Siddhant Khetawat & Shivansh Agarwal from Gujarat National Law University, Gandhinagar, attempt to analyse the case of Harshad Govardhan Sondagar v. International Asset Reconstruction Company.
Abstract
The issue of recovery of debts in India has been plagued with several institutional hindrances and improperly drafted laws. Though many reforms have been suggested and implemented, most of the reforms have been piecemeal in nature. One such legislation envisaged for the expeditious recovery of debts by excluding court’s intervention is the SARFAESI Act, 2002. Though the Act was supposed to improve the debt recovery scenario in India, the legislation is marred with several loopholes and gaps which are subject to widespread abuse. One such gap has been analysed by the Apex Courts in the case of Harshad Govardhan Sondagar v. International Asset Reconstruction Company. In the said case, the Supreme Court has critically analysed the issue of third party interests (such as tenants) in a secured asset and the accommodation of these interests vis-a-vis the rights of the secured creditors under the Act. To this end, the authors undertake a critical appraisal. of the said judgement and the position of law established therein. Further, the authors have tried to throw light on the implications of the judgement on the existing legal regime. This has been done by highlighting some of the possible inconsistencies which might have crept up as a result of the judgement. Lastly, the authors put forward certain measures which could be implemented in order to remove the potential inconsistencies and make the Act more efficient in nature.