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2. The petitioner-company had financial difficulties and failed to adhere to the discipline of the terms of the loan. This resulted in a notice being issued by BOB to the petitioner-company dated 15.06.2006 under Section 13(2) of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 (SARFAESI Act). This notice is stated to be qua the residential property of the promoters of the petitioner-company - Mr. Ashutosh Majmudar and Mrs. Ami Majmudar - in respect of which equitable mortgage had been created in favour of BOB. It may be noticed that some dispute has been raised by the petitioner/company qua the alleged equitable mortgage, but the fact remains that in pursuance to the said notice, BOB took over symbolic possession of the residential property of the promoters under Section 13(4) of the SARFAESI Act on 12.01.2007. The promoters of the petitioner/company, who are the owners of the residential property thus approached DRT-I, Mumbai under Section 17 of the SARFAESI Act by filing SA No.4/2007 on 09.02.2007 alleging that no security/equitable mortgage had been created qua the residential property and that BOB could not have issued the notice or taken symbolic possession of the residential property as they did not constitute 3/4th of the secured creditors and did not have the consent of the majority creditors i.e. GIIC as per the requirements of Section 13(9) of the SARFAESI Act before initiating the process under Section 13(4) of the SARFAESI Act. In these proceedings, the DRT on 08.03.2007 granted an order of status quo prohibiting the BOB from taking further action in pursuance to the symbolic possession taken by them of the residential property.

13. We would also like to note the judgment referred to by learned counsel for the respondent of the learned Single Judge of the Karnataka High Court in WP(C) No.21646/2005 M/s Saketh India Limited v. Indian Bank & Anr, decided on 20.03.2008. In the said case also, similarly two questions had been raised i.e. the secured creditors cannot proceed under Section 13(2) of the SARFAESI Act without the consent of 3/4th of the value of the secured creditors outstanding in view of Section 13(9) of the SARFAESI Act and second, the notice under Section 13(2) of the SARFAESI Act is not maintainable where a reference is pending before the BIFR under SICA. In order to appreciate the said orders, it is relevant to state that the Chapter III of the SARFAESI Act deals with enforcement of security amount. The relevant parts of Section 13 read as under:

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14. In fact, in the present case, the consent from the other secured creditors is stated to have been obtained subsequently which was contended to be of no avail. However, all these pleas were negated. It was held that Section 13(9) of the SARFAESI Act would apply to creditors where all the financiers have jointly financed a financial asset and thus a single creditor cannot exercise any or all of the rights conferred on him under Section 13(4) of the SARFAESI Act. Thus, if a Bank is proceeding against the debtor, only in respect of the properties offered as security to it, by exercising powers under the provisions of Section 13(4) of the SARFAESI Act, the debtor cannot contend that such proceedings are bad in law in view of Section 13(9) of the SARFAESI Act.

24. We have set out the salient facts in view of the multiplicity of proceedings which had been initiated. To our mind, the crucial question is the very object of introduction of the SARFAESI Act and as to how Section 13(9) of the said Act has to be read in that context. The purpose of enactment of SARFAESI Act was to enable the banks and financial institutions to realize long term assets, manage problems of liquidity, asset liability mis-match and improve recovery by exercising powers to take possession of the securities and realize proceeds through sale. This was to assist in reduction of non- performing assets by adopting measures for recovery or reconstruction. Chapter III deals with enforcement of security interest and Section 13 forms a part of this Chapter. Any security interest in favour of secured creditors has, thus, been made enforceable without intervention of court or tribunal in accordance with the provisions of _____________________________________________________________________________________________ SARFAESI Act. If Section 13(9) is read in that context, it is obvious that this is a beneficial provision for the secured creditors and not the debtor. The reason for the same is that there may be more than one secured creditor or joint financiers and one secured creditor should not be able to appropriate the proceeds of the secured assets or take a decision in that behalf without concurrence of the other secured creditors. The benchmark provided herein is of three-fourth value of the secured creditors. Thus, if this benchmark is met, a secured creditor exercises all rights conferred on him in pursuance to Section 13(4) of the said Act. This protects the interests of the other secured creditors as also gives weightage to their opinion. The only infirmity qua the action of BOB relied upon by the petitioner-company in the present case is the absence of consent beforehand from other secured creditor viz.GIIC so as to meet the benchmark of three-fourth in value of the secured creditors. It is, however, not in dispute that consent was accorded by GIIC. The provisions of Section 13(9) of the SARFAESI Act are not meant to be an instrument of defence by a borrower to avoid payment where ultimately three-fourth of the value of the secured creditors are at idem on the action proposed or taken. We have to also keep in mind that with regard to the initial notice of BOB qua the residential property of the promoters of the petitioner- company, GIIC had no interest. Qua the other assets, there was a pari passu charge of GIIC and BOB as is admitted by GIIC. It is obvious that the petitioner-company is using the absence of earlier consent of GIIC as a ruse to deny payment of liability to both the creditors.