M/s. Sree Anandhakumar Mills Ltd. v. M/s. Indian Overseas Bank & Ors.

 

In the case of M/s. Sree Anandhakumar Mills Ltd. v. M/s. Indian Overseas Bank & Ors., the Supreme Court of India addressed the issue of whether a civil suit is maintainable when proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) have been initiated.

Citation: M/s. Sree Anandhakumar Mills Ltd. v. M/s. Indian Overseas Bank & Ors., Civil Appeal Nos. 7214-7216 of 2012, decided on May 3, 2018.

Key Legal Principle Established:

• Bar on Civil Jurisdiction: The Supreme Court held that once proceedings under the SARFAESI Act are initiated, the jurisdiction of civil courts is barred under Section 34 of the Act. The appropriate remedy for an aggrieved party is to approach the Debt Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act. This decision reinforces the principle that the SARFAESI Act provides a specialized mechanism for the adjudication of disputes related to secured assets, thereby ousting the jurisdiction of civil courts in such matters.

This ruling is significant for borrowers and guarantors challenging actions taken by secured creditors under the SARFAESI Act, as it delineates the proper legal forum for such challenges.