Aretha Legal is pleased to secure a favourable interim order before the Debts Recovery Tribunal–I, Delhi in favour of HDFC bank Ltd., resulting in rejection of an application seeking restraint of ongoing recovery proceedings and a scheduled auction of the mortgaged property.

The matter involved an important issue concerning the rights of a secured creditor vis-à-vis claims raised by a third party challenging the validity of a prior sale transaction. The appellant sought to contend that since a substantial portion of the sale consideration allegedly remained unpaid, the registered sale deed itself was liable to be treated as invalid, thereby rendering the subsequent mortgage in favour of the Bank unenforceable.

The Hon’ble Tribunal, while considering the rival submissions and relying upon the principles laid down by the Hon’ble Supreme Court in Dahiben v. Arvind Bhai Kalyanji Bhanusali, observed that allegations of non-payment of consideration, by themselves, do not invalidate a registered sale deed at an interim stage. The Tribunal further found no prima facie illegality in the recovery process and declined to interfere with the enforcement proceedings undertaken by the Bank.

HDFC bank ltd. was represented by Ronnie S. Brara, Principal Associate, assisted by RISHI GUPTA, Senior Associate, on behalf of Aretha Legal.

This order reiterates an important principle in recovery jurisprudence: private disputes and collateral claims, absent any legal restraint, cannot be permitted to obstruct the enforcement rights of secured creditors.