KOTAK MAHINDRA BANK LIMITED versus GIRNAR CORRUGATORS PVT. LTD. & ORS.
[2023] 1 S.C.R. 873, Supreme Court of India, 2023
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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KOTAK MAHINDRA BANK LIMITED
v.
GIRNAR CORRUGATORS PVT. LTD. & ORS.
(Civil Appeal No.6662 of 2022)
JANUARY 05, 2023
[M. R. SHAH AND KRISHNA MURARI, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (SARFAESI Act) – ss.
13(2), 13(4), 14, 17, 26E – Micro, Small and Medium Enterprises
Development Act, 2006 (MSMED Act) – ss. 15-23, 24 – Whether
the MSMED Act would prevail over the SARFAESI Act and whether
recovery proceedings/recoveries under MSMED Act would prevail
over the recoveries made/recovery proceedings under provisions
of the SARFAESI Act – Held : Sec 15 to 23 of the MSMED Act
provides a special mechanism for adjudication of dispute between
buyer and seller – But does not provides for priority over debt dues
of the secured creditor akin to s.26E of the SARFAESI Act – A
‘priority’ conferred / provided under Section 26E of the SARFAESI
Act would prevail over the recovery mechanism   of   the MSMED
Act – There is no repugnancy between the two Acts – In the absence
of any specific provision for priority in the MSMED Act, if MSMED
Act is allowed to prevail it would defeat the very object and purpose
of SARFAESI Act – Under section 14 of the SARFAESI Act, District
Magistrate or the Chief Metropolitan Magistrate is required to assist
the secured creditor in getting the possession of the secured assets
– Neither, District Magistrate or Metropolitan Magistrate would
have jurisdiction to adjudicate the
matter between secured creditor
and debtor – Person aggrieved by the steps u/s. 13(4) and s.14 of
the SARFAESI Act has to approach Debts Recovery Tribunal by
way of appeal/application u/s. 17 of the SARFAESI Act – Recoveries
under the SARFAESI Act with respect to the secured assets would
prevail over the recoveries under the MSMED Act.
Allowing the appeal, the Court
HELD: 1. In the entire Micro, Small and Medium
Enterprises Development Act, 2006 (MSMED Act), there is no
   [2023] 1 S.C.R. 873
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specific express provision giving ‘priority’ for payments under
the MSMED Act over the dues of the secured creditors or over
any taxes or cesses payable to Central Government or State
Government or Local Authority as the case may be. In sharp
contrast to this, Section 26E of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (SARFAESI Act) which has been inserted vide
Amendment in 2016, it provides that notwithstanding anything
inconsistent therewith contained in any other law for the time
being in force, after the registration of security interest, the debts
due to any secured creditor shall be paid in ‘priority’ over all
other debts and all revenue taxes and cesses and other rates
payable to the Central Government or State Government or Local
Authority. However, the priority to secured creditors in payment
of debt as per Section 26E of the SARFAESI Act shall be subject
to the provisions of the IBC. At this stage, it is required to be
noted Section 26E of the SARFAESI Act which is inserted in
2016 is also having a non-obstante clause. As per the settle
position of law, if the legislature confers the later enactment with
a non-obstante clause, it means the legislature wanted the
subsequent / later enactment to prevail. Thus, a ‘priority’
conferred / provided under Section 26E of the SARFAESI Act
would prevail over the recovery mechanism of the MSMED Act.
Sections
15 to 23 of the MSMED Act are providing a special
mechanism for adjudication of the disputes and to adjudicate and
resolve the disputes between the supplier and buyer – micro or
small enterprise. At the cost of repetition, it is observed that
MSMED Act does not provide any priority over the debt dues of
the secured creditor akin to Section 26E of the SARFAESI Act.
