IMPORTANT CASE LAW ON SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002
The important case law on Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Act No.54 of 2002) (hereinafter for brevity’s sake called “SARFAESI Act”) is being discussed to serve as a ready referencer in case of need. An attempt is being made to discuss the case law as it has evolved since its enactment. While every care is taken to cover all important decisions of the various High Courts and the Hon’ble Supreme Court, the full text of the Judgments may be referred to for any specific contextual reference.
1. Constitutional Validity- The Constitutional validity of the Act was questioned in Mardia Chemicals Limited Vs Union of India . The Hon’ble Supreme Court while upholding the constitutional validity of the SARFAESI Act declared as ultra vires sub-section (2) of section 17 and also made the following observations:
· It is incumbent upon the secured creditor to serve 60 days notice before proceeding to take any of the measures as provided under sub-section (4) of section 13 of the act. After service of notice, if the borrower raises any objection or places facts for consideration of the secured creditor, such reply to the notice must be considered with due application of mind and the reasons for not accepting the objections, howsoever brief they may be, must be communicated to the borrower. In connection with this conclusion, we have already held a discussion in the earlier part of the judgment. The reasons so communicated shall only be for the purposes of the information/knowledge of the borrower without giving rise to any right to approach the Debt Recovery Tribunal under section 17 of the Act at that stage.
· On measures having been taken under sub-section (4) of section 13 and before the date of sale/auction of the property it would be open for the borrower to file an appeal (petition) under section 17 of the Act before the Debt Recovery Tribunal.
· The Tribunal in exercise of its ancillary powers shall have jurisdiction to pass any stay/interim order subject to the condition as it may deem fit and proper to impose.
· The requirement of deposit of 75% of amount claimed before entertaining an appeal (petition) under section 17 of the Act is an oppressive, onerous and arbitrary condition against all the canons of reasonableness. Such a condition is invalid and was therefore struck down.
2. Off-shoot of the Decision in Mardia Chemicals – The Act was amended w.e.f. 11.11.2004  in the light of the observations of the Hon’ble Supreme Court in Mardia Chemicals Case and the following major amendments to the Act were carried out -
· Section 3-A was inserted providing for an opportunity to the borrower to make a representation or raise objections against the demand notice issued under sub-section (2) of Section 13 and disposal of such representation within one week from the date of its receipt. A proviso was inserted that the reasons communicated to the borrower in response to the representation shall not confer any right upon him to prefer an application to the Debt Recovery Tribunal.
· Sub-section (2) of Section 17 which provided that the appeal filed by the Borrower against the measures taken by the secured creditor under sub-section (4) of section 13 shall not be entertained unless the borrower deposited with the Debt Recovery Tribunal 75% of the amount claimed under demand notice with a proviso that the Debts Recovery Tribunal may waive or reduce the amount for reasons to be recorded in writing have been substituted with the provision that the Debt Recovery Tribunal shall consider whether any of the measures referred in sub-section (4) of section 13 taken by the secured creditor are in accordance with the provisions of the Act and rules made there under.
· The provision of Appeal to the Appellate Tribunal under section 18 were also modified accordingly, providing that the appellate tribunal shall not entertain any appeal against the Order made by the Debts Recovery Tribunal under section 17, unless 50% of the amount of debt due is deposited with the Appellate Tribunal with a proviso that the Appellate Tribunal is vested with the discretion to reduce the amount to not less than 25% of the debt.
· The Recovery of Debts Due to Banks and Financial Institutions Act was also amended to include a proviso to section 19 (1) to the effect that the bank or financial institution may, with the permission of the Debts Recovery Tribunal, withdrawn the application whether made before or after the Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Act, 2004 for the purposes of taking action under the SARFAESI Act. The interpretation of this proviso came for consideration in a subsequent case decided by the Hon’ble Supreme Court, in the matter of Transcore Vs Union of India.
3. Simultaneous Proceedings under DRT and SARFAESI -
Transcore Vs Union of India – The following important issues came to be considered in Transcore’s Case -
(i) Whether the banks or financial institutions having elected to seek their remedy in terms of DRT Act, 1993 can still invoke the SARFAESI Act, 2002 for realizing the secured assets without withdrawing or abandoning the O. A. filed before the DRT under the DRT Act.
(ii) Whether recourse to take possession of the secured assets of the borrower in terms of Section 13 (4) of the SARFAESI Act comprehends the power to take actual possession of the immovable property.
Held, that withdrawal of application pending before Debts Recovery Tribunal is not a pre-condition for taking action under SARFAESI Act. It is for the bank/FI to exercise its discretion as to cases in which it may apply for leave and in cases where they may not apply for leave to withdraw. We do not wish to spell out those circumstances because the said first proviso to Section 19 (1) is an enabling provision, which provision may deal with myriad circumstances which we do not wish to spell out herein.
