The right of appeal is a statutory creation, and the conditions imposed by the legislature for the exercise of that right are not onerous. The Securitisation Act emphasizes a non-adjudicatory process for enforcement of security interests.

JUDGMENT

1. Rule, by consent returnable forthwith. With the consent of Counsel and at their request the Petition is taken up for hearing and final disposal.

2. By an order dated 6 April 2001 the Debts Recovery Appellate Tribunal has directed the Petitioners to deposit an amount of Rs.7 Crores. The Debts Recovery Appellate Tribunal was moved by the Petitioners for an order of waiver under Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. An application filed by the Petitioners under Section 17 was earlier dismissed by the Tribunal on 4 February 2011. Against the order of rejection, the Petitioners filed an appeal in which an application for waiver was made. The impugned order decides that application.

3. The Petitioners have challenged the constitutional validity of the provisions of the first and second provisos to Section 18 of the Act on the ground that they are discriminatory. The submission is based on a comparison with the provisions of Section 21 of the Recovery of Debts due to Banks and Financial Institutions Act 1993. According to the Petitioners while the Act of 1993 confers a discretion upon the Appellate Tribunal to allow a complete waiver of the predeposit, the discretion of the Appellate Tribunal, while entertaining an appeal under Section 18 of the Securitisation Act is curtailed. By the first proviso to Section 18(1) an appeal cannot be entertained unless the borrower has deposited an amount of 50% of the debt due as claimed by the secured creditor, or as determined by the Tribunal, whichever is less. By the second proviso, the Appellate Tribunal is empowered for reasons to be recorded in writing to reduce the amount to not less than 25% of the debt referred to in the second proviso.

4. Notice was issued to the Attorney General of India in view of the constitutional challenge. The learned Additional Solicitor General of India has appeared in the proceedings.

5. The constitutional challenge to the provisions of the second and third provisos of Section 18 must fail. An appeal, it is well settled, is a statutory creation. A statute which confers a right of appeal can condition the exercise of that right on the observance of conditions which the legislature may consider appropriate to impose. The Securitisation Act is an act to regulate securitisation and reconstruction of financial assets and enforcement of security interests. The Statement of objects and reasons accompanying the introduction of the Bill in Parliament sets out the background in which the law was enacted as follows :

The financial sector has been one of the key “drivers in India’s efforts to achieve success in rapidly developing its economy. While the banking industry in India is progressively complying with the international prudential norms and accounting practices, there are certain areas in which the banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of banks and financial institutions. Further, unlike international banks, the banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of nonperforming assets of banks and financial institutions. Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms have considered the need for changes in the legal system in respect of these areas. These Committees, inter alia, have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions to take po