Claim of secured creditor under SARFAESI Act not affected by attachment under Karnataka protection of deposits Act : Karnataka High Court.

This particular decision is held by the High Court Of Karnataka through the single bench of Justice S G Pandit in the case of BANK OF INDIA v THE SECRETARY TO THE GOVERNMENT


A petition filed by Bank of India challenging an order passed by the Deputy Commissioner and District Magistrate by which the application made by the bank under Section 14 of SARFAESI Act, seeking assistance in taking possession of the secured assets came to be rejected. The rejection was on the premise that the secured assets are attached under the Karnataka Protection of Interest of Deposit in Financial Establishment Act, 2004.

The Bank initiated recovery action by issuing notice under Section 13(2) SARFAESI Act, prior to the attachment under 2004 Act.

Orders and judgements 

“Section 26-E of the 2002 (SARFAESI) Act makes it clear that notwithstanding anything contained in any other law for the time being in force, after the registration of a security interest, the debts due to any secured creditor shall be paid in priority over all other debts.”

2004 Act is a State Act whereas 2002 Act is a Central Act, which would make way for the Bank to realise its dues by bringing the mortgage property for sale.”

Accordingly, it allowed the petition and quashed the order passed by the respondent and directed Deputy Commissioner to consider the application of the Petitioner-Bank filed under Section 14 of the SARFAESI Act without reference to the attachment under 2004 Act and pass appropriate order.

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Judgement reviewed by- Mohammed Shoaib

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