SARFAESI Proceedings Valid Even After Earlier DRT Decree for Same Debt: Supreme Court
· Reported by Moneycontrol
The Supreme Court held that Section 35 of the SARFAESI Act's overriding effect lets a secured creditor, including an Asset Reconstruction Company, invoke SARFAESI measures for a debt even where the Debts Recovery Tribunal has already passed a decree for the same debt. It rejected the borrower's argument that the cause of action had merged into the decree and could only be enforced by executing it.
What this changes for a title check
A property bought at a SARFAESI auction is not vulnerable just because the underlying loan also has a DRT decree against the borrower; the two remedies run in parallel and a borrower cannot use "there's already a decree" to void the auction. For a title check on a SARFAESI-sale property, the presence of a separate DRT money decree against the same borrower is not, by itself, a red flag on the auction's validity.
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