IMPORTANT POINT
Priority conferred / provided under Section 26E of SARFAESI Act would prevail over recovery mechanism of MSMED Act – MSMED Act does not provide any priority over debt dues of secured creditor akin to Section 26E of SARFAESI Act.

JUDGMENT

M.R. Shah, J.

1. Feeling aggrieved by and dissatisfied with the impugned judgment and order passed by the Division Bench of the High Court of Madhya Pradesh at Indore dated 11.08.2017 in Writ Appeal No. 248 of 2017, by which the Division Bench of the High Court has allowed the said appeal preferred by respondent No.1 herein and has quashed and set aside the judgment and order passed by the learned Single Judge and has observed and held that Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as ‘MSMED Act’) will prevail over Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘SARFAESI Act’), the secured creditor – Kotak Mahindra Bank Limited has preferred the present appeal.

The facts leading to the present appeal, in nut shell, are as under:

1.1 One Mission Vivacare (hereinafter referred to as ‘debtor’) advanced various credit facilities by the appellant bank – secured creditor. In order to secure the various credit facilities, Plot Nos. 16 and 14, situated in SEZ Area of Dhar were mortgaged along with certain movable fixed assets.

1.2 On account of default in payment of loan/debt, the bank-initiated recovery proceedings in respect of the secured assets contemplated under Section 13(2) of the SARFAESI Act. The bank – secured creditor filed an application before the District Magistrate on 17.06.2014 under Section 14 of the SARFAESI Act seeking assistance from taking possession of the secured assets. By order dated 24.09.2014, the District Magistrate allowed the said application by directing the SDM, District: Dhar to take vacant possession of the secured assets. However, no action was taken and therefore, the bank submitted applications to the District Magistrate and the SDM complaining non-compliance of the order to take possession of the secured assets. Finally, SDM issued direction to the Naib Tehsildar vide communication dated 07.11.2015 to comply the order of the District Magistrate and obtain the possession by taking police assistance. Thereafter vide order dated 21.03.2016, Naib Tehsildar refused to take possession and to comply the order dated 24.09.2014 on the ground that one recovery proceeding is pending for recovery of certain amounts from the secured assets and on the ground that the recovery certificate issued in favour of respondent No.1 (original respondent No.4 before the High Court) was already pending for recovery of certain amounts from the aforesaid two secured assets. At this stage, it is required to be noted that the recovery certificates were issued in favour of respondent No.1 pursuant to the award passed by the Facilitation Council on 11.09.2014 which was in favour of respondent No.1 herein, which was under provisions of MSMED Act. The order passed by the Naib Tehsildar refusing to take possession of the secured assets pursuant to the order passed by the District Magistrate dated 24.09.2014 was the subject matter of writ petition before the learned Single Judge of the High Court by way of Writ Petition No.2569 of 2016. While refusing to take possession of the secured assets pursuant to the order passed by the District Magistrate under Section 14 of the SARFAESI Act, Naib Tehsildar observed that MSMED Act being a special enactment enacted subsequent to SARFAESI Act would have overriding effect and therefore, MSMED Act would prevail over the SARFAESI Act.

1.3 The learned Single Judge allowed the writ petition preferred by the bank – secured creditor and set aside the order passed by the Naib Tehsildar by observing that the provisions of SARFAESI Act would prevail and if respondent No.1 is aggrieved by the order passed by the District Magistrate under Section 14 of the SARFAESI Act or the measures taken under Section 13(4) of the SARFAESI Act, he may prefer an appeal/application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal.

1.4 Feeling aggrieved by and dissatisfied wit