( 1 ) WITH a view to give impetus to the industrial development of the country, the Central and State Governments encouraged the banks and other financial institutions to formulate liberal policies for grant of loans and other financial facilities to the industrial entrepreneurs. However, those who were granted these facilities did not bother to repay the loans etc. and whenever efforts were made for recovery of the dues, the defaulters dragged the banks etc. in the Courts. The tardy progress made in the adjudication of litigation filed in the Civil Courts resulted in blockage of several hundred crores of public money. In order to redeem the situation, the Parliament enacted the recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the 1993 Act) which, among other things, paved way for creation of specialized forums. e. the Debts Recovery Tribunals and the Debts Recovery Appellate tribunals for expeditious adjudication of disputes relating to the recovery of debts dues of banks and public financial institutions. The 1993 Act also created a bar to the entertaining of civil suits in matters involving recovery of the dues of the banks etc. For few years, the new dispensation of adjudication worked well but with the passage of time, the proceedings before the Debts Recovery Tribunals also become akin to those of Civil Courts. This was mainly due to the fact that the Presiding Officers of the Tribunals, who were drawn from the judicial services, allowed the representatives of the debtors to adopt dilatory tactics which are used for prolonging litigation in the Civil Courts. The survey conducted by the Ministry of Finance, Government of India revealed that as in 2001, a sum of more than Rs. 1,20,000/- crores was due to the banks and financial institutions and the economy of the country was adversely affected on that account. Therefore, the law makers felt that stringent provisions should be made for ensuring speedy recovery of dues of banks, public financial institutions and other secured creditors. To achieve this objective, the Parliament enacted the Securitization and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002 (for short the 2002 Act ). The new enactment is supposed to be free from the trappings of the civil Courts. With a view to ensure that the provisions contained in other laws do not act as impediment in the

recovery of dues of the banks etc. , a non- obstante clause has been incorporated in Section 35 and over-riding effect has been given to the provisions of the 2002 Act vis--vis all other legislations. However, comprehensive implementation of the new legislation could not be done for more than two years because the vires of the 2002 Act was challenged in various High Courts and the Supreme Court and was finally decided in 2004 in mardia Chemicals v. Union of India. Some of the observations made in that judgment are very significant. Therefore, the same are extracted below:

"some facts which need to be taken note of are that the banks and the financial institutions have heavily financed the petitioners and other industries. It is also a fact that a large sum of amount remains unrecovered. Normal process of recovery of debts through courts is lengthy and time taken is not suited for recovery of such dues. For financial assistance rendered to the industries by the financial institutions, financial liquidity is essential failing which there is a blockade of large sums of amounts creating circumstances which retard the economic progress followed by a large number of other consequential ill effects. Considering all these circumstances, the Recovery of Debts Due to Banks and financial Institutions Act was enacted in 1993 but as the figures show it also did not bring the desired results. Though it is submitted on behalf of the petitioners that it so happened due to inaction on the part of the Governments in creating Debts Recovery Tribunals and