Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Maintainability of Writ Petition Despite Alternative Remedies - The courts have consistently held that a writ petition under Article 226 is not maintainable when an effective alternative statutory remedy exists under the SARFESI Act, unless exceptional circumstances are demonstrated. For instance, the petitioners could have mentioned that despite the availability of an alternative remedy, the writ petition is still maintainable under exceptional circumstances, but they have chosen not to do so ["AMIR TRADERS VS AUTHORIZED OFFICER BANK OF BARODA - Gujarat"]. Similarly, the order will not prevent the petitioner from seeking remedy before the appropriate forum in accordance with law ["East India Chemical Products VS State Bank of India - Calcutta"], emphasizing the preference for statutory remedy over writ petitions.
Applicability and Scope of SARFESI Act - The SARFESI Act provides specific procedures for recovery and mortgage redemption, with provisions like Section 13(8) allowing redemption before sale, and Section 18 providing an appeal route to the DRAT. A writ petition against the private financial institution ARC under Article 226... under Section 13(4) of the SARFESI Act can be said to be not maintainable ["Norton Industries Through Pravinbhai M Bane VS Punjab National Bank Through Authorised Officer - Gujarat"]. Courts have clarified that a suit is not maintainable in view of Section 34 of SARFESI when proceedings under SARFESI are initiated, as the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and untenable ["Bharat Singh Patel vs Antar Singh Gour - Madhya Pradesh"].
Challenges to Notices and Orders under SARFESI - The issuance of demand notices under Section 13(2) and subsequent proceedings are subject to judicial review, but courts have consistently ruled that if at all the petitioners are aggrieved against the action taken... they can always ["seek"] alternative remedy ["Asahi Infrastructure and Projects Ltd. VS State Bank of India - Dishonour Of Cheque"]. Notably, the District Magistrate has held that as no notice was given by the petitioner under Section 13(2)... the application under Section 14 was not maintainable, but this was set aside, reaffirming the necessity of proper notice ["Edelseiss Asset Reconstruction Company Limited vs State of Madhya Pradesh - Madhya Pradesh"].
Abandonment of Mortgage Claims & Award Proceedings - Several cases demonstrate that claims of mortgage abandonment or claims being non-maintainable in execution proceedings are upheld when the proceedings are barred by law, such as claim petition under Order 21 Rule 58 CPC is not maintainable in execution proceedings taken out in a mortgage decree ["Federal Bank Ltd. , Represented By Its Senior Manager VS Maniyoth Chandran, S/o. Chekkappi - Kerala"]. Courts have also dismissed petitions where the mortgage or recovery claim was found to be barred or improperly filed, emphasizing adherence to procedural provisions.
Specific Case Insights - In cases involving alleged fraud, courts have permitted civil suits to proceed, stating when the fraud has been alleged, then suit is maintainable and the provision under Section 34 of SARFESI is not attracted ["Bharat Singh Patel vs Antar Singh Gour - Madhya Pradesh"]. Conversely, in situations where proceedings are initiated without proper notice or in violation of statutory procedures, orders have been set aside, such as the order of rejection by the District Magistrate... is not sustainable ["Edelseiss Asset Reconstruction Company Limited vs State of Madhya Pradesh - Madhya Pradesh"].
Analysis and Conclusion:The overarching principle from these sources is that claims regarding non-maintainability of mortgage or SARFESI proceedings—such as claims of abandonment or claims abandoned in awards—are generally upheld when proper legal procedures are not followed or when statutory remedies are available and not exhausted. Courts tend to favor the statutory framework of SARFESI, emphasizing the importance of following prescribed procedures, such as issuing proper notices and pursuing appeals. Abandonment claims or claims of mortgage non-maintainability are often dismissed if proceedings are initiated in violation of law or without proper jurisdiction. Therefore, claims of sarfesi not maintainable mortgage claim abandoned in award are typically rejected unless exceptional circumstances, such as procedural violations or fraud, are established.
