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KK Praveen Loses Challenge: Says SARFAESI Act Overrides DRT Decree
In a significant ruling reinforcing the primacy of the (SARFAESI Act), the has dismissed a writ petition filed by K. K. Praveen, who sought to block recovery proceedings by The bench, comprising Justice B.V. Nagarathna and Justice R. Mahadevan, held that overrides any inconsistent provisions of other laws, including decrees passed by the .
Petitioner’s Novel Legal Argument Fails
The petitioner, through counsel , argued that an in O.A. No. 439/2014 passed by the , merged the cause of action into the decree through the principle of . He contended that the general doctrine of barred any fresh proceedings under the SARFAESI Act or the , since the cause of action had already been adjudicated. The petitioner further sought declarations that Asset Reconstruction Companies (ARCs) are not "banking companies" and thus fall outside Parliament's legislative competence under , and that the simultaneous invocation of multiple recovery forums was unconstitutional.
Court’s Reasoning: The Overriding Clause
Rejecting these submissions, the turned to , which expressly provides: “The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.” The bench observed that this grants the SARFAESI Act supremacy over all other laws, including the DRT decree invoked by the petitioner. Consequently, the existence of an earlier decree does not preclude the respondent from initiating or continuing measures under .
No Merit in Constitutional Challenges
The Court also dismissed the broader challenge to the legislative validity of the SARFAESI Act and the RDB Act as applied to ARCs, holding that the of Section 35 renders such arguments untenable in the present context. The prayers seeking a declaration that ARCs are not banking companies and that the notification bars recovery were similarly rejected.
Final Decision and Implications
The writ petition was dismissed in its entirety, and all pending applications were disposed of. The ruling clarifies that a prior DRT decree—even an ex-parte one—does not create a bar against SARFAESI proceedings. Creditors and asset reconstruction companies can now confidently pursue parallel remedies under the SARFAESI Act, secure in the knowledge that the Act's insulates such actions from challenges based on earlier civil adjudication. The decision reinforces the legislative intent to provide a robust, non-obstante framework for enforcement of security interests.
