DRT lacks jurisdiction over SARFAESI Act in Gujarat sale dispute

The court held that the Debt Recovery Tribunal (DRT) at Calcutta did not have jurisdiction to entertain an application under Section 17 of the SARFAESI Act regarding actions taken by a bank for the sale of mortgaged property in Gujarat. It was determined that the integral part of the cause of action for such an application arises only after measures are taken under Section 13(4) in the location where the secured assets are situated. Additionally, the court rejected an application from a non-party in the original proceeding, affirming the decision of the Debt Recovery Appellate Tribunal and dismissing both applications.

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Issues Involved:
1. Jurisdiction of Debt Recovery Tribunal (DRT) at Calcutta.
2. Integral parts of the cause of action under SARFAESI Act.
3. Application from a non-party in the original proceeding.

Summary:

1. Jurisdiction of Debt Recovery Tribunal (DRT) at Calcutta:
The primary issue was whether the DRT at Calcutta had jurisdiction to entertain an application u/s 17 of the SARFAESI Act concerning actions taken by a bank u/s 13(4) for the sale of mortgaged property in Gujarat. The petitioner argued that part of the cause of action arose within the territorial jurisdiction of the DRT at Calcutta, citing several actions and communications that occurred in Kolkata. However, the bank contended that these actions did not form an integral part of the cause of action for enforcement of security interest, which was centered in Gujarat where the mortgaged property was located.

2. Integral parts of the cause of action under SARFAESI Act:
The court examined the provisions of Section 13 and Section 17 of the SARFAESI Act along with Section 19 of the DRT Act. It was determined that the integral part of the cause of action for filing an application u/s 17 arises only after measures are taken u/s 13(4). The court noted that the entire realization process is divided into two phases: the first phase involving the service of notice u/s 13(2) and the second phase involving measures u/s 13(4). The court concluded that the measures u/s 13(4) are in the nature of execution proceedings, and thus, the DRT within whose territorial jurisdiction the secured assets are located (Gujarat) is the competent tribunal to entertain the application.

3. Application from a non-party in the original proceeding:
An application filed by Dhir & Dhir Asset Reconstruction and Securitisation Company Ltd., which was not a party to the original proceeding, was also considered. The court rejected this application, stating that there is no scope for entertaining an application from a stranger who is not a party in the original proceeding. The court noted that the relief claimed had no correlation with the subject matter of the dispute under consideration.

Conclusion:
The court upheld the decision of the Debt Recovery Appellate Tribunal, Kolkata, which had reversed the judgment of the DRT, Kolkata, and held that the DRT, Kolkata, had no territorial jurisdiction to entertain the application u/s 17 of the SARFAESI Act. The application by the petitioner was rejected, and the application by Dhir & Dhir Asset Reconstruction and Securitisation Company Ltd. was also dismissed.

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