The two-judge bench of the Telangana High Court, comprised of Justices P Naveen Rao and Nagesh Bheemapaka, dismissed two writ petitions filed by the State Bank of India (SBI) against the Securities and Exchange Board of India (Sebi). The panel dismissed the SBI’s allegation that it had priority over the market regulator in retrieving money from defaulters.
The case centres on two private companies, Midfield Industries and SVCL Pvt Limited, who received SBI loans in 2004 and 2006, respectively, and used their immovable properties as security. The SBI commenced collection proceedings under the Sarfaesi Act after the companies defaulted and the loans were termed non-performing assets (NPAs).
However, when the sub-registrar refused to register the property in the name of the victorious bidder due to Sebi prohibitory orders, the SBI filed an appeal. The bank contended that it should be given priority in the recovery process because it made the loan before Sebi’s 2020 prohibition order. The SBI further emphasised that the Sarfaesi Act and the Recovery of Debts Due to Banks and Financial Institutions (RDB) Act both featured a non-obstante clause, indicating that they took precedence over the Sebi Act.
Sebi said that the current case did not fit under the non-obstante provision. The entities committed the breaches considerably earlier, and notices were sent accordingly. The Sebi stated that the SBI could not make such a request at this time, and the prohibitory order was issued to protect the interests of millions of investors.
In a related case, Ramawath Swathi, the owner of the city’s Stylish Spa, was denied anticipatory bail by Justice K Lakshman. Swathi is suspected of operating a prostitution business disguised as a spa. The petitioner’s counsel stated that a bogus case had been made up and that the petitioner had all of the essential permits to operate the spa. The attorney also mentioned the availability of CCTV footage for review.
The Public Prosecutor retorted that the case concerned the trafficking of married women. The prosecution stated that the investigation was still ongoing and that granting bail would result in witness and evidence tampering if the petitioner was released.
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