Why did the Supreme Court make these observations on banks and SBI?
The company had availed a loan of Rs 8.09 crore from SBI in 2019.
What did the Supreme Court say?
Further, it observed that after approaching the DRT, the company ought to have pursued the statutory remedy available there instead of attempting to simultaneously seek relief before the Supreme Court.
Court observed that the fact that the borrower defaulted from the very first instalment indicated negligence on the part of SBI officials while sanctioning such a large loan.
The Supreme Court recently observed that banks, including the State Bank of India (SBI), often adopt a casual approach while sanctioning large loans to big borrowers but impose far stricter and more cumbersome conditions on ordinary people seeking small personal loans, which, in some cases, may amount to borderline harassment.
A Bench of Justices Ahsanuddin Amanullah and R Mahadevan, however, clarified that it was not advocating any dilution of lending norms.
It said framing eligibility criteria is best left to the Reserve Bank of India and the banks, but the process of granting loans and recovering them can certainly be made simpler, fairer and less burdensome for applicants.
Court also observed that policies relating to concessions and incentives should be suitably graded to ensure the maximum benefit reaches those at the lowest social and financial strata.
Why did the Supreme Court make these observations on banks and SBI?
The observations came while the Court was hearing an appeal filed by M/s Bhaskar International Private Limited and others against a January 16, 2025 order of the Punjab and Haryana High Court.
The high court had allowed SBI's writ petition and directed that physical possession of the mortgaged property be taken in accordance with law, preferably within two months.
The company had availed a loan of Rs 8.09 crore from SBI in 2019. However, after failing to pay even the first instalment, its loan account was declared a non-performing asset (NPA) on July 29, 2019, around five to six months after the loan was sanctioned.
SBI thereafter initiated proceedings under Section 14 of the SARFAESI Act to take possession of the secured properties. The District Magistrate, Yamuna Nagar, allowed the application on May 29, 2024. SBI then approached the high court, which passed the impugned order directing possession.
What did the company argue?
The company contended that declaring its account an NPA within five to six months was arbitrary and contrary to SBI's own policy. It also submitted that it had offered to repay the entire principal amount, but the bank had not acted on the proposal.
It further argued that it was capable of restarting its operations and that with some assistance from SBI and the court, the unit could become viable, benefiting the country's economy. According to the company, its proposal to repay the principal amount had still not been finally considered, making SBI's move to take possession premature and arbitrary.
SBI, on the other hand, argued that the company had failed to pay even a single instalment despite taking the loan on commercial terms. It also pointed out that the company had already challenged the District Magistrate's order before the Debts Recovery Tribunal (DRT), Chandigarh, through a securitisation application, where its request for interim relief remained pending.
What did the Supreme Court say?
The Bench found the petitioners' conduct wanting on several counts.
It noted that the company defaulted on the very first instalment of a loan worth Rs 8.09 crore and had not repaid "even a single farthing" thereafter.
Court also found the company's offer to repay only the principal amount, made nearly six years after availing the loan, to be "too little too late."
Further, it observed that after approaching the DRT, the company ought to have pursued the statutory remedy available there instead of attempting to simultaneously seek relief before the Supreme Court.
At the same time, the Bench said it could not ignore SBI's conduct either.
Court observed that the fact that the borrower defaulted from the very first instalment indicated negligence on the part of SBI officials while sanctioning such a large loan.
"Tentatively, this is a clear indicator that a proper assessment was not made of the capacity of the borrower(s)-petitioners to repay the loan by the concerned officials of SBI," the Bench said.
Recording its displeasure, Court said the manner in which banks, including SBI, function in such cases required serious scrutiny and observed that appropriate directions against such practices could be issued in a more suitable case.
However, Court declined to interfere with the high court's order.
It permitted the petitioners to pursue their prayer for interim relief before the DRT, if they had not already done so, and directed the parties to maintain status quo for two weeks, till June 2, 2026.
The Bench expressed the expectation that SBI would not precipitate the matter during this period and clarified that its order would neither assist the petitioners on merits nor prejudice SBI's case before the DRT, the Debts Recovery Appellate Tribunal or any other forum.
Case Title: M/s Bhaskar International Private Limited & Ors Vs State Bank of India & Ors
Bench: Justices Ahsanuddin Amanullah and R Mahadevan
Date of Judgment: May 19, 2026
