SARFAESI enforcement applies to earlier loans when the creditor is later brought within the statutory framework.

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 applies to pre-existing loan transactions where the creditor is later brought within the statutory definition of secured creditor or financial institution. The Act was treated as remedial enforcement machinery, not as creating a new substantive right in the debt itself; the later notification merely enabled invocation of the statutory recovery framework from that date. Applying the distinction between substantive rights and procedural remedy, the later-notified institution was held entitled to proceed under the Act for earlier advances, and the contrary view was overruled.

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Issues: Whether the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 can be invoked for recovery of loans advanced before the secured creditor was notified under the Act.

Analysis: The Act was enacted as a remedial measure to enable speedy recovery of non-performing assets by substituting a summary enforcement mechanism for secured creditors. The definitions of "secured creditor", "financial institution", "borrower", "default" and "security interest" show that the machinery of enforcement is intended to operate on existing secured debts once the creditor falls within the statutory definition. A notification under the Act enlarging the category of financial institutions does not create a new right in relation to the debt itself; it merely brings the institution within the statutory enforcement framework from the date of notification. The distinction between substantive rights and procedural or remedial machinery was applied, and the later-notified institution was held entitled to invoke the Act in respect of earlier loan transactions.

Conclusion: The provisions of the Act are applicable to pre-existing loan transactions, and the contrary view was overruled.

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