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Section 37: Application of other laws not barred

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 • Official Statutory Text & Practice Guide

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Act 2002
Section 36 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 38

Legal Commentary & Landmark Judgments: Section 37

Section 37 of the SARFAESI Act, 2002 establishes that the provisions of the Act are in addition to, and not in derogation of, other recovery and commercial statutes, sanctioning concurrent and cumulative legal proceedings by secured creditors.

  • Cumulative and Additional Remedy: Expressly provides that SARFAESI operates in addition to, and not in derogation of, the RDDBFI Act, 1993, NHB Act, 1987, and other laws.
  • Inapplicability of Doctrine of Election: Secured creditor is not put to an election of remedies and may pursue simultaneous proceedings under SARFAESI, RDDBFI, and arbitration.
  • Non-Obstante Supremacy for Enforcement: While SARFAESI remedies are cumulative, its specific recovery mechanisms supersede conflicting general enactments.
Key Landmark Precedents:
  • Transcore v. Union of India (2008) 1 SCC 125: A 2-Judge Bench held that the doctrine of election does not apply; secured creditors can initiate and pursue proceedings under SARFAESI Act, 2002 and RDDBFI Act, 1993 simultaneously; SARFAESI is an additional, non-derogatory remedy.
  • M.D. Frozen Foods Exports Pvt. Ltd. v. Hero Fincorp Ltd. (2017) 16 SCC 741: The Supreme Court held that SARFAESI proceedings and arbitration proceedings can be pursued concurrently, as one is an enforcement mechanism and the other an adjudicatory process.
  • Pegasus Assets Reconstruction P. Ltd. v. Haryana Concast Ltd. (2016) 4 SCC 47: The Supreme Court confirmed that SARFAESI Act operates concurrently with other laws, but its non-obstante enforcement mechanism supersedes general company winding-up provisions.
Courtroom Practice & Strategic Litigation Guidance:

In defending against borrower objections alleging multiplicity of proceedings or forum shopping (e.g. concurrent DRT OA under Section 19 RDDBFI, Section 13 SARFAESI, Section 138 NI Act, and Section 7 IBC), invoke Transcore and M.D. Frozen Foods to prove that Section 37 sanctions simultaneous and cumulative pursuit of remedies.

Section 36 All 42 Sections of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 Section 38