[Para 7][883-B-G]
2. SARFAESI Act has been enacted providing specific
mechanism / provision for the financial assets and security
interest. It is a special legislation for enforcement of security
interest which is created in favour of the secured creditor –
financial institution. Therefore, in absence of any specific
provision for priority of the dues under MSMED Act, if the
submission on behalf of respondent No.1 for the dues under
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MSMED Act would prevail over the SARFAESI Act, then in that
case, not only the object and purpose of special enactment /
SARFAESI Act would be frustrated, even the later enactment by
way of insertion of Section 26E of the SARFAESI Act would be
frustrated. If the submission on behalf of respondent No.1 is
accepted, then in that case, Section 26E of the SARFAESI Act
would become nugatory and would become otiose and/or
redundant. Any other contrary view would be defeating the
provision of Section 26E of the SARFAESI Act and also the object
and purpose of the SARFAESI Act. [Para 9][884-D-G]
3. While exercising power under Section 14 of the
SARFAESI Act, even the District Magistrate has no jurisdiction
and/or District Magistrate and/or even the Chief Metropolitan
Magistrate has no jurisdiction to adjudicate the dispute between
secured creditor and debtor. Under Section 14 of the SARFAESI
Act, the District Magistrate or the Chief Metropolitan Magistrate
as the case may be is required to assist the secured creditor in
getting the possession of the secured assets. Under Section 14
of the SARFAESI Act, neither District Magistrate nor
Metropolitan Magistrate would have any jurisdiction to adjudicate
and/or decide the dispute even between the secured creditor
and the debtor. If any person is aggrieved by the steps under
Section 13(4) / order passed under Section 14, then the aggrieved
person has to approach the Debts Recovery Tribunal by way of
appeal / application
under Section 17 of the SARFAESI Act. It is
observed and held that so far as recoveries under the SARFAESI
Act with respect to the secured assets would prevail over the
recoveries under the MSMED Act to recover the amount under
the award / decree passed by the Facilitation Council. [Paras 10
and 11][885-B-D, F-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6662
of 2022.
From the Judgment and Order dated 11.08.2017 of the High Court
of Madhya Pradesh Bench at Indore in Writ Appeal No.248 of 2017.
Amar Dave, Himanshu Bhushan, Krishnayan Sen, Advs. for the
Appellant.
KOTAK MAHINDRA BANK LTD. v. GIRNAR CORRUGATORS
PVT. LTD. & ORS.
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Saurabh Mishra, AAG, Niranjan Reddy, Sr. Adv., Pulkit Tare,
Aditya Shekhar, Abhishek Sharma, Sunny Choudhary, Shiv Sagar Tiwari,
Arjun Garg, Advs. for the Respondents.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Feeling aggrieved by and dissatisfied with the impugned
judgment and order passed by the Division Bench of the High Court of
Madhya Pradesh at Indore dated 11.08.2017 in Writ Appeal No. 248 of
2017, by which the Division Bench of the High Court has allowed the
said appeal preferred by respondent No.1 herein and has quashed and
set aside the judgment and order passed by the learned Single Judge and
has observed and held that Micro, Small and Medium Enterprises
Development Act, 2006 (hereinafter referred to as ‘MSMED Act’) will
prevail over Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to as
‘SARFAESI Act’), the secured creditor – Kotak Mahindra Bank Limited
has preferred the present appeal.
The facts leading to the present appeal, in nut shell, are as under:
1.1 One Mission Vivacare (hereinafter referred to as ‘debtor’)
advanced various credit facilities by the appellant bank – secured creditor.
In order to secure the various credit facilities, Plot Nos. 16 and 14, situated
in SEZ Area of Dhar were mortgaged along with certain movable fixed
assets.
