What are the salient features of the Securitisation Act?

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act) was passed in order to regulate securitisation and reconstruction of financial assets and enforcement of security interest. There was an acute need for assistance to the banks and other financial institutions when it comes to the recovery of loans as heavy losses being were incurred on account of unpaid debts. Initially, the Act was considered to be a boon to financial institutions and banks. However, gradually the flaws of the Act became evident, especially in terms of enforcement of security interest. It is true that there are certain deformities in the provisions for the enforcement of security interest. Firstly, a secured creditor can enforce any security interest, created in his favor, without the intervention of any court or tribunal. This may imply that whether the enforcement of security interest is justified or not, the secured creditor can enforce his claims without the intervention of any court or tribunal. Secondly, an inherent flaw in the provisions is that if the dues of the secured creditor are not satisfied under the Securitisiation Act, he can recover such dues by filing an application in the manner and form prescribed by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ("DRT"). Therefore, there are parallel provisions for recovering these dues. This might lead to a lot of confusion for a layman when it comes to understanding the process of enforcement of security interest. In case the secured creditor is not satisfied with the decision of the DRT, a further appeal can be filed to the Appellate Tribunal ("DRAT"). Thirdly, this law restricts its application to such debts as are classified by the secured creditor as non performing assets (an asset or account of a borrower which has been classified by a bank or financial institution as sub-standard doubtful or loss asset, in accordance with the directions/guidelines issued by the Reserve Bank of India ("RBI")). It seems that an unreasonable amount of power has been vested with the Chief Metropolitan Magistrate ("CMM") or the District Magistrate ("DM") to assist the secured creditor in taking possession of the secured asset. This is becomes more relevant as no act of the CMM or the DM, done in pursuance of this section, shall be questioned in any court or before any authority. What is the procedure of enforcement of security under the Securitisation Act? List of 4 items According to section 13 of the Securitisation Act, notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882, any security interest, created in favour of a secured creditor, may be enforced without the intervention of the court or tribunal, by such creditor in accordance with the provisions of the Act.

 If a borrower, who is under a liability to a secured creditor under a security agreement, makes a default in repayment or installment of secured debt and his account in respect of such debt is classified by the secured creditor as a nonperforming asset, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice, failing where after the secured creditor shall be entitled to exercise all or any of the rights that the Securitisation Act have outlined. [1] This notice, which will be produced in writing, will give details of the amount payable by the borrower and the secured assets that are intended to be enforced by the secured creditor in the event of non-payment. The secured creditor may undertake one or more of the following measures to recover his secured debt in the case that the borrower fails to discharge his liability in full within the sixty- day time period from the date of notice. list end The Secured creditor may: List of 10 items take possession of the secured assets of the borrower, including the right to transfer by way of lease, assignment or sale for realising the secured asset; take over the management of the secured assets of the borrower, including the right to transfer by way of lease, assignment or sale and realise the secured asset; appoint any person to manage the secured assets, the possession of which has been taken over by the secured creditor; require at any time, by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt.[2] Any payment made in this last circumstance to the secured creditor shall give such a person a valid discharge as if he has made the payment to the borrower. If there has been any transfer of secured assets, after taking possession or the management of, by the secured creditor or by the manager on behalf of the secured creditor, it shall now vest in the transferee of all rights in relation to the secured asset transferred as if the transfer has been made by the owner of such secured asset. Where any action has been taken against a borrower under the provisions mentioned above, all costs, charges and expenses that, in the opinion of the secured creditor have been properly incurred by him, shall be recoverable from the borrower. In the absence of a contract, the money received by the secured creditor shall be held by him in trust. This should be applied firstly in the payment of such costs, charges and expenses and secondly in discharge of the dues of the secured creditor. The residue of the money so received shall be paid to the entitled person in accordance with his rights and interests.

