DRT & SARFAESI: How High Court’s intervention in SARFAESI matters justified?

No one can defend a willful defaulter and no one can possibly object to the need of providing a special legislation to enable the Banks to recover their dues speedily and thus reduce their ‘Non-performing Assets’. Constitutional validity of ‘The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’ (in short ‘SARFAESI’) was upheld by the Supreme Court and the Courts have given guidelines from time to time as to how to interpret various provisions of SARFAESI Act, 2002. The Apex Court and even the High Courts have discouraged borrowers in approaching High Courts in SAFAESI matters. Initially, the borrowers used to question even the notice under Section 13 (2) of SARFAESI Act, 2002 in High Court under Article 226 of Constitution of India and there were cases where the proceedings of the Bank were stayed even in those cases. Thereafter, the Courts were very strict in entertaining challenge to demand notice issued by the Bank under section 13 (2) of the Act. Instead, the Courts have, from time to time, extended the scope of enquiry of the Debt Recovery Tribunals under Section 17 of the Act and also gone to the extent that every action initiated or taken by the Bank pursuant to section 13 (4) of the Act can be challenged under Section 17 of the Act. Despite so many guidelines and exercise of restraint of jurisdiction under Article 226 of Constitution of India, it is of the concern of many borrowers or bona fide borrowers or guarantors that the relief before Debt Recovery Tribunal under section 17 is not effective. It is increasingly felt that the Debt Recovery Tribunal is a forum to support the Bank irrespective of its mistakes and it is not for the borrowers or guarantors at all. The Tribunal is now being seen by many as an organization working under the control of Finance Ministry with a specific objective rather than a ‘Special Court or Tribunal’ dealing specifically with the recovery matters as the Banks may find it difficult to get this process completed in Civil Courts. There can not be any major difference between a ‘Tribunal’ and ‘Court’ except that even a non-judicial member can be a part of Tribunal and the Tribunal need not follow the ‘Civil Procedure Code’. Tribunals are normally created with a specific objective and through a special legislation and follows a different kind of procedure as prescribed and the object is to reduce the burden in Courts and making a specialized body to decide the issues in accordance with law.

In this background, it is worth noting the observation of a Constitution Bench of the Supreme Court in the case of Associated Cement Companies Ltd. V. P.N.Sharma, AIR 1965SC1595, speaking through Gajendragadkar, C.J., while holding that the appellate authority under the Punjab Welfare Officers Recruitment and Conditions of Service Rules, 1952, is a Tribunal, observed:

“…Special matter and questions are entrusted to them for their decision and in that sense, they share with the courts one common characteristic; both the courts and the Tribunals are ‘constituted by the State and are invested with judicial as distinguished from purely administrative or executive functions…’ They are both adjudicated bodies and they deal with and finally determine disputes between parties which are entrusted to the jurisdiction….As in the case of courts, so in the case of Tribunals, it is the State’s inherent judicial power which has been transferred and by virtue of the said power, it is the State’s inherent judicial function which they discharge. Judicial functions and judicial powers are one of the essential attributes of a sovereign State, and on considerations of policy, the state transfers its judicial functions and powers mainly to the courts established by the Constitution; but that does not affect the competence of the State, by appropriate measures, to transfer a part of its judicial powers and functions to Tribunals by entrusting to them the task of adjudicated upon special matters and disputes between parties. It is really not possible or even expedient to attempt to describe exhaustively the features which are common to the Tribunals and the courts, and features which are distinct and separate. The basis and the fundamental feature which is common to both the courts and the Tribunals is that they discharge judicial functions and exercise judicial powers which inherently vest in a sovereign state.”

In a landmark judgment of R.Gandhi Vs. Union of India, the Apex Court has upheld the judgment of Madras High Court to a great extent and with the result, the establishment of ‘National Company Law Tribunal’ and ‘Appellate Tribunal’ has not taken place till today. The Madras High Court has dealt with the issue clearly and the Supreme Court has given the final verdict on the issue and the Companies Bill is, now, as I think, pending before the Standing Committee.

