Withdrawal of O.A pending before the DRT is not a precondition for taking recourse to the SARFAESI Act, and transparency and fair play are essential in the implementation of the provisions of the SARFAESI Act.

A.P. Shah, C.J.

Admit. Learned counsel appearing for the respondent waives service. By consent, the appeal is taken up for hearing.

2. This appeal is directed against the judgment and order of the learned single Judge dated 9. 2006 in Writ Petition No.11009 of 2006.

3. The brief facts leading to the appeal are as follows:-

The appellant-IDBI had sanctioned financial assistance aggregating Rs.400 lakhs (since reduced to Rs.394 lakhs) to the respondent for setting up a new unit for manufacture of texturised and draw twisted polyester filament yarn with an installed capacity of 600 tpa, in Uruvaiyaru, Villianur Panchayat in Puducherry and for the said purpose, the respondent had executed loan and security documents. As the respondent defaulted in repayment of the principal amount of the loan and in payment of interest and other charges in terms of the relevant loan agreements entered into with the appellant, the appellant filed recovery application against the respondent and others before DRT, Chennai, being O.A.No.960 of 1998 for a claim amount of Rs.6,67,56,908/= as on

33. 98 together with further interest and other charges at agreed rates till realisation. In view of the promulgation of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "SARFAESI Act"), whose prime object was to enable the banking community to speed up the NPA recoveries, the appellant decided to take recourse to the provisions of the SARFAESI Act. Accordingly, the appellant issued the requisite notice under Section 13(2) of the SARFAESI Act on 20.12.2005. This notice was replied by the respondent, which was also responded to by the appellant in accordance with the provisions of Section 13(3-A) of the SARFAESI Act. After verification of compliance of the provisions of Section 13(9) of the SARFAESI Act, the Authorised Officer of IDBI Ltd., took possession of the secured assets on February 20, 2006 in terms of Section 13(4) of the SARFAESI Act.

4. The legality and validity of notices issued by the appellant-Bank under the SARFAESI is questioned in the present writ petition mainly on the ground that without withdrawing the O.A. filed by the appellant before the DRT, invoking of the provisions of Section 13 of the SARFAESI Act is not permissible, in view of the Division Bench decision of this Court in Digivision Electronics Ltd., v. Indian Bank (2005 (3) CTC 513). Learned single Judge, following the dicta in the Digivision Electronics Ltd., v. Indian Bank, has held that the notices issued under Section 13(2) and Section 13(4) of the SARFAESI Act are contrary to Section 19(1) of the SARFAESI Act and are illegal and without jurisdiction.

.5. We have heard Mr.N.V.Srinivasan, learned counsel appearing for the appellants and Ms.J.Anandhavalli learned counsel appearing for the respondents. In our opinion, the Division Bench decision of this Court in Digvision Electronics Ltd., v. Indian Bank (cited supra) is no longer a good law, in view of the decision of the Suprmeme Court in Transcore v.Union of India, (2006) 5 CTC 753. In Transcores case, the Supreme Court has clearly held that the withdrawal of O.A pending before the DRT is not a precondition for taking recourse to the SARFAESI Act. It is for the bank/financial institition to exercise its discretion as to cases in which it may apply for leave and in cases where it may not apply for leave to withdraw. Therefore, in the light of the decision in Transcores case, the appellant is entitled to proceed in accordance with the provisions of the SARFAESI Act without withdrawal of the O.A pending before the DRT.

6. Ms. J. Anandhavalli, learned counsel appearing for the respondent, however, submitted that there has been total non-compliance of Section 13(3-A) of the SARFAESI Act and, therefore, the entire proceedings are vitiated. Learned counsel submitted that in response to the notice dated 20.12.2005 issued under Section 13(2), a reply letter