SARFAESI interim relief and no automatic stay under Section 17 clarify the Tribunal's limited protective jurisdiction

Under the SARFAESI Act, the Debts Recovery Tribunal can grant interim protection in an application under Section 17 because its ancillary powers extend to appropriate interim orders when examining the legality of measures taken under Section 13(4). Filing a Section 17 application, however, does not automatically stay the secured creditor's proceedings; the creditor may continue unless the Tribunal grants interim relief. The stated ratio is that Section 17 provides a statutory remedy and discretionary interim protection, but no automatic suspension of enforcement measures follows from the mere filing of the challenge.

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Issues: (i) Whether the Debt Recovery Tribunal has jurisdiction to pass an interim order in an application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (ii) Whether all proceedings under Section 13(4) of that Act stand automatically stayed on the filing of an application under Section 17.

Issue (i): Whether the Debt Recovery Tribunal has jurisdiction to pass an interim order in an application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Analysis: Section 17 permits an aggrieved person to challenge measures taken under Section 13(4), and the Tribunal is required to examine the legality of such measures. Read with Section 19(12) of the Recovery of Debts Due to Banks and Financial Institutions Act and Rule 7 of the Debt Recovery Tribunal (Procedure) Rules, 1993, the Tribunal's ancillary powers extend to granting interim orders in appropriate cases.

Conclusion: The Tribunal does have jurisdiction to pass an interim order under Section 17, subject to appropriate conditions.

Issue (ii): Whether all proceedings under Section 13(4) of that Act stand automatically stayed on the filing of an application under Section 17.

Analysis: The statutory scheme of Section 17 does not provide for an automatic suspension of the secured creditor's measures merely because an application is filed. The right of the borrower is to seek adjudication and, where warranted, interim protection from the Tribunal; until such interim order is made, the secured creditor is not barred from proceeding under Section 13(4).

Conclusion: There is no automatic stay of proceedings under Section 13(4) upon filing of an application under Section 17.

Final Conclusion: The challenge to the Tribunal's conditional interim order failed, and the matters were disposed of without granting substantive relief, while leaving the borrower to pursue the statutory remedy before the Tribunal.

Ratio Decidendi: In proceedings under Section 17 of the SARFAESI Act, the Debts Recovery Tribunal may grant appropriate interim protection in exercise of ancillary jurisdiction, but filing an application under Section 17 does not by itself create an automatic stay of the secured creditor's measures under Section 13(4).

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