SARFAESI ACT 2002
BY SUSHMA GOWDA
MEANING
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) was circulated –
iii. Matters connected therewith or incidental thereto
It extended to the whole of India.
Amendment in the (SARFAESI) Act, 2002 vide the enforcement of the Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016.
The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisional information in the Official Gazette, s (Amendment) Act, 2016 was published
FACTS
It is an Act further to amend four laws:
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI)
Recovery of Debts due to Banks and Financial Institutions Act, 1993 (RDDBFI)
Indian Stamp Act, 1899
Depositories Act, 1996, and for matters connected therewith or incidental thereto
ILLUSTRATION
The SARFAESI ACT, 2002 gives powers of “seize and desist” to bank. Bank can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. If the borrower fails to comply with the notice, the bank may take one or more of the following measures.
1) Take possession of the security for the loan
2) sale of lease or assign the right over the security
3) Manage the same or appoint any person to manage the same.
CASE
At the outset, the learned counsel appearing for the Respondent Bank submitted that while taking the measures under Section 13(4) of the SARFAESI Act, 2002, the possession of the secured assets had already been taken by the Respondent Bank on 9.9.13 and 10.9.13 even before the present matter was taken up for consideration by this court on 11.9.13. Accordingly, it is submitted that the measures under Section 13(4) having been taken by the Respondent Bank, the secured creditor, the effective and efficacious alternative remedy of filing application AMIT PRAKASH GUPTA & ORS. VS. BANK OF BARODA (S.B.CIVILWRIT PETITION NO.11538/13) before Debt Recovery Tribunal under Section 17 of the SARFAESI Act, 2002, questioning the legality of the measures taken by the Respondent Bank for enforcement of the security, in terms of Section 13(4) of the the SARFAESI Act, 2002, is available to the petitioners and therefore, there is absolutely no reason as to why the petitioners should be permitted to invoke the extra ordinary jurisdiction of this court under Article 226 of the Constitution of India. Learned counsel submitted that as a matter of fact, the petitioners are guilty of concealment of material fact from this court inasmuch as, on 11.9.13, when the matter was taken up by this court for admission hearing, the petitioners were well aware about the proceedings taken by the Respondent Bank under Section 13(4) of the SARFAESI Act, 2002, however, they deliberately concealed the factum of proceedings taken as aforesaid from this court. In support of the contentions, learned counsel has relied upon the decisions of the Hon'ble Supreme Court in the matters of "Union Bank of India vs. Satyawati Tandon" (2010) 8 SCC, 110, "Kanaiyalal Lalchand Sachdev vs. State of
Maharashtra & Ors." (2011) 2 SCC, 782 and "General Manager, Sri Siddeshwara Cooperative Bank Limited & Anr. vs. Cooperative Bank Limited & Anr.", (2013) 10 SCC, 83.
CONCLUSION
SARFAESI Act enables and empowers the secured creditors to take possession of their Securities, to deal with them without the intervention of the court and also alternatively to authorize any Securitization or Reconstruction Company to acquire financial assets of any Bank or Financial Institution (FI).
REFERENCE
Mr.L.R.Mehta With Mr.Ramit Mehta vs Bank Of Baroda on 13 April, 2015
