Whether ARC’s possession/right as an assignee of mortgages created by borrower in favour of several Banks, will enable them to challenge the proceedings initiated by Government for resumption of land by exercising their power under Section 44A of the Land Acquisition Act – M/s. Asset Reconstruction Company (India) Ltd. Vs. M/s. Chennai Petroleum Corporation Ltd. – Madras High Court

Hon’ble High Court held that even as per the agreement, the Government reserved its right to resume the land and therefore, this Court, by considering the issue from any angle, is unable to visualise a situation by which the order of resumption can be held to be inappropriate or invalid. In view of the admitted position that the property has now been taken possession of by the petitioner, by exercising its right under SARFAESI Act and the property is not the property of M/s. SPIC Petro Chemicals Ltd. and the mortgage created by M/s. SPIC Petro Chemicals Ltd. is prohibited and declared to be void on the admitted facts, this Court is of the opinion that the order of resumption passed by the Government by exercising its powers under Sub-Section (2) of Section 44-A, is unavoidable. In the complex situation, this Court is of the view that reasonable opportunity, as contemplated by the proviso to Sub-Section (2) of Section 44-A, will be only an empty or useless formality. The mortgage is void as against the Government. It is true on a construction of Section 44-A, this Court may hold that it is not imperative for the Government to declare every transfer without permission from Government as void.

Whether ARC’s possession/right as an assignee of mortgages created by borrower in favour of several Banks, will enable them to challenge the proceedings initiated by Government for resumption of land by exercising their power under Section 44A of the Land Acquisition Act – M/s. Asset Reconstruction Company (India) Ltd. Vs. M/s. Chennai Petroleum Corporation Ltd. – Madras High Court Read Post »