The Legality of SARFAESI Enforcement on Assigned Debts

Judgments Online

September 3, 2026
7:32 pm

These appeals addressed whether a bank defined under Section $2(1)(c)$ of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 can utilize its provisions to recover a debt assigned by a financial entity that was not governed by the SARFAESI Act when the debt was originally created. The Supreme Court ruled that when a live debt is acquired by a bank to which the SARFAESI Act already applies, the loan account immediately assumes the attributes of a secured debt under the statute, allowing the assignee bank to initiate recovery measures regardless of the original lender’s initial status.

Core Issue: Validity of invoking the SARFAESI Act for debts taken over from Non-Banking Financial Companies (NBFCs) that were unnotified at the time of loan inception.
Precedent Application: Building on D. Frozen Foods and Indiabulls, the Court confirmed that statutory provisions apply to all live and owing debts once held by an eligible institution.
Economic Objective: The framework designed to reduce non-performing assets and maintain financial liquidity overrides borrowers’ attempts to evade repayment obligations through time-consuming civil processes.
Disposal of Appeals: Civil Appeal No. 8531 of 2015 was allowed, restoring the Mehtas’ securitisation application subject to a financial deposit, while the other connected appeals were dismissed.

2026 INSC 943

Kotak Mahindra Bank Limited v. Trupti Sanjay Mehta and others (D.O.J.02.09.2026)

2026 INSC 943 click here to view full text of judgment

Custom Duty: Setting Aside Adjudications Polluted by AI Hallucinations

September 3, 2026 No Comments

This appeal challenged a Gujarat High Court order which had upheld a massive customs penalty imposed on the appellant for allegedly mis-declaring natural diamonds as lab-grown diamonds. The Supreme Court set aside both the High Court order and the original adjudication order, ruling that the reliance by the customs authority on non-existent, fake, or AI-hallucinated case laws and citations vitiated the entire decision-making process, as artificial intelligence can only serve as an assistive tool and never substitute genuine judicial adjudication.

AI-Generated Fabrications: Verification revealed that several judgments and articles cited by the adjudicating authority in the Order-in-Original were either completely non-existent, carried fake citations, or suffered from AI hallucinations that misstated legal ratios.
Zero-Tolerance Standard: Citing Pooja Ramesh Singh v. Jammu & Kashmir Bank Ltd., the Court reiterated a zero-tolerance policy for presenting, citing, or relying on fake or unverified AI-generated precedents, declaring any decision tainted by such material to be void.
Role of Technology: While acknowledging that AI can be a useful assistive tool or “training wheels” to speed up workflows, the Court sternly cautioned that it can never take the “pilot’s seat” in the adjudicatory process.
Final Disposition: The Supreme Court allowed the appeal, quashed the impugned High Court order and the Order-in-Original, and remanded the matter back for a fresh decision to be rendered by a different officer of the same rank, leaving it to the authorities to take appropriate action against the original author.

2026 INSC 947

Vijay Ghanshyam Gadiya v. Union of India & Anr (D.O.J.2.9.2026)

2026 INSC 947 click here to view full text of judgment

Acquittal in a Brutal Child Murder Case Due to Fatal Gaps in Evidence

September 3, 2026 No Comments

This appeal challenged the concurrent judgments of the High Court and Trial Court which convicted the appellant under Sections 302, 201, and 377 of the Indian Penal Code based on circumstantial evidence, a “last seen” theory, an extra-judicial confession, and subsequent disclosures. The Supreme Court set aside the conviction, ruling that the prosecution failed to establish a complete and unbroken chain of circumstances connecting the accused to the crime, burdened as the case was by major discrepancies, fabricated timelines, and an unreliable extra-judicial confession.

Flawed Circumstantial Chain: The prosecution failed to conclusively prove the “last seen” theory, as primary witnesses did not support it in their examination-in-chief, and vital evidence like a generic snack packet lacked any connection to the appellant.
Inadmissible and Unreliable Confession: The alleged extra-judicial confession made to a village Sarpanch closely tied to the police was found to be highly improbable and uncorroborated, serving as a weak piece of evidence that could not form the sole basis for conviction.
Contradictory Timelines: Material contradictions—such as witnesses testifying that the police already had the accused in custody on March 12, 2007—completely demolished the official narrative of an extra-judicial confession and disclosure statement recorded days later on March 14, 2007.
Absence of Forensic Matching: Although semen was found on the appellant’s underwear and the victim’s rectal swab, no DNA profiling was conducted to link the two, and courts improperly shifted the burden of proof onto the accused.
Final Disposition: The Supreme Court allowed the appeal by extending the benefit of the doubt to the appellant, setting aside the lower court judgments, and reaffirming his immediate release after over 16 years of incarceration

2026 INSC 945

Sahab Singh alias Sat Pal v. State of Haryana (D.O.J.02.09.2026)

2026 INSC 945 click here to view full text of judgment

The Impermissibility of Revoking Decades-Old Land Survey Records

September 3, 2026 No Comments

This appeal evaluated whether the revisional authority under Section 56 of the Karnataka Land Revenue Act, 1964 can initiate proceedings to cancel city survey numbers decades after their allotment. The Supreme Court held that the revisional jurisdiction exercised after 35 years was patently time-barred under the three-year limitation period stipulated in the proviso to Section 56(3) of the Act, and that authorities cannot bypass statutory limitations or upend settled third-party rights on the strength of stale complaints.

Core Issue: The legality of exercising suo motu or revisionary power well beyond the statutory limitation period prescribed under the Karnataka Land Revenue Act, 1964.
Statutory Limitation: The proviso to Section 56(3) explicitly mandates that revisional power against an unappealed order must be exercised within three years from the date of the order.
Creation of Third-Party Rights: Long-standing recognition of property as private land, subsequent municipal approvals, building construction, and occupancy clearances prevent authorities from reopening settled matters after decades.
Final Disposition: The Supreme Court allowed the appeals, set aside the conflicting judgment of the Division Bench and the subsequent review order, and quashed the impugned notice dated April 26, 2014, as it pertained to the appellants’ land.

2026 INSC 944

M.R.R. Setty (Dead), by LRs v. Government of Karnataka and others (D.O.J.02.09.2026)

2026 INSC 944 click here to view full text of judgment