Even The Supreme Court Is Not Clear In Its Analysis About The Nature Of Proceedings Affecting The Guarantors Filed By The Banks Before Drt

Recently, Hon’ble Supreme Court in Inderjeet Arya and Another Vs. ICICI Bank Limited {(2014) 2 SCC 229; 2013 STPL (Web) 1005 SC; Civil Appeal No. 11029 of 2013 (@ Special Leave Petition (C) No.35942 of 2012)-Decided on 13-12-2013} has held as follows.

 

“6. Appellants, who are the guarantors, can obtain the protection of Section 22(1) of SICA only if the action filed by the bank comes within the ambit of the term ‘suit’. If the action filed by the respondent bank is in the nature of ‘proceedings’ and not a ‘suit’, protection under Section 22(1) would not be available, especially, when the appellants are guarantors.”

 

“7. This Court, in KSL and Industries Limited {(2008) 9 SCC 763} took the view that even though both the conflicting statutes SICA and Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short the “RDDB”) contain a non-obstante clause, in case of conflict the RDDB Act, 1993 will prevail over SICA, so far as public revenue recoveries are concerned. This Court also emphasized that the liability of surety or guarantor is co-extensive with that of the principal debtor in Kailash Nath Agarwal and others {(2003) 4 SCC 305}. In Nahar Industrial Enterprises Limited {(2009) 8 SCC 646} this Court reiterated that the term ‘suit’ have to be confined in the context of sub- section (1) of Section 22 of SICA to those actions which are dealt with under the Code and not in the comprehensive overarching proceedings so as to apply to any original proceedings before any legal forum. The term ‘suit’ would apply only to proceedings in civil court and not actions or recovery proceedings filed by banks and financial institutions before a tribunal such as DRT.” (emphasis supplied)

 

Thus, in December, 2013, Hon’ble Supreme Court referred to actions or recovery proceedings filed by banks and financial institutions before DRT as ‘comprehensive overarching proceedings’, which is a vague description, especially when the proceedings affect the guarantors. The dictionary meaning of the term ‘overarching’ is to form an arch over, to be central or dominant, affecting or including everything. It is pertinent to note here that even the Supreme Court was not clear in its analysis about the nature of proceedings affecting the guarantors filed by the banks and financial institutions before DRT.

DRT Has No Jurisdiction

























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