New Delhi- In a significant ruling, the Delhi High Court has stated that Sections 3(1)(f) and (g) of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989, cannot be invoked to obstruct or prevent the exercise of a bank's legitimate mortgage rights or security interests.

In this case, Axis Bank had filed a petition against the National Commission for Scheduled Tribes (NCST), challenging the summons and investigation initiated by the commission. The High Court not only stayed the commission's proceedings but also quashed the orders requiring the bank's Managing Director (MD) and CEO to appear in person. Justice Sachin Datta's single bench delivered this verdict on October 16, which could set a precedent in preventing the misuse of the SC/ST Act in the banking sector.

The case stems from a long-standing loan dispute that began in 2013. Axis Bank had sanctioned a credit facility of Rs. 16.68 crore to Sundev Appliances Ltd. As security for the loan, the company's promoters created an equitable mortgage dated December 12, 2013, on a property located at Survey No. 32, Hissa No. 2, Vasai, Thane, Maharashtra (hereinafter referred to as the "subject property"). However, due to the borrower's failure to repay the loan, the bank declared the account a Non-Performing Asset (NPA) on October 28, 2017. Subsequently, the bank invoked Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) to enforce its security interest and take possession of the mortgaged property.

Under the SARFAESI Act, the Court of the District Magistrate, Palghar, in Securitization Application No. 15/2024 (filed by the bank under Section 14), permitted the bank to obtain physical possession of the subject property via an order dated January 19, 2024. In furtherance of this, the Tehsildar and Executive Magistrate, Vasai (Revenue Branch), issued a notice dated July 11, 2024, stating that possession of the subject property would be handed over to the bank between August 8 and 9, 2024.

Meanwhile, Respondent No. 2 claimed ownership of the property through an Agreement to Sell dated July 27, 2016, and filed Civil Suit No. 4/2025 before the Court of Civil Judge, Vasai, against the bank and others. The suit sought a permanent injunction restraining the bank from dealing with the subject property and a declaration that the attachment was illegal without prior permission from the landowners. The suit alleged that the bank accepted the property as security without due diligence into the borrowers' and mortgagors' ownership rights (Respondents Nos. 3 to 6). Notably, no interim order has been passed in this civil suit to date.

In addition to the civil suit, Respondent No. 2 filed a representation dated February 10, 2025, before the NCST under Sections 3(1)(f) and (g) of the Atrocities Act, alleging atrocities committed against him by the bank as a tribal individual. Upon receiving the complaint, the NCST issued a sitting notice dated July 18, scheduling a hearing for July 22, and requiring the bank's MD and CEO to appear "in person." However, the bank received this notice on July 25, three days after the scheduled hearing. Consequently, the NCST issued summons dated July 29, calling upon the MD and CEO to appear personally on August 18, failing which action would be taken under Order XVI Rule 12 of the Code of Civil Procedure, 1908 (CPC).

In response, the bank wrote a letter dated August 1, to the NCST seeking withdrawal or setting aside of the notice and summons. On August 18, 2025, the bank's representatives appeared before the NCST and submitted that: (i) a copy of the February 10, representation was not provided to the bank; (ii) the mortgage was validly created, and upon default, the bank was entitled to enforce its security rights under the SARFAESI Act; (iii) Respondent No. 2 had no locus standi, as he was neither the owner nor in possession of the subject property; and (iv) material facts, including the pendency of two civil suits, were suppressed in the representation, rendering the investigation wholly without jurisdiction.

Instead of addressing these submissions, the NCST, on August 18, directed the Collector and District Magistrate, Palghar, and the Superintendent of Police, Palghar, to submit a status report. Thereafter, the NCST passed an order dated September 22, directing an action report to be sent within 15 days and stating that no action should be taken by the bank regarding the auctioning of the subject property until complete clarity on the ownership rights of tribal persons is obtained. On October 6, fresh summons were issued against the bank's MD and CEO for a hearing scheduled on October 16. Contending that these actions were without jurisdiction and an abuse of process, the bank filed the present writ petition in the Delhi High Court, seeking to restrain the NCST from proceeding with the investigation, inquiry, or action based on the representation, and to quash the summons dated July 29, 2025, and October 6, the order dated September 22, and any incidental proceedings.

During the hearing on the petition, the High Court issued notices to the respondents through all permissible modes, returnable on the next date, and directed them to file replies within four weeks, with rejoinders, if any, within two weeks thereafter. However, on a prima facie basis, the court made crucial observations. Justice Datta remarked, "Prima facie, in the context of the facts of the present case, Sections 3(1)(f) and (g) of the Atrocities Act are not attracted inasmuch as the same cannot be invoked to preclude/prevent the exercise of mortgage right/security interest of the petitioner." The court further clarified that the proceedings before the NCST, particularly the summons requiring the MD and CEO to appear personally, were without jurisdiction.

The court added, "No rationale has been recorded for requiring senior officials of the petitioner to appear personally before the respondent no.1." Relying on a coordinate bench decision in State Bank of India and Anr. v. National Commission for Scheduled Castes and Anr. (order dated August 1, 2017, in W.P.(C) 3471/2013), which in turn referenced the Supreme Court's judgment in State of Uttar Pradesh and Ors. v. Jasvir Singh and Ors. (2011) 4 SCC 288, the High Court emphasized restraint in summoning senior officials. Quoting the Supreme Court, it noted: "The Supreme Court in several cases has deprecated the practice of Courts and other Tribunals to issue summons to senior officers without examining the necessity of requiring their presence... Requiring the presence of the senior officers of the Government in court should be as a last resort, in rare and exceptional cases, where such presence is absolutely necessary."

Accordingly, considering the Supreme Court's judgment and the factual matrix, the court granted an interim stay on the impugned proceedings and the summons dated July 29, and October 6, until the next date of hearing. The matter is listed for February 5, 2026. This decision provides immediate relief to Axis Bank and establishes a strong precedent against the potential misuse of the SC/ST Act in banking recovery processes. Experts believe it will help maintain a balance between the SARFAESI Act and constitutional rights. The final outcome will depend on the respondents' replies and rejoinders at the next hearing, but the prima facie observations strongly favor the bank.