Case Note & Summary
The petitioner, ASREC (India) Limited, is a company registered as a Reconstruction Company and Securitisation Company with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It is an assignee of a debt payable by respondent No.3, M/s. Crystal Mirage Pvt. Ltd., which is under liquidation. The debt was originally owed to Bank of India, which had initiated proceedings under the Recovery of Debt and Bankruptcy Act, 1993 (RDBA), registered as O.A. No. 54/2014. The petitioner was substituted as the applicant after the debt was assigned. The petitioner sought to preserve its right to proceed against a secured asset, namely Flat No. B-2202, 22nd floor, ad-measuring 4072 sq.ft., situated at Mahindra Eminente CHS Ltd., S.V. Road, Goregaon (West), Mumbai, which was mortgaged by respondent Nos. 4 and 5 to secure the dues of respondent No.3. The petitioner filed a writ petition seeking to initiate or continue proceedings under the SARFAESI Act against the secured asset. The court considered whether the assignee of a debt can proceed under the SARFAESI Act when the borrower is under liquidation and RDBA proceedings are pending. The court held that the assignee steps into the shoes of the original lender and is entitled to all rights and remedies available to the lender, including the right to take recourse under the SARFAESI Act. The pendency of liquidation proceedings or RDBA proceedings does not bar the assignee from enforcing its security interest under the SARFAESI Act. The court allowed the petition, permitting the petitioner to proceed against the secured asset in accordance with law.
Headnote
A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Assignment of Debt - Right to Proceed Against Secured Asset - The petitioner, an assignee of debt, sought to preserve its right to proceed against a flat mortgaged to secure dues of a company under liquidation. The court held that the assignee steps into the shoes of the original lender and is entitled to take recourse under SARFAESI Act, 2002, notwithstanding the pendency of liquidation proceedings and proceedings under the Recovery of Debt and Bankruptcy Act, 1993. (Paras 1-3)
Issue of Consideration
Whether an assignee of debt can initiate or continue proceedings under the SARFAESI Act against a secured asset when the borrower company is under liquidation and proceedings under the Recovery of Debt and Bankruptcy Act, 1993 are pending.
Final Decision
The court allowed the writ petition, permitting the petitioner to proceed against the secured asset in accordance with law under the SARFAESI Act.
Law Points
- Assignee of debt steps into shoes of original lender
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act
- 2002 (SARFAESI) proceedings can be initiated against secured asset even if company is under liquidation
- Recovery of Debt and Bankruptcy Act
- 1993 proceedings pending
