Back
Supreme Court of India
THE HONOURABLE MR. JUSTICE ALTAMAS KABIR & THE HONOURABLE MR. JUSTICE CYRIAC JOSEPH
Authorized Officer, Indian Overseas Bank & Another
Versus
M/s. Ashok Saw Mill
CIVIL APPEAL NO. 4429 OF 2009 (Arising out of S.L.P.(C)No.27399 of 2008) With CIVIL APPEAL NO. 4433 of 2009 (Arising out of S.L.P.(C)No.3020 of 2009)
Date of Judgment : 16-07-2009
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002-Section 17 - Appeal-Maintainability-Appeal preferred by appellants themselves-Having invoked jurisdiction of Appellate Court, appellants cannot take a contrary view and urge that such appeal was not maintainable having been filed against an order passed in a review petition-Appeal dismissed. (Paras 25)
(2008)1 SCC 125 ; 2008(4) MLJ 1012; (2007)5 MLJ 98E; 2008(2) LW 381-Referred to.
Certainly. Based on the provided legal document, here are the key points:
The Supreme Court clarified that the jurisdiction of the Debts Recovery Tribunal (DRT) extends to post-13(4) events, including the authority to scrutinize and set aside actions taken by secured creditors under Section 13(4) of the SARFAESI Act, and to restore possession or management of the secured assets to the borrower when appropriate (!) (!) (!) (!) (!) (!) (!) (!) (!) .
The Court emphasized that actions initiated under Section 13(4), such as taking possession or transferring assets, are subject to judicial review and can be challenged before the DRT, which has the power to declare such actions invalid and restore the status quo ante if found inconsistent with the provisions of the SARFAESI Act (!) (!) (!) (!) (!) (!) (!) .
The amendments to Sections 13 and 17 of the SARFAESI Act have reinforced the Tribunal's jurisdiction to examine and adjudicate on post-13(4) measures, including the sale or transfer of assets, and to provide relief to borrowers by restoring possession or management when necessary (!) (!) (!) (!) .
The Act provides safeguards for borrowers, allowing them to approach the DRT within a specified period (generally 45 days) to challenge measures taken under Section 13(4). The DRT is empowered to review such actions and, if warranted, declare them invalid and restore the borrower’s rights (!) (!) (!) (!) .
The Court rejected the argument that actions taken under Section 13(4) are immune from challenge or that the Tribunal's jurisdiction is limited solely to the stage before possession is taken. It affirmed that the Tribunal's authority encompasses subsequent steps, including sale and transfer of assets (!) (!) (!) .
The Court also noted that the provisions of the SARFAESI Act, especially after amendments, override general law, including the law of limitation, meaning that actions under Section 13(4) are not strictly governed by limitation periods (!) (!) .
The appeal process under Section 17 is a statutory right, and the Tribunal’s jurisdiction to entertain appeals is broad enough to include challenges to post-13(4) actions, including sale notices and transfer of assets, ensuring effective oversight of secured creditor actions (!) (!) (!) .
The Court dismissed the contention that appeals against orders passed in review petitions are not maintainable, holding that once the parties invoke the appellate jurisdiction, they cannot later challenge its validity on procedural grounds (!) .
Overall, the judgment underscores the comprehensive authority of the DRT to scrutinize, review, and, if necessary, set aside actions by secured creditors under the SARFAESI Act, thus protecting the rights of borrowers and ensuring compliance with statutory procedures (!) (!) (!) .
Please let me know if you need a more detailed analysis or specific legal advice regarding this case.
Judgment:-
Altamas Kabir, J.
1. Leave granted in both the Special leave petitions.
2. The respondent firm and its sister concern, M/s. Ashok Woodworks, which is also a partnership firm, availed of various loans from the appellant Bank which were secured by movable and immovable assets. The loanee firms having defaulted in repayment of the loans and since their accounts became Non Performing Assets (hereinafter referred to as `NPA), the Bank initiated action against them under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as `the SARFAESI Act) and issued separate demand notices to the respondent partnership firm and its sister concern under Section 13(2) thereof on 17th September, 2002, and 21st September, 2002, for the recovery of Rs.1,56,47,638/and Rs.1,40,18,468.36, respectively.
3. As the respondent and its sister concern did not respond to the said demand notices, the appellant Bank invoked Section 13(4) of the above Act and took possession of the secured assets on 4th December, 2002. The said action of the Bank, as also the vires of the SARFAESI Act, were challenged by the respondent partnership firm and its sister concern by way of two separate writ petitions, being Writ Petition Nos.46328 and 46329 of 2002, in which an interim stay of all further proceedings under the said Act was granted on 27th December, 2002. The said writ petitions were ultimately heard and dismissed by a common order on 23rd April, 2004, with liberty to the respondent firm to approach the Debts Recovery Tribunal (hereinafter referred to as `the DRT), within 30 days. Since, despite such liberty, the respondent firm did not approach the DRT, the Bank took a decision to sell the secured assets of the respondent firm. At that stage, negotiations were held between the parties for a One-Time Settlement, which also failed, causing the Bank to issue a sale notice dated 26th July, 2007, inviting sealed tenders for the sale of the secured assets of the firm. The same was challenged by the respondent firm on 18th August, 2007, in Writ Petition No.27472 of 2007 on the ground that it was unable to move the DRT in view of the expiry of the period of limitation prescribed under the Act. After hearing the parties, the High Court refused to grant any interim relief and posted the writ petition for final disposal.
4. During the pendency of the said writ petition, the respondent firm, along with M/s. Ashok Woodworks, filed SARFAESI Application No.74 of 2007 before the Debts Recovery Tribunal at Madurai for setting aside the sale notice dated 26th July, 2007, on the selfsame cause of action. Despite being informed of the pendency of the writ petition for the selfsame reliefs, the said Tribunal by its order dated 7th September, 2007, directed the Bank to defer the proposed sale which was scheduled to be held on 7th September, 2007. The appellant Bank thereupon filed Civil Writ Petition No.1392 of 2007 before the Madurai Bench of the Madras High Court challenging the filing of S.A. No.74 of 2007. The same was admitted and all proceedings in S.A. No.74 of 2007 were stayed. The said writ petition came up for hearing before the High Court on 18th September, 2007, and was disposed of in the absence of the counsel for the Bank with liberty to the respondent firm to move the Debts Recovery Tribunal at Madurai. The appellant Bank filed Review Petition No.165 of 2007, praying for recall of the order dated 18th September, 2007, by which the writ petition had been disposed of in its absence. On 6th October, 2007, the appellant Bank was permitted to open the sealed tenders which it had received pursuant to the sale notice dated 26th July, 2007, subject to the condition that the sale effected would be subject to the confirmation of the Court. Pursuant to the said order, the sealed tenders were opened on 8th October, 2007, and 3 of the 5 properties were sold and the same was recorded
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
