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2014 (12) TMI 486 - HC - Companies LawPhysical possession of petitioner's property "Kingfisher House" under SARFAESI Act - Property mortgaged by appellant - Jurisdiction of Court in terms of Sections 34 and 35 of the SARFAESI Act - Held that:- A plain reading of Section 34 of the SARFAESI Act, would indicate that the jurisdiction of all civil courts to entertain any suit or proceeding, in respect of any matter, which a DRT or an Appellate Tribunal is empowered to determine under the Act, is barred. And no injunction can be granted by any Court or other authority in respect of any action taken or to be taken pursuant to the aforesaid Act. The bar would apparently apply to this court as well. Section 35 of the SARFAESI Act would declare that the provisions of the Act would prevail over other laws notwithstanding anything inconsistent contained therein. Having regard to the objects of the SARFAESI Act, as indicated in the Statement of Objects and Reasons to the Act, it was found that unlike international banks, the banks and financial institutions in India did not have the power to take possession of securities and sell them, resulting in delayed recovery of loans. It was in that direction that the Central Government had constituted certain Committees to examine the reforms necessary in the banking sector and it is on the basis of reports of those Committees, inter alia, suggesting the legislation for Securitization and empowerment of banks and financial institutions to take possession of the securities and sell them without the intervention of the court, that the SARFAESI Act had come into being. Hence, any intervention by any court or authority in respect of proceedings under the said Act would defeat the object of that Act. Hence it is clear that this court would not have jurisdiction to interfere in the present circumstances of the case with the impugned action. The secured creditor who seeks to prove the whole of his debt in the course of the proceedings of winding up must before he can prove his debt relinquish his security for the benefit of the general body of the creditors. If he surrenders his security for the benefit of the general body of creditors, he may prove the whole of his debt. If the secured creditor has realized his security, he may prove for the balance due to him after deducting the net amount that has been realized. The stage for relinquishing security arises when a secured creditor seeks to prove the whole of his debt in the course of winding up. If, he elects to prove in the course of winding up the whole of the debt due and owing to him, he has to necessarily surrender his security for the benefit of the general body creditors. Therefore, in my view, it would be wholly inappropriate and inapposite to require the secured creditor at the stage when he files Company Petition for winding up to exercise the option of relinquishing his security since that stage does not arise until the debt is to be proved. Consequently, the application filed by the respondent is held to be not maintainable. The interim order granted earlier stands vacated and the application is dismissed. - Decided against applicant.
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