TaxTMI 
TaxTMI 
2019 (11) TMI 114
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....truction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SARFAESI Act"), thereby clubbing challenges to three different notices, to save court fee. Upon upholding such objection, the tribunal disposed of the said application of the petitioners with a direction to file fresh SARFAESI application. 3. The question which falls for consideration in the instant revisional application is, whether separate notices under Section 13(4) of the SARFAESI Act, pertaining to different secured assets for a single debt, can be challenged in a single application under Section 17 of the said Act. 4. Learned counsel for the petitioners argues that, since Section 17 of the SARFAESI Act contemplates an application against measures to recover secured debts and gives the right to any person, including the borrower, aggrieved by any of the measures referred to in sub‐section (4) of Section 13, to approach the tribunal, a single application was maintainable in view of the secured debt being a single one. 5. Placing reliance on Section 13 of the SARFAESI Act, learned counsel for the petitioners argues that the same contemplated enforcement of....
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....the secured creditor as non‐performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub‐section (4). Provided that - (i) the requirement of classification of secured debt as non‐performing asset under this sub‐section shall not apply to a borrower who has raised funds through issue of debt securities; and (ii) in the event of default, the debenture trustee shall be entitled to enforce security interest in the same manner as provide under this section with such modifications as may be necessary and in accordance with the terms and conditions of security documents executed in favour of the debenture trustee; (3) The notice referred to in sub‐section (2) shall give details of the amount payable by the borrower and the secured assets intended to be enforced by the secured creditor in the event of non‐payment of secured debts by the borrower. (3A) If, on receipt of the notice u....
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....a valid discharge as if he has made payment to the borrower. (5A) Where the sale of an immovable property, for which a reserve price has been specified, has been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for any officer of the secured creditor, if so authorised by the secured creditor in this behalf, to bid for the immovable property on behalf of the secured creditor at any subsequent sale. (5B) Where the secured creditor, referred to in sub‐section (5A), is declared to be the purchaser of the immovable property at any subsequent sale, the amount of the purchase price shall be adjusted towards the amount of the claim of the secured creditor for which the auction of enforcement of security interest is taken by the secured creditor, under sub‐section (4) of section 13. (5C) The provisions of section 9 of the Banking Regulation Act, 1949 (10 of 1949) shall, as far as may be, apply to the immovable property acquired by secured creditor under sub‐section (5A). (6) Any transfer of secured asset after taking possession thereof or take over of management under sub‐section (4), by....
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....any in liquidation, the amount realised from the sale of secured assets shall be distributed in accordance with the provisions of section 529A of the Companies Act, 1956 (1 of 1956 ): Provided further that in the case of a company being wound up on or after the commencement of this Act, the secured creditor of such company, who opts to realise his security instead of relinquishing his security and proving his debt under proviso to subsection (1) of section 529 of the Companies Act, 1956 (1 of 1956), may retain the sale proceeds of his secured assets after depositing the workmenʹs dues with the liquidator in accordance with the provisions of section 529A of that Act: Provided also that the liquidator referred to in the second proviso shall intimate the secured creditors the workmenʹs dues in accordance with the provisions of section 529A of the Companies Act, 1956 (1 of 1956 ) and in case such workmenʹ s dues cannot be ascertained, the liquidator shall intimate the estimated amount of workmenʹ s dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositin....
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.... of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him- (a) take possession of such asset and documents relating thereto; and (b) forward such assets and documents to the secured creditor: Provided that any application by the secured creditor shall be accompanied by an affidavit duly affirmed by the authorised officer of the secured creditor, declaring that- (i) the aggregate amount of financial assistance granted and the total claim of the Bank as on the date of filing the application; (ii) the borrower has created security interest over various properties and that the Bank or Financial Institution is holding a valid and subsisting se....
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.... (1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,- (i) to take possession of such assets and documents relating thereto; and (ii) to forward such assets and documents to the secured creditor. (2) For the purpose of securing compliance with the provisions of sub‐section (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary. (3) No act of the Chief Metropolitan Magistrate or the District Magistrate any officer authorised by the Chief Metropolitan Magistrate or District Magistrate done in pursuance of this section shall be called in question in any court or before any authority. .... .... .... .... 17. Application against measures to recover secured debts. - (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 th....
