SARFAESI/HC : "RBI's Guidelines Can Be Followed in One Time Settlement", Borrower's Petition Allowed

 An Interesting Judgment on Banks' Recovery by HC

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act,2002") - Borrower v Secured Creditor - Borrower's Account Turned Non Performing Asset (NPA) - Borrower Approached Court - Direction Issued to Bank

In this case, facts were that a person obtained a "loan". Later on, said borrower's account turned into NPA; "Orders under S.13(4) of SARFAESI Act, 2002 were passed" ; possession was also taken.

Finally, it has been held that if a borrower, under certain conditions, makes a representation and bank is willing to consider One Time Settlement, then One Time Settlement can be made by Secured Creditor in accordance with RBI's guidelines.

Finally, borrower's petition was allowed with direction to secured creditor not to take "any coercive action" against borrower for certain time. 

Citation : [2021] GCtR 1253

Vishal

Guwahati

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Banking Law Updates : Gauhati

Petition Filed Against State Bank of India Dismissed

Before the Hon'ble Gauhati High Court, in the case of MAHAGURU BIBHUTI NARAYAN AYURVEDIC CENTRE v SBI [WP(C) 210/2021] the proprieter "had taken a loan from" SBI "and as the petitioner could not repay the loan, his account was declared as NPA. Thereafter a proceeding under Section 13 (2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ["SARFAESI Act"] has been initiated by" SBI. In this case, the DM had passed an Order under S.14 of the Act on 15 December 2020. 

By 1 March 2021, "the symbolic possession has already been taken but physical possession has not been taken." It was "again an admitted case that the petitioner has already approached the Debts Recovery Tribunal by filing an appeal under Section 17 of the SARFAESI Act." Finally, the writ petition was dismissed.

It is relevant to note that securitization is defined in S.2(z) of SARFAESI Act which says that "securitisation" means acquisition of financial assets by any asset reconstruction company from any originator, whether by raising of funds by such asset reconstruction company from qualified buyers by issue of security receipts representing undivided interest in such financial assets or otherwise". What is secured debt is defined in S.2(ze) of SARFAESI Act which says that "secured debt means a debt which is secured by any security interest". Therefore, the definition of secured debt is dependent on the definition of security interest.