In a sense, Sarfaesi and Transfer of Property deals with one common thing viz property. Here we are looking with the matter of dealing the mortgaged property as per both the legislations. Both the Acts viz. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (hereinafter referred as Sarfaesi Act) and the Transfer of Property Act(hereinafter referred as TP Act) are Central statutes. Both the statutes are having separate provisions for dealing with the transfer of mortgaged property.
In specific, the overriding or conflicting provisions for the present post are Section 13(1) and 35 of the Sarfaesi Act and Sections 69 and 69A of TP Act. In Sarfaesi Section 13 deals with enforcement of security interest created in favour of the bank without the intervention of the court. Anyhow the same has to be done in accordance with the provisions of Sarfaesi Act. The wordings of this section opens with a 'non-obstante clause'. The extract is as follows:
"Notwithstanding anything contained in Section 69 or 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act".
In Section 35, there is another non-obstante clause which says that notwithstanding anything inconsistent therewith contained in any other law, the provisions of Sarfaesi Act shall have effect.
Hence it is clear that Sarfaesi Act is having an upper hand in enforcing the security interest for eg.realising asset secured by mortgage of property, without the intervention of court.
Section 69 and 69A of the TP Act says that the mortgagee or any other person acting on his behalf shall have power to sell the mortgaged property in default of payment of mortgage-money without the intervention of Court. Section 69A deals with appointment of receiver for the purpose of Section 69.
So what is the difference between these provisions. As a matter of fact, TP Act is a much earlier legislation compared to Sarfaesi Act where Sarfaesi is a special enactment. But the power under the TP Act can only be exercised in certain cases. In other words, the power is subject to the provisions of this section. With the enactment of Sarfaesi, any secured creditor can enforce his rights without following the conditions laid down in the respective provisions of TP Act. While TP Act restricts the security interest into some types of mortgages and some places where the right can be exercised, provisions of Sarfaesi Act applies to any security interest created in favour of any secured creditor. We must stress on the word 'any' appearing in this provision. Here it is relevant to note the definition given to 'security interest' in Section 2(1)(zf) of the Sarfaesi Act. The extract of the section is given below:
"security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in Section 31.
So here Sarfaesi Act earns more points. Section 13 of the said Act overrides respective provisions of TP Act. It retains the powers of TP Act and not the conditions. The only condition is that, the power has to be carried out in accordance with the provisions of Act. There are no limitations in applying the power. Section 35 of Sarfaesi more firmly enforces the powers granted by this special enactment by overriding all other laws inconsistent with Sarfaesi. The result is that in case of Banks and other financial institutions, Sarfaesi Act is the best, speedy and effective tool to enforce security interest and thereby realising the dues.