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

The Appellate Tribunal, on Nila ARC's application under section 5A of the SARFAESI Act, 2002, transferred all pending applications against a borrower to the Debts Recovery Tribunal at Chennai. The transferor Tribunal at Pune contends that the order does not bind it because the Pune Tribunal is not within the order-making Appellate Tribunal's territorial jurisdiction. Which statement is correct?

The order binds every Tribunal concerned, including Pune, as if passed by the Appellate Tribunal having jurisdiction over each. Section 5A(3) says so notwithstanding the 1993 Act. Any recovery certificate from the transferee Tribunal is executed under section 19(23) and other provisions of the 1993 Act.

  1. AThe order binds all the Tribunals concerned as if passed by the Appellate Tribunal having jurisdiction over each, and any recovery certificate from the transferee Tribunal is executed under section 19(23) of the 1993 ActCorrect
  2. BThe order binds only the Tribunal within the Appellate Tribunal's own territorial jurisdiction
  3. CThe order binds the Pune Tribunal only if the borrower consents to the transfer
  4. DThe recovery certificate issued by the Chennai Tribunal must be executed only by the Pune Tribunal

Explanation

Section 5A(3) provides that, notwithstanding the 1993 Act, the order binds all the Debts Recovery Tribunals referred to as if passed by the Appellate Tribunal having jurisdiction on each. Section 5A(4) says any recovery certificate issued by the transferee Tribunal is executed under sub-section (23) of section 19 and other provisions of the 1993 Act. The territorial objection and the consent condition therefore fail.

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