The authorized officer is like a court receiver under Order XL Rule 1 Civil Procedure Code. He can take either symbolic possession and in appropriate cases he can take actual possession also. There is no dichotomy between symbolic and physical possession.
See Also Ace Media Advertisers Pvt. Ltd. Vs Bank of Baroda  (Allahabad HC)
4. Approaching High Court under Art 226 when alternative remedy is available & Proceeding against Guarantor’s property without exhausting action against Principal Borrower-
In United Bank of India Vs Satyawathi Tondon and others  the Hon’ble Supreme Court observed that it is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.
Further, the Hon’ble Supreme Court held that issuing notices to guarantor under Section 13 (2) and (4) and filed an application under section 14 of the SARFAESI Act without first initiating action against the borrower for recovery of the outstanding dues is permissible.
The following decisions were also referred for the proposition that the Bank can proceed against the guarantor before exhausting the remedy against the principal borrower. –
Bank of Bihar Ltd. v. Damodar Prasad 
State Bank of India v. M/s. Indexport Registered and others 
Industrial Investment Bank of India Limited v. Biswanath Jhunjhunwala 
5. Whether DRT has jurisdiction to go into post 13 (4) action?
Authorised Officer Indian Overseas Bank Vs Ashok Saw Mill 
The intention of the legislature is, therefore, clear that while the Banks and Financial institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee. The consequences of the authority vested in DRT under sub-Section (3) of Section 17 necessarily implies that the DRT is entitled to question the action taken by the secured creditor and the transactions entered into by virtue of Section 13 (4) of the Act. The Legislature by including Sub-Section (3) in section 17 has gone to the extent of vesting the DRT with authority to even set aside a transaction including sale and to restore possession to the borrower in appropriate cases.
Also refer Anand Jayant More Vs Bank of India 
6. Writ Jurisdiction not appropriate remedy when alternative remedy is available-
Triveni Alloys Limited Vs BIFR  When 3/4th thth of the secured creditors have taken a decision to initiate action under SARFAESI Act, it amounts to measure taken to recover their dues as mentioned under Section 13(4) of the SARFAESI Act. The aggrieved party may approach the DRT and not the High Court. Very often something which is not mentioned can be implied by necessary implication.
V.Sriramulu Vs Karur Vyasya Bank Ltd & ors 
Y.L.K.Prasad son Vs Central Bank of India 
Punjab National Bank Vs Imperial Gift House  (Supreme Court)
Bharat Lal Vs Punjab National Bank Housing Finance Ltd. (Allahabad)
Eppanapally Ravi Vs Canara Bank, Rajendranagar Branch, Hyderabad  (AP)
Sri Kodandaram Alloys Pvt. Limited rep by its Managing Director Bs. SBI 
7. Reply to representation/objections raised by borrower under Section 13 (3-A)
Malhotra Tractors Vs Chief Manager, SBI, Faizabad 
The provisions contained in Section 13 (3-A) are mandatory in nature and the Bank as well as the authority have no right to proceed in violation of this provision. It is open to the authorities to proceed further under section 13 (4) only after the representation or objection of the borrower or guarantor is decided by passing a speaking or reasoned order on the basis of material on record.
Kirandevi Bansal Vs Deputy General Manager (Authorised Officer)  - The time limit of one week prescribed under sub-section 3 A to Section 13 is only directory. Before any proceeding is initiated under sub section 4 of section 13, it is obligatory on the part of the secured creditor to communicate the reasons for non acceptance of the representation/objections submitted by the borrower. The Legislation has fixed the time limit of one week to see that the proceeding initiated u/s 13 is expedited so that there may be some finality in the action. Held, that period of one week is only directory provision and non compliance of time limit as such will not vitiate the proceedings provided the reason for rejection of the objection is communicated to the borrower before taking action under section 13 (4).
Also refer Industrial Development Bank of India Ltd. Chennai Vs Kamaldeep Synthetics Ltd  - Possession notice issued under sec 13 (4) would not be vitiated by the delay in communicating the reasons for rejection of the representation/objections.
Tensile Steels Ltd Vs Punjab and Sindh Bank and ors - Possession ordered to be delivered back as Bank failed to comply with mandatory requirement of the provisions of Sec 13 (3-A).
8. Power of the DRAT to order deposit of 50% of the debt and the challenge to the rate of interest -
Indian Bank Vs. Blue Jaggers Estates Limited and others  - The contention of the Appellant that DRAT has no power to insist for deposit of 50% debt without the debt being determined was rejected by the Supreme Court. The Supreme Court further held that contentions of the appellant that the rate of interest is unconscionable, expropriatory and contrary to law, merits no consideration. It was further held that the appellant cannot question the agreed rate of interest when he signed the agreement with open eyes and agreed to abide by the terms and conditions of loan documents. Doctrine of unconscionable contract cannot be invoked for frustrating the action initiated by the bank for recovery of its dues.