 If the dues of the secured creditor together with all costs, charges and expenses, incurred by him, are tendered to the secured creditor at anytime before the date fixed for sale or transfer, the secured asset shall not be sold or transferred by the secured creditor. He shall take no further step for transfer or sale of that secured asset. In the case of joint financing of a financial asset or financing by more than one secured creditor, no secured creditor shall be entitled to exercise any or all of the rights conferred on him unless exercise of the right is agreed upon by the secured creditors who represent not less than three-fourth of the value of the amount, outstanding on a recorded date. Such action shall be binding by and on all the secured creditors:[3] list end The Securitisation Act provides that where the dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal ("DRT") that is situated within the local jurisdiction or a competent court, for the recovery of the balance amount from the borrower. It is further stipulated that no borrower shall, after receipt of notice[4] transfer either by sale, lease or otherwise (other than in the ordinary course of his business) any of his secured assets, without prior written consent of the secured creditor. Where the possession of secured assets is required to be taken by or to be sold or transferred the secured creditor, the secured creditor may request the CMM or the DM within whose jurisdiction the secured assets or other documents may be situated or found, to take possession thereof. Either the CMM or the DM would then, on such request, take possession of the assets and documents relating thereto, and forward the same to the secured creditor.[5] In order to ensure compliance, the Magistrate concerned may take such steps and use such force as he may deem necessary. No act, undertaken by the Magistrate, can be called in question before any court or authority. [1]This is provided for under subsection (4) of section 13 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [2] The rights that the Secured Creditor shall be entitled to exercise are provided under Subsection (4) of Section 13 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [3] This is under or pursuant to the rights conferred under sub-section (4) of section 13 of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

[4] As referred to in sub-section (2) of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [5] As provided in section 14 of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. What is the difference in the procedure for recovery of debts under the Securitisation Act, 2002 and Recovery of Debts Due to Banks and Financial Institutions Act, 1993? The purpose of the Securitisation Act, 2002 and the DRT Act, 1993 is to provide for expeditious adjudication and recovery of, debts due to banks and financial institutions and for matters connected therewith or incidental thereto. The section within the Act states that where the dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the debts recovery tribunal, having jurisdiction or a competent court, as the case may be, for recovery of the balance amount from the borrower. [1] Under section 3 of the DRT, the central government by notification shall establish one or more Tribunals to be known as the Debts Recovery Tribunal, to exercise the jurisdiction, powers and authority conferred on such a Tribunal under the DRT Act. Similarly, by virtue of section 8 of DRT Act, the Central Government shall by notification, establish one or more Appellate Tribunals to be known as the Debts Recovery Appellate Tribunal to exercise the jurisdiction, powers and authority, conferred on such Tribunal under the DRT Act. The elaborate procedure for the bank or financial institution to recover any debt from any person is stipulated under the DRT Act, whereby the bank or the financial institution makes an application with such documents and other evidence and by such fee prescribed to the Tribunal. [2] On receipt of the application, the Tribunal shall issue summons, requiring the defendant to show cause within thirty days of the service of summons as to why the relief, prayed for, should not be granted. The defendant may submit a written statement of his defence within such time as the Tribunal may permit. The Tribunal may make an interim order (whether by way of injunction or stay or attachment) against the defendant to debar him from transferring, alienating or otherwise dealing with, or disposing of, any property and assets belonging to him without the prior permission of the Tribunal.

