Case Law Details
M. Sons Gems N Jewellery Private Limited Vs RBI (Delhi High Court)
Conclusion: In present facts of the case, the Hon’ble Delhi High Court while rejecting contentions of the Petitioner observed that SARFAESI Act is a code in itself and the remedy provided under Section 17 is an expeditious and effective remedy available to an aggrieved person. The SARFAESI Act under Section 17 provides for an efficacious and efficient remedy to adjudicate the grievances of a borrower and the DRT has the power to determine whether the actions of an ARC are in compliance with the SARFAESI Act.
Facts: In present facts of the case, the State Bank of Bikaner and Jaipur granted cash credit (hypothecation) to the Petitioners with a limit to the sum of Rs. 10 crores and a sub-limit of Rs.4 crores on 24.11.2009. The Petitioners were also granted Bank Guarantee loan of Rs.5crores. The Petitioners in order to secure the cash credit (hypothecation) and the Bank Guarantee granted by SBBJ gave an equity mortgage of two properties.
On account of a survey conducted by the Income Tax Department, the bank accounts of the Petitioners were frozen. The loan accounts of the Petitioners were also frozen by the Income Tax Department. The accounts of the Petitioners were categorised as Non-Performing Assets (NPA) by SBBJ. Notices under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 were issued by SBBJ.
The Petitioner challenged Chapter II of the SARFAESI Act and the RBI Guidelines, 2003 before Hon’ble High Court and contended that the said provisions does not provide for any judicial remedy, unlike the one provided under Chapter III of the SARFAESI Act, and in the absence of a judicial remedy, Chapter II of the SARFAESI Act deserves to be struck down.
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