Case Note & Summary
The judgment involves two writ petitions: Writ Petition No. 1338 of 2016 filed by Narendra Plastic Private Limited and Neemit Punamiya against DBS Bank Limited, and Writ Petition No. 2046 of 2016 filed by DBS Bank Limited against Narendra Plastics Limited and Neemit Punamiya. The dispute arose from a loan facility granted by DBS Bank to Narendra Plastic Private Limited, which became a non-performing asset. The bank issued a notice under Section 13(2) of the SARFAESI Act and took possession of the secured assets. The petitioners challenged the bank's action, arguing that DBS Bank, being a foreign bank incorporated in Singapore, was not a 'bank' under Section 2(1)(c) of the SARFAESI Act and thus could not enforce security interest under Section 13. The court examined the definition of 'bank' under the SARFAESI Act, which refers to the Banking Regulation Act, 1949. Section 5(c) of the Banking Regulation Act defines a 'banking company' as a company which transacts banking business, and Section 5(b) defines 'company' to include a corporation incorporated outside India but having a place of business in India. Therefore, DBS Bank, having a branch in India, qualifies as a banking company and is a 'bank' under the SARFAESI Act. The court also noted that the petitioners had an alternative remedy under Section 17 of the SARFAESI Act before the Debt Recovery Tribunal, which they had already availed. Consequently, the court dismissed both writ petitions, upholding the bank's action and rejecting the challenge to its status.
Headnote
A) Banking Law - SARFAESI Act - Foreign Bank - Registration Requirement - Section 2(1)(c) read with Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - The court considered whether a foreign bank with a branch in India must be registered under Section 2(1)(c) to enforce security interest under Section 13. Held that the definition of 'bank' under Section 2(1)(c) includes a banking company as defined under the Banking Regulation Act, 1949, which includes a foreign bank with a branch in India. Therefore, DBS Bank, being a foreign bank with a branch in India, is a 'bank' under the SARFAESI Act and need not be separately registered. The court relied on the definition in Section 5(c) of the Banking Regulation Act, 1949, which includes a banking company as defined in Section 5(b), and Section 5(b) includes a corporation incorporated outside India but having a place of business in India. (Paras 6-10) B) Banking Law - SARFAESI Act - Alternative Remedy - Writ Jurisdiction - Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - The court held that the petitioners had an alternative remedy under Section 17 of the SARFAESI Act before the Debt Recovery Tribunal, and the writ petition was not maintainable. The court noted that the petitioners had already availed of the remedy under Section 17, and the proceedings were pending. Therefore, the writ petition was dismissed on the ground of alternative remedy. (Paras 11-12)
Issue of Consideration
Whether a foreign bank incorporated outside India, having a branch in India, is required to be registered under Section 2(1)(c) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) to enforce a security interest under Section 13 of the Act.
Final Decision
Both writ petitions were dismissed. The court held that DBS Bank is a 'bank' under Section 2(1)(c) of the SARFAESI Act and can enforce security interest under Section 13. The writ petitions were also dismissed on the ground of alternative remedy under Section 17.
Law Points
- Foreign bank
- SARFAESI Act
- Section 2(1)(c)
- Section 13
- enforcement of security interest
- non-performing asset
- writ petition
- alternative remedy
