Pre-amendment SARFAESI action was unsustainable, but fresh enforcement proceedings could be initiated after the amendment.

Action taken by a bank under SARFAESI before the January 2013 amendment was treated as unsustainable because the relevant entity had not yet been brought within the Act's framework. The earlier possession taken under that invalid action had to be restored to the petitioners. At the same time, the bank's remedy under the Act was preserved, and it was permitted to start fresh proceedings in accordance with law after the amendment to protect its security interest.

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Issues: Whether the action taken by the respondent bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 prior to the January 2013 amendment was sustainable in law, and what consequential relief followed.

Analysis: The action was initiated before the amendment that brought the relevant banking entity within the statutory framework. The Court followed the earlier binding view that action taken before the amendment could not be maintained. At the same time, it recognised that the remedy under the Act remained available to the bank after the amendment and that fresh proceedings could be initiated in accordance with law under Section 13. The consequence of the invalid earlier action was that the possession already taken had to be restored to the petitioners, with liberty to the bank to safeguard its interest and proceed afresh.

Conclusion: The pre-amendment action of the bank under the Act was held to be bad in law, the possession was directed to be re-entrusted to the petitioners, and the bank was permitted to commence fresh action in accordance with law.

Ratio Decidendi: Action taken under a statutory remedy before the relevant amendment brings the entity within its fold cannot be sustained, though fresh action may be initiated after the amendment in accordance with law.

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