside - Inevitable conclusion was that matter deserved to be remanded to Appellate Court for deciding appeal afresh on merits on question involved in appeal as noted above - Impugned order was set aside - Appeal out of which this revision arises was restored to its file - Appellate Court would decide appeal after affording an oppournity to parties - Revision partly allowed.

Haryana State Cooperative Supply and Marketing Federation Limited vs Jayam Textiles and another  [SUPREME COURT OF INDIA, 07 Apr 2014] Criminal - Banking & Finance - Practice & Procedure - Indian Penal Code, 1860, s. 420 - Negotiable Instruments Act, 1881, ss. 138, 140 - Cheque bounce - Dismissal of complaint - Challenged - Appellant Federation supplied cotton bales to respondents of value of Rs.30,45,602/- vide three invoices - Respondents, to discharge their liability issued four cheques - On presentation, all four cheques were returned unpaid by bank with endorsement 'for want of sufficient funds' - Appellant filed complaints u/ss. 138 and 140 of the Act r/w s. 420 IPC against respondents - Complaint was dismissed by Trial Court - Appeals filed against said order was filed before HC - Appeals were dismissed - Hence instant appeals - Whether the order recorded by HC was maintainable -Held, admittedly authorisation by Board of Directors of appellant was not placed before Courts below - However, specific averment was made by appellant before Trial Court that said General Power of Attorney had been filed in connected case being , which had neither been denied nor disputed by respondents - In any case, if Courts below were not satisfied, opportunity ought to be granted to appellant to place document contained authorisation on record and prove the same in accordance with law, this was so because procedural defects and irregularities, which were curable, should not be allowed to defeat substantive rights or to cause injustice - Procedure, hand-maiden to justice, should never be made tool to deny justice or perpetuate injustice, by any oppressive or punitive use - In view of fact that in spite of arbitration award against respondents, there was non-payment of amount by respondents to appellant and in the light of authorisation contained opportunity should be given to appellant to produce and prove authorisation before Trial Court, more so, when money involved was public money - Hence, judgments of Courts below was set aside and matters were remitted back to Trial Court with direction to conduct trial afresh taking into consideration of the authorisation - Appeals disposed of .

Sukhdev Singh and another vs Bamrah and Company and another  [PUNJAB AND HARYANA HIGH COURT, 04 Apr 2014]