9. Pendency of Civil Suit or execution petition or obtaining a decree is no bar to proceed under SARFAESI Act - It was held in the following cases that a pending civil suit or execution petition is no bar to proceed under SARFAESI Act
Mrs. Sunanda Kumari and another Vs Standard Chartered Bank  (Karnataka)
Kerala. Abdul Azeez Vs Punjab National Bank  (Kerala)
10. Claim under SARFAESI can be only to the extent of decree/order passed by DRT
Ace Media Advertisers Pvt. Ltd. Vs. Bank of Baroda 
It has been held in the above case that the process under Securitisation Act can be confined to the extent of the decree/order passed by Debts Recovery Tribunal.
11. Insolvency Petition Vs SARFAESI-
Indian Overseas Bank, Brodipet Branch, Guntur Vs Popuri Veeraiah 
Borrower filing Insolvency Petition and official receiver appointed. The claim of the Bank admitted in the Insolvency Petition. Sec 10 of the Provincial Insolvency Act, 1920 exempts corporations or companies from being proceeded against. Therefore, the question of invoking provisions of Provincial Insolvency Act against the Bank does not arise nor is valid. As the Bank had already initiated the process under SARFAESI Act, the proceedings need not be stopped in view of the Insolvency Petition.
12. Section 14 – Nature of powers that are exercisable by the District Magistrate or Chief Metropolitan Magistrate-
Puran Maharashtra Automobiles Vs Sub Divisional Magistrate  - The nature of the powers that are exercised by the DM or CMM are purely executionery in nature and particularly when no element of quasi-judicial functions or application of mind is required while exercising the said powers, it cannot be said that the DM is a persona designate and that he cannot delegate the powers to other officer.
Arjun Urban Co-operative Bank Ltd, Sholapur Vs Chief Judicial Magistrate, Solapur  - Sec 14 clearly refers to CMM and CM. Two distinct authorities are provided by the statue. There is no casus omissus here. It is well settled that at the stage of Sec 14, there is no adjudication of any issues. The authorities have to only render assistance to the secured creditor to recover possession.
Union Bank of India Vs State of Maharashtra - Sec 14 is procedural in nature and merely empowers the CMM or DM to assist the secured creditor in taking possession of the secured assets and it does not clothe the DM with the power to adjudicate in respect of any dispute pertaining to secured assets. Also refer Kotak Mahindra Bank Limited Vs District Magistrate 
Gujarat Industrial Co-op Bank Ltd Vs District Magistrate - Sec 14 is relatable to taking possession of a secured asset. The District Magistrate is not entitled to re-open a concluded issue subsequently.
Please refer to Authorised Officer Canara Bank Vs Sulay Traders thro Bipin Kantilal Vakta - for the proposition that the DM is to verify the record to the extent that the condition precedent for exercise of the power by the Bank are satisfied.
Sundaram BNP Paribas Home Finance Ltd Vs State of Kerala - The employment of any physical power to dispossess even in terms of a statute or enforceable order could be only had in exercise of the police power of the State. Even a Court does not have the power to dispossess by force through its officer, but has the power to secure it only through the police machinery of the State. That power cannot be conceded to any individual or institution empowered to take possession, except in cases where the power to physically dispossess is also expressly conferred. That such power has not been conferred by Parliament on a secured creditor under the Act. The DM has to exercise the power by himself and cause the relief to be worked out under his control. That cannot be delegated .
Ayishumma Vs Hassan - It is very much clear that absolutely no power, jurisdiction, competence or expertise is intended or vested with the Magistrate to deal with any claim as to the nature of the property in question or as to the merits or demerits with regard to other aspects involved in connection with loan transaction, but for considering whether the property in question in respect of which assistance is sought is a secured asset or not. For similar proposition refer Vaishnavi Pulvarising Mills Ltd Vs SBI, Stressed Assets Management Branch, Chennai 
Issue of Notice to the Borrower by the Metropolitan Magistrate – The question whether the Metropolitan Magistrate while considering an application under section 14, is required to give notice to the borrower was considered in the following cases and it was held that there is no requirement to issue such notice.
