If any property is auctioned by one of the secured creditors without consent of the other secured creditor, it causes prejudice to the later secured creditor – J.M. Financial Assets Reconstruction Company Vs. Allahabad Bank & Ors. – DRAT Allahabad Bench
February 8, 2021
DRAT holds that if any property is auctioned by one of the secured creditors without consent of the other secured creditor, it causes prejudice to the later secured creditor. Thus, such aggrieved person may file the S.A. under section 17 of the SARFAESI Act for redressal of its grievance. Sub section (9) of section 13 of the SARFAESI Act envisages that in case of “financing of a financial asset by more than one secured creditors, or joint financing of a financial asset by secured creditors, no secured creditor is entitled to exercise any right conferred under section 13(4), unless agreed upon by the secured creditors with certain conditions. Thus, the provision of section 13(9) of the SARFAESI Act may be invoked, if any measure is taken under section 13(4) by any of the secured creditors of joint financing. Admittedly, the respondent-Bank has taken the symbolic possession under section 13(4), therefore, the S.A. filed by the appellant was not premature by any stretch of imagination. Since the Tribunal below has dismissed the S.A. stating it to be premature without pondering over the merits of the case, therefore, the order impugned is not sustainable.