It was infact was a very serious issue and in the same judgment of R.Gandhi Vs. Union of India, the Madras High Court has extracted the judgment of Delhi High Court on the same issue and it is as follows:

“In the case of Union of India V. Delhi High Court Bar Association (2002) 110 Comp Case 141; (2002) 4 SCC 275, a two-judge Bench of the court held that the Debt Recovery Tribunals through it may not strictly fall within the concept of judiciary as envisaged by article 50, it is nevertheless an effective part of the justice delivery system. It was also held therein that the creation of such Tribunals in the place of a civil court to decide civil disputes relating to debt recovery matters does not interfere with the independency of judiciary. The court held that nobody has an absolute right to demand that the disputes be adjudicated upon only by a civil court under the Code of Civil Procedure.

The court observed at paragraphs 24 and 25 of that judgment (page 157):

The manner in which a dispute is to be adjudicated upon is decided by the procedural laws which are enacted from time to time. It is because of the enactment of the Code of Civil Procedure that normally all disputes between the parties of a civil nature would be adjudicated upon by the civil courts. There is no absolute right in anyone to demand that his dispute is to be adjudicated upon only by a civil court. The decision of the Delhi High Court proceeds on the assumption that there is such a right. As we have already observed, it is by reason of the provisions of the Code of Civil Procedure that the civil court had the right, prior to the enactment of the Debt Recovery Act, to decide the suits for recovery filed by the banks and financial institutions. This forum, namely, that of a civil court, now stands replaced by a Banking Tribunal in respect to of the debts due to the bank. When in the Constitution articles 233A and 323B contemplate establishment of a Tribunal and that does not erode the independence of the judiciary, there is no reason to presume that the Banking Tribunals and the Appellate Tribunals so constituted would not be independent, or that justice would be denied to the defendants or that the independence of the judiciary would stand eroded.

Such Tribunals, whether they pertain to income-tax or sales tax or excise and customs or administration, have now become an essential part of the judicial system in this country. Such specialized institutions may not strictly come within the concept of the judiciary, as envisaged by article 50, but it cannot be presumed that such Tribunals are not an effective part of the justice delivery system, like courts of law. It will be seen that for a person to be appointed as a Presiding Officer of a Tribunal, he should be one who is qualified to be a District Judge and, in case of appointment of the Presiding Officer of the Appellate Tribunal he is, or has been, qualified to be a judge of a High Court or has been member of the Indian Legal Service who has held a post in Grade I for at least three years or has held office as the Presiding Officer of a Tribunal for at least three years. Persons who are so appointed as Presiding Officers of the Tribunal or of the Appellate Tribunal would be well versed in law to be able to decide cases independently and judiciously. It has to be borne in mind that the decision of the Appellate Tribunals is not final, in the sense that the same can be subjected to judicial review by the High Court under articles 226 and 227 of the Constitution.”

Why many say that the relief before Debt Recovery Tribunal is not effective?

1. The ‘section office’ attached to these Tribunals appears to be implementing directives of the Bank or Bank officials rather acting as officers of a Court or Tribunal.

2. On mere technical grounds, the ‘section office’ attached to these Courts or Tribunals return or reject papers making the Borrower/Appellant to run from pillar to post.

3. While the Borrower or the Appellant struggles to express his grievance and seek justice from Tribunal, the Bank proceeds with their action under SARFAESI Act and even completes the sale of ‘Sale of Secured Asset’.

4. There may not be presiding officers to the Tribunal at times without having an effective alternative arrangement.

5. The Tribunal keeps the matters pending without passing any orders and the Bank will not stay their proceedings and takes every opportunity to effectively use the provisions of SARFAESI Act, 2002.

Like-wise, borrowers or the litigants attribute several reasons as to why the relief provided before the Debt Recovery Tribunal under Section 17 of SARFAESI Act, 2002 is not effective. If the borrower approaches the High Court under Article 226 questioning the clear arbitratory exercise of power, the High Court will be asking the borrower as to why he can not avail the remedy provided under Section 17 of the Act. The borrower can not approach the Civil Court. If the borrower looses his case on technical grounds and despite having a good ground, he will have to make substantial deposit for maintaining an appeal before Debt Recovery Appellate Tribunal.

As lot of people will have exposure to Banks, the misuse of provisions of SARFAESI Act, 2002 by the Banks, at times, is being constantly discussed. The voice against Banks when the Bank initiates SARFAESI proceedings is increasing day-by-day. There are serious allegations very often against Banks when they proceed with the sale of ‘Secured Asset’.

