VINODINI Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner is a defaulter in repayment of loan amounts due to the 2nd respondent Bank. The Bank initiated proceedings before the Debts Recovery Tribunal by filing O.A. No. 262/2003, which is still pending. While the O.A. was thus pending, the Bank initiated the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("the Act" for short) for bringing the security interest to sale. Admittedly pursuant to the same, possession has been taken by the Bank. Now this Writ Petition is filed challenging the proceedings under the Act on the basis of Section 19 of the Cs Act, 1993 on the ground that after the amendment to Rule 19 by introducing three provisos to Sub-section (1) making it obligatory on the Bank to obtain leave of the D.R.T. to withdraw the O.A. before proceedings under the Act, the Bank could not have initiated proceedings under the Act without obtaining such permission under Section 19. The learned Counsel for the petitioner relies on several decisions in support of the contention of the petitioner, which are specifically referred to in the Writ Petition itself,

(2.) In answer to this, the learned Counsel for the Bank submits that the doctrine of election is not applicable as between the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and therefore there is no prior mandatory requirement of withdrawal of the O.A. under the proviso to Section 19(1) of the Debts Recovery Act, to enable the Bank to proceed under the Securitisation Act. He would further submit that whether or not to withdraw the O.A. is in the discretion of the Bank and the proviso to Section 19 of the Debts Recovery Act is only an enabling provision in favour of the Bank and not an embargo on the Bank against invoking Securitisation Act. In support of his contentions he relies on the decision of the Supreme Court in Transcore v. Union of India and Anr.,2007 1 BC 33.

(3.) I have considered the rival contentions in detail.