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Bank of Baroda vs Parasaadilal Tursiram Sheetgrah Pvt. Ltd.

Civil Appeal · 2022 INSC 819Decided 11 Aug 2022
Civil Appeal No. 5240 of 2022

Background

After the respondent company defaulted on its loan, Bank of Baroda took possession of the mortgaged property under the SARFAESI Act and sold it to an auction purchaser. The company's challenge to the sale certificate was dismissed by the Debt Recovery Tribunal (DRT) as time-barred, but on review the DRT recalled that order on the ground that a deceased director's legal heirs had not been given notice before the auction: a review the Debt Recovery Appellate Tribunal (DRAT) later set aside, finding no error apparent on the record to justify reopening the case. The company then challenged the DRAT's order in the Allahabad High Court, which granted an interim stay reviving the company's case, prompting the Bank to appeal to the Supreme Court (whose own stay of that interim order had already been in force for about five years while the appeal was pending).

Decision Breakdown

The Supreme Court held that the High Court was not justified in staying the DRAT's order, since the DRAT had already found, after detailed consideration, that there was no error apparent on the face of the record to warrant the DRT reopening its earlier decision via review. The Court noted the object of the 45-day limitation period under Section 17 of the SARFAESI Act is quick enforcement of security interests, and it was unfortunate that a decade had passed without finality even though third-party rights (the auction purchaser's) had already been created. It allowed the Bank's appeal, set aside the High Court's interim stay order, and directed the High Court to dispose of the underlying writ petition itself expeditiously (preferably within three months), expressly not commenting on the merits of that writ petition.

Lesson Learnt

Interim relief that effectively revives a claim already rejected on a considered finding (here, that a review was wrongly allowed) should not be granted lightly, especially in SARFAESI recovery proceedings, where the law prizes speed and finality once third-party rights have been created through an auction sale.

Official source (sci.gov.in)View Judgment (PDF)

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