An assignee under SARFAESI Act can rely on prior notices issued by the assignor, without needing to reissue such notices, to maintain legal proceedings.

ORDER :

1. Learned counsel for respondent No.4 also appears for legal heir of deceased/respondent No.6, since respondent No.6 was the wife of respondent No.4.

2. Petitioner impugns order dated 06.05.2024 whereby the application filed by the petitioner under Section 14 of the SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT , 2002 (hereinafter referred to as ‘SARFAESI Act') has been dismissed on the ground that no notice of demand under Section 13(2) of the SARFAESI Act was issued by the petitioner prior to filing an application under Section 14 of the SARFAESI Act.

3. We notice that the borrower had taken the subject loan from AU Small Finance Bank Limited and loan was secured by inter alia the subject asset. The account of borrower was declared Non-Performing Asset, and accordingly, a notice of demand dated 25.11.2019 was issued by M/S AU Small Finance Bank Ltd under section 13(2) of the SARFESI Act. Thereafter, there was an assignment of the debt by AU Small Finance Bank Ltd. to the petitioner - Edelweiss Asset Reconstruction Company Ltd. by way of an assignment agreement dated 22.12.2022. Petitioner thereafter filed an application under Section 14 of the SARFAESI Act relying on the notice given by assigner i.e. AU Small Finance Bank Ltd. dated 25.11.2019. The District Magistrate by impugned order has held that as no notice was given by the petitioner under Section 13(2) of the SARFAESI Act and thus the application under Section 14 of the SARFAESI Act was not maintainable.

4. As noticed hereinabove, notice under Section 13(2) of the SARFAESI Act was given on 25.11.2019 by the financial corporation prior to the assignment agreement dated 22.12.2020. Further as per assignment deed, the assigner i.e. petitioner is entitled to take all steps for recovery of debts.

5. District Magistrate by order dated 06.05.2024 has dismissed the issued by the petitioner. However, the District Magistrate has noticed in the order dated 06.05.2024, that petitioner had relied on the notice dated 25.11.2019 issued by AU Small Finance Bank Ltd.

6. The notice dated 25.11.2019 issued by AU Small Finance Bank Ltd. is followed by an assignment in favour of the petitioner by Assignment Agreement dated 22.12.2022. The Assignment Agreement records that the petitioner has taken over the subject loans on "as is, where is basis". Petitioner thus steps into the shoes of the lender from the stage at which the proceedings qua subject loans had reached as on that date. If the reasoning of the District Magistrate, that earlier notice cannot be relied upon and a fresh notice was required, were to be accepted, then qua all loans even in even pending recovery claims the Assignee companies, would have to start entire process de-novo by issuing a 13(2) Notice. This can certainly not be the mandate of law.

7. Since the Assignee acquires all rights in respect of the debts, assignee would be entitled to proceed with all proceedings and loans from the stage where that they were at the time when the assignment agreement dated 22.12.2022 was executed. Consequently, it is permissible for petitioner to rely upon the notice dated 25.11.2019 take the proceedings forward from that stage. Consequently, the rejection by the District Magistrate by order dated 06.05.2024 of the been issued by the petitioner, is not sustainable.

8. We are thus of the view that the impugned order is not sustainable. Accordingly, the same is set aside. The matter is remitted to the District Magistrate to reconsider the application filed by petitioner under Section 14 of the SARFAESI Act in accordance with law. District Magistrate shall accept the notice dated 25.11.2019, under Section 13(2) of the SARFAESI Act issued by AU Small Finance Bank Ltd. as a notice issued by the present petitioner, in furtherance of the requirements of Section 13(2) of the SARFAESI Act and thereafter proceed to examine the matter, in accordance with law.

9. The District Magistrate