Delve into the detailed legal analysis provided by the court in a recent case challenging the provisions of the SARFAESI Act. The case involves complex issues regarding the application of statutory limitations, review jurisdiction, and the interpretation of auction procedures under the Act. Stay updated on the latest developments in this legal saga.
Facts
- The challenge to the Sale Certificate issued in favor of the Auction Purchaser under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was dismissed due to limitation.
- The interim order dated 19.12.2016 passed by the High Court of Judicature at Allahabad, Lucknow Bench was stayed by the Court while issuing notice.
- The order of stay remains in effect as the appeal by Bank of Baroda against the Interlocutory Order of stay is pending disposal.
- The Respondent Company and Directors challenged the sale certificate in an application under Section 17 of the Act.
- The Bank issued notices under Sections 13(2) and 13(4) demanding repayment and physical possession of the secured asset.
- DRT dismissed the Section 17 application as it was filed beyond the statutory period of limitation of 45 days.
- Writ Petition directed the Company to pay dues in installments, failing which the Bank could proceed legally.
- The Company and Directors failed to comply, leading to a sale proclamation where Respondent No 7 was declared the successful bidder.
- Writ Petition was filed against the order in appeal by the Debt Recovery Appellate Tribunal.
- Civil Writ Petition No. 56410/2010 challenged the notices under Sections 13(2) and 13(4) seeking a writ of mandamus.
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Analysis
- The DRT allowed the review petition based on the ground of the deceased director’s legal representatives not being issued notice before auction.
- The DRAT allowed the appeal stating no error was apparent for review jurisdiction.
- The High Court admitted the Writ Petition filed by the Company, its Directors, and the legal representatives of the deceased Director based on the same ground of lack of notice.
- The DRAT found the original DRT order after detailed consideration and no justifiable reason for review.
- The High Court granted an interim order staying the operation of the appellate order, allowing the DRT to proceed with the Securitization Application.
- Despite ongoing legal proceedings, including a Special Leave Petition, the property sale and third-party rights were still unresolved after a decade.
- The SARFAESI Act is enacted for quick enforcement of the security.
- The Act provides banks and financial institutions with wide powers to recover their non-performing assets without the intervention of the court.
- It enables them to take possession of the secured assets and sell them without the intervention of the court or tribunal.
- The Act aims to facilitate the recovery of their dues quickly and effectively.
- The High Court was not justified in staying the operation of the DRAT order
- DRAT found no error apparent on the face of the record for DRT to invoke review jurisdiction
- DRT’s decision to recall its order dismissing the application under Section 17 of the Act was justified
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Decision
- The appeal has been allowed and the interim order dated 19.12.2016 passed by the High Court has been set aside.
- The High Court is requested to expedite the disposal of the Writ Petition, preferably within three months from the date of receipt of the order.
- No opinion has been expressed on the merits of the case.
- No costs have been imposed.
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Case Title: BANK OF BARODA Vs. PARASAADILAL TURSIRAM SHEETGRAH PVT LTD (2022 INSC 819)
Case Number: C.A. No.-005240-005240 / 2022
