9911796707
TMI Blog2008 (7) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... . Subsequent to the said notice, the respondent Bank had filed a suit in O.S. No. 108 of 2004 on the file of the learned District Judge, Nilgiris. A preliminary decree was passed in the said suit on 16.11.2005 directing the petitioner to pay the decretal amount with interest. (b) Much later to the issuance of the demand notice, under Section 13(2) of the SARFAESI Act, the first respondent suddenly proceeded to take possession of the property on 22.08.2007 and further chose to bring the property for sale, by sale notice published in Indian Express daily dated 17.11.2007 giving a go by to the preliminary decree obtained by the Bank. The action of the respondent bank in proceeding under the SARFAESI Act after obtaining the preliminary decree is per se illegal. There cannot be two parallel action after the suit is disposed of. Hence, the writ petition had been filed challenging the possession notice and the sale notice. 3. Counter affidavit had been filed on behalf of the respondents, wherein the following facts have been set out: (a) The petitioner created equitable mortgage for the payment of the loan availed by one M/s. Hotel Sri Navayuga. Since default had been committed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing to do with the decree obtained in the Civil Court and there is no bar to proceed under SARFAESI Act. 6. Mr. T. R. Rajagopalan, learned Senior Counsel appearing for the petitioner while elaborating his arguments on the contention that the respondent Bank cannot proceed under the SARFAESI Act in view of the preliminary decree obtained by the Bank from the competent Civil Court, had taken me to several provisions of the SARFAESI Act. According to the learned Senior Counsel, Section 2(zc) and Sections 13(1)(2) and (4) of the SARFAESI Act refer about secured asset. Since the debt merged with a decree of a competent Civil Court, the decree has to be executed and the debt can no more be considered as a secured asset. Learned Senior Counsel further emphasised that the mortgage created in favour of the Bank is no more in existence since it has merged with the decree of the Civil Court. Learned Senior Counsel further submitted that the SARFAESI Act came into effect in the year 2002 and the decree has been obtained by the Bank in the year 2005 and now the respondent Bank cannot enforce the mortgage. 7. However, I am unable to countenance the said argument of the learned Senior Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force. Therefore, the power of the Bank in taking charge of the secured asset and selling the same for realisation of the secured asset is not in any way affected by the preliminary decree that has been obtained by the Bank. Thus, the SARFAESI Act protects and safeguards the interest of the secured creditors and the same is without prejudice to the provisions contained in any other Act. 8. Thus, looking at any angle, the action taken by the respondent Bank in issuing notice under Section 13(2) or possession notice under Section 13(4) of the SARFAESI Act and the further action cannot be termed to be illegal or invalid. 9. While upholding the constitutional validity of SARFAESI Act, the Hon'ble Apex Court in the case of Mardia Chemicals Limited v. Union of India AIR2004SC2371 has held that the provisions of the Act are not ultra vires except Rule 17(2) of the Act. It would be useful to extract paragraphs 81, 82 and 83 of the said judgment, which reads here under: 81. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession or restoration of management, as the case may be or to pass such other order, as it may consider proper and necessary in relation to any of the recourse taken by the secured creditor under Sub-section (4) of Section 13. 20. In Misons Leathers Ltd. v. Canara Bank, Chennai MANU/TN/1500/2007MANU/TN/1500/2007 : AIR2007Mad268 , the constitutional validity of the amended Section 17 was challenged on the ground that the remedy of filing Application under Section 17 of the Act which is declared to be in the nature of the Suit by the Supreme Court is totally taken away by the amendment and in any event, the remedy is only an empty formality and does not protect the rights of the borrowers, mortgagors and guarantors. Repelling this contention, the Division Bench observed: 10. We are afraid that the contention is totally misconceived. The provisions of Section 17(1) of the Act provides remedy for the borrower/guarantor/mortgagor to challenge the action of the Bank under Section 13(4) of the Act before the Debt Recovery Tribunal. The Debt Recovery Tribunal is required to decide whether the action of the Bank/Financial Institutions, under Section 13(4) is in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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