Whether even where no stay is prayed for by the Borrower, during pendency of the proceedings under Section 17 before the DRT, the Secured Creditor can proceed to auction the secured asset even before a declaration envisaged under Section 17(4) of the SARFAESI Act as made by the DRT? – M/s. Lakshmi Shankar Mills Pvt. Ltd. Vs. The Authorised Officer/Chief Manager, Indian Bank – Madras High Court
April 15, 2017
(i) The right of the bank is not automatically suspended upon filing of an application under Section 17 of the Securitisation Act and the secured creditor can proceed to auction secured asset where no stay is granted by the Tribunal. (ii) The Tribunal has power to impose the condition relating to deposit for grant of stay of auction. (iii)The Tribunal has no power to pass any interim mandatory order relating to restoration of possession or restoration of management before the finalisation of the proceedings under Section 17 of the Securitisation Act, and (iv) All such grounds, which rendered the action of the bank/financial institution illegal, can be raised in the proceedings under Section 17 of the Securitisation Act before the Debt Recovery Tribunal. It is for the Debt Recovery Tribunal to decide in each case whether the action of the bank/financial institution was in accordance with the provisions of the said Act and legally sustainable.