Madras High Court
M/S Deccan Chronicles Holdings ... vs The Union Of India on 8 May, 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated :
08.05.2014
Coram
The Honourable Mr.JUSTICE N.PAUL VASANTHAKUMAR
and
The Honourable Mr.Justice M.M.SUNDRESH
Writ Petition Nos.5897, 5898, 7296 to 7299, 7390, 7653, 7654, 7806, 8090,
8091, 8457,
8458, 8593 to 8596, 8746, 8747, 8766, 8942, 8970, 9019, 9073, 9123, 9124,
9183, 9420,
9421, 9573, 9611, 9649, 9671, 9690, 9774, 9825, 10007, 10304, 10656, 10665,
10766, 11042,
11078, 11317, 11471 to 11474, 12318, 12462, 12506 and 12508 of 2014
W.P.Nos.5897 and 5898 of 2014:
M/s Deccan Chronicles Holdings Limited,
A company incorporated under the
Companies Act, 1956, having Office at
P-3, Developed Plot, Industrial Estate,
Guindy, Chennai 600 032
rep.by its Assistant General Manager,
R.Guruprasad.
Vs.
1. The Union of India,
represented by its Joint Secretary,
Ministry of Finance,
Department of Economic Affairs,
Room No.34-C,
New Delhi 110 001 (India)
..
Petitioner
2. Reserve Bank of India,
represented by its Chairman and
Managing Director,
6, Parliament Street,
New Delhi 110 001
3. Canara Bank,
through its Authorised Officer,
Prime Corporate Bank,
T.S.R.Complex, S.P.Road,
Secunderabad 500 003.
W.P.Nos.7296 and
.. Respondents
7297 of 2014:
Summer India Textile Mills P.Ltd.,
rep.by its General Manager Finance
Shri S.S.Prabhaakaran
No.176.2-A, Kozhikkalantham Road,
Tiruchengode 637 211.
...
Petitioner
Vs.
1. Union of India,
rep. by its Joint Secretary
Ministry of Finance Department of
Economic Affairs, Room No.34-c
New Delhi 110 001
2. Reserve Bank of India,
represented by its
Chairman and Managing Director,
6, Parliament Street,
New Delhi 110 001
3. State Bank of India,
rep.by its Authorized Officer,
Commercial Branch,
C.D.Building, 78/79,
Park Road, Erode 638 003
4. State Bank of Patiala,
MID Corporate Branch, Whbites Road,
Thousand Lights, Chennai 600 014
...
Respondents
W.P.Nos.7298 and 7299 of 2014:
K.S.Rangaswamy
Vs.
1. Union of India,
rep. by its Joint Secretary
Ministry of Finance Department of
Economic Affairs, Room No.34-c
New Delhi 110 001
... Petitioner
2. Reserve Bank of India,
represented by its
Chairman and Managing Director,
6, Parliament Street,
New Delhi 110 001
3. State Bank of India,
rep.by its Authorized Officer,
Commercial Branch,
C.D.Building, 78/79,
Park Road, Erode 638 003
4. State Bank of Patiala,
MID Corporate Branch, Whbites Road,
Thousand Lights, Chennai 600 014
5. Summer India Textiles Mills P.Ltd.,
No.176/2-A, Kozhikkalanatham Road,
Tiruchengode 637 211.
...
Respondents
W.P.No.7390 of 2014:
Ravi Shankar Mangipudy
....
Petitioner
Vs.
1.
Union of India,
rep. by the Secretary
to Government,
Ministry of Finance Department of
Economic Affairs,( Banking Division)
North Block Room No.34-c
New Delhi.
2. Central Bank of India, rep.by its
Manager, Mid Corporate Branch,
48/49, Monteith Road, Egmore,
Chennai 600 008
3. The Authorised Officer,
Central Bank of India,
Mid Corporate Branch,
48/49, Monteith Road, Egmore,
Chennai 600 008
4. M/s.General Nice Mineral Trading Pvt.Ltd.,
rep.by its Manager,
General Nice Tower, 4th Floor,
NO.90, Old NO.87, Chamiers Road,
Chennai 600 018
5. M/s.General Nice Resources (Hong Kong) Ltd.,
7th and 20th Floor,
Lippo Leighton Tower,
103, Leighton Road,
Causeway Bay,
Hong Kong.
6. The Governor
The Reserve Bank of India,
Central Office,
Mumbai.
W.P.Nos.7653
.... Respondents
and 7654 of 2014:
M/s.Gangotri Textiles Ltd.,
rep.by Mr.Manoj Kumar Tibrewal,
No.35, Robertson Road,
R.S.Puram, Coimbatore.
Vs.
1. Union of India,
rep. by its Joint Secretary
Ministry of Finance Department of
Economic Affairs, Room No.34-c
New Delhi 110 001
2. Reserve Bank of India,
represented by its
Chairman and Managing Director,
...
Petitioner
6, Parliament Street,
New Delhi 110 001
3. State Bank of India,
rep.by its Authorized Officer,
Sam Branch, Cross Building,
32, Monteith Road, Egmore,
Chennai 600 008.
...
Respondents
...
Petitioner
W.P.No.7806 of 2014:
Mr.A.Azariah
Vs.
1. Union of India,
rep.by the Secretary to Government
Ministry of Finance Department of
Economic Affairs (Banking Division),
North Block,
New Delhi
2. The Governor,
The Reserve Bank of India,
Central Office, Mumbai
3. The Authorised Officer,
M/s.Corporation Bank,
Velandipalayam Branch
Saibaba Colony, Coimbatore 641 105
4. Royal Educational Trust,
No.16/177, Marappalam
Madukkarai,
Coimbatore 641 105
5. A.Jebasingh Prasad
6. A.Gunasingh
7. G.Flowrence Jasmine Bharathy
....
Respondents
....
