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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
V KAMESWAR RAO, T.M.NADAF
Deepak Raheja – Appellant
Versus
Union Of India – Respondent
| Table of Content |
|---|
| 1. background of the banking dispute. (Para 2 , 3 , 4) |
| 2. appellant's claims against loan reassignment. (Para 5 , 6 , 7) |
| 3. insights into legal frameworks guiding loan assignments. (Para 8 , 10 , 11) |
| 4. judicial limitations on banking decisions. (Para 12 , 13) |
| 5. assessing statutory compliance in loan assignments. (Para 14 , 15 , 16) |
| 6. claims of appellant regarding eligibility under eclgs. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26) |
| 7. legal implications of account classification as npa/sma. (Para 28 , 29 , 30 , 31 , 32 , 33) |
| 8. allegations of improper assignment of loan. (Para 36 , 37 , 39 , 40 , 41 , 42) |
| 9. disputes regarding the financial status of the appellant. (Para 46 , 47 , 48 , 49 , 51) |
| 10. arguments of respondent regarding assignment legality. (Para 56 , 57 , 58 , 59 , 60) |
| 11. defense of respondent regarding assignment compliance. (Para 66 , 67 , 68 , 69 , 70) |
| 12. conclusion on the writ appeal. (Para 73 , 74) |
| 13. court's analysis and final decision. (Para 75 , 76 , 78) |
JUDGMENT :
V. KAMESWAR RAO, J.
This intra-court appeal has been filed by the appellants Sri. Deepak Raheja and Smt. Anita Raheja as Directors of Suspended Board of GSTAAD Hotels Pvt. Ltd. and GSTAAD Hote
Judicial review of banking decisions is restricted; lenders may assign loans classified as stressed without borrower consent, as upheld by the Reserve Bank of India guidelines.
The assignment of debts by banks is part of legitimate banking business, validated by applicable laws and recognized under the Companies Act for winding up petitions.
Banks are under a statutory obligation to comply with the RBI's Resolution Framework (R.F) 2.0 and consider applications for restructuring of MSME loans in accordance with its provisions.
The court's discretionary jurisdiction under Article 226 is not absolute and should be exercised judiciously.
The assignment of debt under the SARFAESI Act and the interpretation of 'financial institution' and 'secured creditor' were central to the court's decision.
The classification of loan accounts as borrower-wise under the SARFAESI Act is upheld, emphasizing that a guarantor cannot evade liability due to another borrower's NPA status.
The classification of loan accounts as non-performing assets must be borrower-wise, not facility-wise, and a guarantor cannot evade liability due to another borrower's defaults.
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