SARFAESI Act - Assignment of Overdraft Facility – Compliance with RBI Master Directions – Validity of Assignment – The appellants argued that their overdraft facility account was not a “Stressed Loan” as it had not been declared as a Special Mention Account (SMA) under the RBI’s Master Directions – Court held: Continuous breach of the sanctioned overdraft limit for 35 days (SMA-1) and 83 days (SMA-2) justified the classification of the account as a “Stressed Loan” and its assignment to the ARC was valid – No violation of Master Directions by the bank [Paras 8.2, 10, 13].

Remedy under Section 17 of SARFAESI Act – Limited Scope – Applicability to ARC – The appellants contended that Section 17 of the SARFAESI Act would not provide them with an effective remedy, as it applies to "Secured Creditors" and not ARCs – Court held: The appellants had alternative remedies available under Section 17 once their account was declared a Non-Performing Asset (NPA) – The writ petition was correctly dismissed by the learned Single Judge [Paras 15-18].

Delay in Challenging the Assignment – Inaction of the Appellants – Despite being informed of the assignment on 2 April 2024, the appellants failed to take timely action – The appellants waited until September 2024 to file the writ petition, by which time the account had already been declared an NPA – Court found the appellants negligent and dismissed the appeal [Paras 25-27].

Decision – Appeal dismissed – The assignment of the overdraft account to the ARC was valid, and the appellants were negligent in challenging the assignment and failed to act in a timely manner – Appellants are directed to seek remedies under Section 17 of the SARFAESI Act [Para 27].

Land Revenue Law – Validity of Sale Deed – Ownership of Tribal Land – The petitioner challenged the orders of the revenue courts declaring his sale deed null and void under Section 170(B) of the MPLR Code on the grounds that the land originally belonged to an individual from a Scheduled Tribe – Held: The petitioner failed to provide evidence of the allotment of land to Pandri, who sold the land to him – The case is remanded to the Sub-Divisional Officer (SDO) to allow the petitioner to submit the allotment proceedings and prove ownership of Pandri, which was not placed before the revenue courts earlier – Orders of the revenue courts quashed and the matter remanded for fresh consideration [Paras 10-20].

Res Judicata – Civil Court Findings on Title – The petitioner argued that a prior civil court decision granting him permanent injunction would preclude the respondents from claiming the land under Section 170(B) of the MPLR Code – Held: The civil court’s findings on ownership, while granting an injunction, do not operate as res judicata because the appellate court refused to consider the petitioner’s amendment application seeking declaration of title due to jurisdictional limitations under Section 257 of the MPLR Code – The revenue court’s decision on title must be reconsidered without being influenced by the prior civil court's findings [Paras 12-18].

Opportunity to Prove Title – Allotment Proceedings – The court allowed the petitioner to present the allotment proceedings to prove that the land was lawfully acquired by Pandri, from whom the petitioner purchased the land – The SDO is directed to reopen the case and decide on the petitioner’s claim in light of these new documents [Paras 20-21].

Decision: The writ petition is allowed – The orders passed by the SDO, Collector, and Board of Revenue are quashed – The case is remanded to the SDO, Chhindwara for fresh adjudication with directions to consider the allotment proceedings to determine whether the land falls under Section 170(B) of the MPLR Code – Parties to appear before the SDO on 13/11/2024 – No order as to costs [Paras 19-23].

Negotiable Instruments – Dishonor of Cheque – Legally Enforceable Debt – The appellant filed a complaint under Section 138 of the NI Act against the respondent, alleging that the respondent issued a cheque of ₹1,00,000 as part of a settlement, which was dishonored – The trial Court acquitted the respondent, holding that the cheque amount was intended as a bribe to secure employment in the Punjab Police, and therefore did not represent a legally enforceable debt – Held: Payments made as bribes or for unlawful purposes do not constitute legally enforceable debts under Section 138 of the NI Act – The cheque, being issued for an illegal consideration, cannot give rise to criminal liability under the NI Act [Paras 6-8].

Admittance of Bribe – Consequences – The appellant admitted during cross-examination that the money was paid as a bribe – Since the cheque represented an illegal transaction, no offence under Section 138 of the NI Act was made out – The trial Court correctly acquitted the respondent based on this admission and the lack of a legally enforceable debt [Paras 4, 6-8].