References:["AMIR TRADERS VS AUTHORIZED OFFICER BANK OF BARODA - Gujarat"] ["East India Chemical Products VS State Bank of India - Calcutta"] ["Norton Industries Through Pravinbhai M Bane VS Punjab National Bank Through Authorised Officer - Gujarat"] ["Bharat Singh Patel vs Antar Singh Gour - Madhya Pradesh"] ["PREM LATA AND ANR vs ZONAL MANAGER PB, & SIND BANK AND ORS - Punjab and Haryana"] ["PREM LATA AND ANR vs ZONAL MANAGER PB, & SIND BANK AND ORS - Punjab and Haryana"] ["Dinesh Shrivastava vs Life Insurance Corporation Housing - Madhya Pradesh"] ["Rita Machine (India) Ltd. VS Debt Recovery Appellate Tribunal - Punjab and Haryana"] ["M/S AMIR TRADERS V/s AUTHORIZED OFFICER BANK OF BARODA - Gujarat"] ["PREM LATA AND ANR vs ZONAL MANAGER PB, & SIND BANK AND ORS - Punjab and Haryana"] ["K.K. Organics P. Ltd. vs Small Industries Development Bank of India - Delhi"] ["V. C. Gnanasekaran VS S. Manugandhi @ Rajeswari - Dishonour Of Cheque"] ["Federal Bank Ltd. , Represented By Its Senior Manager VS Maniyoth Chandran, S/o. Chekkappi - Kerala"] ["Edelseiss Asset Reconstruction Company Limited vs State of Madhya Pradesh - Madhya Pradesh"] ["NAYAK INDUSTRIES LTD. VS CHAIRMAN, BANK OF BARODA - Allahabad"] ["PREM LATA AND ANR vs ZONAL MANAGER PB, & SIND BANK AND ORS - Punjab and Haryana"] ["Asahi Infrastructure and Projects Ltd. VS State Bank of India - Dishonour Of Cheque"]
In the complex world of banking and recovery laws in India, secured creditors often rely on the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) to enforce their rights over mortgaged properties. But what happens when actions during SARFAESI proceedings lead to the abandonment of a mortgage claim? Can such a claim still be pursued later? This is a critical question for banks, financial institutions, and borrowers alike: sarfesi not maintainable mortgage claim abandoned in award.
This blog post delves into the legal nuances, drawing from Supreme Court interpretations and related case laws. We'll explore why such claims typically become non-maintainable, key statutory provisions, and practical implications. Note: This is general information based on legal precedents and not specific legal advice. Consult a qualified lawyer for your situation.
The SARFAESI Act empowers secured creditors to recover dues without court intervention by taking possession, selling, or otherwise enforcing security interests. However, Section 13(13) introduces a pivotal limitation: measures under Section 13 override certain provisions of the Transfer of Property Act, 1882 (TPA), including Section 65A on leases and mortgages. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
If a secured creditor, during securitisation proceedings, abandons or relinquishes its security interest—such as by consenting to a sale or not contesting it—the mortgage claim is generally considered abandoned and not maintainable thereafter. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601 The Supreme Court has emphasized that once the creditor takes steps implying relinquishment, the claim is extinguished to facilitate swift recovery under the Act. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
This principle ensures the Act's purpose—speedy securitisation and reconstruction—is not undermined by prolonged mortgage pursuits post-abandonment.
Under Section 13(13) of the SARFAESI Act, a mortgage claim is typically not maintainable if abandoned in the order of securitisation proceedings, treating it as an abandonment of the security interest. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
In one case, the Court clarified: the mortgage claim cannot be maintained further once relinquishment occurs. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
The SARFAESI Act has overriding effect over the TPA. Section 13(13) explicitly states that measures under Section 13 prevail over Section 65A TPA, implying that post-relinquishment, mortgage rights are not enforceable independently. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
The Supreme Court has held that creditor actions like consenting to sale or not contesting the sale amount to abandonment. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601 This aligns with the Act's goal of efficient recovery, preventing creditors from reviving claims after partial enforcement.
Section 14 aids possession but does not revive abandoned claims. Magistrate orders are not a bar to higher court jurisdiction but fail to preserve mortgages if conduct shows relinquishment. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
For instance, in SARFAESI enforcement scenarios, banks issue notices under Section 13(2), followed by possession under Section 13(4). M/s CHAUSANA PHARMACEUTICALS PRIVATE LIMITED vs BANK OF BARODA & ANR. - 2024 Supreme(Online)(NCDRC) 1647 Bank of Baroda gave notice to the complainant under Section 13(2) of the SARFESI Act, 2002 on 16.11.2011 for taking possession of the mortgage property... M/s CHAUSANA PHARMACEUTICALS PRIVATE LIMITED vs BANK OF BARODA & ANR. - 2024 Supreme(Online)(NCDRC) 1647 Such steps, if leading to sale without reserving rights, may imply abandonment.
Acts like filing proceedings, effecting sale, or surrendering security constitute abandonment. Once established, the mortgagee cannot pursue original recovery. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
Related cases illustrate this. In auction contexts under SARFAESI, properties are sold as is where is basis, and participants cannot later challenge if they consciously engaged. Kumar Rohit VS Allahabad Bank through its Chairman-cum-Managing Director - 2016 Supreme(Jhk) 814 Auction by the respondent bank... cannot be said to be suffering from any legal errors. Kumar Rohit VS Allahabad Bank through its Chairman-cum-Managing Director - 2016 Supreme(Jhk) 814 This underscores that post-sale actions finalize security enforcement, akin to abandonment.
