COMMON ORDER :

(Per Hon’ble Sri Justice P.Naveen Rao)

Heard learned senior counsel Sri E Madan Mohan Rao for petitioner (State Bank of India) in WP 29648 of 2021 and in WP No. 9375 of 2019, learned senior counsel Sri L Ravi Chander appearing for Securities and Exchange Board of India Ltd (SEBI) i.e., second respondent in WP No. 29648 of 2021 and fifth respondent in WP No.9375 of 2019, and learned standing counsel Dr.B.Manoj Kumar for 9^th respondent in WP 9375 of 2019 (EPF Organisation).

2. In W.P.No.29648 of 2021, petitioner-Bank is aggrieved by the various measures initiated by the Securities and Exchange Board of India (SEBI) including freezing of the particular property, which according to the petitioner-Bank, is secured asset and the Registration Department of the State of Telangana issuing prohibitory orders on registration of any transactions. In W.P.No.9375 of 2019, petitioner- Bank is aggrieved by the various measures taken by the Securities and Exchange Board of India, Employees State Insurance Corporation Limited (ESIC), and Employees Provident Fund Organization (EPFO).

3. The question for consideration is whether in terms of Sections 26-E and 35 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ‘Act, 2002’) are the relevant provisions of the Acts governing SEBI, ESI Corporation and Employees Provident Fund Organization, which entity shall have first charge on the concerned property to recover the amounts due.

W.P.NO.29648 OF 2021:

4. M/s. SVPCL Limited availed working capital and term loans aggregating ₹ 23 crores on and from October, 2006 from the petitioner’s Overseas Branch at Abids, Hyderabad. The Managing Director of the company created equitable mortgage in favour of petitioner-Bank by deposit of title deeds of properties on 06.10.2006 apart from other properties standing in the name of the borrower- company. The borrower defaulted in repayment of the loan leading to classifying the loan account as Non-Performance Asset (NPA) and the Bank taking recourse to the provisions of the Act, 2002. Initially it has issued demand notice, took physical possession and has taken steps to sell the secured asset. It appears, Bank has made several attempts to sell the secured asset between the years 2012 and 2016. On 16.10.2021 sale notice was issued and secured asset was auctioned on 09.11.2021. The 4th respondent emerged as highest bidder for sale consideration of ₹ 62,25,000/-. The Bank issued sale confirmation on 11.11.2021. When the document was sought to be presented for registration, the Registering Authority has shown inclusion of the subject property in the prohibited list of properties based on the requisition given by the SEBI.

5. The averments in the writ petition further disclose that on 11.06.2015, Bank received demand letter from the SEBI referring to attachment proceedings against the borrower and seeking details of collateral securities held by the petitioner-Bank. In response, on 18.08.2015, petitioner-Bank informed the SEBI that M/s.SVPCL Limited owes huge sums to the petitioner-Bank and, therefore, Bank initiated recovery proceedings. On 19.01.2016, notification was issued by SEBI listing the schedule property in the list of prohibited properties. On 05.10.2021 Bank addressed a letter to SEBI to remove the properties including the schedule described property from the list of prohibited properties stating that the petitioner-Bank has priority of charge over the same and Bank is entitled to proceed under the Act, 2002 without any interference from other claimants. It is also highlighted that the equitable mortgage created in favour of the petitioner-Bank was much prior to attachment order issued by SEBI and, therefore, petitioner Bank’s rights under the provisions of the Act, 2002 stand altogether on a different footing under the law and shall prevail.

6. In the counter-affidavit filed on behalf of 2nd respondent, deposed by Rajkamal Sendha, Manag