Petitioner
W.P.Nos.8090 and 8091 of 2014:
M/s.Sekar Stores Home Mart,
represented by its Partner
Mr.S.V.Manivannan,
S/o.S.V.S.Pandian,
all having Office at No.37,
Arcot Road, Kodambakkam,
Chennai 24.
Vs.
1. The Union of India,
rep.by Secretary to Government,
Ministry of Finance Department of
Economic Affairs (Banking Division),
North Block,
New Delhi.
2. The Authorised Officer,
M/s.Pridhiv Asset Reconstruction
and Securitisations Company Limited,
Rajaprasadmu, 4th Floor, Wing No.1,
Plot No.6, 6A, 6B, Masjid Bandar Road,
Kondapur, Hyderabad 500 084
3. Reserve Bank of India,
No.16, Rajaji Salai,
Chennai 600 001
4. The Authorised Officer,
M/s.Axis Bank Limited,
Karumuthu Nilayam,
2nd Floor, No.192,
Anna Salai, Chennai 600 002.
...
Respondents
W.P.Nos.8457 and 8458 of 2014:
M/s.Sri Devi Oil Pvt.Ltd.,
A Company Registered under the
Companies Act, having its place of
business at No.279/6, Villipalayam village,
Namakkal 637 206
rep.by its Director,
Mr.V.Janarthana Guptha
Vs.
....
Petitioner
1. Union of India,
rep. by its Joint Secretary,
Ministry of Finance,
Department of Economic Affairs,
Room No.34c,
New Delhi 110 001
2. The Reserve Bank of India,
rep.by its Chairman and
Managing Director,
6, Parliament Street,
New Delhi 110 001
3. State Bank of India,
rep. by its Authorised Officer
Commercial Branch
# 232, NSC Bose Road,
Chennai.
W.P.Nos.8593 and 8596 of 2014:
M/s.Sri Devi Extractions Pvt.Ltd.,
No.50A, Salem Road,
....
Respondents
Namakkal 637 001
rep.by its Director,
Mr.V.Janarthana Guptha
Vs.
....
Petitioner
1. Union of India,
rep. by its Joint Secretary,
Ministry of Finance,
Department of Economic Affairs,
Room No.34c,
New Delhi 110 001
2. The Reserve Bank of India,
rep.by its Chairman and
Managing Director,
6, Parliament Street,
New Delhi 110 001
3. State Bank of India,
rep.by its Authorised Officer
- Asst.General Manager,
Commercial Branch
# 232, NSC Bose Road,
Chennai.
W.P.Nos.8594
....
Respondents
....
Petitioner
....
Respondents
....
Petitioner
and 8595 of 2014:
M/s.Global Trading Impex P.Ltd.,
NO.5, 1st Floor, No.50A, Salem Road,
Namakkal- 637 001
rep.by its Director Mr.V.Janarthana Guptha
Vs.
1. Union of India,
rep. by its Joint Secretary,
Ministry of Finance,
Department of Economic Affairs,
Room No.34c,
New Delhi 110 001
2. The Reserve Bank of India,
rep. by its Chairman and
Managing Director,
6, Parliament Street,
New Delhi 110 001
3. State Bank of India,
rep. by its authorised Officer
- Asst.General Manager,
Commercial Branch
# 232, NSC Bose Road,
Chennai.
W.P.Nos.8746 and 8747 of 2014:
S.Vijayalakshmi
Vs.
1. The Union of India,
rep. by its Joint Secretary
Ministry of Finance Department of
Economic Affairs, Room No.34-c
New Delhi 110 001
2. Reserve Bank of India,
represented by its
Board of Directors,
6, Parliament Street,
New Delhi 110 001
3. The Authorised Officer,
Uco Bank,
Pondicherry Main Branch,
Rue Mahe De Labourdonais,
Pondicherry 605 001.
...
Respondents
W.P.No.8766 of 2014:
M/s.Sri Sivaram Spinning mIll
represented by Parter K>R.Guruswami,
No.674/1C, Kulathur Road,
Venkatapuram Post
Coimbatore- 641 014.
Petitioner
....
Vs.
1. Union of India,
rep. by its Joint Secretary
Ministry of Finance Department of
Economic Affairs,
New Delhi.
2. Reserve Bank of India,
represented by its
Chairman/Managing Director,
6, Parliament Street,
New Delhi
3. State Bank of India,
rep.by its Chief Manager,
Commercial Branch,
Veerappan Complex,
24, Stanes Road,
Thirupur 641 602.
W.P.No.8942 of 2014:
M/s.Alpride Medics
represented by Partner
Mr.Ragunath, L-5, Industrial Estate,
...
Respondents
Ambattur, Chennai.
....
Petitioner
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance, Department of Economic
Affairs, (Banking Division), North Block,
New Delhi
2. The Authorised Officer,
The South Indian Bank Limited,
Regional Office, Niagra Apartments,
No.1, Sterling Road,
Nungambakkam, Chennai 34.
3. The Governor,
Reserve Bank of India,
Central Office
Mumbai.
...
Respondents
....
Petitioner
W.P.No.8970 of 2014:
M/s.Riverside Infrastructure (India) Pvt.Ltd.,
(RIPL), having Regd.Office at
4/318, MARG Axis, Rajiv Gandhi Salai,
Kottivakkam, Chennai
rep.by its Managing Director
Mr.G.R.K.Reddy
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance, Department of Economic
Affairs, (Banking Division), North Block,
New Delhi
2. The Authorised Officer,
State Bank of Patiala,
Commercial Branch, Atlanta,
1st Floor, Nariman Point,
Mumbai 400 021
3. M/s. LIC Housing Finance Ltd.,
Harrington Chambers,
No.30/1A, Block C, II Floor,
Abdul Razack, 1st Street,
Saidapet, Chennai 600 015
4. Syndicate Bank,
Corporate Finance Branch,
No.170, Eldams Road,
Chennai 600 018
5. The Governor,
Reserve Bank of India,
Central Office,
Mumbai.
