STARTUP LEGAL2 Sept 2026
Indian Kanoon - Search engine for Indian Law
The Supreme Court is examining whether a bank can use the SARFAESI Act to recover a loan it bought from a non-banking finance company (NBFC) that was outside the Act when the loan was made. Kotak Mahindra Bank took over such a loan from City Financial and then used SARFAESI, but lower courts said no. Borrowers and banks should follow this.
Key Statutory Highlights
- Kotak Mahindra Bank took over a home loan account from City Financial Consumer Finance Limited, an NBFC, in 2012.
- The Debts Recovery Tribunal, Debts Recovery Appellate Tribunal, and Bombay High Court ruled that Kotak could not use the SARFAESI Act for this debt.
- The Supreme Court is now hearing Kotak's appeal against those decisions, and the case remains pending.
Actionable Advice for Taxpayers / Founders:If your loan has been sold by an NBFC to a bank, or you are a bank buying such loans, track this Supreme Court case and consult a lawyer before invoking SARFAESI.
Statutory Disclaimer: TaxQue Shorts are AI-assisted editorial briefs for compliance awareness. This brief has not passed every source check; confirm the original notification before acting. This does not constitute formal legal or CA counsel.
TaxQue News Desk
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