Interim Order In Writ Petition Challenging SARFAESI Proceedings Should Generally Not Be Passed Without Hearing Secured Creditors: Supreme Court
6 nov 2020
A bench comprising Justices L. Nageswara Rao, Hemant Gupta, and Ajay Rastogi of the Supreme Court has observed that the High Court should be cautious in passing interim orders in petitions challenging SARFAESI proceedings without hearing the ensured creditor as such orders will defeat the purpose of speedy recovery of public money.
Citing the case of United Bank of India v. Satyawati Tondon, the Court observed that in petitions relating to recovery of dues, a stay granted by the High Court would impact the financial health of such institutions or bodies unfavorably and would eventually disturb the nation's economy.
The Court upheld a Kerala High Court judgment that Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act is a directory provision. Section 14 of the Act directs the District Magistrate to deliver ownership of a secured asset within 30 days, which could extend to 60 days for genuine reasons given in writing.