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....te and necessary in relation to any of the recourse taken by the secured creditor under sub‐section (4) of section 13. (4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub‐section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub‐section (4) of section l3 to recover his secured debt. (4A) Where‐ (i) any person, in an application under sub‐section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy, ‐ (a) has expired or stood determined; or (b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or (c) is contrary to terms of mo....
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.... 13. Section 17(1) of the SARFAESI Act provides that any person, including the borrower, aggrieved by any of the measures referred to in Section 13(4), may make an application along with such fee, as may be prescribed, "to the Debts Recovery Tribunal having jurisdiction in the matter" within the time as specified therein. 14. Sub‐section (1A) provides that an application under sub‐section (1) shall be filed before the Debts Recovery Tribunal within the local limits of whose jurisdiction - (a) the cause of action, wholly or in part, arises; (b) where the secured assets is located; or (c) the branch or any other office of a bank or financial institution is maintaining an account in which debt is claimed is outstanding for the time being. 15. The Debts Recovery Tribunal, upon an examination of the facts and circumstances and evidence produced by the parties, has the power to set at naught such measures under Section 13(4). It may also hold that such measures were taken in accordance with law, which shall entitle the secured creditor to take recourse to the measures to recover his secured debt. 16. Section 13, on the other hand, as per it....
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....ed upon the borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of debt securities or;" 21. The said definition indicates that debt means any liability (inclusive of interest) which is claimed as due from any person by a bank etc. "......... whether secured or unsecured, .......... ". 22. As such, the "debt" contemplated in the DRT Act, which has been made applicable to the SARFAESI Act as well by virtue of Section 2(1)(ha) of the latter, contemplates both secured and unsecured debts, thereby releasing the expression "debt" from the fetter of assets. 23. Again, probing into the meaning of "Debts Recovery Tribunal", as defined in the SARFAESI Act, Section 2(1)(i) of the said Act defines it as the Tribunal established under sub‐section (1) of Section 3 of the DRT Act. 24. Moving on to Section 3(1) of the DRT Act, it is found that the same provides for the establishment of Tribunal. 25. Section 17(1) of the DRT Act provides that a tribunal shall exercise the jurisdiction, powers and authority to entertain and decide applications from banks and financial institutions for recovery of debts ....
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....arises or the branch or any other office of a bank or financial institution where it is maintaining an account in which the debt claimed is outstanding for the time being or (in the DRT Act) the defendant resides or works. 27. The only additional feature in sub‐section (1A) of Section 17 of the SARFAESI Act is clause (b) thereof, which confers jurisdiction additionally on the Debts Recovery Tribunal where the secured asset is located. 28. However, clauses (a), (b) and (c) of sub‐section (1A) are disjunctive and it is the option of the applicant in an application under Section 17 of the SARFAESI Act to choose any of the forums. 29. In such view of the matter, the location of the asset cannot be the sole determinant of the jurisdiction of the tribunal. 30. Moreover, Section 14 of the SARFAESI Act contemplates a situation postadjudication under Section 17, in case of such an application being filed. such post facto action cannot be a determinant of the initial jurisdiction of the tribunal to entertain an application under Section 17 of the SARFAESI Act, which is attracted immediately after any measure under Section 13(4) is taken. 31. Even the measures under....
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....umber 1(a) of Rule 13(2) stipulates that where the applicant is a borrower and the amount of debt due is less than Rs. 10 lakhs, the amount of fee payable would be Rs. 500/‐ for every Rs. 1 lakh or part thereof. 36. Serial number 1(b) provides that where the applicant is a borrower and the amount of debt due is Rs. 10 lakh and above, the amount of fee payable would be Rs. 5,000 + Rs. 250 for every Rs. 1 lakh or part thereof in excess of Rs. 10 lakh, subject to a maximum of Rs. 1,00,000. 37. As such, even the fees payable with an application under Section 17 of the SARFAESI Act pertain to the amount due and not to the valuation of the assets. 38. Hence, in the present situation, if the argument of the opposite parties is to be accepted, the borrowers/petitioners have to file several different applications under Section 17(1) of the SARFAESI Act before the different tribunals respectively having territorial jurisdiction over the secured assets, for the same debt, each time paying the amount of fees specified for such debt, since there is no provision for segregation or apportionment of the fees payable within the scope of Rule 13(2) of the said Rules. The said proposit....