The Tribunal may order for the attachment of the property of the defendant, who may hold the intent to obstruct or delay or frustrate the execution of any order for the recovery of debt, passed against him. In the case of disobedience of an order made by the Tribunal or any of the terms on which the order was made, the Tribunal is empowered to order the properties of the person, guilty of such disobedience or breach, to be attached and may also order such person to be detained in the civil prison for a term not exceeding three months, unless, in the meantime, the Tribunal directs his release. [3] List of 6 items Where it appears to the Tribunal to be just and convenient, the Tribunal may, by order [4]: appoint a receiver of any property, whether before or after grant of certificate for recovery of debt; remove any person from the possession or custody of the property; commit the same to the possession, custody or management of the receiver; confer upon the receiver all such powers, as to bringing and defending suits in the courts or filing and defending applications before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of the rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale thereof. list end Where a certificate of recovery is issued against a company registered under the Companies Act, 1956, the Tribunal may order the sale proceeds of the company to be distributed among its secured creditors and to pay the surplus, if any, to the company. [5] After giving the applicant and the defendant an opportunity to be heard, the Tribunal may pass an interim or final order, which includes the order for payment of interest from the date on or before which payment of the amount is found due, up to the date of realisation or actual payment on the application as it thinks fit to meet the ends of justice. After doing so, the Tribunal is required to send a copy of every order passed by it to the applicant and the defendant. Subsequently, the Presiding Officer shall issue a certificate under his signature on the basis of the order of the Tribunal to the Recovery Officer for recovery of the amount of debt, specified in the certificate. In a case when the property is situated within the local limits of the jurisdiction of two or more Tribunals, it may send the copies of the certificate or recovery for execution to such other Tribunals where the property is situated.

[6] The Tribunal shall ensure that the application, made to it, shall be dealt with as expeditiously as possible, making every endeavor to dispose of the application finally within one hundred and eighty days from the date of receipt of the application. Appeal to the Appellate Tribunal Any person, aggrieved by an order made by a Tribunal, may appeal to an Appellate Tribunal having jurisdiction in the matter. An appeal shall not lie in front of the Appellate Tribunal without the consent of all parties. Further, every appeal shall be filed within a period of forty-five days from the date on which a copy of the order. It should be made in the relevant order and accompanied by the prescribed fee. [7] On receipt of an appeal, the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming modifying or setting aside the order appealed against. The Appellate Tribunal shall deal with the appeal as expeditiously as possible and endeavor to dispose of the appeal finally within six months from the date of receipt of the appeal. [1] This is referred to in Sub-Section 10 of Section 13 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [2] This is referred to under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. [3] This refers to an order made by the Tribunal under sub-sections (12), (13) and (18) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [4] Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 [5] This is in accordance with the provisions of section 529A of the Companies Act, 1956 [6] Section 23 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

[7] This refers to the appeal made under Sub Section 1 of Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993What are the provisions regarding registration/cancellation registration of securitisation companies or reconstruction companies? Section 3 of the Securitisation Act provides for the Registration of securitization companies ("SCO") or reconstruction companies ("RCO"), in that no SCO or RCO shall commence or carry out the business of securitisation or asset reconstruction without having obtained a certificate of registration granted under section 3. Furthermore, they are required to have the minimum amount of Rs 2 crores of owned fund or such other amount, not exceeding fifteen percent of the total financial assets as specified by the RBI in order to commence or carry on the business of securitisation or asset reconstruction. The RBI is empowered in the same section to specify by notification different amounts of owned fund for different class or classes of both SCOs and RCOs. It also stipulates the conditions under which the RBI would grant a registration certificate to a SCO or an RCO. The RBI is empowered to cancel a certificate of registration granted to either an SCO or an RCO if the company: [1] List of 3 items ceases to carry on the business of securitisation or asset reconstruction; or ceases to receive or hold any investment from a qualified institutional buyer; or has failed to comply with any conditions, subject to which the certificate of registration has been granted to it; or list end Further, it is stated that if either the SCO or the RCO fails to comply with any direction issued by the RBI under the provisions of the Securitisation Ac-- such as failure to maintain accounts in accordance with the requirements of the RBI, or to submit or offer for inspection its books of account or relevant documents when demanded from the RBI --- it will lead to cancellation of the certificate for registration. [1] Provided for in section 4 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002Definitions of terms: "Secured creditor" means any bank or financial institution or any consortium or group of banks or financial institutions and includes: List of 3 items