1.2 On account of default in payment of loan / debt, the bank-
initiated recovery proceedings in respect of the secured assets
contemplated under Section 13(2) of the SARFAESI Act. The bank –
secured creditor filed an application before the District Magistrate on
17.06.2014 under Section 14 of the SARFAESI Act seeking assistance
from taking possession of the secured assets. By order dated 24.09.2014,
the District Magistrate allowed the said application by directing the SDM,
District: Dhar to take vacant possession of the secured assets. However,
no action was taken and therefore, the bank submitted applications to
the District Magistrate and the SDM complaining non-compliance of
the order to take possession of the secured assets. Finally, SDM issued
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direction to the Naib Tehsildar vide communication dated 07.11.2015 to
comply the order of the District Magistrate and obtain the possession by
taking police assistance. Thereafter vide order dated 21.03.2016, Naib
Tehsildar refused to take possession and to comply the order dated
24.09.2014 on the ground that one recovery proceeding is pending for
recovery of certain amounts from the secured assets and on the ground
that the recovery certificate issued in favour of respondent No.1 (original
respondent No.4 before the High Court) was already pending for
recovery of certain amounts from the aforesaid two secured assets. At
this stage, it is required to be noted that the recovery certificates were
issued in favour of respondent No.1 pursuant to the award passed by
the Facilitation Council on 11.09.2014 which was in favour of respondent
No.1 herein, which was under provisions of MSMED Act. The order
passed by the Naib Tehsildar refusing to take possession of the secured
assets pursuant to the order passed by the District Magistrate dated
24.09.2014 was the subject matter of writ petition before the learned
Single Judge of the High Court by way of Writ Petition No.2569 of
2016. While refusing to take possession of the secured assets pursuant
to the order passed by the District Magistrate under Section 14 of the
SARFAESI Act, Naib Tehsildar observed that MSMED Act being a
special enactment enacted subsequent to SARFAESI Act would have
overriding effect and
therefore, MSMED Act would prevail over the
SARFAESI Act.
1.3 The learned Single Judge allowed the writ petition preferred
by the bank – secured creditor and set aside the order passed by the
Naib Tehsildar by observing that the provisions of SARFAESI Act would
prevail and if respondent No.1 is aggrieved by the order passed by the
District Magistrate under Section 14 of the SARFAESI Act or the
measures taken under Section 13(4) of the SARFAESI Act, he may
prefer an appeal/application under Section 17 of the SARFAESI Act
before the Debts Recovery Tribunal.
1.4 Feeling aggrieved by and dissatisfied with the judgment and
order passed by the learned Single Judge holding that the SARFAESI
Act would prevail, respondent No.1 herein in whose favour there was
an award under provisions of the MSMED Act and in whose favour the
recovery certificates were issued, filed the present writ appeal before
the Division Bench of the High Court. By the impugned judgment and
KOTAK MAHINDRA BANK LTD. v. GIRNAR CORRUGATORS
PVT. LTD. & ORS. [M. R. SHAH, J.]
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order, the Division Bench of the High Court has allowed the said appeal
and has set aside the judgment and order passed by the learned Single
Judge and has observed and held that MSMED Act being the later
enactment, the same shall prevail over the SARFAESI Act.
1.5 The impugned judgment and order passed by the Division
Bench of the High Court holding that MSMED Act being later enactment,
the same would prevail over the SARFAESI Act the bank – secured
creditor has preferred the present appeal.
2. Shri Amar Dave, learned counsel appearing for the appellant
bank – secured creditor has vehemently submitted that as such, there is
no repugnancy between the provisions of SARFAESI Act and MSMED
Act. It is submitted that non- obstante clause in the MSMED Act, i.e.