Respondents
....
W.P.No.9019 of 2014:
Mr.G.Golpalakrishnan
...
Petitioner
....
Respondents
Vs.
1.
Union of India,
rep. by the Secretary to Government,
Ministry of Finance, Department of Economic
Affairs, (Banking Division), North Block,
New Delhi
2.
The Authorised Officer,
Dena Bank,
Retail Asset Branch,
NO.83, TTK Road,
Alwarpet, Chennai 18.
3. The Governor,
Reserve Bank of India,
Central Office
Mumbai.
W.P.No.9073 of 2014:
Mrs.K.Amsavalli
Vs.
....
1.
Union of India,
rep. by the Secretary to Government,
Ministry of Finance, Department of Economic
Affairs, (Banking Division), North Block,
New Delhi
2.
The Authorised Officer,
Indian Bank, CMDA Branch,
CMDA Towers, 1, Gandhi Irwin Road,
Egmore, Chennai 600 008.
3. The Governor,
Reserve Bank of India,
Central Office, Mumbai.
W.P.No.9123 of
2014:
M/s MARG Ltd.,
Registered office at MARG Axis,
4/318, Rajive Gandhi Salai,
Petitioner
....
Respondents
Kottivakkam, Chennai-600 041
having its Corporate Office at
MARG Pancham,
Block-B, NO.334,Futura Tech Park,
Rajive Gandhi Salai, (OMR),
Sholinganallur, Chennai-600 119.
rep. By its Senior Manager (Legal)
Vs.
1. Union of India,
rep. by the Secretary to Government
Ministry of Finance,
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi
....
Petitioner
2.The Authorised Officer,
The South Indian Bank Ltd.,
Regional Office, Niakara Apartments,
1, Sterling Road, Nungambakkam,
Chennai-600 034.
3. The Governor,
Reserve Bank of India,
Central Office,
Mumbai
Respondents.
W.P.No.9124 of
....
2014:
Mrs.R.Vimala
....
Petitioner
Vs.
1. Union of India,
rep. by the Secretary to Government
Ministry of Finance,
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi
2.The Authorised Officer,
Punjab National Bank, Circle Office,
Trichy, PNB House, Kailasapuram P.O.,
Trichy-620 014.
3. The Governor,
Reserve Bank of India,
Central Office,
Mumbai
Respondents.
W.P.No.9183 of
2014:
B.N.Sridhar
Petitioner
Vs.
....
....
1. Union of India,
rep. by the Secretary to Government
Ministry of Finance,
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi
2.The Authorised Officer,
Canara Bank, Asset Recovery Management
Branch, Spencers Towers II,
III Floor, 770-A, Anna Salai,
Chennai-600 002.
3. The Governor,
Reserve Bank of India,
Central Office,
Mumbai
Respondents.
....
W.P.Nos.9420 and 9421 of 2014:
M/s.V.M.E.Precast Pvt.Ltd.,
rep.by its Chairman
No.364, Pillaiayar Koil Street
Pancer Nagar, Mugappair West,
Chennai 600 037
Vs.
...
Petitioner
1. The Union of India,
rep. by its Joint Secretary
Ministry of Finance Department of
Economic Affairs, Room No.34-c
New Delhi 110 001
2. Reserve Bank of India,
represented by its
Chairman and Managing Director,
6, Parliament Street,
New Delhi 110 001
3. Uco Bank,
rep. by its Authorized Officer,
Midcorporate Branch,
NO.67, Burkit Road,
T.Nagar, Chennai 600 017
Fax: 044-24357478
...
Respondents
W.P.No.9573 of 2014:
SKAT INDIA Cloth Apparels (P) Ltd.,
rep.by Mr.K.V.Naidu Managing Director,
Regd.Office and Unit-I, No.536 (No.1057),
Poonamallee High Road, Arumbakkam,
Chennai 600 106.
VS.
1. Union of India,
rep. by the Secretary to Government,
...
Petitioner
Ministry of Finance, Department of Economic
Affairs, (Banking Division), North Block,
New Delhi
2. The Governor,
Reserve Bank of India,
Central Office, Mumbai.
3. Allahabad Bank,
Asset Recovery Management Branch,
Vaairams, 112, Sir Thyagaraja Road,
T.Nagar, Chennai 600 017
4. The Authorised Officer,
Allahabad Bank, Industrial Finance Branch,
Dnna Theatre Building,
No.41, Mount Road, Chennai 600 002.
...
Respondents
W.P.No.9611 of 2014:
M/s LGP Enterprises,
Rep. By its Proprietor L.Gajendran,
No.35, Second Main Road,
Lakshmi Nagar, Velacherry,
Chennai-600 042.
Petitioner
....
Vs.
1. Union of India,
rep. by the Secretary to Government
Ministry of Fiannce
Department of Economic Affairs,
(Banking Division) North Block, New Delhi,
2. The Authorised Officer,
M/s. Indian Bank Porur Branch,
No.225, Trunk Road,
Porur, Chennai 600 116
3. The Governor
The Reserve Bank of India,
Central Office,
Mumbai.
.....
Respondents
W.P.No.9649 of 2014:
M/s Uthrakaliamman Infrastructures (P) Ltd.,
Rep. by its Director Mr.V.Manikanda Raju
Alozz Abdul Kalam Azad Street,
Pollachi-642 001.
Petitioner
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
....
(Banking Division), North Block,
New Delhi.
2. The Governor,
The Reserve Bank of India,
Central Office, Mumbai
3. The Authorised Officer,
M/s State Bank of India,
Stressed Assets Management Branch,
Now at 1112, Raja Plaza, First Floor,
Lakshmi Mills Bus Stop,
Avanashi Road, Coimbatore.