Harshad Govardhan Sondagar vs International Assets Reconstruction Company Limited and others  [SUPREME COURT OF INDIA, 03 Apr 2014] (A)Banking & Finance - Practice & Procedure - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ss. 13(4), 13(3), 13(4)(a), 13(4)(b), 14, 14(1), 17 - Transfer of Property Act, 1882, ss. 65A(2), 111 - Constitution of India, 1950, arts. 136, 226, 227, 300A - Threatened to be dispossessed - Interest of secured creditors - Determination of lease - Legality - Appellants claimed to be tenants of different premises which were mortgaged to different banks as securities for loans advanced by the banks (secured creditors) - As the borrowers defaulted in repayment of their secured debts and failed to discharge their liability, secured creditors exercised their right u/s. 13(4) of 2002 the Act to take possession of the secured assets of borrowers - Secured assets, consist of the premises under possession of the appellants - Secured creditors made a request u/s. 14(1) of 2002 Act to the Metropolitan Magistrate, to take possession of the premises and handover the possession of premises to secured creditors in accordance with s. 14 of 2002 - However, HC by impugned judgment held that appellants have no option but to surrender possession to Metropolitan Magistrate, and move Debts Recovery Tribunal u/s. 17 of 2002 Act - Aggrieved appellants filed instant appeals by way of special leave u/art. 136 of Constitution - Appellant contended that they were not borrowers, but they were lessees of the borrowers and were entitled to remain in possession of secured assets and that such a remedy was not actually available u/s. 17 of 2002 Act and if the remedy was available, it was meaningless as they have to move out from the tenanted premises and only in the event the Debts Recovery Tribunal decide in favour of appellants, they might come back to the tenanted premises - Whether provisions of 2002 Act have in any way affected the right of a lessee to remain in possession of the secured asset during the period of a lease -Held, so long as mortgage-deed did not prohibit a mortgagor from making a lease of the mortgaged property and so long as the lease satisfies the requirements of s. 65A(2) of 1882 Act, a lease made by a borrower as a mortgagor would not only be valid but was also binding on the secured creditor as a mortgagee - Appeals allowed. (B)Banking & Finance - Practice & Procedure - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ss. 13(4), 13(3), 13(4)(a), 13(4)(b), 14, 14(1), 35 - Transfer of Property Act, 1882, ss. 65A, 111 - Constitution of India, 1950, art. 300A - Threatened to be dispossessed - Right of borrower - Possession of leased property - Legality - Whether there was any provision in s. 13 of 2002 Act which was inconsistent with right of a borrower or a mortgagor to make a lease in accordance with the provisions of 1882 Act and the corresponding right of a lessee to remain in possession of the property leased out to him during the period of a lease - Held, s. 13(4) of 2002 Act provided that in case the borrower failed to discharge his liability in full within 60 days from the date of notice u/s. 13(2) of 2002 Act, the secured creditor might take recourse to one or more of the measures mentioned therein to recover his secured debt - One of the measures mentioned in s. 13(4)(a) of 2002 Act was to take possession of the secured assets of the borrower including the right to transfer by way of lease - Where, however, the lawful possession of secured asset was not with the borrower, but with the lessee under a valid lease, secured creditor could not take over possession of the secured asset until the lawful possession of the lessee gets determined - There was, however, no mention in s. 13(4) of 2002 Act that a lease made by the borrower in favour of a lessee would stand determined on the secured creditor deciding to take any of the measures mentioned in s. 13 of 2002 Act - S. 13(3) of 2002 Act, however, provided that after receipt of notice referred to s. 13(2) of 2002 Act, no borrower should lease any of his secured assets referred to in the notice, without the prior written consent of secured creditor - That provision in s. 13(13) of 2002 Act and provisions of 1882 Act enabling the borrower or the mortgagor to make a lease were inconsistent with each other - Thus, s. 13(13) of 2002 Act would override the provisions of s. 65A of 1882 Act by virtue of s. 35 of 2002 Act, and a lease of a secured asset made by the borrower after he receives the notice u/s. 13(2) of 2002 Act from the secured creditor intending to enforce that secured asset would not be a valid lease - So long as a lease of an immovable property did not get determined, lessee had a right to enjoy the property and that right was a right to property and that right could not be taken away without the authority of law as provided in art. 300A of Constitution - There was no provision in s. 13 of 2002 that a lease in respect of a secured asset should stand determined when the secured creditor decides to take the measures mentioned in s. 13 of 2002 Act - Without the determination of a valid lease, the possession of lessee was lawful and such lawful possession of a lessee had to be protected by all Courts and Tribunals - Appeals allowed. (C)Banking & Finance - Practice & Procedure - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ss. 13(2), 13(4)(b), 13(6), 14 - Constitution of India, 1950, arts. 226, 227 - Transfer of Property Act, 1882, ss. 65A, 111 - Interest of secured creditor - Leased secured asset - Recovery of possession - Legality - Whether s. 14 of 2002 Act conferred any power on Metropolitan Magistrate or District Magistrate to assist the secured creditor in taking possession of secured asset which was in lawful possession of lessee under a valid lease - Held, for the purpose of transferring the secured asset and for realizing secured debt, the secured creditor would require the assistance of Metropolitan Magistrate or District Magistrate for taking possession of a secured asset from the lessee where the lease stands determined by any of the modes mentioned in s. 111 of 1882 Act - Possession of secured asset from a lessee in lawful possession under a valid lease was not required to be taken under the provisions of 2002 Act and Metropolitan Magistrate or District Magistrate, thus, did not have any power u/s. 14 of 2002 Act to take possession of the secured asset from such a lessee and hand over the same to the secured creditor - When, thus, a secured creditor moves the Metropolitan Magistrate or District Magistrate for assistance to take possession of the secured asset, he should state in the affidavit accompanying the application that secured asset was not in possession of a lessee under the valid lease made prior to creation of the mortgage by the borrower or made in accordance with s. 65A of 1882 Act prior to receipt of a notice u/s. 13(2) of 2002 Act by the borrower - Even in such cases where secured creditor was unable to take possession of secured asset after expiry of 60 days of the notice to the borrower of intention of the secured creditor to enforce the secured asset to realize secured debt, secured creditor would have the right to receive any money due or which might become due, including rent, from the lessee to borrower - That would be clear from s. 13(4)(b) of 2002 Act, which provided that in case the borrower failed to discharge his liability in full within the notice period, secured creditor might require, at any time by notice in writing, any person who had acquired any of the assets from borrower and from whom any money was due or might become due to the borrower, to pay the secured creditor, so much of the money as was sufficient to pay secured debt - Transferee of a secured asset would not acquire any right in a secured asset u/s. 13(6) of 2002 Act, unless it was effected after the secured creditor had taken over possession of the secured asset - If Metropolitan Magistrate or District Magistrate was satisfied that there was a valid lease created before the mortgage or there was a valid lease created after the mortgage in accordance with the requirements of s. 65A of 1882 Act and that the lease was not determined in accordance with the provisions of s. 111 of 1882 Act, he could not pass an order for delivering possession of the secured asset to the secured creditor - But in case he comes to the conclusion that there was in fact no valid lease made either before creation of the mortgage or after creation of the mortgage satisfying the requirements of s. 65A of 1882 Act or that even though there was a valid lease, the lease stands determined in accordance with s. 111 of 1882 Act, he could pass an order for delivering possession of secured asset to the secured creditor - Decision of Metropolitan Magistrate or District Magistrate could be challenged before the HC u/arts. 226 and 227 of Constitution by any aggrieved party and if such a challenge was made, HC could examine the decision of Metropolitan Magistrate or District Magistrate, as the case might be, in accordance with the settled principles of law - Appeals allowed. (D)Banking & Finance - Practice & Procedure - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ss. 13(4), 17 - Transfer of Property Act, 1882, s. 65A - Secured asset - Delivery of possession - Remedy of lessee - Legality - Whether a lessee had any remedy by way of an appeal u/s. 17 of 2002 Act when secured creditor attempt to take over possession of secured asset which was in possession of lessee - Held, even if Debt Recovery Tribunal comes to conclusion that any of the measures referred to in s. 13(4) of 2002 Act taken by secured creditor were not in accordance with the provisions of 2002 Act, it could not restore possession of the secured asset to the lessee - Where, thus, Tribunal consider the application of the lessee and comes to the that the lease in favour of the lessee was made prior to the creation of mortgage or the lease though made after the creation of mortgage was in accordance with the requirements of s. 65A of 1882 Act and the lease was valid and binding on the mortgagee and lease was yet to be determined, Tribunal would not have the power to restore possession of secured asset to the lessee -Thus, there was no remedy available u/s. 17 of 2002 Act to the lessee to protect his lawful possession under a valid lease - Appeals allowed. (E) Banking & Finance - Practice & Procedure - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ss. 13, 14 - Transfer of Property Act, 1882, ss. 65A, 111 - Maharashtra Rent Control Act, 1999, ss. 33, 34 - Secured asset - Applicability of SERFASI Act - Lawful possession of lessee - Jurisdiction - Legality - Whether appellants as tenants of premises in the State would have any remedy to move these courts having jurisdiction u/s. 33 of 1999 Act and obtain the relief of injunction against secured creditor taking possession of secured asset from the appellants - Held, when action was sought to be taken by secured creditor u/s. 13 of 2002 Act or by Metropolitan Magistrate or District Magistrate u/s. 14 of 2002 Act, Court or authority mentioned in s. 33 of 1999 Act could not grant the injunction to prevent such action by the secured creditor or by Metropolitan Magistrate or District Magistrate - Even otherwise, s. 33 of 1999 Act vests jurisdiction in the Courts named therein to decide disputes between the landlord and tenant and not disputes between the secured creditor and tenant under landlord who was a borrower of the secured assets - If any of appellants claim that they were entitled to possession of a secured asset for any term exceeding 1 year from the date of the lease made in his favour, he had to produce proof of execution of a registered instrument in his favour by the lessor - Where he did not produce proof of execution of a registered instrument in his favour and instead relies on an unregistered instrument or oral agreement accompanied by delivery of possession, Metropolitan Magistrate or District Magistrate, as the case might be, would have to come to the conclusion that he was not entitled to the possession of secured asset for more than an year from the date of the instrument or from the date of delivery of possession in his favour by landlord - Metropolitan Magistrate was directed to consider the claims of appellants that they were in possession of secured asset under a lease made prior to the creation of mortgage and decide the applications u/s. 14 of 2002 Act in accordance with instant judgment and any other law that might be relevant - In case, during pendency of appeals, orders were passed by Metropolitan Magistrate or District Magistrate u/s. 14 of 2002 Act, orders so passed would stand quashed and Metropolitan Magistrate or District Magistrate would pass fresh orders - Appeals allowed.

