Point of Law : There is no repugnancy nor inconsistency between the two remedies under the RDB Act and the Securitisation Act, the Supreme Court observed that “Together they constitute one remedy and, therefore, the doctrine of election does not apply.”

JUDGMENT :

Petitioners had borrowed from a consortium of two banks and created separate security interests favouring those banks. The steps initiated to enforce the security interest are under challenge in this writ petition filed under Article 226 of the Constitution of India.

2. When petitioners raised the question of the authority of the banks to enforce the security interest in the manner proceeded with, respondents questioned the maintainability of the writ petition under Article 226 of the Constitution of India. Both questions raise issues of significance.

3. The issues arise from a loan granted by a consortium of two banks -the Canara Bank and the Punjab National Bank, to the first petitioner. Though the initial sanction for the loan was Rs.180 crores, it was enhanced to Rs.200 crores and later pruned down to Rs.190 crores. The first petitioner thus borrowed an amount of Rs.190 crores from the respondents.

4. Subsequently, when respondents noticed diversion of transactions through other banks, contrary to the agreements, notices were issued reminding the defaults. Thereafter, at the request of the petitioners, restructuring of the loan was carried out. Later, when the amounts fell in arrears, proceedings were initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, 'the Securitisation Act') by issuing two separate notices under section 13(2) of the Act. Accordingly, the Canara Bank issued notice dated 23.12.2015, seeking to recover an amount of Rs.67,88,88,048/-along with interest at 16.65%, while the Punjab National Bank issued notice dated 17.11.2015, demanding an amount of Rs.78,23,69,917/- along with interest at the contracted rate.

5. After initiating proceedings under the Securitisation Act separately, the consortium of banks preferred an original application on 05.08.2016 before the Debts Recovery Tribunal (for short, 'the DRT') as O.A. No.143 of 2017. The application was later renumbered as T.A. No.44 of 2017. Through the original application, the consortium of banks sought to recover the amounts quantified therein from the defendants, who are the petitioners in this writ petition. An aggregate amount of Rs.163,89,66,756.54 was sought to be recovered as on 31.07.2016, of which Rs.74,65,52,816/-with future interest at 14.65% was claimed by the Canara Bank while Rs.89,24,13,940.55 with future interest at 14.60% was claimed by the Punjab National Bank.

6. In the meantime, petitioners challenged the steps initiated under section 14 of the Securitisation Act before the DRT by filing S.A. No.111 of 2017, which was disposed of by Final Order dated 27.11.2018. While disposing S.A. No.111 of 2017, the Tribunal held that the initiation/continuance of further proceedings under the Securitisation Act will be subject to the outcome of T.A. No.44 of 2017. Thus, the proceedings under section 14 of the Securitisation Act were made subject to the outcome of the original application pending before the DRT.

7. Thereafter, the original application before the DRT was disposed of by judgment dated 28.09.2020. The Tribunal allowed the original application and directed the defendants to pay to the consortium of banks Rs.163,89,66,756.54 with pendente lite and future interest at 14% per annum, after deducting Rs.35,91,72,323/-received as compensation awarded under the Land Acquisition Act for the acquisition by the Government of one of the properties, over which security interest was created. The amount received as compensation was kept in a ‘no lien’ account by the banks.

8. The present writ petition revolves around the issue as to whether the deduction directed by the DRT in T.A. No.44 of 2017 initiated at the behest of the consortium of banks necessitates fresh securitisation proceedings from the stage of section 13(2) itself or whether the banks are entitled to continue the securitisation proceedings from the stage at which the order in S.A. No.111 of 2017 was rende