Section 24 provides that provisions under Sections 15 to 23 shall have
effect notwithstanding anything inconsistent therewith contained in any
other law for the time being in force. It is submitted that Sections 15 to
23 of the MSMED Act only provide for special mechanism for
adjudication of the dispute along with enforcing certain other contractual
and business terms on the parties such as time limit for payments and
interest in case of delayed payments. It is submitted that the perusal of
the said scheme, from Sections 15 to 23 of the MSMED Act, clearly
shows that there is no express ‘priority’ envisaged for payments under
the MSMED Act over the dues of secured
creditors or over any taxes
or cesses payable to Central Government or State Government or Local
Authority as the case may be. It is submitted that no provision to this
effect is consciously provided. It is submitted that in sharp contrast to
this, the perusal of the scheme of SARFAESI Act, including in Section
26E, thereof leaves no room for doubt that the legislature has expressly
and unambiguously provided for a legal framework exclusively on the
issue of ‘priority’ of payment of dues. It is submitted that in case of
certain other legislations, there is express provision for the manner in
which the dues thereunder may either have a charge over the property
or have ‘priority’ over other dues. Reference is made to the provisions
of the Maharashtra Value Added Tax Act, 2002; Employees’ Provident
Fund and Miscellaneous Provisions Act, 1952; Kerala General Sales
Tax Act, 1963; Workmen’s Compensation Act, 1923; Central Excise
Act, 1944; Enforcement of Security Interest and Recovery Debts Laws
and Miscellaneous Provisions (Amendment) Act, 2016, etc. It is submitted
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that in the absence of such express provisions, there can be no basis to
ignore the specific scheme of the SARFAESI Act in comparison to such
specific scheme under the MSMED Act with regard to ‘priority’ of
payments. It is submitted that any such ‘priority’ over and above the
dues of secured creditors or government dues has to be expressly and
unambiguously provided for and cannot be read by implication. It is
submitted that viewed from this angle, in fact, there is no conflict between
the two schemes, i.e. MSMED Act and SARFAESI Act as far as the
specific subject of ‘priority’ is concerned.
2.1
It is further submitted that Section 26E of the SARFAESI
Act being subsequently inserted vide amendment in 2016,
the non-obstante clause in Section 26E of the SARFAESI
Act shall prevail over the provisions of MSMED Act.
Reliance is placed on the decision of this Court in case of
Bank of India vs. Ketan Praekh & Ors. [(2008) 8 SCC
148 (para 28)].
2.2
Making above submissions, it is prayed to allow the present
appeal and quash and set aside the impugned judgment and
order passed by the Division Bench and restore the judgment
and order passed by the learned Single Judge by holding
that the recoveries under SARFAESI Act shall be accorded
priority over recoveries under MSMED Act.
3. The present appeal is vehemently opposed by Shri Niranjan
Reddy, learned Senior Counsel appearing for respondent No.1.
3.1
Learned counsel appearing for respondent No.1 has
vehemently
submitted that MSMED Act has been enacted
to promote and protect the interests of the small and medium
scale enterprises which is a source of livelihood for several
citizens and contributes towards 27% to the GDP. It is
submitted that therefore, aggressive provisions were brought
in for the recovery of dues and compound interests are
given in MSMED Act which is not present in any other
legislations and is in the nature of a beneficial legislation. It
is submitted that therefore, in view of Section 24 of the
MSMED Act which provides for an overriding effect over
other prevailing laws, the provisions with respect to
KOTAK MAHINDRA BANK LTD. v. GIRNAR CORRUGATORS
PVT. LTD. & ORS. [M. R. SHAH, J.]
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recoveries under MSMED Act shall prevail over the
recoveries under SARFAESI Act.
3.2
It is submitted that the financial institutions have various
other means of recovery including SARFAESI Act, IBC
etc. as being a secured creditor to an extent of also taking
personal guarantee from the Directors of the company in
certain cases. However, such liberty of taking personal
guarantees etc. are not available to MSME and they
completely rely on MSMED Act for recovery of dues and
as such have only one method of recovery by virtue of the
award which is in the nature of a decree from the Facilitation
Council. It is submitted that in the above said context, an
overriding provision is provided under Section 24 of the
MSMED Act.
