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Withdrawal of notice under S. 13 (4) of SARFAESI Act does not discharge the debt

In Devarshi Kirana Store v. Authorised Officer, argument of the petitioner was that earlier, the concerned Bank initiated proceedings against the petitioner under Section 13 of the SARFAESI Act, 2002. The petitioner invoked the jurisdiction of Debts Recovery Tribunal under Section 17 of the Act. However, such notice was withdrawn. Therefore, the petitioner contended that the Bank was estopped to issue fresh notice to the petitioner.

The Madhya Pradesh High Court did not find any merit in the contention of the petitioner and held that the withdrawal of notice under Section 13(4) did not discharge the petitioner’s debt. The Bank was a secured creditor and a mortgagee and therefore, by withdrawal of earlier notice, the debt did not stand discharged. The Bank continued to be a creditor and petitioner a debtor. Thus, the possession notice could have been issued under the provisions of the Act. Further, the petitioner had an alternate efficacious remedy under Section 17 before the DRT. Accordingly, the petition was dismissed while the petitioner was given a liberty to approach DRT.

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