Supreme Court rules the existence of a mortgage and recoverable loan amounts justify proceedings under the SARFAESI Act.
The Three-Judge Bench of the Supreme Court comprising Justice Sanjiv Khanna, Justice Dipankar Datta and Justice Prashant Kumar Mishra was hearing an appeal and observed that the Appellant is entitled to proceed under the SARFAESI Act, including issuing a notice under Section 13(4), as the existence of a mortgage and recoverable loan amounts justify such proceedings, and the liability of the guarantor is joint and several with the principal debtor, rendering the impugned judgment legally unsustainable.
The Supreme Court granted leave to appeal and noted that the learned counsel for respondent no. 1, Devendra Kumar Sinha, conceded that the impugned judgment was legally unsustainable and requested that the appeal be allowed.
The Supreme Court reviewed the judgment, which originated from Writ Petition (Civil) no. 11907/2016 filed by Devendra Kumar Sinha, contesting the proceedings initiated by the appellant, State Bank of India, under the SARFAESI Act by issuing a notice under Section 13(4). The Court acknowledged the existence of a mortgage and recoverable loan amounts, affirming the appellant's right to proceed under the SARFAESI Act.
The Apex Court emphasized the joint and several liability of the guarantor with the principal debtor. Consequently, the impugned judgment was set aside, allowing the State Bank of India to continue its actions under the SARFAESI Act, including the contested Section 13(4) notice. The Court clarified that respondent no. 1 and others could still seek remedies under the SARFAESI Act if aggrieved.
The Court also noted that Respondent No. 1, Devendra Kumar Sinha had applied for a one-time settlement, which was approved but some payments were not made, and refrained from commenting on this issue. The appeal was allowed and all pending applications were disposed of.
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