3.3
It is submitted that Section 24 of the MSMED Act provides
for an overriding effect over other prevailing laws. It is
submitted that the provisions of Sections 15 to 23 of the
MSMED Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the
time being in force. It is submitted that the entire scheme
of provisions under Chapter V – Sections 15 to 23 which
includes delayed payments, recovery of amounts due, and
establishment of Facilitation Council and its award has an
overriding effect on all other legislations including
SARFAESI Act. It is submitted that therefore, an award
from the Facilitation Council will also have an overriding
effect by virtue of Section
24. It is submitted that the
intention of the legislature is clear as the overriding provision
is for a particular set of delayed payments recovery
mechanism provided under MSMED Act which is also in
consonance with object and purpose of the MSMED Act.
3.4
It is further submitted that MSMED Act is a subsequent
legislation and by providing Section 24 of the MSMED Act,
the legislature has purposefully and knowingly superseded
all the recovery procedures prevailing at that relevant point
of time, by its non-obstante clause. It is submitted that if
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any contrary interpretation is to be given to the said position
of law, then the same would make Section 24 redundant,
which by all means is not the intention of the legislature. It
is submitted that if SARFAESI Act is given overriding effect
over the MSMED Act, then it would render awards of the
Facilitation Council as non-executable in all cases where
there is a secured creditor. It is submitted that the same
would severely affect the existence and growth of the
MSME and is also against object of the MSMED Act.
3.5
It is submitted that as per the law laid down by this Court in
catena of decisions, if two enactments have competing non-
obstante provision and nothing repugnant, then the non-
obstante clause of the subsequent statute would prevail over
the earlier enactments. It is submitted that the principle
therefore would be that the court must look into the objectives
of the two Special Acts. It is submitted that if the legislature
still confers the later enactment with a non-obstante clause,
it means the legislature wanted the enactment to prevail. It
is submitted that therefore, non-obstante clause in MSMED
Act, i.e. Section 24 would prevail over the recovery
mechanism of SARFAESI Act, being enacted later in point
of time, overriding all other laws being in force at that point
of time.
3.6
It is submitted that the State Madhya Pradesh in exercise
of powers conferred under Section 30 read with sub-section
(3) of Section 21 of the MSMED Act made the
Rules known
as ‘M.P. Micro and Small Enterprises Facilitation Council
Rules, 2006’ for procedure to be followed for recovery of
amounts due. It is submitted that under the said Rules, the
decree, award or order passed under provisions of MSMED
Act shall be executed by the Collector of the District
concerned and the amount due shall be recovered as arrears
of land revenue. It is submitted that as per Section 137 of
Madhya Pradesh Land Revenue Code, 1959, land revenue
would have first charge on the proceeds of the recovery of
dues from the subject property. It is submitted that
KOTAK MAHINDRA BANK LTD. v. GIRNAR CORRUGATORS
PVT. LTD. & ORS. [M. R. SHAH, J.]
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SARFAESI Act does not provide that it will have
precedence over a decree / award of the decree holder.
3.7
It is submitted that Section 240A of the IBC, 2016 provides
exception of certain provisions of Section 29A of the IBC
to MSME. It is submitted that it is a settled law that IBC,
2016 would override SARFAESI Act and therefore, in the
said context also, MSMED Act may have precedence over
SARFAESI Act.
3.8
It is further submitted that MSMED Act is an extension of
the welfare policy of the State and may need to be
considered in order to balance the larger public interest of
the small and medium scale enterprises and their means of
existence. It is submitted that therefore, to strike the balance
of interest for survival of small and medium scale
enterprises, it is prayed to interpret the provisions in favour
of the small and medium scale enterprises and to hold that
the recoveries under MSMED Act would prevail over the
recoveries under SARFAESI Act.
3.9
Making above submissions, it is prayed to dismiss the present
appeal.
4. Heard learned counsel appearing for the respective parties at
length.
5. The short question which is posed for the consideration of this
Court is whether the MSMED Act would prevail over the SARFAESI
Act? The question is whether recovery proceedings / recoveries under
the MSMED Act would prevail over the recoveries made / recovery
proceedings under provisions of the SARFAESI Act?
