M/S TRANSCORE versus UNION OF INDIA AND ANR.

Citation: [2006] SUPP. 9 S.C.R. 785 · Decided: 29-11-2006 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off

Judgment (excerpt)

MIS TRANSCORE 
v. 
UNION OF INDIA AND ANR. 
NOVEMBER 29, 2006 
[ARIJIT PASAYAT AND S.H. KAPADIA, JJ.] 
Securitisation and Reconstruction of Financial Assets and Enforcement 
of Security Interest Act, 2002: 
A 
B 
Section 13(4)-Recovery of Debts Due to Banks and Financial C 
Institutions Act, 1993 (inserted by amending Act 30 of 2004)-Section 19(1) 
first proviso-Recovery of bank dues-Recourse to 2002 Act-Withdrawal of 
original application in terms of the first proviso to section 19(1)-Held: ls 
not a condition precedent-Bank having elected to seek their remedy in 
terms of DRT Act can still invoke 2002 Act for realizing secured assets D 
without withdrawing application filed before DRT-lt's the discretion of the 
Bank-Doctrine of election is not applicable-Code of Civil Procedure, 
1908-0rder XXIII, Rule 1(3). 
Sections 13(4), 13(8) and 17(3)-Recovery of dues by secured 
creditor-Possession of secured assets of borrower under section 13(4)- E 
Power of, secured creditor-Scope of-Held: 2002 Act provides for recovery 
of possess ion by non-adjudicatory process-If dues of secured creditor together 
with all costs, charges and expenses incurred by him are tendered to the 
creditor before the date f1Xed for sale or transfer, asset shall not be sold or 
transferred-Till the time of issuance of sale certificate, Authorised Officer is 
like a court receiver who can take symbolic possession-Where court receiver F 
finds that a third party interest is likely to be created overnight, he can take 
actual possession even prior to the decree-Authorized officer under Rule 8 
has greater powers than even a court receiver as security interest in the 
property is. already created in favour of banks/Fis-Thus, the dichotomy 
between symbolic and actual possession does not find place in the Act read G 
with the Rules-Security Interest (Enforcement) Rules, 2002-Rules 8 and 
9-Code of Civil Procedure, 1908-0rder XL Rule 1. 
Sections 13(4), 17(1) and 40-Securitisation and Reconstructr'on of 
785 
H 
786 
SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R. 
A Financial Assets and Enforcement of Security Interest (Removal Qf Dif.ficulties) 
Order, 2004-Action by Banks or financial institutions under section 13(4) 
against borrowers-Challenged by borrowers-Application to DRT under 
section 17(1) as amended by Act 30of2004 w.ej I I. I 1.04-Ad valorem court 
fee prescribed under Rule 7 of 1993 Rules-levy of-Borrower's case that 
section 17(/) provides for prescribing fees for application under section 
B 17(1) and since no Rule framed thereunder, after I I.I 1.2004,fees not leviab/e 
under Order 2004 dated 6.4.2004, being redundant-Held: Since fees not 
prescribed by Rules after I I. I 1.2004, it cannot be said that fees cannot be 
levied on the basis of Order 2004 which was there prior to I I. I 1.2004-
0rder 2004 dated 6.4.2004 does not alter the scheme of amended Act-It 
C merely fills in the deficiency-Debts Recovery Tribunal (Procedure) Rules, 
1993. 
Bank filed original application before Debt Recovery Tribunal for 
recovery of dues from the appellant company. Claim was disputed. Bank filed 
an interlocutory application in the O.A. to bring the properties to sale. In 
D 2003, a notice under section 13(2) of the Securitisation and Reconstruction 
of Financial Assets and Enforcement of Security Interest Act, 2002 (NPA Act) 
was issued. On 11.11.2004, proviso to section 19(1) of the Recovery of Debts 
Due to Banks and Financial Institutions Act, 1993 was inserted by amending 
Act 30 of2004 that the bank or financial institution may, with the permission 
E of Debts Recovery Tribunal, on an application made by it, withdraw the 
application, for taking action under the NPA Act, if no such action had been 
taken earlier under that Act. Thereafter, bank issued possession notice under 
section 13(4) of the NPA Act read with Rule 8 of the Security Interest 
(Enforcement) Rules, 2002 that since the appellant had failed to repay the 
amount the bank had taken possession of the immovable properties. 
F 
The question which arose for consideration in these appeal were: 
(i) Whether withdrawal of O.A. in terms of the first proviso to section 
19(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 
1993 (inserted by the Amending Act No.30 of 2004) is a condition precedent 
G to recourse to the Securitisation and Reconstruction of Financial Assets and 
Enforcement of Security Interest Act, 2002. 
H 
(ii) Whether recourse to take possession of 

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