Now, it should become a regular practice that when there is a good case and clear arbitrariness on the part of the Bank in proceeding under SARFAESI Act, 2002, the High Court can interfere and the reasons for exercise of power be stated in brief while granting relief to the borrowers. There are cases where the High Courts have come heavily on the Banks and their actions under SARFAESI Act, 2002. This exercise is likely to continue and the High Courts may be forced to listen to the grievance of the borrowers in SARFAESI matters despite the argument of the Bank that “anyone aggrieved can approach Debt Recovery Tribunal under Section 17”.

Note: the views expressed are my personal.

SARFAESI & DRT: ‘SARFAESI Auctions’ & the need of fairness?

It may be true that Banks do face numerous difficulties in recovering the dues despite having ‘security’. But, there can not be any difficulty for the Banks in recovering their dues under SARFAESI Act, 2002. It is alleged that even the Debt Recovery Tribunals and Appellate Tribunal do favour Banks and keep on insisting on making substantial payment to the Bank without looking into the merits or demerits in the Appeal filed by the borrower under the Act. According to me, earlier, the High Courts used to discourage the borrowers filing Writ Petitions and Civil Revision Petitions under Article 227 either during the pendency of the Appeal before the Tribunal or before filing the Appeal. The High Courts say that the borrower can avail the alternative remedy before the Debt Recovery Tribunal. In pending cases, there used to be directions for disposal of a particular application or appeal in a prescribed time. But, there will be difficulties in prescribing the time-frame for the DRT or DRAT to dispose of a particular application or Appeal. It is true that some borrowers do approach the Tribunal in order to delay the recovery process and in some cases, there can be genuine grievance and each case should depend upon its own merits. Only with this spirit, the Courts held that the Debt Recovery Tribunals can go into all issues in the Appeal and the Tribunals can even restore the possession of the ‘Secured Asset’ back. In a proceeding like an appeal under section 17 of SARFAESI Act, 2002, if the Debt Recovery Tribunal relies on technicalities, then, the borrower need not even approach the Tribunal seeking justice and that can not be the object or spirit behind SARFAESI Act, 2002. It is complicated for the borrower to pursue his remedy under section 17 of the SARFAESI Act, 2002 and there are issues like:

1. The borrower may be talking to the Bank for settlement even when the Bank proceeds under the provisions of SARFAESI Act, 2002. At this stage, the borrower will be under dilemma as to whether to file an Appeal antagonizing the Bank or the Bank Manager or to pursue the talks of settlement.

2. The borrower will be having a right to object to the demand or the notice issued by the Bank under Section 13 (2) of the Act. But, the borrower may choose not to raise any objections considering his relations with the Bank or Bank Manager and considering settlement talks.

3. Even when it comes to settlement, in many cases, the Bank Manager may orally say something and believing that the borrower may make some deposit and then, the Bank turns around and will say that the entire outstanding is to be cleared.

4.The law prescribes a time limit for filing an appeal pursuant to the notice issued by the Bank under section 13 (4) of the Act. However, in view of the continuous talks, assurances from the Bank or the Manager concerned, the borrower may not choose to exercise his right of Appeal.

5.Though it is now settled that all actions of the Bank pursuant to Section 13 (4) of the Act are appeallable, the borrower may have to explain to the Tribunal as to why there is a delay in filing the Appeal and there can be insistence for filing ‘condonation of delay’ application. It is really illogical in the context that even the ‘Auction Sale’ can be challenged under Section 17.

6. It is often alleged that the Debt Recovery Tribunal insists for ‘substantial deposit’ while granting a temporary stay of Bank’s proceedings. In many cases, this temporary relief ends even without looking at the allegations in the Appeal seriously.

7. The Bank keeps on proceeding under SARFAESI Act, 2002 even when an Appeal is pending. If there is some development during the pendency of the Appeal, the Bank will contend that the original Appeal becomes infructuous. This is illogical. The Debt Recovery Tribunal shall consider all issues pertaining to the Bank’s action when the Appeal is pending. Even where the borrower only challenges the notice under section 13 (4) and if the property is sold pending the Appeal, then, the DRT shall consider setting aside the sale also if it is found that the Sale is illegal. There can’t be any logic in asking the borrower to file an appeal afresh and at the best, the borrower may be asked to file additional affidavit if there are further allegations about the ‘Sale Proceedings’.

