Loan granted under state govt sponsored scheme not Amounts debt u/s 2(g) of RDB Act, Proceeding under SARFAESI Act Not Maintainable: DRAT
The proceeding under the SARFAESI Act initiated by the Bank is not maintainable
The Debts Recovery Appellate Tribunal (DRAT) at Allahabad Bench has ruled that loan granted under state government-sponsored scheme is not amount to debt under section 2(g) of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), and proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, (SARFAESI), 2002 are not maintainable.
Suresh Prasad Chaubey, the appellant filed appeal under section 18 of the SARFAESI Act against the interim order dated 04.04.2025 passed by the Tribunal below in S.A. No. 268/2025, whereby the interim relief sought by the appellant has been declined on the ground of non-challenge of the order passed by the authority under section 14 of the SARFAESI Act.
It is contended by the counsel for the appellant that the loan was granted under the state government sponsored scheme, which is not covered under the definition of debt under section 2(g) of the RDB Act, therefore, the proceeding under the SARFAESI Act initiated by the Bank is not maintainable.
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The counsel further submitted that the SDM, Robertsganj, Sonbhadra has issued a notice dated 16.05.2025 for vacating the secured asset till 05.06.2025, otherwise the possession will be taken on 09.06.2025 forcefully. It is therefore prayed that the interest of the appellant may be protected.
After hearing the counsel for the appellant and considering the facts and circumstances of the case, Justice R. D. Khare held that there is remedy available to the appellant by filing an appropriate application for seeking relief against the aforesaid notice dated 16.05.2025 issued by the District Authority in the securitization application, which is stated to be pending. If any such application is filed by the appellant before thetribunall below, the same shall be considered and decided on the same day or within a week thereafter.
Alok Rai appeared for the appellant and Pawan Kumar Mishra appeared for the respondent-Bank.
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