.. Respondents
W.P.No.9671 of 2014:
M/s Karpaga Vinayagar Cosntructions,
Represented by its Proprietor Mrs.M.Aruvi,
No.2/32, Arunagirinathar Street,
New perungalathur, Chennai-600 063.
.. Petitioner
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
(Banking Division), North Block,
New Delhi.
2. The Authorised Officer,
M/s Punjab National Bank,
Teynampet Branch, No.152,
Eldams Road, Teynampet,
Chennai-600 018.
3.
Reserve Bank of India,
Department of Banking Operations
and Development, Central Office,
Mumbai-400 001.
.. Respondents
W.P.No.9690 of 2014:
M/s Mangai Interiors,
Represented by its Proprietor
Mr.L.Alagappan, Plot No.107,
Kambar Cross Street,
Gandhi Nagar, Virugambakkam,
Chennai-600 092.
Petitioner
Vs.
1. Union of India,
represented by the Secretary to Government,
Ministry of Finance,
..
Department of Economic Affairs,
(Banking Division), North Block,
New Delhi.
2. The Authorised Officer,
M/s Punjab National Bank,
Teynampet Branch, No.152,
Eldams Road, Teynampet,
Chennai-600 018.
3. Reserve Bank of India,
rep. By its Chief General Manager,
Department of Banking Operations
and Development, Central Office,
Mumbai-400 001.
.. Respondents
W.P.No.9774 of 2014:
M/s.Current Trends,
No.28/15, M.K.Building,
Indira Nagar, 1st Street,
Behind CSI Church, Avinashi Road,
Gandhi Nagar Post, Tiruppur 641 603.
rep. by its Managing Partner
S.Krishnakumar
Vs.
1. Union of India,
rep.by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
(Banking Division), North Block,
New Delhi
2. The Governor,
The Reserve Bank of India,
Central Office, Mumbai,
Maharashtra
3. The Authorised Officer &
Assistant General Manager,
State Bank of India,
Stressed Assets Management Branch,
Red Cross Building,
32, Montieth Road,
Egmore, Chennai 600 008
4. The Authorised Officer &
Assistant General Manager,
State Bank of India,
Stressed Assets Management Branch,
1112, Raja Plaza
Avinashi Road,
Colimbatore 641 037
5. The Manager,
State Bank of India,
Specialized Commercial Branch,
..,,
Petitioner
Tiruppur, Tiruppur District.
Respondents
W.P.No.9825 of
....
2014:
M/s Everwin Textile Mill (P) Ltd.,
Rep. by its Managing Director,
K.Periasamy, No.4/12, Chittappa Avenue,
Royapuram Main Road, Tiruppur-641 601.
..
Petitioner
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
(Banking Division), North Block,
New Delhi
2. The Governor,
The Reserve Bank of India,
Central Office, Mumbai.
3. The Assistant General Manager,
M/s Punjab National Bank,
No.54, Sabari Street,
Tiruppur-641 601.
4. The Chief Manager,
The State Bank of Mysore,
Tiruppur Branch,
No.72, Appachi Nagar Main Road,
Kongur Nagar, Tiruppur-641 607.
... Respondents
W.P.No.10007 of 2014:
M/s Eurostyle Tex,
Rep. by Mr.S.Gughan,
Managing Partner,
No.9, Poonthottam,
Murugampalayam,
Gandhi Nagar Post,
Tiruppur-641 603.
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
(Banking Division), North Block,
New Delhi
2. The Governor,
The Reserve Bank of India,
Central Office, Mumbai.
.. Petitioner
3. The Authorised Officer,
M/s Uco Bank, Nos.55 & 56,
Sakthi Towers, Ground Floor,
Vallipalayam 3rd Street,
Tiruppur-641 603
.. Respondents
W.P.No.10304 of 2014:
M/s Tribune Textiles (India) Pvt. Ltd.,
Rep. by its Director Mr.G.Surendra Gupta,
No.284/2, Sanapudur, Manellore Post-601 202.
Gummidipoondi Taluk,
Thiruvallur District(T.N.)
Petitioner
..
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
(Banking Division), North Block,
New Delhi
2. The Governor,
The Reserve Bank of India,
Central Office, Mumbai.
3. City Union Bank Limited,
by its Branch Manager,
Achari Street,
Nellore.
4.India SME Asset Reconstruction Company
Ltd.(ISARC), M.S.M.E. Development Centre,
C-11, G. Block, Bandra-Kurla Complex,
Bandra East,
Mumbai-400 051.
....
Respondents
W.P.No.10656 of 2014:
M/s. Satyam Educational Trust,
Rep. By its Chairman A.Thinagar,
II Floor, S.D.S. Building,
Court Road, Nagercoil-629 001.
Petitioner
VS.
1. The Union of India,
rep.by its Joint Secretary,
Ministry of Finance,
Department of Economic Affairs,
Room No.34-C, New Delhi-110 001.
2. The Reserve Bank of India,
....
rep. By Governor,
No.6, Parliament Street,
New Delhiu-110 001.
3. The Authorised Officer/
The Chief Manager,
Bank of Maharastra,
Chennai Zonal Office,
No.4, Sivagnanam Road,
T.Nagar, Chennai-600 017.
W.P.No.10665 of
....
Respondents
2014:
B.Gnanasambandan @ Rajakumar,
No.10, Sundaravinayagar Koil Street,
Saint Simonpet, Muthialpet,
Pondicherry-605 003.
.. Petitioner
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
(Banking Division), North Block,
New Delhi.
2.The Authorised Officer,
Uco Bank, Pondicherry Main Branch,
No.7, Rue Mahe De Labourdonnais,
Pondicherry-605 001.
3. The Governor,
The Reserve Bank of India,
Central Office, Mumbai.
