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CS Professional · Insolvency and Bankruptcy - Law and Practice · Debt Recovery and Securitization

Nila ARC Ltd., an asset reconstruction company, acquired financial assets of one borrower comprising secured debts of two banks. The banks had filed recovery applications before two different Debts Recovery Tribunals. Nila ARC wants all pending applications heard by one Tribunal. Under section 5A of the SARFAESI Act, 2002, what is the correct course?

Nila ARC should apply to the Appellate Tribunal having jurisdiction over any one of the Tribunals where the applications are pending. After hearing the parties, that Appellate Tribunal may transfer all pending applications to one Debts Recovery Tribunal, and its order binds all the Tribunals concerned.

  1. AFile an application before the Appellate Tribunal having jurisdiction over any of those Tribunals, which may transfer all applications to one Tribunal after hearing the partiesCorrect
  2. BFile an application before the High Court, which alone may order such transfer
  3. CRequest the Debts Recovery Tribunal hearing the larger claim to pull the other case without any hearing
  4. DAsk the Reserve Bank of India to direct the transfer by notification

Explanation

Section 5A(1) allows the asset reconstruction company to apply to the Appellate Tribunal having jurisdiction over any of the Tribunals where applications are pending. Under section 5A(2) the Appellate Tribunal orders transfer after giving the parties a hearing, and under 5A(3) the order binds all the Tribunals concerned.

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