TMI Blog2007 (2) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... al assistance aggregating Rs. 400 lakhs (since reduced to Rs. 394 lakhs) to the respondent for setting up a new unit for manufacture of texturised and draw twisted polyester filament yarn with an installed capacity of 600 tpa, in Uruvaiyaru, Villianur Panchayat in Puducherry and for the said purpose, the respondent had executed loan and security documents. As the respondent defaulted in repayment of the principal amount of the loan and in payment of interest and other charges in terms of the relevant loan agreements entered into with the appellant, the appellant filed recovery application against the respondent and others before DRT, Chennai, being O.A. No. 960 of 1998 for a claim amount of Rs. 6,67,56,908 as on 31-3-1998 together with furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SARFAESI Act are contrary to section 19(1) of the SARFAESI Act and are illegal and without jurisdiction. 5. We have heard Mr. N.V. Srinivasan, learned counsel appearing for the appellants and Ms. J. Anandhavalli, learned counsel appearing for the respondents. In our opinion, the Division Bench decision of this Court in Digivision Electronics Ltd. s case ( supra ), is no longer a good law, in view of the decision of the Supreme Court in Transcore v. Union of India [2007] 73 SCL 11. In Transcore s case ( supra ), the Supreme Court has clearly held that the withdrawal of O.A. pending before the DRT is not a pre-condition for taking recourse to the SARFAESI Act. It is for the bank/financial institution to exercise its discretio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t if, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor must consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower. This provision is obviously incorporated in the light of the decision of the Supreme Court in Mardia Chemicals Ltd. v. Union of India [2004] 4 SCC 311 1 . 8. In Mardia Chemicals Ltd. s case ( supra ), the Supreme Court held that under section 13(2) of the SARFAESI Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SARFAESI Act. The Court, however, made it clear that as per the provisions of the SARFAESI Act, the borrower will not be entitled to challenge the reasons communicated or the likely action of the secured creditor at the stage of communication of reasons, unless his right to approach the DRT as provided under section 17 of the SARFAESI Act matures on any measure having been taken under sub-section (4) of section 13 of the SARFAESI Act. 9. The Proviso to sub-section (3A) of section 13 of the SARFAESI Act makes it abundantly clear that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the DRT under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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