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Analysing the retrieved Case Laws
Scanned Judgements…!
Bank of Baroda VS U. N. Automobiles Pvt. Ltd. - Current Civil Cases
"].The courts have also clarified that third-party interests created overnight or after the initiation of proceedings are subject to the outcome of the main DRT proceedings, and such third-party applications are generally not entertained unless explicitly provided for. Third-party interests are created overnight and in very many cases those third parties take up the defence of being a bona fide purchaser for value without notice ["
P.THAVASIRAJ vs VIRGIN MANUFACTURING INDUSTRIES PVT LTD - Madras
"].Analysis and Conclusion:
References:- ["2026 Supreme(Online)(Ker) 5478"]- ["2025 Supreme(Online)(DRAT) 301"]- ["
Bank of Baroda VS U. N. Automobiles Pvt. Ltd. - Current Civil Cases
"]- ["2025 Supreme(Online)(Tel) 56254"]- ["2025 0 Supreme(Kar) 1811"]- ["2013 Supreme(Online)(Mad) 3"]- ["P.THAVASIRAJ vs VIRGIN MANUFACTURING INDUSTRIES PVT LTD - Madras
"]
In the complex landscape of debt recovery in India, the () plays a pivotal role. Secured creditors rely on it to enforce security interests swiftly without court intervention. However, a common query arises: whether () is maintainable in () filed by a third party? This question often surfaces when third parties claim rights over secured assets amid enforcement actions.
This blog post delves into the legal nuances, drawing from key judgments and statutory provisions. While this provides general insights, it is not legal advice. Consult a qualified lawyer for case-specific guidance.
The empowers secured creditors to take possession and sell secured assets upon borrower default, bypassing traditional initially. outlines the process: notice to borrower, possession under (4), and remedies for aggrieved parties under before the .
's role is limited. As clarified in judgments, the is a tribunal with . It cannot pass decrees for specific performance or damages in favor of third parties, nor does it have the authority to decide disputes unrelated to the enforcement of security interests
. allows challenges to measures under (4), but not broad civil remedies like specific performance.
retain jurisdiction under , but only in exceptional cases, such as . The in carved a narrow exception: civil suits may lie if actions are fraudulent or absurd and untenable 2015 0 Supreme(Del) 849. Mere allegations of do not suffice; they must be substantiated, and remains the primary remedy.
No, suits for specific performance filed by third parties are generally not maintainable in under SARFAESI. The Act focuses on secured creditors' enforcement, not third-party contractual claims. The does not confer authority upon a State Authority () to initiate or maintain a () filed by a third party. Such suits are generally within the domain of (from core analysis).
Key reasons include:- Limited Scope of : examines validity of actions only, not independent title or performance claims
.- Third-Party Rights: Third parties with independent titles cannot invoke SARFAESI; their disputes belong in 2005 3 Supreme 574.- Rules: Third parties claiming or title are not necessary parties in specific performance suits unless directly linked to the contract. Third parties claiming independent titles or possession cannot be impleaded... unless their presence is necessary for the complete adjudication 2005 3 Supreme 574 2019 0 Supreme(SC) 929 2008 0 Supreme(Mad) 4497.
Courts emphasize preserving SARFAESI's efficiency: allowing third-party SAs in would defeat the Act's purpose of quick recovery.
Several rulings reinforce this position:
, the court held lacks jurisdiction for third-party specific performance, limiting it to validity.
These precedents ensure SARFAESI remains creditor-focused.
Other judgments provide context on third-party involvement:
Exception Limited: In 2015 0 Supreme(Del) 849, a suit alleging bank in fund transfers was dismissed. The limited exception allowing ' jurisdiction... is applicable only when the action of the is alleged to be fraudulent or absurd and untenable. Grievances go to under .
Borrower vs. Third-Party Suits: Borrowers may file civil suits alongside proceedings (no bar under Act , 34) 2024 0 Supreme(Mad) 193. However, third parties lack this flexibility for SAs.
Waivers for Third Parties: Interestingly, third parties (not borrowers/guarantors) need not make 50% under for appeals. If a person other than borrower/guarantor files appeal... stipulation of ... shall not be insisted upon
Indiabulls Housing Finance Ltd VS Vaibhav Jhawar
2018 0 Supreme(Del) 3278. Yet, this does not extend maintainability to SAs.Jurisdictional Shifts: In IBC overlaps, yields to for personal guarantors if corporate insolvency is ongoing 2025 0 Supreme(Bom) 1686. Irrelevant for pure third-party SAs.
