Finality of a prior judgment bars new proceedings under the SARFAESI Act when based on the same invalid security, reinforcing jurisdictional limits of financial institutions.

1. Heard Mr. G. Agni, learned counsel appearing for the petitioners, Mr. P. Rao, learned counsel appearing for the respondent No. 1 and Mr. D. Lawande, learned Government Advocate appearing for the respondent Nos. 3 and 4.

2. The above Writ Petition seeks for a direction inter - alia to quash and set aside the impugned orders dated 10.07.2014 and 30.10.2014 and the impugned notices dated 31.10.2011 and 20.11.2013 issued under S.13(2) and S.13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (herein after referred to as " the SARFAESI Act") being illegal and bad in law.

3. Briefly, the facts of the case as stated by the petitioners are that the petitioner No. 1 appointed one Mr. Ajay Verma, proprietor of M/s. Aesquire Estates to develop a plot of land belonging to the petitioner No. 1. The said Mr. Ajay Verma availed a loan from the respondent No. 1 by offering a security of the petitioners' land with building. The respondent No. 1 sanctioned a loan of Rs. 15 lakhs on 05.12.1998 in the name of the petitioner No. 1. However, in the same sanctioned letter, clandestinely, it was mentioned that the entire loan amount is to be adjusted to the cash credit account of M/s. Asqueire Estate and the account was to be closed. The purpose of the loan was also mentioned to take over the entire existing liability of M/s. Asqueire Estate. It is further the contention of the petitioners that without their consent, sanctioned loan was re - worked at Rs. 18 lakhs somewhere in the year 1999. It is further their case that the petitioners assumed that the loan was required for the purpose of putting up the construction in the subject property wherein the petitioners were supposed to get a flat and as such, the petitioners were induced by the said Mr. Ajay Verma to execute a mortgage deed by convincing the petitioners. The petitioners further states that bonafidely believing the said Mr. Ajay Verma that they would be put in possession of the entire ground floor and on the basis of the assurance of the said Mr. Ajay Verma, the deed of mortgage was signed with the respondent No. 1 without understanding the consents or implications thereof. It is further the case of the petitioners that on 25.05.2007, an arbitral award ordering the recovery of the loan amount came to be obtained by the respondent No. 1 by initiating proceedings under S.84(4) of the Multi State Co - operative Societies Act, 2002 (herein after referred to as " the Co - operative Societies Act, 2002"). But however, the arbitral award came to be set aside by the learned District Judge on 03.06.2011 by holding that the whole transaction of disbursement was fraught with disparities and for all purposes it was a fraudulent transaction. Thereafter, on 31.10.2011, the respondent No. 1 issued notice under S.13(4) of the SARFAESI Act and subsequently, on 20.11.2013 the petitioners were issued possession notice taking over of the premises of the petitioners as mentioned in the said notice. The said notice was duly replied by the petitioners pointing out that by judgment dated 03.06.2011 the award dated 25.05.2007 passed by the Arbitrator was quashed and set aside. It was also pointed out that having availed of the remedy for recovery of the alleged amount by way of arbitration proceedings and having so failed, it was now not available in law to the respondent No. 1 to initiate another proceedings by way of second inning. Despite of receiving the said reply, the respondent No. 1 continued to visit