A.Aboobacker Vs PNB & others 
Mrs. Sunanda Kumari and another Vs Standard Chartered Bank 
Vijaya Bank, S.D Road Branch, Secunderabad Vs Shameem Transport, Bangalore
State Bank of India Vs Kathikkal Tea Plantations, Melur 
13. Exercise of power by Additional Collector under section 14 -
Irshad Hussain Vs District Magistrate, Moradabad 
Where the Additional Collector has similar power as of Collector under Sec 14 A of the UP Land Revenue Act, 1901, the Order passed by the Additional Collector cannot be said to be without jurisdiction.
13. Demand Notice to Guarantor Mandatory - Notice to guarantor under SARFAESI Act is mandatory. Proceedings without such notice will be vitiated. Mahavir Plantations Pvt Ltd Vs K.K.Steel Enterprises Vs ICICI Bank Ltd. 
14. Demand Notice not giving details of the amount payable –
Madhusudhan Ghosh Vs Bank of Baroda  - Sec 13 (2) notice shall give details of the amount payable by the borrower on the secured assets intended to be enforced. As no details of the amount payable has been supplied to the borrower, showing the debit and credit balance resulting therein, there is a serious infirmity in issuing the notice and vitiates the entire procedure adopted for realization.
15. In Bank’s claim application before the DRT, stay application filed by the Borrower to stop SARFAESI action initiation by the Bank is not maintainable - S.K.Viji & another Vs Indian Overseas Bank & Others  - Application for stay of proceedings initiated by the Bank under SARFAESI Act in the claim application filed by the Bank not maintainable. Appeal dismissed. Parties have been given liberty to file appeal/application under Section 17 of SARFAESI Act, if they so choose.
16. Security Interest under Lease/tenancy to third party –
Shikshak Sahakari Bank Ltd & another Vs Indian Oil Corporation Ltd & Another 
Property mortgaged to the Bank leased out to a third party. Bank taking symbolic possession of the property. Possession is subject to the lease hold rights of the Lessee. Lessee directed to pay monthly rent to the Bank before physical possession of the property is delivered to the bank. Provisions of Section 65 (a) of the Transfer of Property Act is not inconsistent with Section 13 of SARFAESI Act. Provisions of 65 (a) of T.P. Act is being subject to lis pendens embodied in Sec 52 of Transfer of Property Act.
Khaja Atheequlah Vs Union Bank of India  - On exercise of powers under the Act, the Bank assumes to itself the right to put the property to sale. This is, in a way, comparable to the power of a executing court to enforce a decree. Any step taken preceding the sale, can be equated to attachment. The attachment of an immovable property in course of execution of decree does not entail in dispossession of a person, who is otherwise entitled to remain in it. In case there is a tenant in respect of a building, which is sought to be sold, in the course of execution, the tenant cannot be evicted or thrown away on mere account of attachment. Even if sale is successfully conducted, tenancy has to be attorned in favour of the higher bidder on conclusion of sale. Therefore, the steps taken by the Bank to seal the premises and thereby disabling the petitioners from undertaking business, cannot be sustained in law.
Pankaj Kumar Chandulal Antala Vs Central Bank of India 
The question of possession or occupation of the premises will have to agitated under Sec 17 (4) r/w Sec 35 of SARFAESI Act. No protection is available as the State Rent Act is created by State statute and the SARFAESI Act being a Central Act is later in time. Even unregistered lease in contravention of sec 65 A of TP Act cannot be pressed into service for any protection by an occupier.
Nitco Roadways Private Limited, Bangalore Vs Punjab National Bank  - If the secured asset is in possession of bona fide tenants or lessees, they cannot be thrown out by invoking sec 13 & 14 of the Act. The secured creditor/bank can only take symbolic possession from the bona fide tenants. The secured creditor has to take recourse to appropriate legal proceedings for taking actual possession from the tenants or lessees. Reference made to Hutchison Essar South Limited Vs Union Bank of India and another 
17. Rule 9 (4) – Granting extension of time for payment of the balance of sale price-
Kalu Ram Vs State of UP 
It is clear that neither Rule 9 (4) nor the terms and conditions of the sale cast any statutory obligation on the authorized officer or the Bank to consider the application of the petitioner for extension of time.
18. Encashment of TDRs offered as collateral security without waiting for 60 days-
Adi Jogesh Radia Vs State of West Bengal  - Writ filed contending that within 5 days of issue of notice under Sec 13 (2), Bank issued a letter informing that certain fixed deposits and other collateral securities had been encashed, without waiting for the period of 60 days. Held, that the secured creditor cannot resort to any measures specified in Sec 13 (4) till the expiry of 30 days and hence the action of encashing TDRs is not contrary to the scheme of the Act.
19. Section 35
SBI Vs Heera Laxmi Contractors Pvt. Ltd. (Mumbai HC)
Kohinoor Creations Vs Syndicate Bank (Delhi HC).
