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On Thursday the Supreme Court held that the burrower or debtor can approach the Debt Recovery Tribunal under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act at the stage of the possession notice referred to in rule 8(1) and 8(2) of the Security Interest (Enforcement )Rules, and Enforcement of Securities Interest Act at the stage of the possession notice referred to in rule 8(1) and 8(2) of the Security Interest (Enforcement )Rules,2002.
The Allahabad High Court had held that a securitization application under Section 17(1) of the Act is maintainable only when physical possession is taken by the secured creditor or the burrower loses actual or physical possession of the secured assets. The high court had further held that taking “symbolic Possession” or issuance of possession notice, cannot be treated saw “measure “ taken under Section 13(4) of the Act and therefore the borrower at that stage cannot file application under Section 17(1) of the Act.
The bench comprising Justice RF Nariman and Justice Navin Sinha in Hindon Forge Pvt.Ltd vs State Of Uttar Pradesh observed that the object of providing a remedy against the wrongful action of a secured creditor to a burrower will be stultified if the borrower has to wait until a sale notice is issued or worse still, until a sale actually takes place.
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