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Bank is Entitled to Proceed under the SARFAESI Act for the Recovery of Loan, as the Liability of the Guarantor is Joint and Several with the Principal Debtor



The Supreme Court held that the bank is entitled to proceed under the SARFAESI Act for recovery of the loan, as the liability of the guarantor is joint and several with the principal debtor.


The Supreme Court bench comprising Justices Sanjiv Khanna, Dipankar Datta and Prashant Kumar Mishra was hearing an appeal filed by the bank and observed that the appellant, State Bank of India, is entitled to proceed under the SARFAESI Act for recovery of loan amounts, including issuing notice under Section 13(4), as the liability of the guarantor is joint and several with the principal debtor. The impugned judgment was set aside, allowing the bank to proceed under the SARFAESI Act.


The Supreme Court, upon granting leave, considered the appeal presented by the State Bank of India against an impugned judgment originating from Writ Petition (Civil) No. 11907/2016 filed by respondent no. 1, Devendra Kumar Sinha. The petitioner is a guarantor and challenged the actions initiated by the bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, specifically the issuance of notice under Section 13(4) of the SARFAESI Act.


After due consideration, the court found the impugned judgment untenable in law and accordingly set it aside. Consequently, the appellant, State Bank of India, was affirmed the right to proceed under the SARFAESI Act, including the notice under Section 13(4) which had been contested and annulled in the impugned judgment.


The court clarified that respondent no. 1, Devendra Kumar Sinha, Guarantor and other affected parties retained the option to initiate and pursue remedies available under the SARFAESI Act, should they feel aggrieved by the decision. It was noted that Sinha had previously applied for a one-time settlement, which was granted approval but remained partially unsettled. The court refrained from commenting further on this matter.


Consequently, the appeal was allowed, and any pending applications were deemed disposed of in accordance with the above judgment.


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