Section 35 of the SARFAESI Act will over ride the provisions Arbitration and Conciliation Act 1996. It cannot be pleaded that the dispute with regard to auction should be resolved through Arbitration and Conciliation Act.
20. EPF dues have priority over dues of Secured Creditor
Bank of India Vs Assistant Provident Commissioner 
Dues under EPF will have priority over the dues of the Secured Creditor. There is no specific provision in the SARFAESI Act which enable the Bank to claim statutory charge. It is not the intention of the SARFAESI ACT to disturb the social welfare policy embedded in Sec 11(2) of the E.P.F Act.
21. Income Tax attachment order prior to creation of security interest
UCO Bank Vs Union of India  - In the absence of any specific provisions in SARFAESI Act creating any first charge in favour of the Bank, Sec 281 b of the Income Tax Act r/w Rule 16 of the Second Schedule of the IT Act will have over-riding effect. The provisional attachment being prior to the creation of the security interest, the subsequent action of the Bank under SARFAESI, the notice issued by Tax Recovery Officer to UCO Bank demanding the sale proceeds in respect of property is legal.
A. Venkata Ramana Vs LIC Housing Finance Ltd.
Limitation for enforcement of security Interest under SARFAESI Act is 12 years. No need to withdraw pending civil suit before proceeding under SARFAESI Act.
23. Limitation – Applicability of Sec 5 to application under Sec 17 (1)-
La Kozy Vs ING Vysya Bank Ltd - Though as observed in UCO Bank Vs Kanji Manji Kothari and Co. and ors  section 5 of the Limitation Act is applicable for proceedings u/s 17 (1) of SARFAESI Act, it does not mean that DRT is obliged to entertain the proceedings even after the same has become hopelessly barred by limitation and no sufficient cause for condoning delay is made out.
24. When can the mortgagor redeem the property
Shakeena P.Sahul Hameed Vs Bank of India and others 
Mortgagor can redeem the property sold by the Bank in SARFAESI auction before Registration of sale certificate. Until the sale is complete by registration the mortgagor does not lose right of redemption. When question of law is involved writ petition is maintainable even though alternate remedy is available
When sale becomes complete, vesting right in property in favour of auction purchaser-
K.Chidambara Manickam Vs. Shakeena and Others 
When once Sale Certificate is issued as per Rule 9 (7) of the Rules, sale is complete and absolute and the same need not be registered under the provisions of the Registration Act.
25. Notice of assignment to ARCIL whether necessary
Sashi Agro Foods (P) Ltd Vs Andhra Bank 
SARFAESI proceedings initiated by a Bank can be continued by ARCIL after assignment of debt, no further notice is required. But some payments were made and MOU had been entered with Bank, it would be prudent to issue a notice by mentioning the payments.
Assignment set aside in the matter of Arunachalam Murthu Vs State Bank of India on the ground that the assignment of the debt of Helios Company by SBI in favour of Kotak Mahindra Bank Ltd was less than the offer of OTS made by the Company.
26. Non payment of balance price bid – Whether sale can be confirmed in favour of second highest bidder-
Ullas Chandra Sahoo Vs Bank Of India, Bhubaneswar 
If the highest bidder fails to deposit 25% of the bid amount, the property cannot be sold to the second highest bidder. “sold again forth with” as contemplated in Rule 9(3) of the Security Interest Rule does not mean that the property shall be sold to the second highest bidder. Entire process of sale by public auction shall have to be conducted again.
27. Partial Payment subsequent to demand notice - Whether can make the asset come out of NPA
Chembeti Brahmaih Chowdhary VsState Bank Of Hyderabad 
Any payment made by the borrower subsequent to issuance of invocation of SARFAESI proceedings by the bank, the loan account of the borrower cannot come out of NPA classification.. Also refer to Azam Food Products Pvt Ltd Vs DRAT Chennai 
28. When and within what time does the right to approach DRT accrue to the Borrower
UCO Bank Vs Kanji Manji Kothari and Company and others 
Borrower can approach the DRT with in 45 days from the date when symbolic possession is taken or from the date when actual possession is taken. Provisions of Section 5 of limitation Act is applicable as there is no express exclusion of Limitation Act.
Also refer –
D.M.Nangia Engineering & Contractors & Others Vs Bank Of Maharashtra DRAT Mumbai.
Union Bank of India VS Chairperson DRAT & Ors 
Time limit of 45 days provided in Section 17 of SARFAESI ACT with in which the effected party has to approach the DRT challenging the measures taken under Section 13(4) of the act cannot be extended by taking the aid of Section 5 of the Limitation Act. Akshat Commercial Pvt Ltd Vs Kalpana Chakraborty and Other 2010(2) DRTC 362 Calcutta.
