The Supreme Court recently took a strong stand against the Karnataka High Court for interfering in the proceedings of the SARFAESI Act without giving proper reasons. The apex court was hearing a special leave petition filed by LIC Housing Finance Ltd challenging the interim relief granted to a defaulting borrower - Nagesan & Co.
A bench of Justices Dipankar Datta and Augustine George Masih expressed concern over the stay of SARFAESI proceedings by the High Courts even after repeated warnings.
The bench remarked, "Some High Courts grant interim relief on mere request, without recording proper and sufficient reasons… thereby causing great damage to the institutional credibility."
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Background of the case
The secured lender, LIC Housing Finance Ltd, had issued two demand notices on August 5, 2021, claiming ₹41 crore and ₹31 crore respectively from Nagesan & Co under Section 13(2) of the SARFAESI Act.
Despite this, the Karnataka High Court passed an interim order on September 29, 2021, restraining LIC from taking any further steps under Section 13 of the Act, provided the borrower deposits ₹5 crore in two instalments.
The High Court issued this relief without assigning any reason, which also raised concerns in the Supreme Court.
"The High Court has interfered on the basis of a claim of Rs 41 crore and Rs 31 crore, without assigning any reason," the High Court said.
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On September 23, 2022, the High Court continued the interim relief even though the borrower had delayed the payment. The apex court said that more than 30 months have elapsed, yet the final hearing on the writ petition has not taken place.
The bench said, "We are shocked that the matter is pending for such a long time… and irrational interim orders are also being passed."
Refraining from commenting on the merits of the writ petition, the court urged the high court to give priority to the matter and dispose it off by September 2025. The roster bench was directed to hear it without being influenced by the observations of the apex court.
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Further, the court issued notice on the application for condonation of delay and the special leave petition filed by LIC Housing Finance Limited, which is due to be answered by October 10, 2025.
Hearing Date: July 15, 2025
Case details:
Case Title: LIC Housing Finance Limited vs Nagesan & Co. & Ors.
Case Number: Special Leave Petition (Civil) Diary No. 7979/2025