Suppose a borrower defaults on a home loan.
Under SARFAESI:
- Bank issues a Section 13(2) notice.
- Takes possession under Section 13(4).
- Conducts auction.
- Borrower challenges before DRT.
Under RDB Act:
- Bank files an OA before DRT.
- Evidence is recorded.
- DRT determines liability.
- Recovery Certificate is issued.
🔍 The Practical Reality
Many banks use both laws simultaneously.
A bank may:
- File an OA under the RDB Act to obtain a Recovery Certificate.
- Continue SARFAESI proceedings against the secured asset.
The Supreme Court has repeatedly recognized that these remedies are generally complementary and not mutually exclusive. In the case of Vishnu S. Bhatia vs. State Bank of India, (2020) 14 SCC 92, the Court held that the provisions of the SARFAESI Act and the RDB Act can coexist and be pursued concurrently, provided the procedural requirements under each law are satisfied.
💡 Key Takeaway
SARFAESI is about enforcing security.
RDB Act is about adjudicating and recovering debt.
This distinction is crucial for both lenders and borrowers to understand their rights and obligations under Indian law.
Relevant Links:
Hashtags: #SARFAESI #RDBAct #IndianLaw #DebtRecovery #BankingLaw #LegalInsights