 debenture trustee, appointed by any bank or financial institution; or securitisation company or reconstruction company; or any other trustee, holding securities on behalf of a bank or financial institution, in whose favour security interest is created for due repayment by any borrower of any financial assistance. list end "Securitisation" means acquisition of financial assets by any securitisation company or reconstruction company from any originator, whether by raising of funds by such securitisation company or reconstruction company from qualified institutional buyers by issue of security receipts representing undivided interest in such financial assets or otherwise. "Security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, and assignment. "Non-performing asset" means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset, in accordance with the directions or under guidelines relating to assets classifications, issued by the Reserve Bank. What is excluded from the application of the Securitisation Act? The following transactions are exempt from the application of the provisions of the Securitisation Act [1]: List of 10 items a lien on any goods, money or security, given by or under the Indian Contract Act, 1872 or the Sale of Goods Act, 1930 or any other law for the time being in force; a pledge of movables within the meaning of section 172 of the Indian Contract Act, 1872; creation of any security in any aircraft as defined in clause (1) of section 2 of the Aircraft Act, 1934; creation of security interest in any vessel as defined in clause (55) of section 3 of the Merchant Shipping Act, 1958; any conditional sale, hire-purchase or lease or any other contract in which no security interest has been created; any rights of unpaid seller under section 47 of the Sale of Goods Act, 1930; any properties, not liable to attachment or sale under the first proviso to sub-section (1) of section 60 of the Code of Civil Procedure, 1908; any security interest for securing repayment of any financial asset not exceeding one lakh rupees; any security interest created in agricultural land; any case in which the amount due is less than twenty per cent of the principal amount and interest thereon.

list end [1] Section 31 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. What is the limitation period for application of Securitisation Act? The limitation period for the application of the Securitisation Act limits the secured creditor to be entitled to take all or any of the measures under subsection 4 of section 13 [1], unless his claim in respect of the financial asset is made within the period of limitation, prescribed under the Limitation Act, 1963. [2] [1] Subsection 4 of the Securitisation Act stipulates the measures by which the secured creditor may recover his secured debt. The secured creditor may take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; take over the management of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realise the secured asset; appoint any person to manage the secured assets the possession of which has been taken over by the secured creditor. [2] Section 36 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. What is the manner and effect of takeover of management under the Securitisation Act? When a secured creditor takes over the management of a business of a borrower, the secured creditor may, after publishing a notice in a newspaper published in the English language and in a newspaper published in an Indian language that is in circulation in the place where the principal office of the borrower is situated. Hereafter, the secured creditor may appoint as many persons as it thinks fit. This depends on a case in which the borrower is a company as defined in the Companies Act, 1956, to be the directors of that borrower. In any other case the secured creditor may appoint persons to be the administrator of the business of the borrower. On publication of such notice in the aforementioned circulating newspapers, it is further stipulated that if the borrower is a company as defined in the Companies Act, 1956, all persons that were holding office shall be deemed to have vacated their offices. This undertakes that any contract of management between the borrower and any director or manager, holding the office immediately before publication of the notice, shall be deemed to be terminated.

It is the role of the directors or the administrators that are appointed [1] to take necessary steps to take into their custody or under their control all the property, effects and actionable claims to which the business of the borrower is or appears to be entitled to. Moreover, all the property and effects of the business of the borrower shall be deemed to be in the custody of the directors or administrators, as the case may be, from the date of the publication of the notice. The directors or the administrators appointed shall be entitled to exercise all the powers of the directors or of the business of the borrower whether such powers are derived from the memorandum or articles of association of the company of the borrower or from any other source whatsoever. In the case where the management of the business of a borrower, being a company as defined in the Companies Act, 1956, is taken over by the secured creditor, then, notwithstanding anything contained in the Securitisation Act or in the memorandum or articles of association of such borrower: it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company; no resolution, passed at any meeting of the shareholders of such company, shall be given effect to unless approved by the secured creditor; no proceeding for the winding up of such company or for the appointment of a receiver in respect thereof shall lie in any court, except with the consent of the secured creditor. In the event where the management of the business of a borrower had been taken over by the secured creditor, the secured creditor shall, on realisation of his debt in full, restore the management of the business of the borrower to him. However, the aforesaid is currently sub-judice before the Hon''ble Supreme Court of India [2]. The Supreme Court has directed the banks and financial institutions not to dispose of the assets after taking them over under the Securitisation Act till such time as the Hon''ble Supreme Court determines the question of vires of the impugned statutory provisions. [1] Section 15 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [2]

