Justice Gowda delivered the judgment in the Singur acquisition case
Justice Gowda delivered the judgment in the Singur acquisition case
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Suit in Civil Court not maintainable when SARFAESI proceedings are initiated, SC

Bar & Bench

The Supreme Court has reiterated that a suit in civil court will not be maintainable in a situation where proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) have been initiated.

The judgment was passed by a Bench of Justices Ranjan Gogoi and R Banumathi in an appeal against a decision of the Madras High Court.

Senior Advocate Dhruv Mehta along with advocates PB Suresh, Vipin Nair, Udayaditya Banerjee and V Ramesh appeared for the appellants. Advocate Rajeev Roy appeared for respondents.

The High Court had held that a suit is maintainable in law, notwithstanding the provisions of Section 34 of SARFAESI Act.

The Court did not go into the facts of the case in detail. Instead, it noted that the case was squarely covered by its judgment in Jagdish Singh v. Heeralal and others.

“The matter need not engage the Court in any great detail as in view of the law laid down by this Court in Jagdish Singh vs. Heeralal and others1 it would clear and evident that the suit filed by the second respondent (i.e. O.S. No.106 of 2009) is not maintainable.”

In Jagdish Singh’s case, the Supreme Court after an elaborate consideration of the provisions of the SARFAESI Act, particularly, Section 2(zf), 2(zc), 13(1), 17, 18 and 34, had taken the view that a suit for partition would not be maintainable in a situation where proceedings under the SARFAESI Act had been initiated. It was also held that the remedy of any person aggrieved by the initiation of proceedings under the SARFAESI Act would lie under Section 17 which provides for an efficacious and adequate remedy to a party aggrieved.

Placing reliance on the above judgment, the Court held that the same is sufficient to set aside the order of the High Court.

The Court also noted that provisions of Sections 17 and 18 of the SARFAESI Act provide an adequate and efficacious remedy for respondents by approaching DRT and Appellate Tribunal. It, therefore, stated,

“As we have held that under the provisions of Section 17 of the SARFAESI Act and thereafter under Section 18 of the SARFAESI Act the respondent No.2 has an adequate and efficacious remedy we are inclined to permit the respondent No.2 to have recourse to the said remedies and agitate before the learned Debts Recovery Tribunal all issues that may be open in law. All objections as may be available to the appellant may also be raised before the learned Debts Recovery Tribunal.”

Read the judgment below.

SARFAESI-Act-judgment.pdf
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