SARFAESI enforcement requires mandatory consideration of borrower objections before section 13(4) action, even with pending DRT proceedings.

A secured creditor may invoke the SARFAESI Act without first withdrawing pending DRT proceedings, because the proviso to section 19(1) of the 1993 Act is directory rather than mandatory. Pendency of BIFR proceedings, a failed settlement, and the absence of notice or hearing under section 14 do not by themselves bar enforcement under the 2002 Act. However, section 13(3A) requires the secured creditor to consider the borrower's representation against the section 13(2) notice and communicate its decision before taking measures under section 13(4). Non-compliance with that mandatory requirement vitiates the enforcement action.

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Issues: (i) whether the proviso to section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 required the bank to first withdraw its pending DRT proceedings before taking recourse to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (ii) whether the pendency of BIFR proceedings, an earlier settlement, or the absence of notice and hearing under section 14 of the 2002 Act barred the bank's action; (iii) whether the bank's failure to consider and communicate the borrowers' reply under section 13(3A) of the 2002 Act invalidated the measures taken under section 13(4).

Issue (i): whether the proviso to section 19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 required the bank to first withdraw its pending DRT proceedings before taking recourse to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Analysis: The proviso permits withdrawal of a pending DRT application for the purpose of taking action under the 2002 Act, but the language used is permissive and not compulsive. The competing views of the High Courts were examined. A mandatory construction would create avoidable multiplicity of proceedings, create difficulties regarding attachment orders and limitation, and would frustrate the remedy under the 2002 Act. The provision was therefore read as enabling, not prohibitory.

Conclusion: The proviso to section 19(1) of the 1993 Act is directory, not mandatory, and the bank was not required to withdraw the DRT proceedings before proceeding under the 2002 Act.

Issue (ii): whether the pendency of BIFR proceedings, an earlier settlement, or the absence of notice and hearing under section 14 of the 2002 Act barred the bank's action.

Analysis: Once measures under section 13(4) of the 2002 Act are taken, the pending BIFR reference abates by force of the statutory proviso to section 15 of the 1985 Act, and no further protection survives for the borrower. The failed one-time settlement did not restrain the bank from recovering its dues after the borrower did not honour the agreed payment. Section 14 is in the nature of an /enforcement mechanism and does not contemplate a prior notice or hearing to the borrower or guarantor.

Conclusion: The BIFR proceedings, the failed settlement, and the absence of notice under section 14 did not invalidate the bank's recourse to the 2002 Act.

Issue (iii): whether the bank's failure to consider and communicate the borrowers' reply under section 13(3A) of the 2002 Act invalidated the measures taken under section 13(4).

Analysis: Section 13(3A) imposes a mandatory obligation on the secured creditor to consider the representation or objection received in response to the section 13(2) notice and to communicate its decision before proceeding further. In the present case, the bank admittedly proceeded under section 13(4) and sought assistance under section 14 without complying with that statutory requirement. Such non-compliance was contrary to the mandate of the statute.

Conclusion: The bank's action under section 13(4), taken without deciding and communicating the borrowers' objections under section 13(3A), was invalid and liable to be set aside.

Final Conclusion: The petition succeeded because the impugned measures were vitiated by non-compliance with the mandatory obligation to consider and communicate the borrowers' objections, although the other challenges to the bank's recourse under the 2002 Act were rejected.

Ratio Decidendi: A secured creditor may proceed under the 2002 Act without first withdrawing pending DRT proceedings, but it must mandatorily consider and communicate the borrower's reply to the section 13(2) notice before taking measures under section 13(4).

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