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2016 (12) TMI 1201 - HC - Indian LawsExercise of the power conferred by Section 14 of SARFAESI Act - sale the land - Held that - When the status of the party being a borrower and the property being a secured asset is questioned, this Court is of the opinion that the bar under Section 34 of the SARFAESI Act would not apply at all. A third party to a loan transaction who is actually in possession would be left with no remedy if the jurisdiction of the civil Court is held to be barred and no separate remedy is provided to him under the SARFAESI Act, as Section 17 thereof cannot be invoked by him. As the petitioner was protected by the interim order granted by this Court and the sale held by the 1st respondent company has not been confirmed pursuant thereto, the petitioner shall continue to have the benefit of the said interim order for a period of six weeks from today. In the meanwhile, it would be open to him to seek appropriate interim relief from the civil Court. We make it clear that we have not ventured into the merits of the matter and all issues are left open for adjudication by the civil Court. Subject to the above, the writ petition is dismissed leaving it open to the petitioner to approach the competent civil Court.
Issues:
1. Validity of the order passed under the SARFAESI Act regarding the sale of the petitioner's land. 2. Interpretation of provisions defining borrower, secured asset, and security interest under the SARFAESI Act. 3. Determination of whether a secured interest was created in the subject property. 4. Jurisdiction of the civil Court in matters related to the SARFAESI Act. Analysis: 1. The petitioner challenged the order passed by the Chief Metropolitan Magistrate under the SARFAESI Act regarding the sale of his land. The petitioner claimed to be a third party to any loan transaction and asserted that his property was illegally offered as security without his consent. 2. The SARFAESI Act defines borrower, secured asset, and security interest crucial for determining the rights of the parties involved. The key question was whether a secured interest existed in the subject property allowing the 1st respondent company to proceed under the SARFAESI Act. 3. The petitioner denied being a borrower or guarantor for the loan and alleged fabrication of documents regarding the creation of a secured interest in the land. The court had to ascertain the validity of the claimed security interest to establish the rights of the parties under the SARFAESI Act. 4. The court analyzed the jurisdictional aspect concerning the SARFAESI Act and the role of civil courts in cases where the status of the borrower and the property as a secured asset is disputed. It was held that the civil court's jurisdiction is not ousted in such cases, allowing parties like the petitioner to seek redressal through civil court proceedings. In conclusion, the court dismissed the writ petition while allowing the petitioner to approach the civil court for further adjudication. The interim order protecting the petitioner's rights was extended, and the court emphasized that all issues remained open for the civil court to decide. The judgment clarified the applicability of Section 34 of the SARFAESI Act and upheld the petitioner's right to seek remedies through the civil court system.
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