AGARWAL TRACOM PVT. LTD. versus PUNJAB NATIONAL BANK & ORS.

Citation: [2017] 11 S.C.R. 164 · Decided: 27-11-2017 · Supreme Court of India · Bench: R.K. AGRAWAL · Disposal: Dismissed

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Judgment (excerpt)

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[2017] 11 S.C.R. 164 
AGARWAL TRACOM PVT. LTD. 
v. 
PUNJAB NATIONAL BANK & ORS. 
(Civil Appeal No. 19847 of2017) 
NOVEMBER 27, 2017 
[R. K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ.] 
Securitization and Reconstruction of Financial Assets and 
Enforcement of Security Interest Act, 2002 - ss.17 and 13 (4) -
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Auction purchaser challimging the action of the secured creditor in 
foifeiting the deposit -Appropriate remedy- Filing q( an application 
uls.17 before the DRT or writ petition u!Art.2261227 - Held: Reading 
of s.17(2) and r. 9(5) clear(v show that an action of secured creditor 
in forfeiting the deposit made by the auction purchaser is a part of 
the measures taken by the secured creditor u!s. 13(4) - Auction 
D purchaser is one such person, who is aggrieved by the action of the 
secured credilor in forfeiting their money - Auction purchaser, thus, 
falls within the expression "any person" as specified u!s. 17(1) and 
thus, enritled 10 challenge the action of the secured creditor before 
the DRT by jl/ing an applicalion uls.17(1) - Security Interest 
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(Enforcement} Rules, 2002 - rt: 8 and 9 - Constitution of India -
Art. 2261227. 
Dismissing the appeal, the Court 
HELD: 1.1 Section 13(4) of the Securitization and 
Reconstruction of Financial Assets and Enforcement of Security 
Interest Act, 2002 is invoked by the secured creditor against 
their borrower when the borrower fails to discharge his liability 
in full within the specified time. The secured creditor then can 
take possession of the assets of the borrower, transfer the assets 
by lease or by assignment or sell the assets to recover the 
outstanding dues under clanse (a). The secured creditor under 
clause (b) can also take over the management of the business of 
the borrower or transfer by way of lease, assignment or sale. 
However such power can be invoked only when the creditor h11lds 
substantial part of the borrower's business as security and further 
it satisfies the condition set out in second proviso. The secured 
164 
. AGARWAL TRACOM PVT. LTD. v. PUNJAB NATIONAL 
165 
BANK& ORS .. 
creditor under·clause (c) can also appoint any manager to manage 
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the borrower's business and lastly under clause (d), the secured 
creditor can ask any .person to whom the money is due or become 
due to pay to the secured creditor instead of paying to borrower· 
which is sufficient to satisfy the debt. [Paras 20-22][174-B-EJ 
1.2 Section 17 provides a remedy to a person who is 
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aggrieved by the measures taken by the secured creditor or his 
authorized officer under Section 13(4) in rellition to secured assets 
of the borrower. It says that "any person (including borrower)" 
may make an application to the DRT within 45 days from the date 
of nleasures taken under Section 13(4). Sub-section (2) of Section 
17 was added by way of amendment w.e.f. 11.11.2004. It provides 
that the tribunal, on such application being made under Section 
'17(1), shall consider whether the measures referred to and taken 
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under Section 13(4) by the secured creditor are in accordance 
with the "provisions of this Act and the Rules made thereunder". 
Similarly, sub- sections (3), (4) and (7) of Section 17 which deal 
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with the power of the DRT also use the expression "in accordance 
with provisions of the Act and the Rules made thereunder". )Para 
23)[174-E-G] 
1.3 Sub-rule (S) of Ruic 9 is relevant. It provides that, if 
the auction purchaser commits any default in payment of sale 
consideration within the time specified, the deposit made hy 
auction purchaser shall be "forfeited" to the secured creditor 
and the auctioned property shall be resold and the defaulting 
purchaser shall "forfeit" air claims to the property or its part of 
the sum for which it may be sold subsequently. [Para 26][175-C] 
1.4 Reading of the aforementioned Sections and the Rules 
and, in particular, Section 17(2) and Rule 9(5) would clearly go to 
show that an action of secured creditor in forfeiting the deposit 
made by the. auction purchaser is a part of the .measures taken by 
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the secured creditor under Section 13(4). The reason Is that 
Section 17(2) empowers the Tribunal to examine all the issues 
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arising out of the measures taken under Section 13(4) including 
the measures taken by the secured creditor under Rules 8 and 9 
for disposal of the secured assets of the borrower. The expression 
"provisions of this Act and the Rules made thereunder" occurring 
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166 
SUPREM

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