W.P.No.10766 of
.. Respondents
2014:
M.Shanthikumar
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
(Banking Division), North Block,
New Delhi.
2.The Authorised Officer,
Indian Bank, Chengalpattu Branch,
.. Petitioner
No.7, G.S.T. Road, Chengalpattu,
Kancheepuram District.
3. The Governor,
The Reserve Bank of India,
Central Office, Mumbai.
W.P.No.11042 of
.. Respondents
2014:
M/s Deepa Panels Private Limited,
Represented by its Managing Director
Mr.Pradeep Chirakal,
No.184/3C, Mettupalayam-Parivakkam Road,
Mettupalayam, Thiruverkadu Road Post,
Chennai-600 007.
Petitioner
....
Vs.
1. Union of India,
rep. by the Secretary to Government
Ministry of Finance,
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi
2. The Governor,
Reserve Bank of India,
Central Office, Mumbai.
3. The Authorised Officer,
Assistant General Manager,
State Bank of India,
Stressed Assets Management Branch,
No.32, Montieth Road, Indian Red Cross
Society Buildings, Egmore,
Chennai-600 008.
4. The Divisional Manager,
New India Assurance Company Ltd.,
Bancassurance Divisional Officer 712300
Mac Millan House, IInd Floor, B Wing,
No.21, Pattullos Road, Chennai-600 002.
W.P.No.11078 of
.. Respondents
2014:
M/s Fine Furniture (P) Ltd.,
Rep. By its Managing Director
Mr.Pradeep Chirakal,
No.48, Varadarayapuram Trunk Road,
Poonamallee, Chennai-600 056.
Vs.
1. Union of India,
rep. by the Secretary to Government
Ministry of Finance,
.... Petitioner
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi
2. The Governor,
Reserve Bank of India,
Central Office, Mumbai.
3.The Authorised Officer/Chief Manager
& Relationship Manager, Overseas Branch,
No.86, Rajaji Salai,
Chennai-600 001.
W.P.No.11317 of
.. Respondents
2014:
Mr.S.B.Sanyasi Rao
.... Petitioner
Vs.
1. Union of India,
rep. by the Secretary to Government
Ministry of Finance,
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi.
2.The Authorised Officer,
Indian Bank, Yanam Branch,
Jaladangi Street, Yanam-533 464.
3. The Governor,
Reserve Bank of India,
Central Office, Mumbai.
W.P.Nos.11471 to 11474 of 2014:
M/s Karpaga Vinayagar Electricals,
Represented by its Proprietor Mr.T.R.Mahadevan,
No.2/32, Arunagirinathar Street,
New Perungalathur, Chennai-600 063.
.. Respondents
.... Petitioner
in
.... Petitioner
in
.... Petitioner
in
WP.11471/2014
M/s Sri Venkateswara Enterprises,
Represented by its Proprietor Mr.T.R.Pandian,
No.2/32, Arunagirinathar Street,
New Perungalathur, Chennai-600 063.
WP.11472/2014
M/s Sapthagiri Enterprises,
Represented by its Proprietor Mr.T.R.Ellappan,
No.2/32, Arunagirinathar Street,
New Perungalathur, Chennai-600 063.
WP.11473/2014
M/s Shri Lanco Enterprises,
Represented by its Proprietor Mr.S.Deenadayalan,
No.C17, K.P.Towers, 159, Arcot Road,
Vadapalani, Chennai-600 026.
in
.... Petitioner
WP.11474/2014
Vs.
1. Union of India,
rep. by the Secretary to Government
Ministry of Finance,
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi.
2.The Authorised Officer,
M/s Punjab National Bank,
Teynampet Branch,
No.152, Eldams Road, Teynampet,
Chennai-600 018.
3. Reserve Bank of India,
Represented by its Chief General Manager,
Department of Banking Operations and Development,
Central Office, Mumbai-400 001.
in
.. Respondents
all
WPs.
W.P.No.12318 of 2014:
M/s.Nyle Garments
rep.by its Managing Partner
M.Duraisamy, Son of Subramaniam
1/223, Amman Thottam
Kalampalayam, Pongupalayam Post
Tiruppur District.
Petitioner
Vs.
1. Union of India,
rep.by the Secretary to Government,
Ministry of Finance,
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi
2. The Governor
The Reserve Bank of India,
Central Office,
Mumbai, Maharashtra
3. The Authorised Officer,
Punjab National Bank
No.54, Sabari Salai,
Binny Compound,
....
Tiruppur, Tiruppur District.
Respondents
....
W.P.No.12462 of 2014:
M/s.Gowtham Industries,
a partnership firm
represented by its Partners
Vijaykumar and V.Ponnuthai
....
Petitioner
....
Respondents
Vs.
1. Union of India
represented by the Secretary
to Government,
Ministry of Finance,
Department of Economic Affairs
(Banking Division) North Block
New Delhi
2. The Governor,
Reserve Bank of India,
Central Office,
Mumbai
3. Lakshmi Vilas Bank Limited,
represented by its Authorised Officer,
LVB Platinum Jubilee Building,
No.68, Oppanakara Street,
IInd Floor, Coimbatore 641 001
4. Chairman and Managing Director,
Lakshmi Vilas Bank Limited,
Administrative Office,
Chennai.
W.P.No.12506 of 2014:
M/s.Trinity Textiles
rep.by G.Sunitha
Cypress, B/103, Prince Green Woods
NO.66, Vanagaram Road,
Chennai 600 058
Vs.
1. Union of India,
rep. by the Secretary to Government
Ministry of Finance,
Department of Economic Affairs,
(Banking Division) North Block,
New Delhi
2. The Governor,
Reserve Bank of India,
Central Office, Mumbai.
....
Petitioner
3. Indian Overseas Bank,
No.2, Kirupashankar Street,
West Mambalam,
Chennai 600 033.
....
Respondents.
