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Proceedings Under The A&C Act And SARFAESI Act Can Be Resorted To Simultaneously: Rajasthan High Court Reiterates The Legal Position

Ausaf Ayyub
17 May 2022 4:30 AM GMT
Proceedings Under The A&C Act And SARFAESI Act Can Be Resorted To Simultaneously: Rajasthan High Court Reiterates The Legal Position
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The High Court of Rajasthan has held that proceedings under the A&C Act and SARFAESI Act can be resorted to simultaneously.

The Single Bench of Justice Mahendra Kumar Goyal has held that the existence of an arbitration clause and filing of an application under Section 9 of the A&C Act is not a bar to the institution of proceedings under the SARFAESI Act.

The writ petitioner challenged that order of the Chief Metropolitan Magistrate, Jaipur passed under Section 14 of the SARFAESI Act on the ground that the loan agreement between the parties contains an arbitration clause and the respondent having filed an application under Section 9 of the A&C Act, therefore, the remedy under SARFAESI Act cannot be resorted to and the CMM erred in entertaining the application.

On the other hand, the respondent objected to the maintainability of the writ petition on the ground that firstly, the petitioner can avail of the alternative remedy available under the SARFAESI Act and Secondly, the proceedings under the SARFAESI Act are maintainable notwithstanding an arbitration clause between the parties.

The Court accepted the argument of the respondent that the petitioner has an efficacious alternative remedy of appeal under Section 17 of the SARFAESI Act, therefore, the writ petition would be non-maintainable.

The Court observed that in view of the Supreme Court decision in M.D. Frozen Foods Exports Pvt. Ltd. & Ors. Vs. Hero Fincorp Ltd. in Civil Appeal No.15147/2017, the issue as to the maintainability of the proceedings under the SARFAESI Act when there is an arbitration clause is no more res integra.

The Court held thatwh merely because there exists an arbitration clause between the parties and the respondent having filed an application under Section 9 of the A&C Act, the proceedings under the SARFAESI Act cannot be held to be non-maintainable. The Court held that the proceedings under the SARFAESI Act and the A&C Act can go hand in hand.

Accordingly, the Court dismissed the writ petition.

Case Title: Om Prakash Kumawa v. Hero Housing Finance Ltd., S.B. Civil Writ Petition No. 6199/2022

Date: 11.05.2022

Citation: 2022 LiveLaw (Raj) 167

Counsel for the Petitioner: Mr. Prahlad Sharma

Counsel for the Respondent: Mr. Pramod Kumar

Click Here To Read/Download Order




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