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ARTICLE · 27 FEBRUARY 2023

Supreme Court: Dues Under The SARFAESI Act Will Prevail Over MSMED Act

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The Supreme Court of India in the case of Kotak Mahindra Bank Limited vs. Girnar Corrugators Pvt. Ltd. and Ors. has held that the provisions of the SARFAESI Act for recovery of dues payable to a secured creditor ...

IndiaFinance and Banking
Dheeraj Nair
Dheeraj Nair
Avni Sharma
Avni Sharma
Utkarsh Gupta
Utkarsh Gupta
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The Supreme Court of India ('Supreme Court') in the case of Kotak Mahindra Bank Limited vs. Girnar Corrugators Pvt. Ltd. and Ors.1 has held that the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act') for recovery of dues payable to a secured creditor will prevail over the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 ('MSMED Act').

Brief Facts

The Kotak Mahindra Bank Limited ("Appellant") initiated recovery proceedings on account of default by a debtor under Section 13(2) of the SARFAESI Act. The Appellant's application to seek assistance from the District Magistrate to take possession of the secured assets was allowed, following which the Sub Divisional Magistrate, then directed the Naib Tehsildar to acquire possession.

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