2005 (7) TMI 365 - HC - Companies Law

Court Upholds Interim Order on Property Takeover Under Securitisation Act

The Court dismissed the review petition challenging an interim order under the Securitisation Act for taking over a residential property. The petitioner's ... Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Issues:1. Review of interim order under Securitisation Act for taking over residential property.2. Interpretation of Securitisation Act provisions regarding exemption of properties and appeal to Debts Recovery Tribunal.3. Definition of 'debt' under Securitisation Act and applicability of Recovery of Debts Act provisions.Analysis:1. The petitioner sought a review of an interim order passed by the High Court regarding proceedings initiated by a bank under the Securitisation Act to take over the petitioner's residential property. The interim relief granted was a stay of all proceedings under the Act related to the property upon depositing a sum of Rs. 50,000.2. The petitioner's counsel raised two main points. Firstly, regarding the exemption of properties under section 31(g) of the Securitisation Act, which excludes properties specifically charged with the debt sought to be recovered. Secondly, based on section 17 of the Act allowing appeals to the Debts Recovery Tribunal, arguing that the present proceedings for a debt below Rs. 3 lakhs are not maintainable under the Recovery of Debts Act.3. The Court found that the properties specifically charged with the debt sought to be recovered under the Act are excluded from exemption as per section 31(g). The definition of 'debt' under the Securitisation Act aligns with the Recovery of Debts Act, covering all security interests created for repayment exceeding one lakh rupees. The Court clarified that the powers of the Debts Recovery Tribunal under the Securitisation Act are additional to those under the Recovery of Debts Act.4. Ultimately, the Court dismissed the review petition, stating that the imposed condition for the stay was moderate and did not warrant invoking the review jurisdiction. The judgment upheld the interim relief granted and rejected the arguments raised by the petitioner's counsel regarding the interpretation of the Securitisation Act provisions and the applicability of the Recovery of Debts Act.