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SARFAESI - What happens if secured asset was agricultural land - Madras HC

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, (SARFAESI Act), 2002, is a self-contained code and has been enacted to enable banks and financial institutions (FIs) to recover the outstanding without approaching the courts and tribunals, the Madras High Court has said.

Prior to the Act, the banks were not empowered to take possession of securities to realise the debts. It was only under such circumstances that Parliament enacted the SARFAESI Act to enable banks and FIs to recover the loan without resorting to the time consuming legal proceedings, a division bench of justices S Rajeswaran and S Vaidyanathan said.

The bench was dismissing a writ petition from Silicon Valley Auto Components Private Limited in Maraimalai Nagar, which borrowed a huge sum from the Nandanam branch of Indian Bank. There remained a balance of Rs. 26 crore. The bank initiated recovery proceedings in February this year. Challenging the same, the firm filed the present petition. The contention of the petitioner was that the secured assets were agricultural lands and therefore they must be exempted from the purview of SARFAESI proceedings.

The bench said that the secured asset is situated in Neelankarai, which has become a very posh residential area in Chennai and a number of posh and giant residential projects have come up in and around it. In fact, the petitioner himself has constructed a huge bungalow with swimming-pool and a tennis court therein. “Therefore, when the area has developed in a great extent and became a posh residential area and when the bank resorted to take possession of the same, we do not find any justification on the part of the petitioner still to contend that the secured asset is an agricultural land,’’ the bench said and dismissed the petition.

It, however, granted liberty to the petitioner to avail the remedy provided under Section 17 of the Act before the Debt Recovery Tribunal concerned within two weeks, if it is so advised.

Article referred: http://www.newindianexpress.com/states/tamil_nadu/SARFAESI-Act-is-to-Recover-Dues/2014/08/24/article2395251.ece

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