The Inherent Futility of ‘Exceptional’ Debt Recovery Mechanisms Alternative to the SARFAESI, 2002: Such as the ‘OTS’ Scheme Due to Creditor Rights Primacy
Keywords:
SARFAESI Act, debt recovery, Secured-CreditorsAbstract
The primary modus of debt recovery by ‘Secured-Creditors’, in the jurisdiction of India, is subject to the legislative impetus of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002), with the alternative/resultant: initially direct (for secured-creditors) /appellate (for borrowers), recourse of Debt Recovery Tribunals and Debt Recovery Appellate Tribunals-prescribed by Sections 17[i] and 18[ii] of the SARFAESI Act [originally stipulated by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDBFI Act, 1993) and the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act, 1993)], and the ultimate recourse of the Insolvency and Bankruptcy Code-(IBC, 2016).
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References
i The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s 17
ii The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s 18
iii The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s
31 (j)
iv The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002,
s 3-12 (b)
v The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s 31
vi The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002,
s 13 -19
vii The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002,
s 13 (1)
viii The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s
13 (4) (b)
ix The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s 2
(z) (g)
x Mardia Chemicals v. Union of India (2004) 4 SCC 311, [81]
xi Reserve Bank of India, 'Framework for Compromise Settlements and Technical Write-offs' (RBI 2023)
https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=3459 accessed 15 September 2023
xii Reserve Bank of India, 'Guidelines on One-Time Settlement Scheme for SME Accounts' (RBI 2005)
https://www.rbi.org.in/commonman/English/Scripts/Notification.aspx?Id=64 accessed 15 September 2023
xiii Vinod Kothari, 'A Comprehensive Framework for Compromise Settlement and Technical Write-offs' (Vinod
Kothari 2023) https://vinodkothari.com/2023/06/a-comprehensive-framework-for-compromise-settlement-andtechnical-write-offs/ accessed 15 September 2023
xiv Ibid.
xv Reserve Bank of India - Notifications' (Reserve Bank of India, 7 June 2019)
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11580&Mode=0 accessed 15 September 2023 [1]
xvi The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002,
s 13 (2)
xvii The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s
13 (4)
xviii The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s
2 (o)
xix Reserve Bank of India - Master Circular- Income Recognition, Asset Classification, Provisioning and Other
Related Matters - UCBs' (Reserve Bank of India, 1 July 2011)
https://www.rbi.org.in/CommonPerson/english/Scripts/Notification.aspx?Id=889 accessed 15 September 2023
[2]
xx Sri Srinivasa Rice & Floor Mill v. SBI 2007 AIR (AP) 252, [21]
xxi Phoenix ARC Pvt. Ltd. Vs. Vishwa Bharati Vidya Mandir & Ors 2022 Latest Caselaw 42 SC, [10]
xxii Balkrishna Rama Tarle Dead thr LRS & Anr Vs. Phoenix ARC Pvt. Ltd. & Ors 2022 Latest Caselaw 767 SC,
[9]
xxiii Reserve Bank of India, 'Letter to IBA' (RBI 2007)
https://rbidocs.rbi.org.in/rdocs/content/pdfs/LettertoIBAdt10507.pdf accessed 15 September 2023
xxiv Reserve Bank of India, 'Framework for Compromise Settlements and Technical Write-offs' (RBI 2023)
https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=3459 accessed 15 September 2023
xxv Bijnor Urban Cooperative Bank Limited v. Meenal Agarwal LL 2021 SC 742, [11]
xxvi Reserve Bank of India, 'Framework for Compromise Settlements and Technical Write-offs' (RBI 2023)
https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=3459 accessed 15 September 2023
xxvii State of Haryana v. Mukesh Kumar AIR 2012 SC 559, [36]
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