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Recovery of debt by HFCs and initiation of SARFAESI action in case of a decided civil suit: Two significant rulings by High Courts

-Shrestha Banerjee & Archisman Bhattacharjee I finserv@vinodkothari.com

Introduction

The High Courts of Madhya Pradesh and Kerala recently rendered two judgments delving into crucial legal inquiries surrounding the recoverability and enforcement of security interests in instances of borrower default via initiation of SARFAESI proceedings by financial institutions.

The Madhya Pradesh High Court’s ruling specifically addresses the recoverability of Housing Finance Companies (HFCs) in relation to the initiation of SARFAESI actions following borrower default. Conversely, the Kerala High Court’s judgement examines the enforcement of security interests through SARFAESI actions, where the same has been initiated without placing consideration on any judgement delivered by the civil courts concerning such recovery.

In this article, we aim to analyse both judgments, shedding light on their implications and legal interpretations.

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Summary of Important Supreme Court Judgements on IBC

Team Resolution | resolution@vinodkothari.com

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