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SARFAESI : Borrower Has No Right Of Hearing In Proceedings Under Section 14

In HDB FINANCIAL SERVICES LIMITED vs M/S. REMO SOFTWARE PVT. LTD, the matter pertained Section 14 proceedings initiated by banks against few tenants, who were possessing the secured assets on lease. Challenging the SARFAESI proceedings initiated against them, they approached the High Court.

The Single Judge disposed of the writ petition, directing them to approach the DRT against the proceedings within two weeks under Section 17(4A) of the Act. The proceedings were kept in abeyance for two weeks based on the undertaking made by the bank. Going further, the Single Judge also held that even the borrower had to be heard before issuing directions under Section 14.

Challenging this direction regarding borrowers, appeal was before before the Division Bench.

The High Court of Karnataka referring to the judgments in Harshad Govardhan Sondagar vs. International Assets Reconstruction Company Limited and Vishal N. Kalsaria vs. Bank of India and Ors, has held that borrower has no right of hearing in proceedings under Section 14 of the SARFAESI Act. The aforesaid judgments in no manner provide that a borrower is also to be afforded an opportunity of hearing in the proceeding under Section 14 of the SARFAESI Act. That no such opportunity is envisaged in relation to the borrower remains a settled principle and may not require much elaboration.

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