Authority: Gauhati High Court (High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh)

Order Date: 23.06.2026

Case Overview

  • Parties: Petitioners – L. Sarat Kumar Singha and wife Sumita Devi (residents of Silchar, Cachar, Assam); Respondents – State of Assam and three others: SBFC Finance Limited (registered office in Mumbai), its Branch Manager in Ulubari, Guwahati, and the Branch Manager of State Bank of India, Silchar, Cachar.
  • Nature of Proceeding: Writ petition challenging the State Bank of India's refusal to allow petitioner No.1 access to his Savings/Salary Bank Account on the basis of a private arbitral award directing a lien on the account.
  • Background: The petitioners obtained a loan of ₹21,00,000 from SBFC Finance Limited, secured by a mortgage on a house. The loan defaulted, prompting SBFC Finance to invoke the SARFAESI Act and issue a Section 13(2) notice demanding ₹22,49,201 (principal plus interest). A possession notice of the mortgaged property was also served, and the property is currently in the possession of SBFC Finance.
  • Dispute Points: 1) Whether a creditor can enforce an arbitral award while SARFAESI proceedings are pending. 2) Whether freezing the petitioner’s salary/savings account is justified when the secured asset is already in the creditor’s possession and likely sufficient to satisfy the debt.
  • Arguments: Petitioners claimed the bank’s notice demanding ₹30,00,000 was served without due care. The bank contended it was an error later amended. Petitioners highlighted hardship caused by the account freeze.

Final Outcome

  • The Court held that SARFAESI proceedings and enforcement of an arbitral award are generally mutually exclusive; a creditor may pursue multiple remedies but must avoid unjust enrichment or recovery exceeding the due amount.
  • Freezing the petitioner’s salary/savings account was deemed excessive and disproportionate, especially since the secured property is already under the creditor’s control and its valuation is likely sufficient to cover the debt.
  • Order: The State Bank of India is directed to de‑freeze the salary/savings account of petitioner No.1, subject to the condition that the secured property remains available for sale by SBFC Finance Limited. The creditor retains the liberty to seek further recovery if, after the sale of the secured asset, any balance remains unpaid.
  • The writ petition is disposed of with the above directions.

Topics: Banking Regulation, SARFAESI Act