FIRST LAW

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 14 -  Insofar as the non mentioning of some of the items of the properties in the affidavit filed under Section 14 (1) is concerned, it is evident that only five items of properties were situated within the jurisdiction of the learned Magistrate. The clear wording in Section 14 would show that the assistance can be sought by the secured creditor of any of the secured asset. Furthermore, the orders impugned would reveal that the learned Magistrate was aware of the averment in the affidavit that the secured creditor was intending to proceed against only five items of properties as against the 11 items mentioned in Section 13 (2) notice. Thus, there is no suppression or misstatement as contended by the petitioner.

The Constitution of India – Article 226 - The Securitization and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 - The Security Interest (Enforcement) Rules, 2002 - Rule 8 (1) - Section 13 (4) - There may be sometimes genuine reasons for the borrowers for being late in payments but such issues can be addressed by the appropriate forum provided for dealing with these matters. The extraordinary jurisdiction of Court is not to be invoked in such cases.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -  S.18(1) Second Proviso -  It is either the borrower or the guarantor, who is liable to make pre-deposit on an appeal filed by him / her against the order of the DRT.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 14 & 17(4A) - the observations as made in the order impugned after paragraph 11 had been rather unnecessary and the learned Single Judge, with respect, has been in error in issuing generalised directions and that too, to the extent that the borrowers have a right to be heard in the proceedings under Section 14 of the SARFAESI Act.

Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 - filing a writ petition when an SA is pending is an abuse of process.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -  Arbitration and Conciliation Act, 1996 -  the SARFAESI proceedings are in the nature of enforcement proceedings, while arbitration is an adjudicatory process and, therefore, the proceeding which has been initiated under Section 14 of the SARFAESI Act is maintainable.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 -  loan was given by IBFSL which was not a financial institution covered by the SARFAESI Act when the loan was given. However, this entity has got merged with the appellant and appellant is a SARFAESI company.    In this backdrop, the entire thrust of the argument of the respondent is that as a successor company, the appellant cannot take advantage. Held,   respondent No.1 would be treated as ‘borrower’ within the meaning of Section 2(1)(f) of the SARFAESI Act; the arrangement would be classified as ‘security arrangement’ under Section 2(1) (zb); the agreements created ‘security interest’ under Section 2(1) (zf); and the appellant became ‘secured creditor’ within the meaning of Section 2(1)(zd) of SARFAESI Act. 

Constitution of India - Article 226 - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13(4) - Discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined exceptions.