Mardia Chemicals vs. Union of India and associated transfer petitions and Amulet Industries cases. Where does an appeal lie from actions of secured creditors under the Securitisation Act? A right to appeal under the Securitisation Act provides that any person, aggrieved by any of the measures stipulated under the enforcement of interest section, [1] may prefer an appeal to the DRT of the relevant jurisdiction within forty-five days from the date on which such measures are taken. Where a borrower prefers an appeal, the DRT concerned is not to entertain such appeal unless the borrower deposits with the DRT seventy-five per cent of the amount claimed in the notice. [2] However, it is also provided that the DRT may for reasons to be recorded, waive or reduce the amount to be deposited. A person further aggrieved by any order made by the DRT can appeal further to an Appellate Tribunal within thirty days from the date of receipt of the order of the DRT. [3] Both the DRT and the Appellate Tribunal may dispose of the appeal in accordance with the provisions of the DRT Act and the Rules made thereunder. [1] These measures are stipulated under Sub Section 4 of Section 13 of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [2] In reference to the notice referred to in Sub Section 2 of Section 13 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. [3] Any person aggrieved, by any order made by the Debts Recovery Tribunal under section 17 can appeal to the Appellate Tribunal under Section 18. What is Securitisation? Securitisation is the conversion of existing or future cash in-flows of any person into tradable security, which then may be sold in the market. The cash inflow from financial assets becomes the security against which borrowings are raised. It is the process by which the future cash inflows of an entity (originator) are converted and sold as debt instruments, called ''pay through'' or ''pass through ''certificates with a fixed rate of return to the holders of beneficial interest. The originator of a typical securitisation transfers a portfolio of financial assets to a Special Purpose Vehicle ("SPV") or more commonly: a trust. Investors basically fund the SPV. In return for the transfer, the originator gets cash up-front on the basis of a mutually agreed valuation

of the receivables. The transfer value of the receivables is done in such a manner so as to give the lenders a reasonable rate of return. In ''pass-through'' and ''pay-through'' securitisations, receivables are transferred to the SPV at the inception of the securitisation, and no further transfers are made. All cash collections are paid to the holders of beneficial interests in the SPV. What is an Special Purpose Vehicle ( SPV )? An SPV is an entity, specially created for doing the securitisation deal. It invites investment from investors, uses the invested funds to acquire to receivables of the originator and then uses the realizations from the receivables transferred to it to pay the investors, thereby giving them a reasonable return. An SPV may be a trust, corporation, or any other legal entity. Its activities are: List of 4 items Holding title to transferred financial assets; Issuing beneficial interest (if the beneficial interests are in the form of debt securities or equity securities, the transfer of assets is a securitisation); Collecting cash proceeds from assets held, reinvesting proceeds in financial instruments pending distribution to the holders of beneficial interests and otherwise servicing the assets held and; Distributing proceeds to the holders of the beneficial interests. list end Beneficial interests in the qualifying SPV are sold to investors and the proceeds are used to pay the transferor for the assets transferred. Those beneficial interests may comprise either a single class having equity characteristics or multiple classes of interests, some having debt characteristics and others having equity characteristics. The cash, collected from the portfolio, is distributed to the investors and others as specified by the legal documents that establishes the SPV. Debt Recovery Dilemma: RDDB&FI V/s SARFAESI .........by Subhashis Kundu Money maketh the world go round, and now it is making the legal fraternity ponder, too. Many a times, the interpretation of statutes becomes a tedious job, mostly due to the clash of legislations- their ambit and scope. On the surface what may seem as supplementary legislations, may in realty be two diverse tools of laws addressing different issues altogether. There are many situations, which neither the courts nor the legislators imagined would crop up. One of such issue is the conflict created by defaulters. And the statutes in question are the Recovery of Debts Due to Banks Financial Institution (RDDB&FI) Act, 1993 and the Securitisation and Reconstruction of Finance Assets and Enforcement of Securities Interest (SARFAESI) Act, 2002. The choice of remedy which one creditor has against the debtor creates a problem of choice for the creditors. Is there actually a choice for the creditor?