29. Jurisdiction of the Tribunal where Sec 17 (1) proceeding to be initiated –
Elements Coke Pvt. Ltd. Vs UCO Bank - Since action u/s 13 (4) is in the nature of execution proceeding, the Tribunal within whose territorial jurisdiction the secured assets is situate is the only competent Tribunal whose jurisdiction can be invoked.
30. Agricultural Property – Change in nature of use of land
Gajula Exim (P) Ltd Vs Authorised Officer, Andhra Bank 
Possession notice issued by the bank was challenged before DRT stating that the property was an agricultural property. DRT dismissed the same stating that there were plant and machinery and building in the land. The borrower approached the High Court. High Court dismissed the writ petition among other things stating that the borrower failed to prove that any agricultural operations are being conducted in any part of the land. It was held that mere paying Land Revenue cannot be treated as agricultural property.
J.Malliga & Others A.O. Union Bank Of India 
Cultivation of cardamom comes with in the term agriculture and SARFAESI Proceedings cannot be initiated against the cardamom estate.
Mohd. Basheer Vs Kannur District Co-operative Bank Ltd 
Land planted with rubber be treated as an agriculture and SARFAESI Act cannot be invoked. The order passed by the learned single judge who held that rubber plant does not come within the meaning of agriculture was set a side
Also refer Kalpesh PC Surana Vs Indian Bank Teynampet Branch - The factual issues regarding nature of the land cannot be the subject matter of writ jurisdiction.
31. Proceeding against only one property though demand notice issued in respect of two properties –
Wasan Shoes Ltd Vs Chairperson Debts Recovery Appellate Tribunal, Allahabad
Notice u/s 13 (2) issued mentioning two properties located at Agra and Noida. Possession under Sec 13 (4) confined to one property located at Agra. Held, there is no error in the issue of Sec 13 (2) notice and it is open to the secured creditor to proceed against any secured asset and it is not essential that all the secured properties should be put to sale simultaneously. No error in procedure adopted and there is substantial compliance under Rule 8 (2) of the Rules.
32. SARFAESI Vs. SICA
Provisions of SARFAESI Act override Section 22 of SICA.
Protection under Section 22 SICA is available to the borrower and not the guarantor. Proceedings pending before BIFR shall stand abated on Bank taking steps under SARFAESI Act.
Also refer Nouveaw Exports Private Limited Vs Appellate Authority for Industrial & Financial Reconstruction 
33. Bar of Jurisdiction of Civil Court
Yuth Development Co-operative Bank Ltd Kolhapur Vs Balasaheb Dinakrrao Salokhe & Ors 
Civil Court has no jurisdiction to entertain any suit filed in respect of action taken under SARFAESI Act.
Also Refer Allahabad Bank Vs Bipin Behari Lal Srivastasva & Ors 
Punjab National Bank Vs Shaikh Jumman Shakih Guljar 
Civil Court not to grant injunction restraining the bank from taking measures under SARFAESI Act as the same is barred under Section 34 of the Act
Sunayana Malhotra & Ors Vs ICICI Bank 
Civil Court barred from issuing any injunction in respect of the action taken under SARFAESI Act by a bank or Financial Institution
34. Exercise of powers by Labour Court for recovery of dues for prohibiting the secured creditor from exercising the powers-
Union Bank of India Vs General Workers Union- The Labour Court will have no jurisdiction as per provisions of Sec 35 of SARFAESI Act to prohibit the secured creditor from exercising the powers. The power, if any, can be to the extent that in a given case the amount that is realized by sale of secured assets of a company by a secured creditor may be called upon to give the facts of appropriation and seek for payment proportionately for payment to the workmen dues.
35. Issue of second notice not barred
Omeshwar Baldwa Vs Vasavi Co-Operative Urban Bank Ltd 
Issue of fresh/second notice not forbidden. SARFAESI Act not provided any limit within which period steps or measures enumerated under Section 13(4) have got to be accomplished. Conduct of petitioner lulled bank into some kind of hibernation- any intervention by the Court would only be putting a premium to such conduct. Writ petition dismissed.
Davji Farms Ltd & Others Vs Dena Bank and another 
No bar to issue second notice –first notice is treated as cancelled
Bhuvanendran Vs LIC Housing Finance Limited . – The Act never stipulates that once notice is issued under section 13 (2) it is inevitably to be followed up by measures contemplated u/s 13 (4). There is no bar under the Act to issue a corrected/fresh notice under section 13 (2).
Sujit Kumar Roy Vs Union of India - The notice was issued under Sec 13 (2) quoting the Second Ordinance. The notice questioned on the ground that no valid notice issued as the Act had already come into force. Held, that mere mentioning a wrong provision would not vitiate the action provided it is relatable to a known source.
