TaxTMI 
TaxTMI 
2009 (7) TMI 792
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....e institution of the suit by issuing notice under section 13(2) on 18th December, 2004 and, hence, that the secured creditor is very much entitled to proceed with such steps under the Act. During the course of the proceedings before the civil court, the secured creditor issued Ext.P5 notice under section 13(2) of the Act again, stating that the earlier notice and records were not traceable (in response to a petition filed by the petitioner for causing production of the details). The specific contention of the petitioner is that, no second notice under section 13(2) will lie and. hence, that the proceedings under the SARFAESI Act, are liable to be declared as unsustainable. 3. With regard to the main prayer i.e., for a declaration that the suit filed by the petitioner before the sub court, Kollam for settlement of accounts is not barred under the provisions of the SARFAESI Act, the learned counsel for the petitioner submits that, the bar of jurisdiction is only with regard to the sustainability of the steps taken by the secured creditor and to see whether it is in accordance with the provisions of the SARFAESI Act and nothing more. It is also pointed out that, the right of the peti....
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.... wherein 75 per cent of the liability was directed to be deposited for availing the benefit of appeal, were also set aside. In conformity with the above observations. Section 13(3A) was introduced making it clear that, on service of notice under section 13(2), the borrowers will the entitled to raise their objections and that the same will have to be considered by the secured creditors. 'Proviso' to section 13(3A) states that, the reply given by the secured creditors in response to the objections will not confer any jurisdiction or right to the parties for approaching the Tribunal, invoking the power under section 17 of the Act. 6. Coming to the scope of challenge against the action being pursued by the secured creditors, the rights and liberties of the parties concerned, particularly the borrowers are very much liable to be adjudicated before the DRT. Section 17( 1) is extracted below : "17. Right to appeal.-(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this chapter, (may make an application along with such fee, as may be prescribed) to the Debts Rec....
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....pleadings and evidence before the DRT. While so, the Parliament thought of enacting-the SARFAESI Act, whereby the intervention of the court/tribunal was decided to be ousted by resorting to the SARFAESI proceedings, providing stringent stipulations, particularly the steps under section 13(4), subject to issuance of notice under section 13(2) and the same was brought into force of course providing necessary safeguard by way of appeal to the DRT under section 17 and by way of further appeal to the Debts Recovery Appellate Tribunal ('DRAT') as provided under section 18. 9. However, the question came up for consideration before the Apex Court in Mardia Chemicals' case (supra), where the validity of the stringent provisions under the SARFAESI Act was under challenge. The Hon'ble Supreme Court, in the said case, inter alia, :- (a)Upheld the validity of the provisions of the said Act except that of sub-section (2) of section 17, which was declared ultra vires article 14 of the Constitution the said sub-section provided for deposit of seventy-five per cent of the amount claimed before entertaining an appeal (petition) by the DRT under section 17]. (b) Observed that in cases where a secu....
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....he civil court was specifically held as not applicable under any circumstances. 11. Viewed in the above context, the reliance placed by the learned counsel for the petitioner on the decisions in Vysa Co-operative Bank Ltd. v. Ms. G. Keerthana AIR 2008 Kar. 25 and Lakshmi Shankar Mills (P.) Ltd. v. Authorised Officer, Indian Bank [2008] 84 CLA 344 (Mad.)/AIR 2008 Mad. 181 does not deserve to be considered; particularly since the law laid down by the Apex Court is the 'law of the land' by virtue of article 141 of the Constitution of India. 12. The petitioner has got a contention that, no proceedings under the SARFAESI Act can be pursued during the pendency of the civil suit instituted by the petitioner. Proviso to section 19(1) of the RDB Act, stipulates that the bank or the Financial Institution may, with the permission of the DRT, on an application made by it, withdraw the application so as to proceed with the SARFAESI Act. Scope of the said stipulation was considered, analysed and appreciated by the Apex Court in Transcore v. Union of India [2007] 76 CLA 175 (SC)/AIR 2007 SC 712 and held that, the pendency of the proceedings before the DRT is not a bar and the secured creditor i....
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....make the chance to file objections, an empty formality; which cannot be the position anymore after the decision in Mardia Chemicals' case (supra) and after incorporation of section 3A. Since there is no specific bar under the statute, even to issue a corrected/fresh notice under section 13(2), the contention raised in this regard does not appear to be correct or sustainable and the reliance placed on the provisions of the NI Act is wrong and misconceived. This is more so because arising of the 'cause of action' under the NI Act is specifically dealt with, under sections 138 and 142 of the NI Act. Once the cheque is dishonoured, the party concerned will have to issue a notice of dishonour to the person who issued the cheque, within 30 days from the date of dishonour, giving the latter a period of 15 days' time to satisfy the contents of the cheque. If there is failure in this regard, a complaint will have to be filed within the stipulated time and the cognisance is to be taken as specifically dealt with under section 142, where it is stated that, the complaint has to be filed within one month from the date of arising the cause of action (with power to condone the delay brought into ....