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2008 (4) TMI 500 - HIGH COURT OF MADRASWhether even where no stay is prayed for by the Borrower, during pendency of the proceedings under section 17 before the Debt Recovery Tribunal, the Secured Creditor can proceed to auction the secured asset even before a declaration envisaged under section 17(4) of the SARFAESI Act as made by the Debt Recovery Tribunal? Whether for granting any stay of auction, the Debt Recovery Tribunal can impose any condition relating to deposit? Whether, even before finalisation of the proceedings under section 17 of the SARFAESI Act, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal has any incidental or ancillary power to pass any interim order relating to restoration of possession or restoration of management, subject to imposition of any reasonable condition as deemed fit and proper? What is the scope of enquiry under section 17 of the SARFAESI Act and whether the merits of the contentions raised by the borrower can be decided while dealing with the question relating to validity of the action taken by the Bank under section 13 of the Act? Held that:- The right of the Bank is not automatically suspended upon filing of an Application under section 17 of the Securitisation Act and the secured creditor can proceed to auction secured asset where no stay is granted by the Tribunal. The Tribunal has power to impose the condition relating to deposit for grant of stay of auction. The Tribunal has no power to pass any interim mandatory order relating to restoration of possession or restoration of management before the finalisation of the proceedings under section 17 of the Securitisation Act, and All such grounds, which rendered the action of the Bank/Financial Institution illegal, can be raised in the proceedings under section 17 of the Securitisation Act before the Debt Recovery Tribunal. It is for the Debt Recovery Tribunal to decide in each case whether the action of the Bank/Financial Institution was in accordance with the provisions of the said Act and legally sustainable.
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