DEBT TRIBUNAL CAN STOP SALE BY CREDITOR

The Supreme Court has ruled that the debt recovery tribunal has the powers to undo the takeover and sale of assets of a debtor firm by a secured creditor. The court stated so while dismissing an appeal by the Indian overseas bank against the judgment of the madras high court in the case involving Ashok Saw Mills and another firm. The latter could not return the loan and therefore, the bank sold some properties of the firm invoking the securitization Act. When the firms challenged it in the tribunal, the bank argued that the tribunal had no power to interfere in the recovery action as the Securitization
Act has barred it. The Supreme Court rejected its contention and stated that the tribunal could stop the takeover and sale, and even restore the property to the debtor in such cases.