The Supreme Court held on 5th December 2021 that failure to furnish a reply by the creditor as per the mandate of Section 13(3A) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) would not entitle the debtor to discretionary relief if the Court is satisfied that the creditor has considered the debtor's representation and granted it sufficient opportunity to repay the debt. The Apex Court added that a borrower not questioning and objecting to the action of the creditor and accepting the favourable decisions from the creditor, would be later estopped from taking inconsistent positions to gain advantage through the aid of judicial proceedings.
The judgment was delivered by a Bench comprising Justices L. Nageshwara Rao, Sanjiv Khanna and B.R. Gavai by allowing a Special Leave Petition, assailing the order of Telangana High Court, setting aside and quashing the proceedings initiated by Andhra Bank for sale of concerned mortgaged asset holding it to be in derogation of the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) and the Security Interest (Enforcement) Rules, 2002 (Rules).
The Supreme Court also took note of the fact that the ITC Ltd. judgment referred to by the High Court to establish a violation of Section 13(3A) of the SARFAESI. The act had on the facts of the case distinguished the principle to state that the creditor has given sufficient opportunity to the debtor to pay, the debtor is not entitled to discretionary relief under Article 226 of the Constitution, which is an equitable relief.
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