Concurrent recovery remedies under SIDBI and SARFAESI may create unguided discretion and Article 14 arbitrariness concerns.

The SARFAESI Act was treated as operating alongside Section 38 of the SIDBI Act, because the later enactment did not expressly repeal the SIDBI recovery remedy and Section 37 of the SARFAESI Act was read as saving other existing laws. The availability of both procedures was also said to confer unguided discretion on SIDBI, since the remedies differed materially in severity and procedural safeguards, making the choice vulnerable to challenge as arbitrary under Article 14. The commentary notes that relief was refused on the petitioner's facts, while SIDBI was cautioned to frame guiding criteria for future exercise of the choice of remedy.

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Issues: (i) Whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 overrides or excludes the remedy available to SIDBI under Section 38 of the Small Industries Development Bank of India Act, 1989; (ii) whether SIDBI's ability to choose between the two remedies without guiding criteria is arbitrary and violative of Article 14 of the Constitution of India, and if so whether the petitioner is entitled to relief.

Issue (i): Whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 overrides or excludes the remedy available to SIDBI under Section 38 of the Small Industries Development Bank of India Act, 1989

Analysis: The two enactments were held to operate in addition to each other. The later statute did not expressly repeal Section 38 of the SIDBI Act, and Section 37 of the SARFAESI Act was read as saving other laws in force, including the SIDBI Act. The fact that the SARFAESI Act provides a less onerous procedure did not by itself displace the special recovery mechanism created for SIDBI.

Conclusion: The remedy under Section 38 of the SIDBI Act was not held to be excluded by the SARFAESI Act.

Issue (ii): Whether SIDBI's ability to choose between the two remedies without guiding criteria is arbitrary and violative of Article 14 of the Constitution of India, and if so whether the petitioner is entitled to relief

Analysis: The availability of two different procedures for the same recovery action, one carrying notice, hearing and appeal rights and the other not, was held to confer unguided discretion on SIDBI. That discretion was found capable of resulting in discriminatory treatment between similarly situated borrowers and therefore inconsistent with Article 14. However, relief was declined because the petitioner was a chronic defaulter, had not made any repayment proposal, and was not found entitled to the Court's discretionary jurisdiction under Article 226 of the Constitution of India.

Conclusion: The impugned action was found arbitrary, but the petitioner was denied relief.

Final Conclusion: The petition was dismissed, though SIDBI was cautioned to frame guidelines governing the choice of remedy, failing which future action could be vulnerable to constitutional challenge.

Ratio Decidendi: Where two statutory recovery procedures of materially different severity are available for the same subject matter without any legislative or administrative guidance for selecting between them, the resulting unguided discretion is vulnerable to challenge as arbitrary and discriminatory under Article 14.

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