Like-wise, there are several issues if the borrower wants to pursue his case against the Bank through an appeal under section 17 of the SARFAESI Act, 2002. There can not be any problem if the Debt Recovery Tribunal takes quick decisions instead of keep-on adjourning the issues. In the recent past, there are several serious allegations against the Bank as to how it conducts the ‘Auction Sale’. In one case, an Appeal is pending before the DRAT and as the Bank is proceeding with the auction, the borrower has mentioned the urgency and wanted to look into the issue on urgent basis as there will be ‘third party interest’ if the auction is proceeded to. While the proceeding is ‘on’, the Bank says that the ‘Auction’ is going-on and then says that the ‘Auction’ is over as there is one ‘bid’ and it is confirmed also. How come this be termed as a fair ‘Auction Sale’. The DRAT should have decided the issue ‘then and there’ instead of keeping the matter pending and adjourning the matter without recording anything on merits and submissions of the parties concerned.

These genuine difficulties of the borrowers and the reality as to how the provisions of SARFAESI Act, 2002 are misused, there is a merit in the argument that the High Court can interfere under Article 226 of the Constitution in ‘SARFAESI proceedings’. Now, the argument will be against the ‘judicial restraint’ in this regard. If the borrower is not genuine, then, he can be handled straight-away and even if the borrower is not genuine on one issue, that can not be a ground for the Bank to be ‘unfair’ to him while using the provisions of SARFAESI Act, 2002.

In the recent past, the Madras High Court has passed several judgments coming heavily against the Banks and their action. It is laudable and the Banks and their officers should be taken to task in appropriate cases. The extract of a recent wonderful judgment of Madras High Court in W.P.No.21987 of 2010 & M.P.No. 1 of 2010, reported in CDJ 2011 MHC 5036, emphasizing as to how the ‘Auction process’, is to be fair is as follows:

“18. The course of conduct adopted by the Bank clearly gives an indication that the market rate was deliberately reduced in the subsequent valuation report. The forced/distress value was shown only for the purpose of fixing a lesser amount as reserve price. In case there were no bidders during the second auction, the Authorised Officer in all fairness should have postponed the auction. It is not the case of the Bank that several attempts were made earlier to dispose of the property. Given the location of the property, there would be no difficulty to get higher price as indicated in the earlier valuation report.

19. It is true that the there is no provision akin to that of Order XXI Rule 72 of the Code of Civil Procedure in SARFAESI Act dis-entitling the decree holder from participating in the auction without the express permission of Court. However, in a matter like this, when there were no bidders, the Bank should not have knocked down the property for a paltry sum.

20. The petitioner is still liable to pay the balance amount to the Bank, in spite of losing the property.

21. The Bank is a responsible body. The SARFAESI Act gives wide powers to the Bank to take action to recover the amount and for the purpose of such recovery, to take possession of the property and to sell the same, without reference to Court. Therefore the Bank is expected to conduct the procedure in a bona fide manner. The dealings of the Bank should be fair and transparent. When the amount due from the borrower is more than Rs.4 cores, the attempt of the Bank should be to auction the property for the maximum amount and to adjust it towards the dues and in case of any excess amount after meeting the liability, to refund the same to the borrower. By reducing the market value and the reserve price and by purchasing the property for the alleged distress value by the secured creditor themselves, the public sale has become a mockery.

22. The Authorised Officer is none other than the officer of the Bank. The auction was conducted at the premises of the respondent Bank. Admittedly there were no other bidders. In case the Bank was having an idea to purchase the property, they should have given prior intimation to the borrower. The fact that there is no statutory prohibition against the secured creditor taking part in the auction, will not enable them to purchase the property by re-fixing the market price as well as the reserve price and to purchase the property at such reduced rate. This is absolutely not the intention of the law makers while enacting the SARFAESI Act.

23. In Kerala Financial Corpn. v. Vincent Paul, (2011) 4 SCC 171 the Supreme Court found that there were no rules or guidelines framed by the Kerala Financial Corporation for sale of properties. Therefore, the Supreme Court indicated certain guidelines in the matter of sale of properties owned by the Corporation till such formation of rules, guidelines or orders. The relevant norms are extracted below :-

"(v) In the matter of sale of public property, the dominant consideration is to secure the best price for the property to be sold. This can be achieved only when there is maximum public participation in the process of sale and everybody has an opportunity of making an offer. It becomes a legal obligation on the part of the authority that property be sold in such a manner that it may fetch the best price.

(vi) The essential ingredients of sale are correct valuation report and fixing the reserve price. In case proper valuation has not been made and the reserve price is fixed taking into consideration the inaccurate valuation report, the intending buyers may not come forward treating the property as not worth purchase by them."

