Proceeding under SARFAESI Act and IBC is saved from provision providing precedence to BUDS Act

HDB Financial Services Limited Vs Sub Registrar (Kerala High Court)

Kerala High Court held that action/proceeding under the the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [SARFAESI Act] and the Insolvency and Bankruptcy Code [IBC] is saved from the provision providing precedence to the Banning of Unregulated Deposit Schemes Act, 2019 [BUDS Act].

Facts- One Rajeev A.R and one Sunitha Kumari S.R (the borrowers) availed loans from the petitioner-financial institution by mortgaging all pieces and parcels of the land. The borrowers defaulted on loan repayment, prompting the petitioner to initiate proceedings under the SARFAESI Act. Physical possession of the property was taken on 05.12.2023. Thereafter, the property was put up for auction and sold to the 3^rd respondent for a sum of Rs. 56,10,443/-. However, when the 3^rd respondent attempted to register the sale certificate, it was informed that the 4^th respondent has issued a communication dated 27.02.2023 to the 1^st respondent, restraining the transfer of the property.

According to the 4^th respondent, FIRs were registered against the aforesaid Rajeev A.R by the State Crime Branch for misappropriating amounts of the BSNL Engineers Co-operative Society. During the course of the investigation, certain offences under the Banning of Unregulated Deposit Schemes Act, 2019 were also incorporated.