36. Payment of Commission to Enforcement Agents
Badugu Vijaya Laxmi Vs State Bank Of India 
The Hon’ble High Court has held that services of Enforcement Agents and Recovery Agents comes within the purview of profession and the said persons cannot charge exorbitantly for their services. The Court further held that grant of exorbitant amount of commission to the recovery agents and enforcement agents at a minimum rate of 10% is excessive and disproportionate to the nature of the work to be performed by them. The Court has expressed hope and trust that the bank would focus its attention on payment of fees to the agents and take appropriate measures for remedying the situation, if necessary in consultation with the RBI.
Ashoka Books (P) LTD Vs State of HP (SBI case) 
Bank initiated action under SARFAESI Act. Borrower tried to set Criminal Law into motion against officers of the Bank. Police officers have not taken action against Bank Officers. Borrower filed writ petition. The Act of the Bank and it’s Officers can be tested in appropriate Court of competent Jurisdiction. By no stretch of Imagination the action of the Bank be termed as being criminal in nature
Santosh Traders Sons Vs Bhusawal Peoples Co-Op Bank 
Bank failed to adduce evidence to show that it had served the notice. DRT directed the Bank to return the movables taken over from the Borrower..
BPPV Classic Tea Factory Pvt Ltd Vs Corporation Bank 
Sale proceedings initiated by the secured creditor under SARFAESI Act cannot be challenged under Companies Act.
Dayanath Pandey Vs State Of U.P. 
60 days notice under section 13(2) to be counted from the date of notice and not from the date of service. Clear 30 days time from the date of publication of notice of sale not given. Entire recovery proceedings quashed. Sale deed executed was also cancelled.
Krishna Chandra Sahooo Vs Bank Of India 
Bank failed to give reply to the objections raised by borrower to the notice issued by the bank under section 13(2). Possession notice issued by the bank quashed.
Sravan Dal Mill Pvt Ltd Vs Central Bank Of India 
The borrower has a right to question the classification of NPA by the bank in a writ petition. Bank has been directed to answer the objections raised by the borrower.
Swastik Agency & Others Vs State Bank Of India & Ors
Possession notice in vernacular language was published in English News paper. The same is not in accordance with the rule,. would not serve the purpose
Narender Singh Vs Punjab and Sind Bank & another DRAT Delhi 
Demand notice issued in the name of dead person. The bank has not taken any action though informed about the death. Auction conducted was set aside with a liberty to start proceedings afresh. Bank directed to deliver the property bank.
Prakash Agarwal Vs Sapna Dikshit & Others
An auction purchaser at a sale held in execution of a mortgage decree buys not only the interest of the mortgagor but also the interest of the mortgagee. If the lease does not bind the mortgagee, it doest not equally bind the auction purchaser. If the mortgagor grants a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. Neither the mortgagor nor the lessee can defeat the right of mortgagee and no lessee can claim any protection unless his tenancy is as per the requirements of section 64-A of T.P. Act. The writ petition filed by a tenant questioning SARFAESI proceedings initiated by the bank was dismissed.
Forum Diamonds & another Vs Bank Of Baroda & Others 
Borrower challenged the order of DRAT who directed to deposit 50% of the debt due as a precondition to hear appeal filed by him. The borrower contended that unless the debt is determined, the DRAT has no power to direct him to deposit the amount. The High court dismissed the writ petition stating that if the said contention is accepted the very purpose of the SARFEASI Act would be defeated
Dr. Pranjivan Puroshottam Zaveri and another Vs Dena Bank 
The appellant claiming himself as bona fide purchaser for valuable consideration without notice challenged the action of the bank and disputed the mortgage created in favour of the bank. The High Court held that appellant cannot raise such disputes before DRT. The appellant may redress their grievance by filing civil suits
Signal Apparels Pvt Ltd Vs Canara Bank 
Guidelines issued by RBI in relation to classifying NPA should be followed by the bank before issuing notice under Section 13(2) of SARFAESI Act. The judgment discussed at length the meaning of NPA it’s ambit scope. Writ petition dismissed.
Manjk Industries Vs Union Bank Of India 
Correct amount due was not mentioned in 13(2) notice. But account was correctly classified as NPA. Appellant has not denied about the availment of loan. Typographical mistake is a technical violation, but not vitiate the action.
 2004 CLR -1 – 626 = 2004 (4) JT SC 245 = 2004 (4) SCC 311 = II (2004) BC 397 SC
 The Enforcement of Security Interest and Recovery of Debts Laws ( Amendment) Act, 2004 (Act No.30/2004.
