SC/ST act cannot hinder bank mortgage rights: Delhi HC

The Delhi High Court has held that the provisions of the Scheduled Castes and Scheduled Tribes Act (SC/ST Act) relating to wrongful occupation or dispossession of land belonging to SC/ST members cannot be invoked to prevent a bank from exercising its lawful mortgage rights.

Justice Sachin Datta made the observation while staying proceedings initiated by the National Commission for Scheduled Tribes against Axis Bank, its Managing Director (MD), and Chief Executive Officer (CEO). The order was passed on October 16.

“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 the same cannot be invoked to preclude or prevent the exercise of mortgage right or security interest of the petitioner,” the court stated in its order.

The proceedings were initiated after a representation was made alleging violation of Sections 3(1)(f) and 3(1)(g) of the SC/ST Act. Section 3(1)(f) penalises wrongful occupation or cultivation of land belonging to SC/ST members, while Section 3(1)(g) relates to wrongful dispossession of land or premises belonging to members of these communities. Following the representation, the Commission had directed Axis Bank’s MD and CEO to appear in person.

The dispute arose from a credit facility of Rs 16.69 crore sanctioned by Axis Bank to Sundev Appliances Ltd in 2013, secured by a mortgaged property in Vasai, Maharashtra. After the borrower defaulted, the account was declared a non-performing asset in 2017, leading the bank to invoke its legal rights over the mortgaged property. A civil dispute subsequently emerged over ownership of the property, after which one of the parties approached the National Commission for Scheduled Tribes.

The Delhi High Court stayed the Commission’s order, noting that the proceedings were without jurisdiction. The judge observed that no rationale had been provided for requiring senior bank officials to appear personally before the Commission. The court further posted the matter for further hearing on February 5, 2026.

This ruling clarifies that while the SC/ST Act protects members of Scheduled Castes and Scheduled Tribes from wrongful occupation and dispossession, it cannot be used to obstruct banks from exercising lawful rights under mortgage or security agreements.