Back
2005 Supreme(Del) 1104
Delhi High Court
MAKANDEYA KATJU,MADAN B. LOKUR
R. V. Saxena - Appellant
Versus
U.O.I. - Respondent
W. P. (C) No. 19640 of 2005
Decided On : 12/14/2005
Naresh K. Thanai, for Petitioner; Lajwinder Singh, for Respondents.
The right of appeal is a statutory right and can be subject to conditions imposed by the legislature.
Headnote:
ultra vires - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 18(1) - 13(2) - 15(1) - 406(c)
Fact of the Case:
The petitioner, a retired Government servant, challenged the order of the Debt Recovery Appellate Tribunal (DRAT) and the constitutional validity of the proviso to Section 18(1) of the Securitisation Act. The respondent No. 3 availed credit facilities and defaulted, leading to the bank declaring them a non-performing asset. The bank initiated proceedings under the Securitisation Act to recover the outstanding amount, leading to a series of legal actions and appeals.
Finding of the Court:
The court held that the right of appeal is not absolute and can be subject to conditions imposed by the statute. It cited similar provisions in other enactments and upheld the constitutionality of the proviso to Section 18(1) of the Act, which requires the borrower to deposit a percentage of the debt for entertaining the appeal.
Issues: Constitutional validity of the proviso to Section 18(1) of the Securitisation Act, legality of bank's actions under the Act, and the petitioner's challenge to the order of the Appellate Tribunal.
Ratio Decidendi: The right of appeal is a statutory right and can be subject to conditions imposed by the legislature. The court cited precedents and upheld the constitutionality of the proviso to Section 18(1) of the Act, which requires the borrower to deposit a percentage of the debt for entertaining the appeal.
Final Decision: The petition was dismissed, and the court upheld the constitutionality of the proviso to Section 18(1) of the Securitisation Act.
MARKANDEYA KATJU, C. J. :- This writ petition has been filed challenging the order of the Debt Recovery Appellate Tribunal (DRAT), dated 23-9-2005 and praying for declaring the proviso to Section 18(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter refer to as the Act) which requires pre-deposit for entertainment of the appeal under Section 18 of the Securitisation Act as ultra vires Article 14 of the Constitution of India.
2. Heard learned counsel for the parties and perused the record.
3. The petitioner is a retired Government servant. Respondent No. 3 M/s. Graffiti Infotech Ltd. is a company registered under the Indian Companies Act and is carrying on the business of dealing in laptop computers etc. Presently, it is being managed by respondent No. 4. The respondent No. 3 availed certain credit facilities to the extent of Rs. 30 lakhs by way of hypothecation of stocks etc. Immediately after availing loan from respondent No. 2, Punjab and Sind Bank, respondent No. 3 has been showing losses. On account of irregularities in repayment to respondent No. 2, the said respondent No. 2 declared respondent No. 3 as a non-performing asset on 31-3-2002.
4. The respondent No. 2 bank sent notice dated 7-9-2002 under Section 13(2) of the Securitisation Act, inter alia, claiming a sum of Rs. 44,77,239/- along with interest @ 18.15% per annum up to 31-3-2002. Subsequently notice dated 26-2-2003 claiming Rs. 47,08,662/- was issued by respondent No. 2. In reply to the notice dated 26-2-2003, the petitioner sent a letter stating that a sum of Rs. 2.09 lakhs has been deposited by the principal borrower/respondent No. 3 company and further substantial amount was likely to be deposited. It was requested that no legal action be taken in pursuant to the notice. It is also stated that respondent No. 3 had deposited Rs. 16.50 lakhs till September, 2004.
5. The petitioner along with respondents 3 to 5 filed writ petition Nos. 4657-61/2004, inter alia, challenging the vires of the Act and also the order dated 26-2-2004 passed by the Chief Metropolitan Magistrate directing taking possession of the properties alleged to have been mortgaged with the respondent No. 2 bank. Pursuant to the orders passed by this Court another sum of Rs. 2.50 lakhs was deposited with respondent No. 2 by the respondent No. 3. The said writ petition was disposed of by order dated 16-4-2004 in view of the judgement of the Supreme Court in Mardia Chemicals' case.
6. Subsequently, petitioner received a notice dated 13-9-2004 whereby the receiver appointed by the Chief Metropolitan Magistrate by order dated 7-8-2004 sought to take possession of the two properties being Flat No. B-21, South Park Apartments, Kalkaji, New Delhi and Flat No. 80, NPL Apartments, Vikaspuri, New Delhi. It is stated that subsequently pursuant to negotiations a sum of Rs. 4.53 lakhs was deposited with the respondent No. 2 on 25-9-2004.
7. It is alleged in the writ petition that contrary to the assurances of the bank, possession of the property bearing Flat No. 80, NPL Apartments, Vikaspuri, New Delhi was taken over by the receiver on 29-12-2004. The other property bearing Flat No. B-21, South Park Apartments, Kalkaji New Delhi, possession of which was also to be taken over pursuant to the notice dated 13-9-2004, is still with the guarantor. No action in respect of the said property has been taken. It is alleged that the action of respondent No. 2 in taking over possession of the property is contrary to the provisions of the Act. It is alleged that since the property has not been mortgaged in accordance with law, the respondent No. 2 bank is not a secured creditor and thus no proceedings under the Securitization Act could be initiated. It is alleged that no mortgage of the property could be created without the prior permission from the DDA. The petitioner had no intention and never attempted to create a mortgage of the said property,
