The Delhi High Court, on Thursday, held that arbitration and SARFAESI proceedings can be resorted to simultaneously for recovery of loan arrears.
According to Justice Navin Chawla, “As the SARFAESI Act and the Arbitration /Debt Recovery Act are held to be complementary in nature and the doctrine of election has been held to be not applicable, it cannot be said that if a party has invoked one remedy, it is debarred from invoking the other during the pendency of the first one. Under the SARFAESI Act, especially under Section 13 thereof, the secured creditor will proceed against the security given for the loan. The Arbitration Proceedings and SARFAESI Act proceedings can go hand in hand. It has held that the provisions of SARFAESI Act are a remedy in addition to the provisions of the Arbitration Act. The two Acts are cumulative remedies to the secured creditors. While SARFAESI Act proceedings are in nature of enforcement proceeding, the arbitration proceedings would be in form of an adjudicatory process. In the event that the secured assets are insufficient to satisfy the debt, the secured creditor can proceed against other assets in execution against the debtor, after determination of pending outstanding amount by a competent forum i.e. in this case the arbitration.”