In prior charge scenarios, secured creditors like IBHFL hold precedence: Respondent No.2 IBHFL being a secured creditor holds a prior first charge over the mortgage property... SRI. PARAMANAND SINGH vs STATE OF KARNATAKA - 2025 Supreme(Online)(Kar) 22644 Abandoning such would bar further claims.
Abandonment concepts appear in other domains, reinforcing SARFAESI principles:
Arbitration Contexts: Courts set aside awards lacking reasons on abandoned claims. It does not appear... that the contractor abandoned its claim for 108 days. State Of West Bengal VS Tapas Kumar Hazra - 2022 Supreme(Cal) 408 Similarly, not pressing counterclaims implies abandonment. Star Track Agency Private Limited VS Efcalon Tie up Private Limited
Insurance and Contracts: Claims deemed abandoned if not filed timely. the claim is not maintainable and is deemed to be abandoned. New India Assurance Co. Ltd. , Rep. , by its Divisional Manager VS Varsha Aqua Farm Sarvasiddi, Rep. , by its Managing Partner - 2017 Supreme(AP) 725 Such clauses... if the claim is not made within a stipulated period, the right itself would stand extinguished. New India Assurance Co. Ltd. , Rep. , by its Divisional Manager VS Varsha Aqua Farm Sarvasiddi, Rep. , by its Managing Partner - 2017 Supreme(AP) 725
Civil Appeals: Jurisdiction issues in SARFAESI don't bar civil courts unless specified, but abandonment governs maintainability. PREM LATA AND ANR vs ZONAL MANAGER PB, & SIND BANK AND ORS
These parallels highlight courts' consistent view: implied relinquishment extinguishes claims.
Exceptions are rare—only if the creditor explicitly reaffirms security. Mere initiation doesn't imply abandonment unless conduct suggests otherwise. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
Practical Tips for Secured Creditors:- Explicitly retain security interests in proceedings.- Avoid acts implying relinquishment, like unconditional sale consent.- Document intentions clearly to preserve claims.
In disputes, courts focus on creditor conduct. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
Under SARFAESI, abandoning a security interest during proceedings generally renders mortgage claims non-maintainable, prioritizing efficient recovery. Supreme Court rulings and Section 13(13) provide clear guidance, overriding TPA where applicable. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601
Key Takeaways:- Abandonment via sale consent or non-contest extinguishes claims. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601- Section 14 doesn't revive abandoned interests. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601- Preserve rights explicitly to avoid pitfalls.- Related cases on auctions and prior charges reinforce finality. Kumar Rohit VS Allahabad Bank through its Chairman-cum-Managing Director - 2016 Supreme(Jhk) 814SRI. PARAMANAND SINGH vs STATE OF KARNATAKA - 2025 Supreme(Online)(Kar) 22644
For banks and borrowers navigating SARFAESI, understanding abandonment is crucial. Stay informed, act deliberately, and seek professional advice to safeguard interests.
References:1. Harshad Govardhan Sondagar VS International Assets Reconstruction - 2014 7 Supreme 601: Core case on Section 13(13) overriding TPA and abandonment effects.2. M/s CHAUSANA PHARMACEUTICALS PRIVATE LIMITED vs BANK OF BARODA & ANR. - 2024 Supreme(Online)(NCDRC) 1647, Kumar Rohit VS Allahabad Bank through its Chairman-cum-Managing Director - 2016 Supreme(Jhk) 814, etc., for procedural insights.
#SARFAESI, #MortgageLaw, #BankingRecovery
The petitioners could have mentioned that despite the availability of an alternative remedy, the writ petition is still maintainable under exceptional circumstances, but they have chosen not to do so. ... The respondent-bank, thereafter filed and application under section 13(4) of the SARFESI Act for getting the order under section 14 of the SARFESI Act. ... It is also not in dispute that the petitioners have an alternative remedy available to them under section 18 of the SARFESI Act t....
FOR the aforesaid reasons, I hold that the writ petition is not maintainable on the ground of existence of alternative statutory remedy and I dismiss the same. This order will not prevent the petitioner from seeking remedy before the appropriate forum in accordance with law, if so advised. ... THE respondents argued that the writ petition was not maintainable on the ground of existence of alternative statutory remedy under SARFSI Act. THE respondents also disputed the factual claims of the petitioner. .....
maintainable. ... Advocate for the applicant in support of his claim made in the Securitization Application has submitted that respondent has not served the demand notice issued under Section 13(2) of the SARFAESI Act is concerned. Ld. ... Even otherwise, it is required to be noted that a writ petition against the private financial institution ARC the appellant herein under Article 226 of the Constitution of India against the proposed action/actions under Section 13(4) of the SARFAESI Act can be said to be not ....
