Académique Documents
Professionnel Documents
Culture Documents
received
notices
from
State
Revenue
the
SARFAESI
and
the
DRT
Acts
were
central
the
SARFAESI
were
not
inconsistent
but
were
2. Issues to consider:
a. One major issue being discussed in various articles is the
issue of priority of claims especially against State dues, in
light of the recent Supreme Court judgment in the Central
Bank of India case. It has been urged that in the absence of a
provision giving first priority to secured debts, very little may
be realised by creditors from a secured asset.
b. Foreign investors may not be entitled to invoke the SARFAESI
provisions unless they are notified by the Government and
fall within one of the categories of secured creditor
c. S.13(9) of the SARFAESI deals with situations of financing of
a financial asset by more than one secured creditors or joint
financing of a financial asset by secured creditors. It is
stipulated that in these cases, the consent of creditors
representing not less than 75% of the debt must consent to
initiating a particular action under the SARFAESI. It appears
that there is some support (in some DRT rulings) for the view
that this provision applies only to cases of consortium lending
and not to cases where security rights are created in relation
to one asset, in favour of many different creditors. In that
event, one creditor chooses to enforce a measure under
SARFAESI without the consent of others. Given that a
securitisation notice is not published in the papers, other
secured creditors may be unaware of the action initiated by
one creditor and may therefore lose the opportunity to
control treatment of the secured asset.