Decision: Appeal dismissed – The findings of the trial Court are upheld, and the respondent’s acquittal is confirmed, as the cheque amount did not represent a lawful liability [Paras 8-9].

Family Law – Guardianship – Jurisdiction of Family Court – The appellant, Amit Dhansing Jagtap & Ors., challenged the jurisdiction of the Family Court, Navsari, which rejected their application under Exh.14 – The custody of minor Varad was disputed between the father and maternal grandparents after the death of the mother – Appellants claimed that Varad resided in Maharashtra, making Navsari Court incompetent – The court held that the issue of whether Navsari was the ordinary place of residence of the child needed further factual inquiry and could not be determined solely on past residence in Navsari – Order quashed and remanded to the Family Court for re-consideration [Paras 5-9].

Interpretation of "Ordinarily Resides" – The Family Court relied on the father's claim that Varad was forcibly taken to Pune by the maternal grandparents and that his past residence was at Navsari – Appellants argued that Varad had been residing in Maharashtra since his mother's death – The High Court emphasized that the term "ordinarily resides" under Section 9 of the Guardians & Wards Act must be determined based on a factual inquiry, considering both the child's welfare and actual place of residence before custody was contested [Paras 8.9-8.12].

Welfare of the Child – The court reiterated that the welfare of the child is paramount in custody disputes, and the factual situation, including the forced removal and current residence, should guide jurisdictional determinations – The case was sent back for the Family Court to decide the issue afresh, with the current custody arrangement (with maternal grandparents) remaining until further orders [Paras 8.12-9].

Decision: First Appeal No. 1268 of 2023 allowed – Order of Family Court quashed – Case remanded for fresh consideration of jurisdiction – First Appeal No. 4464 of 2023 not pressed by the respondent-father and dismissed accordingly – Family Court directed to expedite proceedings and decide within six months [Paras 9-10].

Specific Performance – Agreement of Sale – Dispute over sale agreement dated 05.01.1990 – The appellants/defendants claimed that the agreement was fabricated, while the respondent/plaintiff sought specific performance, asserting full payment of sale consideration – Held: The Trial Court’s decree for specific performance was upheld – The plaintiff proved the execution of the sale agreement and payment of the full consideration, while the defendants failed to disprove the validity of the agreement – The appeal was dismissed [Paras 1-20].

Burden of Proof – The plaintiff discharged his burden by proving the sale agreement through oral and documentary evidence, including witnesses and the scribe – The defendants did not produce sufficient evidence to counter the plaintiff’s claim, relying solely on the testimony of one defendant – Held: The plaintiff is entitled to specific performance, and the defendants must execute a registered sale deed [Paras 21-30].

Section 45, Indian Evidence Act – Handwriting Expert – The appellants sought to send the sale agreement to a handwriting expert – The petition was dismissed by the Trial Court and the dismissal was upheld by the High Court in a Civil Revision Petition – Held: The appellants’ renewed request for a handwriting expert during the appeal was dismissed as it was not maintainable [Paras 31-40].

Decision: Appeal dismissed – Trial Court’s decree and judgment upheld – Appellants directed to execute a registered sale deed within two months, failing which the plaintiff may take legal steps.

Contract Law – Breach of Compromise Agreement – Liquidated Damages Awarded – The plaintiff claimed recovery of ₹3.5 crore, asserting that the defendant breached an agreement by filing a criminal complaint despite receiving ₹3 crore as part of the settlement – Held: The defendant breached the contract by filing a police complaint, violating Clause 4 of the compromise agreement, which stipulated the return of ₹3 crore in case of any action against the plaintiff – Plaintiff entitled to liquidated damages of ₹3 crore, as the breach caused inconvenience and humiliation – The sum was found to be a genuine pre-estimate of damages [Paras 46-51].

Criminal Complaint Filed Despite Settlement – Consequences on Contractual Obligations – Defendant's filing of an FIR against the plaintiff, despite receiving settlement amounts, constituted a breach of the settlement agreement – The defendant failed to appear and provide legitimate justification for filing the complaint after accepting the settlement, reinforcing the breach of contract [Paras 43-45].