Alternative Remedies: or delays do not excuse bypassing ; statutory remedies must be exhausted 2023 0 Supreme(Guj) 605 2018 0 Supreme(Ker) 756.
Auction Proceeds: Even aggrieved auction participants can approach under Sections 13(4) & 13(7), but not for specific performance 2019 0 Supreme(Del) 1796.
These cases highlight 's narrow remit, pushing third-party contractual claims elsewhere.
Rare exceptions exist:- If third-party rights derive directly from the contract or security documents and intertwine with enforcement, may consider them.- or absurdity might open , but prove it robustly 2015 0 Supreme(Del) 849.- if necessary for adjudication, not mere adverse claims 2005 3 Supreme 574.
Generally, independent title holders must sue in .
Indiabulls Housing Finance Ltd VS Vaibhav Jhawar
.Always document claims meticulously to avoid dismissal for suppression 2023 0 Supreme(Guj) 605.
| Aspect | Ruling ||--------|--------|| by Third Party in | Not maintainable
|| Proper Forum | 2005 3 Supreme 574 || Scope | validity only || Exceptions | (limited), direct contract links || | Not for third parties
Indiabulls Housing Finance Ltd VS Vaibhav Jhawar
|In summary, SARFAESI streamlines creditor recovery but excludes third-party specific performance suits from . Opt for to safeguard rights. Stay informed on evolving jurisprudence, as courts prioritize statutory intent.
This analysis is for informational purposes. Legal outcomes vary by facts; professional advice is essential.
#SARFAESI #DRT #SpecificPerformance
The appellants, who are third parties and are sought to be impleaded as respondents 2 to 4 in OP(DRT)No.350 of 2025 and as respondents 1 to 3 in OP(DRT)No.348 of 2025 filed W.A.No.3045 ... Therefore, we find that the present writ appeals are maintainable against the common impugned order dated 18.11.2025, passed by the learned Single Judge in OP(DRT)No.348 of 2025 and OP(DRT)No.350 of 2025. ... The learned counsel for the original petitioners raised a preliminary obj....
The core issues to be decided in this Appeal are - (i) As to whether Review Application filed by the Respondent was legally maintainable or not? (ii) Whether the provisions of Rule 5-A of Now we have to see as to whether Learned DRT has rightly passed the judgment reviewing the earlier judgment dated 19.10.2023. Debts Recovery Tribunal (Procedure) Rules, 1993 demonstrates that a review is only maintainable on the ground of some mistake or error apparent on the face....
Now, the question which remains for consideration before this Court is whether a writ petition is maintainable against the order passed by the DRT particularly when the petitioner has an alternative statutory remedy of filing an appeal before the DRAT. ... Some prepare and sign the orders and communicate the same to the party concerned. A quasi judicial authority will become functus officio only when its order is pronounced, or published/notified or communicated (put in the course of transmission) to the party#....
We are accordingly of the view that the writ petition is not maintainable. ... However, considering the fact that the petitioners were not made parties to the S.A. filed by the borrowers/the respondent Nos.1 and 2, we deem it fit to restrain the respondent No.3-Canara Bank, or any other interested party, from taking any steps against the schedule property until the petitioners ... file an appropriate application before the DRT/DRAT. ... We are of the view that the writ petition is not maintainable. 2. .....
This results in two consequences viz., (i) out of frustration, the Banks agree for one time settlements, or (ii) third party rights get created by taking advantage of the situation. ... A borrower or a third party cannot be permitted to defeat or to render nugatory the provisions of the Act merely by a stray reference to an allegation of fraud or, as in the present case, by an averment in paragraph 15 of the plaint of "a systematic fraud". ... The error, with respect, in the judgment of the Learned Single Judge is that t....
She would submit that if at all the borrower seeks for a relief against the Bank, the borrower is entitled to make a counter-claim in the DRT proceedings and separate suit filed by a borrower will not lie and is not maintainable. ... She drew the attention of this Court to Sections 18 and 34 of the DRT Act and would submit that since there is a statutory bar, the present suit is not maintainable. ... (d) Consequently, Application No.6465 of 2023 filed by the defendan....