 2006 (12) SCALE 585 = 2007 (1) DRTC 298 SC – (2007) 135 Company Cases 1 SC
 AIR 2009 Allahabad 120
 2010 (2) DRTC 457 (SC)
 (1969) 1 SCR 620
 (1992) 3 SCC 159
 (2009) 9 SCC 478
 2010 TLPRE 494
 2009 (6) ALLMR 187 (BOM)
 2005(3) LW 764
 2006(1) DRTC AP
 2008(3) ALD 127
 2009-TLPRE-0-732 = 2009 (TLS)49112
 2010 (3) ADJ 307 Allahabad
 2009 (3) ALD 307 (AP)
 2010 (3) ALT 31 (AP)
 AIR 2009 Allahabad 150 = 2009 TLS 330018
 2009 (2) GLH 1 (Guj)
 AIR 2007 Mad 173
 AIR 2007 Bom 126
 2010 (2) DRTC 305 SC
 (2007) 135 Company Cases 604(Karnataka) DB
 2005 (127) CC 514 Kerala DB
 See 4 ibid
 2009 (4) ALT 365
 2009 TLMHH 226 = 2009 TLS 1343817
 2009 (5) MHLJ 380 (Bom)
 2010 TLMHH 633=2010 TLS 1348567 (BOM)
 2009 TLGJ 2799 (Guj)
 2009 TLGJ 2796 (Guj)
 2010 TLGJ 407 (Guj)
 AIR 2009 Ker 85
 2009 (3) Kerala Law Times 399
 2010 (1) Mad LJ (Cri) 31
 2005(127) CC 519 (Kerala)
 23 Supra
 2007(1) DRTC 494 (Karnataka)
 AIR 2009 Mad 152
 AIR 2009 Allahabad 125
 2005(127) CC DRAT Chennai 456.
 2010 TLCAL 668
 2006(2)DRTC 76 (DRAT Chennai)
 2006(2) D.R.T.C. 92 (DRAT Mumbai)
 2010 (2) ALT 634 (AP)= AIR 2010 AP 65
 2009 TLGJ 2358 (Guj)
 2010 (2) KCCR 1402
 AIR 2008 Kar 14
 2009 TLALL 1255=2009 (74) ALLLR 902
 2010 (1) CAL LJ 272
 2006(2) DRTC215 (DRAT Mumbai)
 2005(2) RAJ 622(Del)
 2006(2) DRTC 282 (KER) DB
 2009 TLGJ 87 (Guj)
 2007 (135) CC MAD 514
 2009 (6) ALLMR 240 = 2009 TLS 1346844
 2008 (2) ALL MR 512 (BOM) = 2008 (2) DRTC 179 (Bom)
 (2007) 138 CC 976 (MAD)
 AIR 2008 Mad 108
 2008(2) ALD 536 (AP)
 2009 TLALL 1554
 2007(1) DRTC 58 (Orissa)
 2010 (4)ALD 408 AP (DB)
 2010(4) ALD 424 A.P.(DB)
 57 Supra
 2009(1) DRTC 284
 2010(1)DRTC 180 (Gujarat)
 AIR 2009 Cal 252
 2008 (4) ALD 385= 2009(149) Company Cases 489
 2010(2) DRTC 143(Madras)
 2010(2) DRTC 123 (Kerala) DB
 2010 (3) Madras Law Journal 849 =2010 (2) DRTC 253 Mad
 AIR 2009 Allahabad 163
 2008(2) DRTC 341 Orissa DB
 2009(1) DRTC 501
 2010 (3) ALD 41 (AP) = 2010 LAP 189
 (2007)(1) DRTC 31 (GUJ)
 2010 TLMHH 455 (Bom)
 2008(2)DRTC 438 Bombay
 2010(1) DRTC340 (Allahabad)
 2010(2)DRTC Bombay 499
 2010(1) DRTC 353 (DELHI)
 2010 TLMHH 548 (Bom)
 2009 (1) Kerala Law Times 227
 AIr 2010 Madras 115
 2009 (1) GLR 867 (Guj)
 2010(1) DRTC 167 AP(DB)
 20009(1)DRTC 570 Chattisgad High Court
 2009 (4) Kerala Law Times 72
 AIR 2009 Cal 160
 2007(1) DRTC 490(H.P)
 2006(2) DRTC DRT Aurangabad 484
  142 CC 793
 2008(2) DRTC 290 DB Allahabad
 2009(1)DRTC 101(Orissa High Court)
 2010(1) ALT 321 = 2010(1)DRTC 489 A.P.
 2010(1)DRTC 102 (Orissa) DB
 2010(1) DRTC 440 DRAT Allahabad
 2010(1) DRTC 345 Bombay(DB)
 2010(2) DRTC 591(DRAT Mumbai)
 2010(2) DRTC 543.Madras High Court DB
 2010(2) DRTC 419 DRAT Allahabad