The SARFAESI Act provides cumulative remedies to secured creditors and does not preclude them from enforcing security interest while arbitration proceedings are ongoing.

Sanjeev Sachdeva, J.

ARB.A.(COMM.) 15/2017 & IA No.7399/2017(stay)

1. The appellants, by this Appeal under Section 37(2)(b) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as ‘the Arbitration Act’), seek quashing of order dated 19.05.2017 passed by the Arbitral Tribunal and further seek a direction for preservation of the mortgaged properties belonging to Appellant Nos.2 to 4 during the pendency of the arbitration proceedings.

2. The appellants had secured a loan from the respondent. Loan was sanctioned in the sum of Rs.6.5 crores by Sanction Letter dated 29.09.2015. The said loan amount was also released to the appellants. Master Facility Agreement was signed on 30.09.2015. On 21.10.2015, Supplementary Agreement for Rs.1.8 crore was also signed.

3. The repayment of the loan was secured by creation of Equitable mortgage by deposit of Title Deeds of immovable properties. Seven Memorandum of Title Deeds were executed; four dated 30.09.2015 and three dated 21.10.2015.

4. The properties in respect of which charge was created are as follows:-

“(i) 1202, 12th Floor, Black no. 4, Uniworld Harden, Sector-47, Gurgaon (property in the name of Appellant no. 3)

(ii) 1604, 15th Floor, Block no. 4, Uniworld Harden, Sector-47, Gurgaon (property in the name of Appellant no. 3)

(iii) 1904, 18th Floor, Block no. 4, Uniworld Harden, Sector-47, Gurgaon (property in the name of Appellant no. 3)

(iv) 0.1166 hectare (1166 Sq. Mt.) land situated in Khasra no. 841 in village Masuri, Pargana-Dasna, Ghaziabad, U.P (in the name of Appellant no.2)

(v) 0.2020 hectare (2020 Sq. Mt.) land situated in Khasra no. 843,844, 845 in village Masuri, Pargana-Dasna, Ghaziabad, U.P (in the name of Appellant no.2).

(vi) 0.0690 hectare (690 Sq. Mt.) land situated in Khasra No. 2680 in village Masuri, Pargana-Dasna, Ghaziabad, U.P (in the name of Appellant no.2)

(vii) 0.059 hectare (590 Sq. Ft) land situated in Khasra no. 2681 in village Masuri, Pargana-Dasna, Ghaziabad, U.P (in the name of Appellant no.2).

5. As per the respondent, there was default in payment of the monthly instalments. Loan Recall Notice was issued on 07.10.2016. On 16.11.2016, notice invoking arbitration was issued and Arbitrator appointed. The proceedings before the Arbitrator are underway.

6. On 24.11.2016, notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the ‘SARFAESI Act’) was issued with regard to property No.1202, 12th Floor, Block No.4, Uniworld Harden, Sector-47, Gurgaon.

7. The petitioners approached the Arbitral Tribunal by filing an application under Section 17 of the Arbitration Act seeking restraint on the respondent from proceeding further with under Section 14 of the SARFAESI Act in respect of property No. 1202, 12th Floor, Block No.4, Uniworld Harden, Sector-47, Gurgaon.

8. The Arbitrator passed an interim order directing the respondent to maintain status quo with regard to the said property.

9. Subsequently, another notice dated 16.02.2017, under Section 13(2) of the SARFAESI Act with regard to Apartment Nos.1604, 15th Floor, Block No.4, Uniworld Harden, Sector-47, Gurgaon and 1904, 18th Floor, Block No.4, Uniworld Harden, Sector-47, Gurgaon, was issued.

10. It is contended by the counsel for the petitioners that petitioners never received notice dated 16.02.2017 issued under Section 13(2) of the SARFAESI Act with regard to the other two properties.

11. By the impugned order dated 19.05.2017, the Arbitrator found no justification to stay the proceedings initiated by the respondent/claimant under the provision of SARFAESI Act. The Arbitrator held that the appropriate remedy of the appellants is also to take proceedings under the SARFAESI Act.

12. The contention of the appellants is that since the respondents have chosen to invoke arbitration and have proceeded under the Arbitration Act for determination of their claim, they could not have simultaneously proceede