02/08/2022

Whether the Bank is entitled to avail the remedy u/s 14 of the SARFAESI Act in view of the existence of the Arbitration clause in the loan agreement and thereby proceeding under the provision under the Arbitration Act – Cholamandalam Investment & Finance Ltd. Vs. Hotchand Kishinchand Talreja & 2 Ors. – DRAT Mumbai Bench

DRAT held that what is to be understood is that arbitral proceedings are a form of adjudication of the dispute between the appellant and the respondents whereas Sarfeasi measures are provided for expeditious action against the debtors. It is true that R.D.B. Act does not provide the option to the creditor to go for relief before a Civil Court and the adjudicatory process has to be adjudicated by the D.R.T. alone. Simultaneous proceedings before the D.R.T. under the R.D.B. Act as well as proceedings under the SARFAESI Act without approaching the D.R.T. or the Civil Court are also maintainable. In the instant case, the Appellant is a financial institution coming under the provisions of the SARFAESI Act. But, at the same time, it is not a financial institution coming under the provisions of the R.D.B. Act. Under the circumstances, the Appellant could not have moved the D.R.T. with an Original Application seeking an adjudication of the dispute pertaining to the debt with the Respondents. The only adjudicatory process that is available to the Appellant is by way of arbitration and, therefore, the appellant rightly resorted to the provisions of the Arbitration provided in the loan agreement. Whether the Arbitration Award passed ex-parte is questionable is a matter for challenge under Section 34 of the Arbitration & Conciliation act, 1996. The D.R.T. cannot decide on the subject and has no jurisdiction to do so.

Whether the Bank is entitled to avail the remedy u/s 14 of the SARFAESI Act in view of the existence of the Arbitration clause in the loan agreement and thereby proceeding under the provision under the Arbitration Act – Cholamandalam Investment & Finance Ltd. Vs. Hotchand Kishinchand Talreja & 2 Ors. – DRAT Mumbai Bench Read Post »

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