24. In Eureka Forbes Ltd., vs. Allahabad Bank and ors. [2010(6) SCC 193], the Supreme Court while considering the concept of public accountability and performance, indicated that the same would apply to the banks as well. The Supreme Court observed :-

"82. Principle of public accountability is applicable to such officers/officials with all its vigour. Greater the power to decide, higher is the responsibility to be just and fair. The dimensions of administrative law permit judicial intervention in decisions, though of administrative nature, but are ex facie discriminatory. The adverse impact of lack of probity in discharge of public duties can result in varied defects not only in the decision-making process but in the decision as well. Every public officer is accountable for its decision and actions to the public in the larger interest and to the State administration in its governance."

25. There is no dispute that judicial review is concerned only with the decision making process. Courts and Tribunals are not expected to sit in appeal over the decisions taken by the authorities including banks. However, when a case of grave miscarriage of justice is made out, necessarily, the Court has to come to the rescue of the affected party. The Court of equity is expected to advance justice. When it is made out that substantial injustice has been done to a party, the Court should not shirk its responsibility. Technicality has no say in such matters.

26. The authority given to the Bank to recover the dues without recourse to legal proceedings will not give them the right to snatch away the property from the borrower. The very fact that in spite of the steep rise in land value, the market value was shown at a low rate after a period of about two years itself shows the mala fides in the matter. The subject sale effected by the Authorised Officer of the Bank cannot be treated as a valid public sale. Therefore we are constrained to set aside the sale made in favour of the Bank.

27. The Authorised Officer is directed to issue fresh auction notice and conduct the auction as per statute in a fair and transparent manner, without giving room for complaints.”

Note: the views expressed are my personal.

Cause of Action to Appeal to DRT continues at various stages under SARFAESI Act, 2002?

It is felt that enormous powers are conferred on Banks or Public Financial Institutions under SARFAESI Act, 2002 from the stage of determination of outstanding due, entertaining objections, taking possession of the property and selling the property through private treaty at times and in public auctions very often. The borrower too has got a right to question the illegality if any on the part of the Bank in proceeding against the ‘secured asset’ under the Act. The right of the borrower to question the illegal act on the part of the Bank if any starts when the Bank issues a possession notice under section 13 (4) of the Act. Within 45 days from the date of receipt of notice under section 13 (4), the borrower can prefer an appeal to the Debt Recovery Tribunal under Section 17 of the Act seeking stay of further proceedings and seeking to set-aside the action initiated by the Bank under the provisions of SARFAESI Act, 2002 starting from the demand notice under section 13 (2). There were and there are many complicated areas under SARFAESI Act, 2002. The legislature wanted to make a balance between the rights of the borrowers and the interests of the Bank and focused on speedy recovery of loans as can be seen from the objects. Though, there were many complicated areas in the course of proceeding against the ‘secured asset’ under the provisions of SARFAESI Act, 2002, the issue of cause of action to file an appeal under section 17 of the Act was debated and remained complicated for some time. After considering the complications, the plight of the borrowers and the need of providing the borrower a remedy for his grievance, according to me, now it is settled that the borrower can question the action of the Bank under the provisions of SARFAESI Act, 2002 at any stage and on each event after issuance of notice under section 13 (4) of the Act. There still exist complications even with this proposition. There can be cases where the borrower could have remained silent after receiving notice under section 13 (4) and could have got all the knowledge of proceedings initiated by the Bank till the steps to sell the property and will he be allowed to question the sale proceedings finally? This is a very important question as the situation would be different if the borrower expresses his acceptable inability to approach the DRT under section 17 immediate to receipt of notice under section 13 (4). However, in view of the vast powers conferred on the Bank to enforce the ‘secured interest’, the borrower should be given an opportunity to file an appeal liberally though granting of relief will depend on the facts and circumstances of the case and also the law. The views expressed by the High Courts in few cases on the issue of cause action to file an appeal under section 17 of SARFAESI Act, 2002 are as follows:

1. Madras High Court – in Indian Overseas Bank Vs. G.S.Rajshekaran (2008 (4) MLJ 1012):

“From the aforesaid facts, it would be evident that the respondent-Writ Petitioner had not challenged the notice issued under Section 13(2) of the SARFAESI Act, but challenged the action of the appellant-Bank in taking possession of the secured asset for realising the same and such action of taking the possession of the secured asset though started on 13.11.2007, the cause of action continued till the notice dated 26.12.2007 was issued for auction-sale of the secured asset under Section 13(4) of the SARFAESI Act.