6. It is the case
on behalf of respondent No.1 that in view of
Section 24 of the MSMED Act which provides that the provisions of
Sections 15 to 23 of the MSMED Act would have overriding effect and
shall have effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force and in view of the
fact that the MSMED Act being a later enactment, then the SARFAESI
Act, the MSMED Act would prevail over the SARFAESI Act.
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KOTAK MAHINDRA BANK LTD. v. GIRNAR CORRUGATORS
PVT. LTD. & ORS. [M. R. SHAH, J.]
7. While appreciating the above submissions, it is required to be
appreciated that Sections 15 to 23 of the MSMED Act only provide for
special mechanism for adjudication of the dispute along with enforcing
certain other contractual and business terms on the parties such as time
limit for payments and interest in case of delayed payments. In the entire
MSMED Act, there is no specific express provision giving ‘priority’ for
payments under the MSMED Act over the dues of the secured creditors
or over any taxes or cesses payable to Central Government or State
Government or Local Authority as the case may be. In sharp contrast to
this, Section 26E of the SARFAESI Act which has been inserted vide
Amendment in 2016, it provides that notwithstanding anything inconsistent
therewith contained in any other law for the time being in force, after
the registration of security interest, the debts due to any secured creditor
shall be paid in ‘priority’ over all other debts and all revenue taxes and
cesses and other rates payable to the Central Government or State
Government or Local Authority. However, the priority to secured creditors
in payment of debt as per Section 26E of the SARFAESI Act shall be
subject to the provisions of the IBC. Therefore, such dues vis-a-vis dues
under the MSMED Act, as per the decree or order passed by the
Facilitation Council debts due to the secured creditor
shall have a priority
in view of Section 26E of the SARFAESI Act which is later enactment
in point of time than the MSMED Act. At this stage, it is required to be
noted Section 26E of the SARFAESI Act which is inserted in 2016 is
also having a non-obstante clause. Even as per the submission on behalf
of respondent No.1, two enactments have competing non-obstante
provision and nothing repugnant, then the non-obstante clause of the
subsequent statute would prevail over the earlier enactments. As per
the settle position of law, if the legislature confers the later enactment
with a non-obstante clause, it means the legislature wanted the subsequent
/ later enactment to prevail. Thus, a ‘priority’ conferred / provided under
Section 26E of the SARFAESI Act would prevail over the recovery
mechanism of the MSMED Act. The aforesaid is to be considered along
with the fact that under provisions of the MSMED Act, more particularly
Sections 15 to 23, no ‘priority’ is provided with respect to the dues under
the MSMED Act, like Section 26E of the SARFAESI Act.
8. As observed hereinabove, Sections 15 to 23 of the MSMED
Act are providing a special mechanism for adjudication of the disputes
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and to adjudicate and resolve the disputes between the supplier and
buyer – micro or small enterprise. At the cost of repetition, it is observed
that MSMED Act does not provide any priority over the debt dues of the
secured creditor akin to Section 26E of the SARFAESI Act. At the
most, the decree / order / award passed by the Facilitation Council shall
be executed as such and the micro or small enterprise in whose favour
the award or decree has been passed by the Facilitation Council shall be
entitled to execute the same like other debts / creditors. Therefore,
considering the provisions of Sections 15 to 23 read with Section 24 of
the MSMED Act and the provisions of the SARFAESI Act, as such,
there is no repugnancy between two enactments viz. SARFAESI Act
and MSMED Act. As such, there is no conflict between two schemes,
i.e. MSMED Act and SARFAESI Act as far as the specific subject of
‘priority’ is concerned.
