Assignee secured creditor may invoke SARFAESI despite pending tribunal recovery proceedings; withdrawal of the original application is not required.

Pendency of a recovery application before the Debts Recovery Tribunal does not bar an assignee secured creditor from invoking the SARFAESI Act. The statutory scheme treats the assignee as the deemed lender, preserves pending proceedings relating to the financial asset, and gives the secured creditor an independent right to enforce security interest under section 13. Section 13(10) is enabling only and does not make withdrawal of the original recovery application a condition precedent for SARFAESI . The challenge to the section 13(2) notice and the possession direction therefore failed.

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Issues: Whether, after assignment of the debt, the assignee secured creditor could invoke the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and proceed under section 13 despite the pendency of recovery proceedings before the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, without withdrawal of the original application.

Analysis: The statutory scheme of sections 5(2) and 5(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 makes the assignee company the deemed lender and preserves pending proceedings relating to the financial asset without abatement or prejudice on account of assignment. Sections 13(1) and 13(2) confer an independent power on the secured creditor to enforce the security interest by notice and further measures, while sections 35 and 37 show that the Act operates with overriding force yet is in addition to other recovery laws. Section 13(10) is only enabling and does not impose a bar on resorting to section 13 measures merely because proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are pending. The earlier pending original application therefore does not disable the assignee from invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and withdrawal of the original application is not a prerequisite.

Conclusion: The challenge to the notice under section 13(2) and the direction to hand over possession failed; the writ petition was dismissed.

Ratio Decidendi: Pendency of a recovery application before the Debts Recovery Tribunal does not bar a secured creditor or its assignee from invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and withdrawal of that application is not a condition precedent for action under section 13.

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