The SARFAESI Act was intended to provide an additional remedy to a financial institution to recover its debts. The Statement of Objects and Reasons of the SARFAESI Act acknowledged that the existing legal framework relating to commercial transactions has not kept pace with the changing commercial practice which has resulted in slow pace of recovery of defaulting loans and mounting levels of non-performing assets of banks and financial institutions. Section 35 SARFAESI Act provides that “the provisions of the said Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law”. It is therefore, apparent that the remedy provided under the SARFAESI Act to a secured creditor for recovery of a debt owing to it, is independent of any other remedy available in law.
Section 36 SARFAESI Act requires that a claim should have been made by the lender in respect of the financial assets within the period of limitation prescribed under the LA. Section 36 does not mandate that the notice u/s 13(2) SARFAESI Act must be issued within such period of limitation. A ‘claim’ in respect of the financial asset, could be by way of any proceedings in accordance with law. Since the SARFAESI Act itself came into force only on 18th December 2002, the legislative intent was that even the sum owned to a secured creditor prior to that date can be sought to be recovered as long as the claim was made within the prescribed period of limitation.
A similar view has been expressed by the Gujarat High Court in Ivee Injectaa Ltd. and Another Vs. Junagadh Vibhagiya Nagrik Sahakari Bank Ltd.[(2006) 129 CompCas 528 : (2005) 2 GLR 962 : (2007) 74 SCL 147]
