Home Case Index All Cases Indian Laws Indian Laws + SC Indian Laws - 2018 (11) TMI SC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 498 - SC - Indian LawsMaintainability of application - SARFAESI Act - default in repayment of a secured debt or any instalment - recovery of borrowed amount - physical or actual possession of secured assets by banks/financial institutions not taken place - Whether an application under section 17(1) of the SARFAESI Act, at the instance of a borrower, is maintainable even before physical or actual possession of secured assets is taken by banks/financial institutions in exercise of their powers under section 13(4) of the Act read with rule 8 of the Security Interest (Enforcement) Rules, 2002? Held that:- There isa radical change in the borrower dealing with the secured asset from this stage. At the stage of a section 13(2) notice, section 13(13) interdicts the borrower from transferring the secured asset (otherwise than in the ordinary course of his business) without prior written consent of the secured creditor. But once a possession notice is given under rule 8(1) and 8(2) by the secured creditor to the borrower, the borrower cannot deal with the secured asset at all as all further steps to realise the same are to be taken by the secured creditor under the 2002 Rules. Section 19, which is strongly relied upon by Shri Ranjit Kumar, also makes it clear that compensation is receivable under section 19 only when possession of secured assets is not in accordance with the provision of this Act and rules made thereunder. That this is the general scheme of the Act is also clear from section 17(2) which states that the Debts Recovery Tribunal, when an application is filed before it, shall consider whether any of the measures referred to in section 13(4) taken by the secured creditor are in accordance with the provisions of the Act and rules made thereunder. The scheme of section 13(4) read with rule 8(1) therefore makes it clear that the delivery of a possession notice together with affixation on the property and publication is one mode of taking “possession” under section 13(4) - This being the case, it is clear that section 13(6) kicks in as soon as this is done as the expression used in section 13(6) is “after taking possession”. Also, it is clear that rule 8(5) to 8(8) also kick in as soon as “possession” is taken under rule 8(1) and 8(2). The statutory scheme, therefore, in the present case is that once possession is taken under rule 8(1) and 8(2) read with section 13(4)(a), section 17 gets attracted, as this is one of the measures referred to in section 13(4) that has been taken by the secured creditor under Chapter III. It is hereby declared that the borrower/debtor can approach the Debts Recovery Tribunal under section 17 of the Act at the stage of the possession notice referred to in rule 8(1) and 8(2) of the 2002 Rules - appeal allowed.
|