BHASKARA ACHARYA Vs. BANK OF INDIA
DEBTS RECOVERY APPELLATE TRIBUNAL
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(1.) THIS appeal is directed as against the order dated 23.3.2006 in ASA-31/2006 passed by the DRT, Bangalore.
(2.) The appellant had borrowed a loan payable over a period of 180 months. Though the appellant had repaid some amount, he was not able to pay the instalments in time. Hence the Bank had issued a demand notice under Section 13(2) of the SRFAESI Act on 15.11.2003, and taken possession of the property on 14.12.2004 and a sale notice was issued on 24.11.2005, and the sale was held on 13.2.2006, and sale certificate was also issued on 27.2.2006 As against the measures taken by the respondent Bank the appellant preferred an application/ appeal before the DRT, Bangalore, in ASA-31/2006 questioning the validity of the measures taken by the Authorised Officer and his application was dismissed aggrieved by the same, this appeal has been filed.
I have heard the learned Advocates for the appellant and the respondent.
The learned Advocate for the appellant has raised the following points in the appeal:
(1) The provisions of the SRFAESI Act arc not applicable to the debt concerned.
(2) The DRT passed the order without considering the objections raised by the appellant and the same is contrary to law.
(3.) THE appellant's contention is that the provisions of the SRFAESI Act, has no application on the ground that the loan was advanced in the year 2001 i.e. prior to the passing of the SRFAESI Act, but whereas the Act came onto force only on 21.6.2002 and the Act is not retrospective and the action taken is invalid. Before proceeding to consider the other grounds of the appeal, I wish to take up the objections raised with regard to the applicability of the SRFAESI Act.
Appellant's contention that the provisions of the SRFAESI Act are not applicable, on the ground that the loan was advanced prior to the passing of the Act. No doubt, it is true that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, was passed in the year 2002, and it came into force on 21.6.2002, but whereas the loan was given to the appellant in the month of March, 2001 i.e. prior to the passing of the Act. But could it be said that the Act is not applicable.
Section 13(1) of the Act states, "Notwithstanding anything contained in Section 69 or Section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or Tribunal, by such creditor in accordance with the provisions of this Act." i.e. the 'security interest' may be enforced under this Act.
'Security interest' is defined under Section 2(zf) which states, "Security interest means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in Section 31." THE fact that the appellant had created 'security interest' in respect of his property for the loan advanced by the respondent is not in dispute and, therefore, the security interest may be enforced by the secured creditor without the intervention of the Court or Tribunal in accordance with the provisions of the said Act.
THE provisions of SRFAESI Act, is applicable in respect of any security interest for secured repayment of any financial asset exceeding Rs. 1 lakh. THE amount due by the appellant is more than Rs. 1 lakh and, therefore the provisions of this Act are applicable.
Section 34 of the SRFAESI Act also states that, "No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts to Banks and Financial Institutions Act, 1993 (51 of 1993)." As it could be seen that the provisions of this Act are made applicable, the jurisdiction of the Civil Court is taken away to entertain any suit or proceedings on any matter of which the DRT or the Appellate Tribunal is empowered by or under this Act. When the jurisdiction of the Civil Court is specifically barred, the secured creditor is entitled to enforce the 'security interest' under this Act, irrespective of the fact whether secured interest was created either before or after passing of the Act.
Section 35 speaks about the overriding effects of the Act which states, "THE provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." As such, the provisions of this Act are having overriding effect than any other law and, of course, it is subject to the limitation as provided under Section 36 that the claim in respect of the financial asset must be made within the period of limitation under the Limitation Act, 1963 (36 of 1963). As such, the Section 13(1) empowers the secured creditors to enforce any secured interest in accordance with the provisions of the Act and, therefore, the action taken by the respondent under this Act is valid. THE argument advanced on behalf of the appellant that the invocation of the Act by the respondent is not proper, cannot be accepted and is rejected.;
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