The plaintiff ought to have approached the DRAT challenging the orders passed by the DRT, wherein the plaintiff was not at all a party. ... an application before the DRT in O.A.No.424/1998 and obtained an award from the DRT. ... This suit was filed on 23.06.2000. ... The Bank filed O.A.No.424/1998, before the Debt Recovery Tribunal, Bengaluru (for short, `DRT') and obtained an order for sale of the suit schedule property to recover the outstanding amount. 4. ... Hence....
Therefore, we are satisfied that the applications filed by the 3rd Respondent before the DRT were not maintainable or competent. ... The NCLAT held that the application having been filed under Section 95(1) and the Adjudicating Authority for application under Section 95(1) as referred in Section 60 (1) being the NCLT, the application filed by the Appellant was maintainable. ... From the above observations, we are satisfied that in this case, the proceedings should have been ....
In my view, as also agreed by learned counsel for the parties, the only but crucial question, up for consideration in this case, is, whether Act 1963, and in particular S.5 and S.14 would apply to an application filed under S.17 of Act 2002. ... 13. ... The Tribunal at Coimbatore rejected an application filed under S.5 of Act 1963 seeking condonation of delay of 47 days in filing appeal under S.17(1) of Act 2002 on the ground that such an application is not maintainable. ... No. 74 of 2007 before DRT ....
By way of the amended prayer, a further direction is sought against the respondent no. 2 not to transfer land, mortgage or transfer possession of the resident bungalow to any third party. 4. BRIEF FACTS: 4.1. ... Hence, as per the observations of the Apex Court, the right of redemption in favour of the petitioners has already extinguished, hence, no direction can be issued against the respondent no. 2 not to transfer land, mortgage or transfer possession of the resident bungalow to any third party. ... The respondent no.....
Read as above, it is clear that a person aggrieved by the measures taken on a collective reading of Section 13 (4) with Section 13 (7) of the SARFAESI Act would be entitled to maintain an application before the DRT. Consequently, the Court disagrees with the DRAT that the aforementioned SA No.65 of 2012 filed by the Petitioner was not maintainable before the DRT.
It was contended on behalf of the petitioner therein that the petitioner is neither the borrower nor the guarantor and therefore, there is no necessity for filing any waiver application before the DRAT. 40. Insofar as the reliance placed by Mr. Mata on the judgment of the Madras High Court in the case of K. Kalpana (supra) is concerned, there the petitioner was the owner of the property, which was mortgaged with the respondent No. 1 Bank. The SA filed by the petitioner was dismissed by the DRT-III, Chennai. In an appeal before the DRAT, the appeal was not entertained becaus....
The SA filed by the petitioner was dismissed by the DRT-III, Chennai. In an appeal before the DRAT, the appeal was not entertained because the petitioner therein had failed to make pre-deposit. 40. Insofar as the reliance placed by Mr. Mata on the judgment of the Madras High Court in the case of K. Kalpana (supra) is concerned, there the petitioner was the owner of the property, which was mortgaged with the respondent No.1 Bank. It was contended on behalf of the petitioner therein that the petitioner is neither the borrower nor the guarantor and therefore, there is no neces....
The SA filed by the petitioner was dismissed by the DRT-III, Chennai. In an appeal before the DRAT, the appeal was not entertained because the petitioner therein had failed to make pre-deposit. 40. Insofar as the reliance placed by Mr. Mata on the judgment of the Madras High Court in the case of K. Kalpana (supra) is concerned, there the petitioner was the owner of the property, which was mortgaged with the respondent No.1 Bank. It was contended on behalf of the petitioner therein that the petitioner is neither the borrower nor the guarantor and therefore, there is no neces....
In this judgment, the learned Judge found that the conclusions of the DRT in Exhibit P20 order, that it was not entitled to consider the validity of the SA because the properties had been taken possession of and handed over to the auction purchasers under the directions of this Court in W.A.No.1250/2007, to be not tenable or legally correct and therefore, directed the DRT to consider the SA on its merits, taking note of the specific contentions of the petitioner; as also the interim application filed by the auction purchasers of the secured asset asserting the SA not to be maintainable, with....
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