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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
KRISHNA S.DIXIT, G.BASAVARAJA
B.A. Varadarajachar, S/o. Anjaneyachar – Appellant
Versus
Reliance Asset Reconstruction Company Limited, Represented By Its Authorized Signatory, Mr. Rajesh Suresh Bichitkar – Respondent
ORDER :
KRISHNA S. DIXIT, J.
This petition by the guarantor-cum-surety of the subject loan, seeks to lay a challenge to the order dated 18th April 2024, whereby the Debt Recovery Appellate Tribunal at Chennai has negatived his Miscellaneous Appeal No.40 of 2023. Petitioner has also sought for the quashment of Debt Recovery Tribunal’s order dated 28th June 2023, whereby his Application No.724 of 2022, seeking stay of all further proceedings in respondent’s Original Application No.73 of 2025, has been negatived.
2. Sri.Madhukar Deshpande, learned Counsel appearing for the petitioner argues that although his client was admittedly a guarantor having executed mortgage for securing the repayment of initial debt, his client's liability by virtue of suretyship, would stand discharged, absolutely because of, (a) Novatio inasmuch as new transaction has been brought about by executing a whole lot of new loan documents; and (b) there is fraud & fabrication of documents perpetrated by the principal borrower hand-in-glove with the officials of the respondent. He cites the decision of Apex Court in the case of S.P. CHANGALVARAYA NAIDU (DEAD) BY LRs v. JAGANNATH (DEAD) BY LRs, [(1994)1 SCC 1] in sup
The Debt Recovery Tribunal has limited jurisdiction and cannot adjudicate complex issues like fraud and fabrication without a full trial.
The jurisdiction of the civil court is excluded in matters related to the classification of loan accounts as NPA under the SARFAESI Act.
(1) Recovery of loan amount – There is no provision in RDB Act by which remedy of a civil suit by a defendant in a claim by bank is ousted, but it is matter of choice of that defendant.(2) There is n....
Civil courts lack jurisdiction under Section 34 of the SARFAESI Act for matters within the DRT's purview, and vague fraud allegations do not suffice to maintain a civil suit.
The main legal point established in the judgment is that the jurisdiction of the Civil Court is barred under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of....
(1) Recovery of debt – A person whose case is based on falsehood has no right to approach Court and he can be summarily thrown out at any stage of litigation. (2) Debts Recovery Tribunal shall not en....
The superior court can intervene in cases of manifest injustice but must defer to statutory appellate processes if adequately pursued.
Point of law: In appropriate cases, the courts may consider ordering prosecution otherwise it may not be possible to maintain purity and sanctity of judicial proceedings.
The main legal point established in the judgment is that a civil court's jurisdiction is barred in respect of matters which can be taken cognizance of by the DRT under the SARFAESI Act, and that a bo....
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