Liquidated Damages – Compensation under Section 74 of the Indian Contract Act – The return of ₹3 crore was upheld as liquidated damages under Section 74 of the Indian Contract Act, as the plaintiff faced mental agony and inconvenience due to the breach – Plaintiff awarded ₹3 crore with interest at 4% per annum from the date of filing the suit till the date of recovery [Paras 47-53].

Decision: The suit is decreed in favour of the plaintiff for a sum of ₹3 crore with interest at 4% per annum from the date of filing the suit till the date of payment – The claim for ₹50 lakhs is rejected – The defendant no.2 is not held liable under the agreement – Costs awarded to the plaintiff [Paras 52-57].

Customs Law – Refund of Special Additional Duty (SAD) – Interest on Delayed Refund – The petitioner sought interest at 6% per annum on the delayed refund of SAD under Section 27A of the Customs Act, 1962 – The refund application was filed on 04 August 2014, and despite multiple remands and delays, the refund was sanctioned only in 2024 – Held: The interest should be calculated from 04 August 2014, the date of the original refund application, and not from 08 August 2022, as contended by the respondent – The petitioner is entitled to interest at 6% per annum for the delay in refund [Paras 2-5, 18-23].

Section 27A of Customs Act – Interpretation – The court rejected the respondent's argument that the interest period should begin only from the petitioner's subsequent request for refund on 08 August 2022 – Held: Section 27A provides for interest on delayed refunds starting from three months after the receipt of the original refund application, not from a later follow-up application [Paras 28-34].

Decision: Petition allowed – The respondent was directed to pay Rs. 421,940 as interest on the delayed refund within two months, failing which interest at 8% per annum would apply – Costs of Rs. 15,000 were also awarded to the petitioner [Paras 40-45].

Fraud Classification – RBI Master Circular – Natural Justice – The petitioner company sought to quash PNB's action of declaring its account as 'fraud' without prior notice or hearing – The court held that the declaration of the petitioner's account as fraud, without following the principles of natural justice, violated RBI guidelines – Held: The petitioner was neither given a chance to respond nor was the fraud declaration substantiated through proper procedure, making the declaration invalid [Paras 18-21].

Suspension of Credit Facilities – Illegal Action – The court quashed SBI's letter suspending the petitioner's credit facilities based on PNB's fraud classification – It was held that since the fraud declaration itself was invalid, the consequent suspension of credit facilities by SBI could not stand – Held: The suspension of credit facilities was unlawful and must be reversed [Paras 19, 22].

Compensation for Damages – Costs Imposed – The court acknowledged the financial loss and reputational damage suffered by the petitioner due to PNB's wrongful action – As compensation, PNB was ordered to pay Rs. 5,00,000 to the petitioner, failing which an 18% per annum interest would apply from the date of filing the petition [Paras 23-24].

Decision: Petition allowed – The court directed PNB to remove the petitioner's account from the fraud list and notify RBI and SBI accordingly – SBI was instructed to restore the petitioner's credit facilities [Paras 22-24].

Fraud Classification – RBI Master Circular – Natural Justice – The petitioner company sought to quash PNB's action of declaring its account as 'fraud' without prior notice or hearing – The court held that the declaration of the petitioner's account as fraud, without following the principles of natural justice, violated RBI guidelines – Held: The petitioner was neither given a chance to respond nor was the fraud declaration substantiated through proper procedure, making the declaration invalid [Paras 18-21].

Suspension of Credit Facilities – Illegal Action – The court quashed SBI's letter suspending the petitioner's credit facilities based on PNB's fraud classification – It was held that since the fraud declaration itself was invalid, the consequent suspension of credit facilities by SBI could not stand – Held: The suspension of credit facilities was unlawful and must be reversed [Paras 19, 22].

Compensation for Damages – Costs Imposed – The court acknowledged the financial loss and reputational damage suffered by the petitioner due to PNB's wrongful action – As compensation, PNB was ordered to pay Rs. 5,00,000 to the petitioner, failing which an 18% per annum interest would apply from the date of filing the petition [Paras 23-24].

Decision: Petition allowed – The court directed PNB to remove the petitioner's account from the fraud list and notify RBI and SBI accordingly – SBI was instructed to restore the petitioner's credit facilities [Paras 22-24].