Constitutional Challenge and Bench Composition
The Supreme Court held that SARFAESI Proceedings Maintainable despite an earlier Debts Recovery Tribunal (DRT) decree for the same debt. The Court dismissed a petition filed under Article 32 of the Constitution. The petitioner had challenged enforcement action by an asset reconstruction company. A bench of Justice BV Nagarathna and Justice R Mahadevan heard the matter.
The challenge concerned actions under Sections 13(2), 13(4), and 14 of the SARFAESI Act, 2002. It also involved Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act).
Arguments on Res Judicata and Doctrine of Merger
The petitioner argued that a DRT decree changes the legal position of the underlying claim. This argument also covered an ex-parte decree passed in an Original Application.
According to the petitioner, the principle of transit in rem judicatam applies once the DRT issues a decree. Therefore, the original cause of action merges into that decree.
The petitioner further relied on the doctrine of res judicata. On this basis, counsel argued that the creditor could not initiate another proceeding on the same cause of action. Consequently, the petitioner claimed that the SARFAESI Act could not apply to the dispute.
Supreme Court Examines Section 35
However, the Supreme Court rejected this argument. The bench examined Section 35 of the SARFAESI Act while considering the challenge.
Section 35 gives the SARFAESI Act an overriding effect. Its provisions operate despite anything inconsistent contained in another law in force. They also prevail over instruments that derive effect from such laws.
Therefore, the Court concluded that an earlier DRT adjudication does not prevent a creditor from pursuing remedies under the SARFAESI Act.
The ruling establishes that SARFAESI Proceedings Maintainable even when a DRT has already passed a decree concerning the same debt.
Case Details and Legal Representation
The Court delivered the decision in KK Praveen v JM Financial Asset Reconstruction Company P Ltd & Ors. The reported citation is 2026 LiveLaw (SC) 932.
Dr Linto K.B., AOR, represented the petitioner. Advocates Mathews J Nedumpara, Maria Nedumpara and Hemali Suresh Kurne also appeared. In addition, Shameem Fayiz, Samuel Dara, Jeevan R. Patil and Rakesh Kumar represented the petitioner.
This version uses shorter sentences, more active constructions, and additional transition words such as therefore, however, consequently, further, and in addition.
