In a significant ruling, the Delhi High Court has held that provisions of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 (SC/ST Act) cannot be invoked to obstruct banks from exercising their lawful rights over mortgaged properties in cases of loan default.
The order, passed by Justice Sachin Datta on October 16, 2025, came in response to a petition filed by Axis Bank Limited challenging proceedings against it initiated by the National Commission for Scheduled Tribes (NCST). The court stayed the NCST’s summons requiring Axis Bank’s Managing Director and Chief Executive Officer to appear personally, deeming the proceedings without jurisdiction. The matter is slated for further hearing on February 5, 2026.
The dispute traces back to 2013, when Axis Bank extended a credit facility of Rs 16.69 crore to Sundev Appliances Ltd. The loan was secured by a mortgage on a property in Vasai, Maharashtra. After the borrower defaulted on repaying the loan, the account was classified as a non-performing asset (NPA) in 2017. The bank then proceeded under 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.
The Court of District Magistrate in Palghar permitted the Bank to obtain physical possession of the subject property, and a notification was issued in July 2024 informing that the mortgaged property will be handed over to the Bank in August that year.
However, much after the Bank completed all the formalities to take over the property for the defaulted loan, the company approached the courts claiming that the attachment of the subject property without prior permission of the landowners is illegal. It emerged that a civil dispute over the property’s ownership is going on, and one of the involved parties, allegedly from the ST community, claimed that the bank’s action violated the SC/ST act.
This party, who was not party to the loan agreement, approached the National Commission for Scheduled Tribes, accusing the bank of violating Sections 3(1)(f) and 3(1)(g) of the SC/ST Act, which penalise wrongful occupation or cultivation of land belonging to SC/ST members and wrongful dispossession from such land or premises. Based on the complaint, the NCST initiated proceedings and summoned the bank’s the Managing Director (MD) and CEO, asking them to appear in person.
In response, Axis bank wrote to the commission with complete details of the case, asking it to withdraw the summons. The bank clarified that the mortgage was legally created and bank has right to seize if after default of the loan. However, instead of taking cognizance of these facts, the commission directed the Palghar district administration and the Superintendent of Police to submit a status report on the matter.
The commission also directed the bank not to auction the property until the ownership rights of the tribal persons are clarified. After that, Axis Bank contested this action in the Delhi High Court, arguing that the SC/ST Act was being misused to impede its legitimate recovery efforts.
In his order, Justice Datta observed prima facie that the invoked sections of the SC/ST Act “are not attracted inasmuch the same cannot be invoked to preclude/ prevent the exercise of mortgage right/security interest of the petitioner”. The court also stated that the NCST has no jurisdiction to summon senior bank officials to appear before it in person, and that no rational was given for the summons.
Accordingly, the Delhi High Court stayed the NCST proceedings against Axis Bank.
