DRT Can Examine Legality of SARFAESI Action Against MSME Borrowers Under RBI Framework: Calcutta High Court
· Reported by LiveLaw
The Calcutta High Court held that the Debts Recovery Tribunal can decide whether a bank's SARFAESI action against an MSME borrower was legally valid in light of the RBI's framework for revival and rehabilitation of stressed MSMEs. It set aside orders dismissing two companies' writ petitions and sent the question back to the DRT, without finally ruling on whether the framework applied.
What this changes for a title check
Before treating a SARFAESI sale of an MSME borrower's mortgaged property as final, check whether the borrower ever raised a live claim that the bank skipped the RBI stress-resolution framework before issuing the Section 13(2) notice; that question now squarely belongs to the DRT, and an unresolved version of it is a live cloud on the sale, not something a writ court will have finally closed off.
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