Choice of remedy is governed by the theory of election of remedies, which gives the creditor the liberty of choosing one out of several means afforded by law for the redressal of an injury, or one out of several available forms of action. An "election of remedies" arises when one having two co-existent but inconsistent remedies chooses to exercise one, in which event he loses the right to thereafter exercise the other. The Supreme Court dealt with this issue in Andhra Pradesh State Financial Corporation v M/s GAR Re-Rolling Mills[1] wherein the Court held that " the doctrine of election clearly suggests that when two remedies are available for the same relief, the party to whom the said remedies are available has the option to elect either of them but that doctrine would not apply where the ambit and scope of the two remedies are essentially different. To hold otherwise may lead to injustice and inconsistent results. Since the corporation must be held entitled and given full protection by the court to recover its dues it cannot be bound down to adopt only one of the two remedies provided under the Act". There is, however a considerable difference in the scope and legislative utility between RDDB&FI and SARFAESI. A thorough understanding of SARFAESI shows that it is an act to regulate securitisation and reconstruction of financial assets and enforcement of security interest; whereas RDDB&FI is there to establish Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions. Moreover, only secured creditors can refer to SARFAESI, whereas RDDB&FI is for all types of creditors whether or not they are secured or unsecured. Both these statutes throw an insight on the recovery of money due from defaulters to the banks and financial institutions. The Debt Recovery Tribunal, Ranchi dealt with this issue in Sushil Kumar Agarwal v Allahabad Bank[2] wherein it held that " the question that arises is whether during pendency of the suit, the defendant Bank can resort to Section 13(4) of the SARFAESI Act, 2002. So when alternative method has been prescribed to recover the amount, which the petitioner is liable to pay, and the bank in order to enforce payment has taken recourse to the Act, which has the overriding effect over other laws, no fault can be found with defendant bank in proceeding under the Act". The same issue came to light yet again, before the Debt Recovery Appellate Tribunal, Chennai in ARCIL v Kumar Metallurgical Corporation Limited[3] wherein the Appellate Tribunal held that there is no question of applicability of doctrine of election as the RDDB&FI Act covers secured as well as unsecured dues, while the SARFAESI Act takes into account only secured assets and secures interest of secured creditors only. It is not doubtful that the intention behind enacting both the Acts is complimentary to each other, but they operate in different spheres. The RDDB&FI Act

is for expeditious adjudication at the hands of Tribunals, while the SARFAESI Act bypasses intervention of the courts for expeditious recovery of dues of banks and financial institutions, which is public money of which they are custodian. The Appellate Tribunal further held that Section 37(application of other laws not barred) makes it clear that the provisions of the SARFAESI Act are in addition to the provisions of the RDDB&FI Act, 1993. To conclude, thus, the ambit and scope of the two remedies provided by the RDDB&FI Act and SARFAESI Act, is distinct, and has different shades. RDDB&FI Act is an adjudicating act and SARFAESI Act is executory in nature. There is no adjudication process at least, till action under Section 13(4) is taken. It is another thing that, thereafter, the legality of the action taken by secured creditor under Section 13(4) can be challenged by filing appeal under Section 17 of the Act. Footnotes: [1] AIR 1994 SC 2151 [2] II(2004)BC94 (DRT, Ranchi) [3] RA-10/2005 (SA) (DRT, Chennai) (The author is a Final Year Law student, NALSAR, University of Law, Hyderabad)