Sek Saidul Human Hair & Others Vs Reserve Bank of India & Others (Calcutta High Court)
Summary: The Calcutta High Court held that the monetary threshold prescribed for specified non-banking financial companies under the Ministry of Finance notifications governing invocation of the SARFAESI Act, 2002 does not attach permanently to the underlying debt so as to restrict a bank that subsequently acquires the loan. The petitioners had originally borrowed Rs.14,33,500/- from Bajaj Finance Limited against mortgage of immovable property. After assignment of the loan to the respondent-bank, a demand notice under Section 13(2) was issued for Rs.18,75,630/- and proceedings under Sections 13(4) and 14 followed.
The petitioners contended that the secured debt was below the Rs.20 lakh threshold applicable to specified NBFCs under Notification S.O. 856(E) dated 24 February 2020, as amended by Notification S.O. 652(E) dated 12 February 2021. According to them, because the original financial institution could not have invoked SARFAESI for such debt, assignment of the loan could not confer greater enforcement rights upon the assignee bank. The High Court rejected this contention, observing that the notifications were issued specifically under Section 2(1)(m)(iv) and applied to financial institutions falling within that provision, whereas a “bank” under Section 2(c) constituted a distinct category.
