ALTAMAS KABIR, CYRIAC JOSEPH
Authorized Officer, Indian Overseas Bank – Appellant
Versus
Ashok saw Mill – Respondent
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 (!) (!) (!) .
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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 resp
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