9911796707
TMI Blog2020 (12) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central or State Governments or local authority. Section.31B of the Bankruptcy Act is also to the same effect. When the language of the provisions of law is very lucid and clear, no other interpretation is possible. In the instant case, the 3rd respondent created mortgage over the subject property by way of a registered deed in favour of Andhra Bank as long back as on 16-03-2013 and as the account of the loanee became NPA on 31-07-2016, the Bank authorities initiated action under the provisions of the Act by issuing notices under Section 13(2) and (4) of the Act. It is absol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring No.29/2020, dated 17-02-2020 of the 2nd respondent. 2. The 3rd respondent herein borrowed amounts from Andhra Bank, Hosur Branch by mortgaging the subject property on 16-03-2013. In view of the default committed by the 3rd respondent, its account became Non Performing Asset . Thereafter, Andhra Bank pressed into service the provisions of the Securitization Reconstruction of Financial Assets Enforcement of Security Interest Act, 2002 ('Act , for brevity) and issued notices under Sections 13(2) and (4) of the Act on 08-08-2016 and 18-07-2017 respectively. Subsequently, on 26-09-2017, Andhra Bank assigned the debt in favour of the petitioner herein, which is an Asset Reconstruction and Securitization Company. The 2nd responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner seeks to place reliance have no relevance to the facts of the present case. It is also the submission of the learned Government Pleader that the benefit as provided under Section 26E of the Act can be extended only to the debts accrued after the advent of said provision of law. It is also the submission of the learned Government Pleader that the mortgage debt should necessarily yield to the crown debt coupled with charge and the petitioner-Asset Reconstruction Company cannot take advantage of the provisions of either Section 26-E of the Act or Section 31B of the Recovery of Debts and Bankruptcy Act,1993 ( for short Bankruptcy Act ). 6. In the above backdrop, now the points that emerge for consideration of this court are: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for secured debt securities; or (v) any other trustee holding securities on behalf of abank or financial institution, in whose favour security interest is created by any borrower for due repayment of any financial assistance. It is very much clear from a reading of the above provision of law that Asset Reconstruction Company is also a secured creditor, as such, the petitioner herein is undoubtedly a secured creditor. 8. It is also important to note the definition of security interest . Section 2(zf) of the Act defines security interest , which reads as under:- security interest means right, title or interest of any kind, other than those specified in section 31, upon property created in favour of any secured creditor and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government or State Government or local authority. Explanation :- For the purpose of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code,1016, in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of the Code. Section 31B of the Bankruptcy Act reads as under:- 31 B. Priority to secured creditors . - Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realize secured debts due and payable to them by sale of assets over which security interest is created, shall have pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices under Section 13(2) and (4) of the Act. It is absolutely not in controversy that the petitioner herein clearly falls under the definition of secured creditor as defined under Section 2(zd) of the Act, since the petitioner herein is an Asset Reconstruction Company in whose favour Andhra Bank assigned the debt by way of registered document on 26-09-2017. In fact, the material available on record further reveals that on 18-11- 2020 i.e., immediately after the sale notice came to be issued by the 2nd respondent, the petitioner herein brought to the notice of the Office of the 2nd respondent about the existence of the security interest in favour of the petitioner herein. In fact, when the provisions of Section 26E of the Act and 31B of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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