W.P.No.12508 of 2014:
D.John
Vs.
1. Union of India,
rep.by its Joint Secretary,
Ministry of Finance,
Department of Economic Affairs,
Room No.34-C
New Delhi 110 001
....
Petitioner
...
respondents
2. Reserve Bank of India,
rep.by its Board of Directors,
6, Parliament Street,
New Delhi 110 001
3. The Authorised Officer,
Bank of India,
120/174, Luz Church Road,
Mylapore, Chennai 600 004.
Prayer: Writ Petition in W.P.Nos.5897 and 7654 of 2014 are filed
under Article 226 of the Constitution of India seeking for the relief of
issuance of a Writ of Declaration to declare that the provisions of Section
2(1)(o) of the Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Act, 2002 as arbitrary, unconstitutional and
opposed to public policy, null and void and the same being ultra vires the
Constitution of India.
Writ Petition in W.P.No.5898 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of a Writ of
Declaration declaring the guidelines No.DBOD.No.BP.BC.9/ 21.04.048/2012-13
dt. 2.7.2012 qua classification of account as Non-performing asset as
arbitrary, unconstitutional and opposed to public policy, null and void and
the same being ultra vires the Constitution of India.
Writ Petition in W.P.Nos.7296, 7298, 8746 and 12508 of 2014 are
filed under Article 226 of the Constitution of India seeking for the relief
of issuance of writ of declaration to declare that the provisions of Section
2(1)(o) of the Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Act, 2002 as being ultra vires the provisions of
the Constitution of India and thus null and void.
Writ Petition in W.P.Nos.7297 and 8747 of 2014 are filed under
Article 226 of the Constitution of India seeking for the relief of issuance
of a Writ of Declaration to declare the circular/guideline
No.DBOD.No.BP.BC.9/ 21.04.048/2012-13 issued by the Reserve Bank of India dt.
2.7.2012 qua classification of accounts as a Non-performing asset as being
arbitrary, unconstitutional and null and void.
Writ Petition in W.P.No.7390 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 6th
respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 2nd and 3rd respondents
from continuing the proceedings initiated under the provisions of
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 as against the petitioner herein with reference
to the subject property more specifically set out in the petition schedule.
Writ Petition in W.P.Nos.7653 and 8595 of 2014 are filed under
Article 226 of the Constitution of India seeking for the relief of issuance
of a Writ of Declaration declaring the guidelines bearing No.DBOD.No.BP.BC.9/
21.04.048/2012-13 dt. 2.7.2012 issued by the Reserve Bank of India relating
to the classification of accounts as Non-performing assets as arbitrary,
unconstitutional, opposed to public policy, null and void and ultra vires the
Constitution of India.
Writ Petition in W.P.No.7806 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 2nd
respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 3rd respondent from
continuing the proceedings initiated under the provisions of Securitization
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 as against the petitioner herein with reference to the subject
property more specifically set out in the petition schedule.
Writ Petitions in W.P.Nos.8090 and 8091 of 2014 are filed under
Article 226 of the Constitution of India seeking for the relief of issuance
of writ of declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 3rd
respondent Reserve Bank of India as ultra vires the Constitution of India,
void ab initio and consequently forbear the 2nd respondent from continuing
the proceedings initiated under the provisions of Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 as against the petitioner herein with reference to the property at
No.37, Arcot Road, Kodambakkam, Chennai 24.
Writ Petition in W.P.No.8457 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of a Writ of
Declaration to declare that Section 2(1)(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Securities Act is ultra
vires and null and void.
Writ Petition in W.P.No.8458 and 8593 of 2014 are filed under
Article 226 of the Constitution of India seeking for the relief of issuance
of a Writ of Declaration declaring the guidelines bearing DBOD.No.BP.BC.9/
21.04.048/2012-13 dt. 2.7.2012 issued by the Reserve Bank of India relating
to the classification of accounts as Non-performing assets as arbitrary,
unconstitutional, opposed to public policy, null and void and ultra vires the
provisions of the Constitution of India.
Writ Petition in W.P.Nos.8594 and 8596 of 2014 are filed under
Article 226 of the Constitution of India seeking for the relief of issuance
of a Writ of Declaration to declare that the Section 2(1)(o) of the
Securitization and Reconstruction of Financial Assets and Enforcement of
Securities Act, 2002 as arbitrary, unconstitutional, opposed to public
policy, null and void and ultra vires the provisions of the Constitution of
India.
Writ Petition in W.P.No.8766 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of a Writ of
Declaration declaring the guidelines issued by the Reserve Bank of India vide
DBOD.No.BP.BC.9/ 21.04.048/2012-13 dt. 2.7.2012 relating to the
classification of accounts as Non-performing assets (NPA) as arbitrary,
unconstitutional and null and void and opposed to public policy.
Writ Petition in W.P.No.8942 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 3rd
respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 2nd respondent Bank from
continuing the proceedings initiated under the provisions of Securitization
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 as against the petitioner herein with reference to the subject
property.
Writ Petition in W.P.No.8970 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 5th
respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 2nd respondent Bank from
continuing the proceedings initiated under the provisions of Securitization
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 as against the petitioner herein with reference to the subject
property more specifically set out in the petition schedule.
Writ Petition in W.P.No.9019 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 2nd
respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 2nd respondent Bank from
continuing the proceedings initiated under the provisions of Securitization
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 as against the petitioner herein with reference to the subject
property more specifically set out in the petition schedule.
Writ Petition in W.P.No.9073 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 3rd
respondent Reserve Bank of India as ultra vires the Constitution of India,
void ab initio and consequently forbear the 2nd respondent Bank from
continuing the proceedings initiated under the provisions of Securitization
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 as against the petitioner herein with reference to the subject
property.