When the fraud has been alleged, then suit is maintainable and the provision under Section 34 of the SARFESI Act, 2002 is not attracted. Further, it is pleaded that under fraudulent transaction and abnormal circumstances, a civil suit can be filed. 5. ... (supra) submitted that where the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and untenable which may not require any probe whatsoever, the jurisdiction of civil Court cannot be barred. ... In conspectus of t....
It is averred that a secured loan was raised against mortgage of the purchased property with the Section 34 of The Securitisation and Reconstruction of Financial Assets to how an appeal was maintainable against the orders rejecting the alleged then jurisdiction of the Civil Courts is not barred. ... Learned counsel, first of all, has not been able to explain as p style="position:absolute;white-space:pre;margin:0;padding:0;top
In spite of service of the notice dated 16.11.2011, the complainant did not clear the outstanding dues of the Bank then the notice under Section 13(4) of the SARFESI Act, 2002 was published on 18.02.2012 for taking possession of the mortgage property and possession was taken on 26.03.2012. ... Bank of Baroda gave notice to the complainant under Section 13(2) of the SARFESI Act, 2002 on 16.11.2011 for taking possession of the mortgage property, giving liberty to the complainant to clear outstanding dues ....
After notice, the respondent filed a reply by submitting that this petition is not maintainable, as the petitioner has a remedy under section 17 of the SARFESI Act. In support of the aforesaid contention, reliance is placed on the order dated 15.7.2025 passed by Hon'ble Supreme Court in S.L.P. ... ORDER Per: Justice Vivek Rusia The petitioner has filed the present writ petition claiming the following reliefs:- "{A} The Hon'ble court kindly be pleased to command the respondents not to take possession of the mor....
The obligations of ICICI Bank Ltd. towards its borrowers (customer) under the loan agreement secured by deed of hypothecation/mortgage have not been assigned by ICICI Bank Ltd. to the assignee bank, namely, Kotak Mahindra Bank Ltd. ... On the application filed by the petitioner in the OA, it was opined that since IARC Limited had not been substituted in the OA in place of the Central Bank of India, which had assigned the debt, the OA itself should be dismissed, while the same fate should not be for the counter-....
The petitioners could have mentioned that despite the availability of an alternative remedy, the writ petition is still maintainable under exceptional circumstances, but they have chosen not to do so. ... The respondent-bank, thereafter filed and application under section 13(4) of the SARFESI Act for getting the order under section 14 of the SARFESI Act. ... It is also not in dispute that the petitioners have an alternative remedy available to them under section 18 of the SARFESI Act ....
In the absence of respondent No.2 IBHFL being party to the transaction, complaint is not maintainable. ... In the Central Government Notification dated 19.09.2007, issued under Section 2(1)(m) of SARFESI Act, it is specified as Financial Institution for the purposes of the SARFESI Act. ... Respondent No.2 IBHFL being a secured creditor holds a prior first charge over the mortgage property and therefore, petitioners are not supposed to enter into any agreement or create any third party ....
For the sheer lack of reasons, the amounts awarded under the first two heads of claim cry out to be annulled.' It does not appear - at least it is not recorded in the award - that the contractor abandoned its claim for 108 days. In the circumstances, it has to be concluded that there are no reasons for the arbitrator's finding that 108 of the 492 days ought to be disregarded or, for that matter that any part of the claim was justified. The material referred to in support of the conclusion was primarily on the documents relied upon by the contractor and the oral evidence of ....
The respondent in collusion with her son, filed collusive suit. The respondent is not challenging the auction of the bank taken under the SARFESI Act against the borrower. On the other hand, it is the contention of the petitioner that suit itself is not maintainable in view of Section 34 of SARFESI Act. The contention of the petitioner that present suit is not maintainable is untenable. 3. The petitioner filed the present Civil Revision Petition to strike off the plaint in O.S.No.10 of 2014 on the file of the Subordinate Court, Kanchipuram on the ground that when ....
4. An additional written statement was also filed wherein it was pleaded that the disputed claim should have been made the subject matter of the suit within 12 calendar months from the date of disclaimer. As the same was not done, the claim is not maintainable and is deemed to be abandoned.
The learned Arbitrator also observed that Efcalon had not pressed its counterclaim. In effect, the learned Arbitrator held that by not pressing its counter-claim, Efcalon had abandoned its claim to an award of eviction.
Auction by the respondent bank in putting the said property on auction sale, cannot be said to be suffering from any legal errors. Auction is being held in respect of the property on “As is where is basis” and the petitioner who has consciously participated with his eye and ears open, should not be allowed to raise question mark over the exercise of auction sale undertaken after compliance of the relevant provisions of SARFESI Act. In any case, if the property in question was under mortgage with the respondent Bank, it is entitled under the provisions of SARFESI Act to realise its ....
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