Enforcement Directorate vs Morgan Industries Limited  [DELHI HIGH COURT, 03 Apr 2014]

D. Simpson vs (1) S. T. Perumal; (2) State Represented by Inspector of Police (L and O), Nellankarai Police Station, Chennai  [MADRAS HIGH COURT, 02 Apr 2014] Criminal - Banking & Finance - Practice & Procedure - Code of Criminal Procedure, 1973, ss. 320, 320(8), 320(9), 362, 482 - Negotiable Instruments Act, 1881, s. 138 - Dishonor of cheque - Conviction - Legality - A case was filed against petitioner u/s. 138 of the Act Trial Court passed conviction order - Petitioner filed before Appellate Court - Appellate Court confirmed order of Trial Court - A revision was moved before Single Judge and the same was dismissed confirming judgments of Lower Courts - Hence instant petition - Whether impugned order passed by Lower Courts were justified -Held, when revision petition was disposed of by Single Judge circumstance that parties settled dispute and complainant compounded offence was not there at all - It was subsequent change in circumstance - Powers u/s. 482 CrPC have not been sought to be invoked earlier - Only revisional powers were exercised - That was all more reason why under changed circumstances extra ordinary inherent jurisdiction could be invoked - In light of compromise entered into between parties, stood allowed, with costs of Rs. 25,000/- payable by petitioner to Tamil Nadu State Legal Services Authority, within time framed - Petitions disposed of.