Writ Petitions in W.P.Nos.9123, 9124 and 9183 of 2014 are filed
under Article 226 of the Constitution of India seeking for the relief of
issuance of writ of declaration declaring that Section 2(o) of the
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 and Clause 2.1 of prudential norms on income
Recognition, Asset Classification and provisioning pertaining to Advances
issued by the 3rd respondent as ultra vires the Constitution of India, void
ab initio and consequently forbear the 2nd respondent from continuing the
proceedings initiated under the provisions of Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 as against the petitioner herein with reference to the subject
properties.
Writ Petition in W.P.No.9420 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of Writ of
Certiorarified Mandamus to call for the records pertaining to the Master
Circular-Prudential norms on Income Recognition, Asset Classification and
provisioning pertaining to advances as issued by Reserve Bank of India in
RBI/2012-2013/39;DBOD.No.BP.BC.9/21.04.048/2012-13 dt. 2.7.2012 on the file
of the respondent and quash the same and consequently forbear the respondents
from taking any further action pursuant to the notice issued by UCO Bank,
Midcorproate Branch, T.Nagar, Chennai 17/3rd respondent dated 28.1.2014.
Writ Petition in W.P.No.9421 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Sec.2(1)(o); Sec.2(ha) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 as arbitrary, unconstitutional, discriminatory and opposed to public
policy.
Writ Petition in W.P.No.9573 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 2nd
respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 3rd and 4th respondent
Banks from continuing the proceedings initiated under the provisions of
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 as against the petitioner herein with reference
to the subject properties.
Writ Petitions in W.P.Nos.9611, 10766 and 11317 of 2014 are filed
under Article 226 of the Constitution of India seeking for the relief of
issuance of writ of declaration declaring that Section 2(o) of the
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 and Clause 2.1 of prudential norms on income
Recognition, Asset Classification and provisioning pertaining to Advances
issued by the 3rd respondent as ultra vires the Constitution of India, void
ab initio, illegal and unconstitutional and consequently forbear the 2nd
respondent Bank from continuing the proceedings initiated under the
provisions of Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 as against the petitioner herein
with reference to the subject properties.
Writ Petition in W.P.No.9649 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 2nd and
3rd respondents as ultra vires the Constitution of India, void ab initio,
illegal and unconstitutional and consequently forbear the 2nd respondent
Bank from continuing the proceedings initiated under the provisions of
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 as against the petitioner herein with reference
to the subject properties.
Writ Petitions in W.P.No.9671 and 9690 of 2014 are filed under
Article 226 of the Constitution of India seeking for the relief of issuance
of writ of declaration declaring that Section 2(o) of SARFAESI Act and
Enforcement of Security Interest Act, 2002 and Clause 2.1 of prudential norms
on income Recognition, Asset Classification and provisioning pertaining to
Advances issued by the 3rd respondent-RBI as ultra vires the Constitution of
India, void ab initio, illegal and unconstitutional and consequently forbear
the 2nd respondent Bank from continuing the proceedings initiated under the
provisions of Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 as against the petitioner herein
with reference to the properties bearing Door No.2/32, Arunagirinathar
Street, New Perungalathur, Chennai-600 063 measuring an extent of 1706
sq.ft., comprised in S.No.145-B, Perungalathur Village, Tambaram Taluk,
Kancheepuram District and plot No.104, measuring an extent of 1657 sq.ft.,
and bearing plot No.107, measuring an extent of 1840 sq.ft., Gandhi Nagar,
Kambar Street, Virugambakkam, Chennai-600 092, comprised in R.S.No.163, Part
of Virugambakkam Village, Mambalam-Guindy Taluk, Chennai District
respectively.
Writ Petition in W.P.No.9774 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of Writ of
Declaration declaring Section 2(o) of the Securitization and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 and Clause
2.1 of Prudential norms on Income Recognition, Assets Classification and
Provisioning pertaining to Advocates issued by the 2nd respondent as ultra
vires and Constitution of India, void ab initio, illegal and unconstitutional
and consequently forbear the 3rd to 5th respondents from continuing the
proceedings initiated under the provisions of Securitization and
Reconstruction of Financial Assets and Enforcement of Security Enforcement
Act 2002 as against the petitioner with regard to the subject property.
Writ Petition in W.P.No.9825 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of Writ of
Declaration by declaring that Section 2(o) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and Provision and Provision pertaining to Advances issued by
the 3rd respondent as ultra vires the Constitution of India, void ab initio,
illegal and unconstitutional and consequently, forbear the 3rd and 4th
respondent Banks from continuing the proceedings initiated under the
provisions of Section 13(2) dated 18.05.2013 and 22.05.2013 and 13(4)
notices of Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 as against the Petitioner herein
with reference to the subject properties.
Writ Petition in W.P.No.10007 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 2nd
respondent as ultra vires the Constitution of India, void ab initio and
consequently forbear the 3rd respondent-Bank from continuing the proceedings
initiated under the provisions of Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 as against
the petitioner herein with reference to the subject properties.
Writ Petition in W.P.No.10304 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 2nd
respondent as ultra vires the Constitution of India, void ab initio and
consequently forbear the 3rd and 4th respondent-Banks from continuing the
proceedings initiated under the provisions of Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 as against the petitioner herein with reference to the subject
properties.
Writ Petition in W.P.No.10656 of 2014 is filed
under Article 226
of the Constitution of India seeking for the relief of issuance of Writ of
Declaration to declare Section 2(1)(o) and 2(1)(ha) of the Securitization
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002(54 of 2002) and the Master Circular-Prudential Norms on Income
Recognition, Asset Classification and Provisioning pertaining to Advances as
issued by the 2nd respondent in RBI/2012-13/39; DBOD
No.BP.BC.9/21.04.048/2012-13 dated 02.07.2012 as ultra vires the
Constitution of India, void ab initio, illegal and unconstitutional and
consequently forbear the respondents from taking any further action pursuant
to the notice issued by the third respondent in AX48/Legal/Sec/Satyam/2013
dated 18.12.2013.
