2026 (1) TMI 773 - AT - Indian Laws

Jurisdiction to entertain RDDBFI recovery order challenge in SARFAESI proceedings; section 30/30-A remedy required, impugned order set aside

Dominant issue: Whether a tribunal hearing under the SARFAESI Act had jurisdiction to entertain an interim application challenging an order of the ... Recovery of dues - Challenge to demand notice, possession notice and sale notice - jurisdiction of Tribunal to entertain and allow the interim application filed by the borrowers in the SARFAESI Act proceedings - nature of enforcement proceedings under the SARFAESI Act and the RDDBFI Act - proceedings under the SARFAESI Act and the RDB Act are separate and distinct in nature and cannot be clibbed - HELD THAT:- It is clear from the contents of the section 30 of the RDB Act that any person aggrieved by an order of the recovery officer made under this Act may prefer an appeal before the Tribunal below, but in the present case, instead of filing the appeal under the said Act, the respondents-borrowers filed interim application before the Tribunal below in its pending S.A. filed under the SARFAESI Act. It is settled by the Hon'ble Apex Court that the Bank can proceed simultaneously in both the Acts i.e. RDDBFI Act and the SARFAESI Act, but both the proceedings cannot be clubbed together, as the proceedings under the SARFAESI Act and the RDDBFI Act are separate and distinct. The respondents-borrowers have filed the Interim Application against the order of the Recovery Officer in its pending S.A. under the SARFAESI Act in order to save themselves from depositing the amount of debt due because if the borrowers had filed an appeal under section 30 of the RDDBFI Act, 1993, then section 30-A would have come and they had to deposit 50% of the debt due as determined by the Tribunal below under section 19 of the said Act. Thus it is clear that the borrowers have filed the said application with very cleverly in its pending S.A. under the SARFAESI Act in spite of having alternative remedy u/s 30 of the RDDBFI Act. If any order is passed under the wrong Act, the same is considered to be null and void as well as without jurisdiction. In the present case, the application filed by the borrowers has been entertained by the Tribunal under the SARFAESI Act below knowingly that there was alternative remedy for the borrowers to file the appeal u/s 30 of the RDDBFI Act against the order of the Recovery Officer. Thus the order impugned passed by the Tribunal below is liable to be held without jurisdiction. The order impugned is set aside being without jurisdiction and the appeal filed by the appellant is allowed. Issues: Whether the Tribunal below had jurisdiction to entertain and allow the interim application filed by the borrowers in the SARFAESI Act proceedings, challenging the Recovery Officer's order under the RDDBFI Act, instead of the borrowers availing the alternative remedy of appeal under Section 30 of the RDDBFI Act; and whether the impugned order directing the Recovery Officer to keep issuance of proclamation of sale in abeyance was valid.Analysis: The parties proceeded under two separate statutory schemes: the SARFAESI Act, 2002 and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act). The Recovery Officer's order disposing the borrowers' objection and directing issuance of notice for proclamation of sale arose under the RDDBFI Act and, as per Section 30 of that Act, an aggrieved person has a statutory alternative of appeal to the Tribunal against orders of the Recovery Officer. The borrowers instead filed an interim application in pending SARFAESI Act proceedings seeking to restrain recovery actions taken under the RDDBFI Act, effectively invoking the wrong forum to avoid consequences (including deposit obligations under Section 30-A) that would follow from an appeal under the RDDBFI Act. The Tribunal below entertained that interim application and granted relief affecting the RDDBFI Act recovery process. Where an order is sought or obtained under a wrong enactment or forum despite an available and prescribed alternative remedy, such adjudication lacks jurisdiction. The statutory schemes are distinct and cannot be clubbed to bypass the specific appellate remedy provided by the RDDBFI Act.Conclusion: The impugned order of the Tribunal below is without jurisdiction and is set aside; the appeal is allowed in favour of the Appellant.