Appala Venkata Naga Durga Srinivas vs (1) Manager, Payment Assistance Unit, SBI Cards and Payment Service Private Limited; (2) Manager, State Bank of India, Rajahmundry [NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, 01 Apr 2014] Consumer Protection - Banking & Finance - Consumer Protection Act, 1986 - Deficiency in service - Compensation - Entitlement of - Complainant got a Credit Card, from OP which he noticed his name was wrongly mentioned - Complainant returned the credit card with a request to block it to avoid misuse - OPs informed him that the said credit card was blocked - Later on complainant received a demand notice for amount with statement to pay settlement amount - Complainant filed complaint before the District Forum - District Forum dismissed the complaint - On appeal filed by complainant was also dismissed by State Commission - Hence instant revision petition - Whether Foras below were justified in dismissing the complaint -Held, complainant should not be allowed to take undue benefit of such inadvertent small mistake - Normally, the transaction took place with card number of complainant and the description of the name does not come in the way of operating the card - At this stage the complainant filed an additional document, the Temporary receipt No. 6985091 for Rs.390/- collected by the agent of OP - Said receipt did not specify the purpose of collection of Rs.390/- - Even, complainant had not produced any cogent evidence or a copy of letter by which he made a request to OPs for cancellation of the card - Complainant had not produced postal A.D - Agent was not examined before the District Forum - As per the cl. (a) of the terms and conditions, complainant did not cut card diagonally, to avoid any transactions, still the card was in his possession might be used for transactions - It appeared that complainant want to shirk away from the overdue payment, by carving such frivolous complaint - Revision dismissed.

Association for Democratic Reforms and another vs Union of India and others  [DELHI HIGH COURT, 28 Mar 2014]

Deutsche Bank AG., Mumbai vs Finolex Industries Limited, Pune  [BOMBAY HIGH COURT, 28 Mar 2014]

Dipti Choudhury W/o Late Sudhangsu Choudhury vs Sangeeta Mandal @ Sangita Das W/o Sujit Das  [GAUHATI HIGH COURT, 28 Mar 2014] Criminal - Banking & Finance - Practice & Procedure - Code of Criminal Procedure, 1973, ss. 262, 264, 265, 313, 326, 326(1), 326(3), 482 - Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 - Negotiable Instruments Act, 1881, ss. 138(1), 143, 144, 145, 146, 147 - Dishonor of cheque - Criminal proceedings - Quashing of - Respondent/complainant filed a case before Trial Court u/ss. 138(1), 143, 144, 145, 146, 147 of the Act - Accused/petitioner filed a petition before Trial Court for recording of evidence afresh and the same was dismissed - Petitioner appealed to Lower Appellate Court and the same was dismissed - Hence instant revision - Whether in view of provision of s. 143 of the Act, such proceeding would be deemed to be summary trial inviting application of s. 326(3) of CrPC, prohibiting successor-in-interest in office to act upon evidence already recorded by his predecessor -Held, it was not that invariably and mandatorily an offence u/s. 138 of the Act had to be tried summarily and some amount of flexibility was in-built in section itself - Recording of reason and opportunity of hearing was provided for in proviso when Trial Court contemplates not to try case, either at commencement or during continuance of a summary trial, so as not to prejudicially affect right of parties to otherwise have a summary trial - If any of parties was aggrieved by initiation or commencement of trial as in summons procedure case without there being an order to that effect after hearing parties, certainly such course of action on part of Magistrate could be challenged in an appropriate proceeding at appropriate time - If parties allow proceeding to go on as in summons procedure case without any demur and participate therein fully, it could not be countenanced that proceeding was to be deemed to be summary proceeding - Non-recording of reasons as well as failure to grant opportunity as contemplated in proviso to s. 143(1) of the Act was, in that event, only an irregularity which does not invalidate trial - It does not fall into category of cases where acquiescence or consent of parties purport to confer jurisdiction on a Magistrate where he had none otherwise - Proceeding was conducted as summons procedure case with full participation of parties and evidence was recorded in its entirety and not in its substance - Recording of evidence afresh was not warranted - Revision dismissed.