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Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) - C ss.2(1)(m)(iv),(o).(zd) and 13(2), 31A, 35, 37 - Simultaneous proceedings for recovery under the Arbitration and Conciliation Act, 1996 and the SARFAESI Act - Permissibility of - Appellants borrowed monies from respondent, against security of immovable properties by creating equitable mortgage of seven properties - Account of appellants became a 'Non-Pe1forming Asset' ('NPA ') - Agreement between the parties contained an arbitration clause and thus, the /ender/respondent invoked arbitration clause - Prior to such invocation, a notification was issued specif•ing 'Non-Banking Financial Companies' as financial institutions and directing that provisions of SARFAESI Act shall apply to such financial institutions - Respondent, a Non-Banking Financial Company was notified as E a financial institution - Respondent issued a notice u!s. 13(2), SARFAESI Act for one of the seven properties of the appellants - In the arbitration proceedings, interim orders granted by the Arbitrator restraining appellant from creating any third party interest over the properties - Another notice issued by respondent u/s.13(2), SARFAESI Act for two more properties of the appellant - Interim order passed in arbitration proceedings, later confirmed - In order to remove any impediment in the SARFAESI proceedings, application filed by respondent to substitute the order of status quo qua parties with the name of the appellants/borrowers - Application allowed - G Appeal filed by appellants u!s.37(2){b), Arbitration Act, dismissed by High Court - Plea of appellants before Supreme Court that respondent elected its remedy by seeking recovery through arbitration process and, thus, could not subsequently and simultaneously initiate proceedings under SARFAESI Act - Held: The present is not a case of election of remedies - Provisions of the SARFAESI Act are a remedy in addition to the. provisions of theArbitration Act, i996 - SARFAESI proceedings and arbitrationproceedings, thus, can go hand in hand - impugned order is well-reasoned order giving cogent reasons - Costs of Rs. 20,0001- imposed- Arbitration and Conciliation Act, i996 - s.37(2)(b) - Recoveryof Debts Due lo Banks and Financial institutions Act. i 993 -Banking/Banks. Securitisation and Reconstruction of Financial Assets andEnforcement of Security interest Act, 2002 - History of- Discussed.Securitisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 - s.2(/) - Remedy under - Nature of - Substantive or procedural - Loan borrowed byappellants -Account of appellants became a 'Non-Performing Asset'('NPA ') - Said loan was borrowed by appellants, prior to theapplication of the SARFAESI Act to the respondent - Plea ofappellants that it was impermissible for respondents to take recourseto provisions of SARFAESi Act in respect of an account already declared an NPA, as that would amount to retrospective applicationof a substantive law - Held: Scheme of SARFAESI Act sets out anexpeditious, procedural methodology, enabling the bank to takepossession of the property for non-payment of dues, withoutintervention of the court - Mere fact that a more expeditious remedy is provided under the SARFAESI Act, does not mean that it issubstantive in character or has created an a/together new right -Scheme of the SARFAESI Act, is really to provide a procedural remedyagainst security interest already created - Therefore, an existingborrower, who was granted financial assistance was covered u/s.2(/)as a 'borrower' - Thus, SARFAESI Act applies to all existing agreements irrespective of the fact whether the lender was a notified'financial institution' on the date of the execution of the agreementwith the borrower or not - Interpretation of Statutes.Securitisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 - Whether parallel recovery proceedings could go on under the RDDB Act; I993 andthe SARFAESI Act'. 2002 - Held: The two Acts are complimentary toeach other and simultaneous proceedings can go under both theActs - Recovery of Debts Due to Banks and Financial institutionsAct, 1993.Interpretation of Statutes - Issue of retroactivity -· What is -DiscussedSecuritisation and Reconstruction of" Financial Assets andEnforcement of Security Interest Act, 2002 - Proceedings under -Nature ol - Discussed |
