HC dismisses plea challenging bank's recovery proceedings

The Madras High Court has dismissed a plea challenging recovery proceedings initiated by a bank under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act against a borrower but gave liberty to the latter to avail remedy provided under the Act before concerned debt recovery tribunal within two weeks.
Silicon Valley Auto Components Private Limited (now called as Accem Industries Private Limited), Maraimalai Nagar, Kancheepuram District, had filed the writ petition challenging the recovery proceedings of Indian Bank, Nandanam Branch, against availing a loan amount of Rs.26,00,49,218.11.
The petitioners contended that the property, which was given to the bank as collateral security, was an agricultural land and the bank cannot initiate recovery proceedings on the agricultural land as per the Act.

The Division Bench, comprising Justice S.Rajeswaran and Justice S.Vydyanathan, in its order, said "SARFASI Act is a self-contained code and it has been enacted to enable the banks and financial institutions to recover the outstanding without approaching the courts and tribunals. Prior to the Act, the Banks were not empowered to take possession of securities and dispose of the same to realize the debts."
The bench said the petitioners' contention is that the secured assets are agricultural lands and therefore, it has to be exempted from the purview of the Act. But the area situated at Neelankarai, Chennai, has become a posh residential area and several residential projects are taking place there, the bench said.

"In fact, the petitioners themselves have constructed a huge bungalow with swimming-pool and a tennis court therein. Therefore, when the area has developed to a great extent and become a posh residential area, ... We do not find any justification on the part of the petitioners still to contend that the secured asset is an agricultural land."
"However, since it is a disputed question of fact, as already discussed supra, which cannot be decided in the writ proceedings, we (have) left the issue to be decided by the concerned Debt Recovery Tribunal. For the foregoing discussion, the writ petition fails and it is dismissed," the bench said.

It, however, gave liberty to the petitioners to avail the remedy provided under Section 17 of the Act before the concerned Debt Recovery Tribunal within a period of two weeks from the date of receipt of copy of this order.