COURTS NOT TO STAY DUES OF BANKS, CREDITORS'
The Supreme Court (SC) in case of United bank of India vs. Satyawati said that the courts should not
normally pass stay orders in cases relating to recovery of dues of banks, financial institutions and secured creditors as they would have serious adverse impact on the financial health of such institutions which ultimately prove detrimental to the economy of the nation. "The high court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters," the court stated. In this case, the bank initiated against the guarantor of a debt when the borrower, Pawan Colour lab, defaulted in repayment of the loan. This action of the bank under the securitization and reconstruction of financial asset and enforcement of security interest act was challenged by the guarantor in the Allahabad high court. It stayed the recovery proceedings.
normally pass stay orders in cases relating to recovery of dues of banks, financial institutions and secured creditors as they would have serious adverse impact on the financial health of such institutions which ultimately prove detrimental to the economy of the nation. "The high court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters," the court stated. In this case, the bank initiated against the guarantor of a debt when the borrower, Pawan Colour lab, defaulted in repayment of the loan. This action of the bank under the securitization and reconstruction of financial asset and enforcement of security interest act was challenged by the guarantor in the Allahabad high court. It stayed the recovery proceedings.
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