9. At this stage, the object and purpose of the enactment of
SARFAESI Act is required to be considered. SARFAESI Act has been
enacted to regulate securitization and reconstruction of financial assets
and enforcement of security interest and to provide for a central debts
of security interest created on property rights, and for matters connected
therewith or incidental thereto. Therefore, SARFAESI Act has been
enacted providing specific mechanism / provision for the financial assets
and security interest. It is a
special legislation for enforcement of security
interest which is created in favour of the secured creditor – financial
institution. Therefore, in absence of any specific provision for priority of
the dues under MSMED Act, if the submission on behalf of respondent
No.1 for the dues under MSMED Act would prevail over the SARFAESI
Act, then in that case, not only the object and purpose of special
enactment / SARFAESI Act would be frustrated, even the later enactment
by way of insertion of Section 26E of the SARFAESI Act would be
frustrated. If the submission on behalf of respondent No.1 is accepted,
then in that case, Section 26E of the SARFAESI Act would become
nugatory and would become otiose and/or redundant. Any other contrary
view would be defeating the provision of Section 26E of the SARFAESI
Act and also the object and purpose of the SARFAESI Act.
10. Even otherwise the Naib Tehsildar was not at all justified in
not taking possession of the secured assets / properties as per order
dated 24.09.2014 passed by the District Magistrate under Section 14 of
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the SARFAESI Act. The order passed by the Naib Tehsildar refusing to
take possession of the secured assets / properties despite the order passed
under Section 14 of the SARFAESI Act on the ground that recovery
certificates issued by respondent No.1 for recovery of the orders passed
by the Facilitation Council are pending, is wholly without jurisdiction.
While exercising power under Section 14 of the SARFAESI Act, even
the District Magistrate has no jurisdiction and/or District Magistrate and/
or even the Chief Metropolitan Magistrate has no jurisdiction to adjudicate
the dispute between secured creditor and debtor. Under Section 14 of
the SARFAESI Act, the District Magistrate or the Chief Metropolitan
Magistrate as the case may be is required to assist the secured creditor
in getting the possession of the secured assets. Under Section 14 of the
SARFAESI Act, neither District Magistrate nor Metropolitan Magistrate
would have any jurisdiction to adjudicate and/or decide the dispute even
between the secured creditor and the debtor. If any person is aggrieved
by the steps under Section 13(4) / order passed under Section 14, then
the aggrieved person has to approach the Debts Recovery Tribunal by
way of appeal / application under Section 17 of the SARFAESI Act.
Therefore, the order passed by the Naib Tehsildar refusing to take the
possession pursuant to the order passed by the District Magistrate under
Section 14 of the SARFAESI Act was wholly without
jurisdiction and
therefore also the same was liable to be set aside.
11. In view of the above and further reasons stated above, the
impugned judgment and order passed by the Division Bench of the High
Court is unsustainable and the same deserves to be quashed and set
aside. Consequently, the present appeal is allowed. The impugned
judgment and order dated 11.08.2017 passed by the Division Bench of
the High Court of Madhya Pradesh at Indore in Writ Appeal No. 268 of
2017 is set aside and the judgment and order passed by the learned
Single Judge is hereby restored. It is observed and held that so far as
recoveries under the SARFAESI Act with respect to the secured assets
would prevail over the recoveries under the MSMED Act to recover the
amount under the award / decree passed by the Facilitation Council. It is
rightly observed by the learned Single Judge that if respondent No.1 is
aggrieved by the order passed by the District Magistrate under Section
14 of the SARFAESI Act, it will be open for him to initiate proceedings
under Section 17 of the SARFAESI Act which be considered in
KOTAK MAHINDRA BANK LTD. v. GIRNAR CORRUGATORS
PVT. LTD. & ORS. [M. R. SHAH, J.]
A
B
C
D
E
F
G
H
886
SUPREME COURT REPORTS
[2023] 1 S.C.R.
accordance with law and on its merits and subject to the provisions of
Section 17 and the provisions of the SARFAESI Act.
12. The present appeal is accordingly allowed. No order as to
costs.
Ankit Gyan
Appeal allowed.
(Assisted by : Abhishek Pratap Singh and Rahul Rathi, LCRAs)