MPID Vs. SARFAESI Acts -Preferential Right to Secured Assets
Statutory Priority & Right of Secured Creditor in the matter of Economic Offences Attachment under MPID Act.
Bombay HC – No Bar on SARFAESI Sale Despite MPID Attachment in NSEL Scam Proceedings
SBI granted credit facilities to the respondent no.4 against the mortgage deeds. It had taken the symbolic possession of the secured assets under Section 13(4) of the SARFAESI Act, 2002.
In the meanwhile, the respondent no.1 issued EOW notice for offences in the NSEL Scam under the IPC and MPID Act. It has also filed application in MPID case for restraint from taking physical possession and sale.
It is not in dispute that the subject properties were mortgaged in favour of the Appellant much prior in point of time and constitute secured assets in respect of the financial assistance extended to Respondent Nos. 4 to 8. The Appellant therefore occupies the position of a secured creditor, whose rights cannot be lightly defeated.
we are of the opinion that the Appellant would be entitled to proceed against the secured assets in accordance with the SARFAESI Act, 2002 and recover the monies. No prejudice would be caused to any party, by permitting such course of action for the reason that, in the event it is ultimately held that the sale proceeds are required to be appropriated towards the claims of the depositors of NSEL under the MPID proceedings, the Appellant, having unquestioned financial capacity, can be directed to account for and deposit the requisite amounts without delay. At this stage, therefore, there is no justification to interdict the Appellant’s statutory remedy. The Appeal accordingly deserves to be allowed.
Judgment dated 8.5.2026 of the High Court of Bombay in Criminal Appeal No.860 of 2023 of the State Bank of India Vs. State of Maharashtra and others with connected appeal.
