Case Note & Summary
The petitioner, IDBI Trusteeship Services Limited, a debenture trustee, filed a writ petition seeking a direction to the District Collector, Pune, and the Additional Tehsildar to take possession of a mortgaged property in terms of Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The property was mortgaged by Darode Jog Homes Pvt. Ltd. (respondent no. 4) and its directors (respondent nos. 5 and 6) to secure debentures issued to investors. The petitioner had issued a notice under Section 13(2) of the SARFAESI Act and subsequently filed an application under Section 13(4) read with Section 14 before the District Collector, who failed to act. The respondents opposed the petition, arguing that the matter was pending before the Maharashtra Real Estate Regulatory Authority (RERA) and that the company was under winding up. The High Court held that the petitioner is a secured creditor under the SARFAESI Act and is entitled to enforce the security interest. The court clarified that RERA proceedings do not bar the remedy under SARFAESI, and the winding up of the company does not prevent the secured creditor from realising its security. The court directed the District Collector to take possession of the property within four weeks and hand it over to the petitioner. The petition was allowed with costs.
Headnote
A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Secured Creditor - Debenture Trustee - The petitioner, a debenture trustee, is a 'secured creditor' within the meaning of Section 2(1)(zd) read with Section 2(1)(zc) of the SARFAESI Act, 2002, and is entitled to enforce the security interest created in its favour by the borrower company. (Paras 1-10) B) Real Estate (Regulation and Development) Act, 2016 - Concurrent Jurisdiction - RERA - The provisions of RERA do not bar the jurisdiction of the High Court under Article 226 of the Constitution or the remedy under the SARFAESI Act. The two statutes operate in different fields and can coexist. (Paras 11-15) C) Companies Act, 2013 - Winding Up - Leave of Company Court - The pendency of winding up proceedings against the borrower company does not prevent the secured creditor from enforcing its security interest under the SARFAESI Act, as the secured creditor's right to realise its security is independent of the winding up process. (Paras 16-20) D) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13(4) - Possession - The District Collector is duty-bound to assist the secured creditor in taking possession of the secured asset under Section 14 of the SARFAESI Act, and failure to do so amounts to dereliction of duty. (Paras 21-25)
Issue of Consideration
Whether a debenture trustee acting as a secured creditor under the SARFAESI Act can enforce security interest against a developer and its directors despite the pendency of proceedings before RERA and the company being under winding up.
Final Decision
The High Court allowed the writ petition and directed the District Collector, Pune, to take possession of the secured asset within four weeks from the date of the order and hand it over to the petitioner. The petition was allowed with costs.
Law Points
- Secured creditor
- Debenture trustee
- Security interest
- Enforcement
- SARFAESI Act
- RERA
- Concurrent jurisdiction
- Mortgage
- Possession
- Winding up