9. Section 13(4) of the SARFAESI Act enables the secured creditor to take recourse to one or more of the measures to recover the secured debt as shown under Clauses (a), (b), (c) and (d) of Section 13(4). The cause of action takes place as and when one or other such measure to recover the secured debt is taken by the secured creditor.”

2. Madras High Court – in Ponnusamy and another Vs. Debt Recovery Tribunal 2009 (1) LW 954, 2009 (2) CTC 302, 2009 (3) MLJ 1271:

“38. In Karnataka State Financial Corporation Vs. N. Narasimahaiah {2008 (5) SCC 176}, the Supreme Court held as follows:-

"40. Right to property, although no longer a fundamental right, is still a constitutional right. It is also human right. In the absence of any provision either expressly or by necessary implication, depriving a person therefrom, the Court shall not construe a provision leaning in favour of such deprivation."

"In a case where a Court has to weigh between a right of recovery and protection of a right, it would also lean in favour of the person who is going to be deprived therefrom. It would not be the other way round."

39. Viewed in the context of the ratio laid down by the Supreme Court extracted above, it could be seen that the right conferred upon the secured creditor under Section 13 (4) of the SARFAESI Act, is a right of recovery. The right conferred upon the debtor or the surety under Section 17 is a right to save one's own property. To hold that the fate of a debtor or surety will be sealed in a period of 45 days from the date of initiation of the measures under Section 13 (4) and that he would be left remediless after the said period on account of non-availability of Section 5 of the Limitation Act, would defeat the right to property. Therefore the Court has to choose an interpretation which would lean in favour of the right to property. If so done, the conclusion is irresistible that Section 5 of the Limitation Act, would apply to applications filed under Section 17 of the SARFAESI Act.

40. In so far as the present case is concerned, the possession notice under Section 13 (4) is dated 16.10.2007 and the notice of sale is dated 26.12.2007. The application was filed on 14.1.2008 and hence it was within the period of limitation, from the date of the notice of sale. Therefore there was not even a necessity for the petitioners to have filed an application to condone the delay, in so far as their prayer for setting aside the notice of sale was concerned.”

3. Bombay High Court – in Anand Jayant More Vs. Bank of India (2009 (6) ALL MR 187, 2010 (1) AIR(Bom) R 375, 2010 (2) BCR 484:

“11. Considering the rival submission, the first question is: whether the Debts Recovery Tribunal has jurisdiction to deal with post Section 13(4) situation. Both the Tribunal as well as Appellate Tribunal have proceeded on the basis that it is not open to the borrower to question the sale of the property which is post Section 13(4) situation. This issue has now been authoritatively answered by the Apex Court in the recent decision in the case of Authorized Officer, Indian Overseas Bank & Anr. vs. M/s.Ashok Saw Mill reported in 2009(9) SCALE 649. The main question examined by the Apex Court in this decision was whether the Debts Recovery Tribunal would have jurisdiction to consider and adjudicate with regard to post Section 13(4) events or whether its scope in terms of Section 17 of the Act would be confined to the stage contemplated under Section 13(4)? The Apex Court has answered the said issue in the affirmative. It has held that the consequences of the authority vested in Debts Recovery Tribunal under sub-section (3) of Section 17 necessarily implies that the Debts Recovery Tribunal is entitled to question the action taken by the secured creditors and the transactions entered into by virtue of Section 13(4) of the Act. It has expounded that the Legislature by including sub-section (3) in Section 17 has gone to the extent of vesting the Debts Recovery Tribunal with authority to even set-aside a transaction including sale and to restore possession to the borrower in appropriate cases. It has also noted that the dichotomy in the views expressed by the Bombay High Court and the Madras High Court has in fact been resolved to some extent in the case of Mardia Chemicals (supra) and also by virtue of the amendments effected to Sections 13 and 17 of the principal Act. It has thus held that the Debts Recovery Tribunal has jurisdiction to interfere with the action taken by the secured creditor even after the stage contemplated under Section 13(4) of the Act, as the action of the secured creditor is not only open to scrutiny and can be set-aside but it is also open to the Tribunal to restore status-quo ante in a given situation.”

Note: the views expressed are my personal and it’s a view point only.