Pendency before the Debts Recovery Tribunal does not bar securitisation action; withdrawal of the application is not mandatory.

Pendency of an original application before the Debts Recovery Tribunal does not bar a bank from initiating securitisation measures under the SARFAESI Act. Withdrawal of the pending application is not a condition precedent for invoking that remedy, and the first proviso to Section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act was treated as enabling rather than mandatory. The bank may decide whether to seek withdrawal in a given case, so recourse to securitisation remains available notwithstanding the pending tribunal proceedings.

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Issues: Whether the pendency of an original application before the Debts Recovery Tribunal bars the bank from initiating action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and whether withdrawal of the pending application is a pre-condition for such action.

Analysis: The pending original application before the Tribunal did not prevent the bank from proceeding under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The later Supreme Court ruling clarified that withdrawal of the original application is not a condition precedent for invoking the securitisation remedy. The first proviso to Section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was treated as enabling, leaving the bank free to decide whether to seek withdrawal in a given case.

Conclusion: The bank was held entitled to initiate action under the securitisation notwithstanding the pending original application, and the writ petition challenging that notice failed.

Ratio Decidendi: Pendency of proceedings before the Debts Recovery Tribunal does not bar recourse to securitisation , and withdrawal of the pending application is not a mandatory pre-condition for such action.

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