Home Case Index All Cases Indian Laws Indian Laws + SC Indian Laws - 2018 (3) TMI SC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (3) TMI 118 - SC - Indian LawsRecovery of Loan amounts - validity of actions taken by the appellant against the contesting respondents under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - arbitration clauses - doctrine of election - rejection of applicability of the doctrine of election by holding that simply because remedy under the provisions of the DRT Act was availed would not mean that the financial institution was precluded from taking steps under SARFAESI Act. Whether the arbitration proceedings initiated by the respondent can be carried on along with the SARFAESI proceedings simultaneously? - Held that: - merely because remedy under the Arbitration Act was invoked was no ground to debar the respondent from taking recourse to the SARFAESI Act. Whether resort can be had to Section 13 of the SARFAESI Act in respect of debts which have arisen out of a loan agreement/mortgage created prior to the application of the SARFAESI Act to the respondent? - whether the lender can invoke the SARFAESI Act provision where its notification as financial institution under Section 2(1) (m) has been issued after the account became an NPA under Section 2(1)(o) of the said Act? - Held that: - the SARFAESI Act was retroactive in nature and, therefore, once this Act came into force, the respondent in the said case had right to invoke the provisions of the Act even if loan agreement was entered into and mortgage created prior to the coming into force the SARFAESI Act. The 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. In order to deal with this aspect, we will have to first taken into consideration, the effect of such a merger scheme as approved by the High Court. It is to be kept in mind that the loan/debts/financial assets stood vested in the appellant pursuant to the amalgamation scheme filed by the two companies under Sections 391 and 394 of the Companies Act, 1956 whereunder the predecessor company, IBFSL got amalgamated with the appellant - on sanction of the scheme of amalgamation, all loans, recoveries, security, interest, financial documents, etc. in favour of IBFSL got transferred to and stood vested in the appellant including the loans given by IBFSL to respondent borrowers, debts recoverable by IBFSL from respondent borrowers in favour of IBFSL, security documents executed by respondent borrowers in favour of IBFSL, etc. On the sanctioning of the scheme, the respondent borrowers became the borrower of the appellant as if the financial assistance was granted by the appellant to the respondent borrowers. 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. Appeal allowed - decided in favor of appellant.
|