Claim Of Secured Creditor Under SARFAESI Act Not Affected By Attachment Under Karnataka Protection Of Deposits Act: High Court

The Karnataka High Court has held that the attachment of a secured asset under the Karnataka Protection of Interest of Deposit in Financial Establishment Act, 2004, would have no priority over the claim of the Bank, to recover dues made under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. A single judge bench of Justice S G Pandit allowed the petition filed by Bank of India challenging an order passed by the Deputy Commissioner and District Magistrate by which the application made by the bank under Section 14 of SARFAESI Act, seeking assistance in taking possession of the secured assets came to be rejected. He referred to Section 26-E of the SARFAESI Act which relates to the priority of secured creditors and stipulates that notwithstanding anything contained in any other law for the time being in force, after the registration of a security interest, the debts due to any secured creditor shall be paid in priority over all other debts. Findings: The bench said, "Section 26-E of the 2002 Act makes it clear that notwithstanding anything contained in any other law for the time being in force, after the registration of a security interest, the debts due to any secured creditor shall be paid in priority over all other debts."