Rajiv Sahai Endlaw, J.

1. The question falling for adjudication in the present petition is, whether after the enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, the Small Industries Development Bank of India (SIDBI) constituted under the Small Industries Development Bank of India Act, 1989 is, in case of default of repayment of loan, precluded from proceeding under Section 38 of the SIDBI Act and is required to necessarily proceed under the SARFAESI Act only.

2. It is not in dispute that the Petitioner had availed of loan / financial assistance from the Respondent SIDBI and the Respondent SIDBI on 7th December, 2009 recalled the loan and called upon the Petitioner to pay the amount of ` 3,41,67,167/- then claimed to be due; it is also not in dispute that the Respondent SIDBI vide its notice dated 24th May, 2010 impugned in this petition invoked the provisions of Section 38 of the SIDBI Act. The said Section 38 of the SIDBI Act empowers SIDBI to take over the management or possession or both of an industrial concern in the small-scale sector which is in default of a liability to SIDBI under an agreement of repayment of loan or advance; the same also authorizes SIDBI to transfer by way of lease or sale and realise the property pledged / mortgaged to SIDBI. This writ petition was filed seeking to restrain the Respondent SIDBI from forcibly taking over possession of the assets of the Petitioner under the said provision.

3. The writ petition came up before this Court first on 3rd June, 2010 when after some arguments, the matter was adjourned to 7th June, 2010. Even though the writ petition was accompanied with an application for interim relief to restrain the Respondent SIDBI from taking over possession of the assets of the Petitioner but no interim relief was granted to the Petitioner. On 7th June, 2010, it was informed to this Court that the Respondent SIDBI had on 3rd June, 2010 itself taken over possession of the factory premises of the Petitioner at Rudrapur. In the circumstances, while adjourning the matter, it was directed that till the next date, the Respondent SIDBI shall not proceed any further in the matter in pursuance to the notice dated 24th May, 2010. The said order has continued in force. The Respondent SIDBI has filed a short affidavit.

4. The contention of the senior counsel for the Petitioner is:

(i) that Section 38 of the SIDBI Act is more onerous and draconian than the procedure prescribed under Section 13 of the SARFAESI Act, also for realising the security interest by taking over possession of the secured assets of the borrower and transfer thereof by way of lease, assignment or sale.

(ii) it is contended that while under the SARFAESI Act as interpreted in Mardia Chemicals Ltd. v. Union of India (2004) 4 SCC 311, Misons Leather Ltd. v. Canara Bank, Raghunath Rai Bareja v. Punjab National Bank (2007) 2 SCC 230, Naresh Kumar Mittal v. State Bank of India 161 (2009) DLT 452, Authorized Officer, Indian Overseas Bank v. Ashok Saw Mill (2009) 8 SCC 366, T. Bhuvanendran v. LIC Housing Finance Ltd. AIR 2010 Ker 15 and Kohinoor Creations v. Syndicate Bank 121 (2005) DLT 241 (DB), the debtor has an opportunity of showing cause and a right of hearing (under Sections 13(2) & 13(3A) of the SARFAESI Act) and right of appeal to the Debt Recovery Tribunal (under Section 17 of the SARFAESI Act), there is no such remedy available to the debtor under the SIDBI Act.

(iii) that the proceedings under the SIDBI Act are thus in derogation of the proceedings under the SARFAESI Act.

(iv) the provisions of the SARFAESI Act, by virtue of Section 35 thereof have an overriding effect over the SIDBI Act particularly since the SIDBI Act is inconsistent with the rights / remedies of the debtor/borrower under the SARFAESI Act.

(v) that while Section 34(2) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 expressly provides that the procedure