The Delhi High Court recently addressed the intersection of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 (SC/ST Act) and the enforcement of security interests under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). In a case involving Axis Bank's efforts to recover a loan from Sundev Appliances Ltd., the Court ruled that the provisions of the SC/ST Act could not be invoked to prevent the bank from enforcing its mortgage rights.
The dispute originated from a credit facility of ₹16.68 crore sanctioned by Axis Bank to Sundev Appliances Ltd. in 2013. The loan was secured by an equitable mortgage on a property located in Vasai, Thane, Maharashtra. Following the borrower's default, the account was classified as a non-performing asset in 2017. Subsequently, the bank invoked its rights under the SARFAESI Act to enforce the security interest and obtained an order from the District Magistrate of Palghar in January 2024 to take physical possession of the mortgaged property.
During the recovery process, a party claiming ownership of the property filed a civil suit in Vasai in 2025, seeking to restrain Axis Bank from dealing with the property. The civil court did not grant any interim relief. Following this, the same party approached the National Commission for Scheduled Tribes (NCST), alleging that the bank's actions amounted to atrocities against a tribal person under the SC/ST Act. The NCST issued multiple summons to Axis Bank's Managing Director and CEO, directing them to appear in person.
Axis Bank challenged these summons, contending that the NCST had no authority to interfere in a commercial recovery dispute governed by the SARFAESI Act. The bank further argued that the complainant was neither the owner nor in possession of the property, and that the issue of ownership was already pending before a civil court.
Justice Sachin Datta, while staying the summons issued by the NCST, observed that, prima facie, the provisions of the SC/ST Act were not attracted in this case. He noted that Sections 3(1)(f) and (g) of the Atrocities Act, which pertain to preventing the exercise of mortgage rights, could not be invoked to preclude or prevent the enforcement of the bank's security interest.
This ruling underscores the judiciary's stance on upholding the enforcement of security interests under the SARFAESI Act, even when allegations under the SC/ST Act are raised. It clarifies that the provisions of the SC/ST Act cannot be used to obstruct the legitimate actions of banks in recovering dues secured by mortgage.
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