Writ Petition in W.P.No.10665 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and provisioning pertaining to Advances issued by the 3rd
respondent as ultra vires the Constitution of India, void ab initio and
consequently forbear the 2nd
respondent-Bank from continuing the
proceedings initiated under the provisions of Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and consequent auction notice dated 04.03.2014 as against the petitioner
herein with reference to the subject property.
Writ Petition in W.P.No.11042 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of Writ of
Declaration by declaring that Section 2(1)(o) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and Provision and Provision pertaining to Advances issued by
the 2nd respondent as ultra vires the Constitution of India, void ab initio,
illegal and unconstitutional and consequently forbear the 3rd respondent Bank
from continuing the proceedings initiated under the provision of Section
13(2) dated 12.7.2013 and 28.12.2013 and 13(4) notices of Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 as against the Petitioner, herein with reference to the subject
properties.
Writ Petition in W.P.No.11078 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of Writ of
Declaration by declaring that Section 2(1)(o) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and Provision and Provision pertaining to Advances issued by
the 2nd respondent as ultra vires the Constitution of India, void ab initio,
illegal and unconstitutional and consequently forbear the 3rd respondent Bank
from continuing the proceedings initiated under the provisions of Section
13(2) notice dated 20.08.2013 of Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 as against
the Petitioner, herein with reference to the subject properties.
Writ Petition in W.P.No.11471 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of SARFAESI Act and Enforcement of
Security Interest Act, 2002 and Clause 2.1 of prudential norms on income
Recognition, Asset Classification and provisioning pertaining to Advances
issued by the 3rd respondent-RBI as ultra vires the Constitution of India,
void ab initio and consequently forbear the 2nd respondent Bank from
continuing the proceedings initiated under the provisions of SARFAESI Act
2002 as against the petitioner herein with reference to the properties namely
All that piece and parcel under S.No.145/B, building thereon at Plot No.135
AB, Door No.4/31, Arunagirinathar Street, New Perungalathur, Chennai-600
063, measuring an extent of 2165 sq.ft., and all that piece and parcel of
vacant house site bearing Plot No.5, measuring an extent of 1040 sq.ft.,
bearing Plot No.6, measuring an extent of 1020 sq.ft., and bearing Plot
No.7, measuring an extent of 1020, known as Dakshin Avenue-II, comprised in
S.No.75/2 as per Patta No.146, Re S.No.75/2C, 76/1A, 85/5C2, 85/5C3 and 85/6,
situated in No.12, Unaimancheri Village, Kanchipuram District, total
measuring an extent of 3080 sq.ft. In respect of the cash credit Account
No.253008700167876 and Term Loan-Vehicle Account No.25300NG02380677.
Writ Petition in W.P.No.11472 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of SARFAESI Act and Enforcement of
Security Interest Act, 2002 and Clause 2.1 of prudential norms on income
Recognition, Asset Classification and provisioning pertaining to Advances
issued by the 3rd respondent-RBI as ultra vires the Constitution of India,
void ab initio and consequently forbear the 2nd respondent Bank from
continuing the proceedings initiated under the provisions of SARFAESI Act
2002 as against the petitioner herein with reference to the properties namely
all that piece and parcel of vacant residential land measuring 2340 sq.feet
bearing Plot Nos.390 and 2340 sq.feet bearing Plot No.391, in all admeasuring
4680 sq.feet, Sreeram Nagar, comprised in S.Nos.300/2 and 301/4 of
Pazhanthandalam Village, Sriperumbudur Taluk, Kancheepuram District, in
respect of the Cash Credit Account No.253008700168006 and Term Loan-Vehicle
Account No.25300NG02380686.
Writ Petition in W.P.No.11473 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of SARFAESI Act and Enforcement of
Security Interest Act, 2002 and Clause 2.1 of prudential norms on income
Recognition, Asset Classification and provisioning pertaining to Advances
issued by the 3rd respondent-RBI as ultra vires the Constitution of India,
void ab initio and consequently forbear the 2nd respondent Bank from
continuing the proceedings initiated under the provisions of SARFAESI Act
2002 as against the petitioner herein with reference to the properties namely
all that piece and parcel of vacant residential land measuring 2340 sq.feet
bearing Plot Nos.387 and 2340 sq.feet bearing Plot No.388, in all admeasuring
4680 sq.feet, Sreeram Nagar, comprised in S.Nos.300/2 and 301/4 of
Pazhanthandalam Village, Sriperumbudur Taluk, Kancheepuram District, in
respect of the Cash Credit Account No.253008700167991 and Term Loan-Vehicle
Account No.25300IB02295555.
Writ Petition in W.P.No.11474 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of SARFAESI Act and Enforcement of
Security Interest Act, 2002 and Clause 2.1 of prudential norms on income
Recognition, Asset Classification and provisioning pertaining to Advances
issued by the 3rd respondent-RBI as ultra vires the Constitution of India,
void ab initio and consequently forbear the 2nd respondent Bank from
continuing the proceedings initiated under the provisions of SARFAESI Act
2002 as against the petitioner herein with reference to the properties namely
All that piece and parcel of Southern portion of land measuring 1925
sq.feet out of 5835 sq.feet, bearing Plot No.31, Part in Venkateswara
Nagar, New Perungalathur, Chennai-600 063, comprised in old S.No.211 and
213, Re S.Nos.211/1B and 213/1B of Perungalathur Village, Tambaram Taluk,
Kancheepuram District, measuring 1860 sq.ft., bearing Plot No.22,
Venkateswara Nagar, New Perungalathur, Chennai-600 063, comprised in S.No.213
of Perungalathur Village, Tambaram Taluk, Kanceepuram District.
Writ Petition in W.P.No.12318 of 2014 is filed
under Article 226
of the Constitution of India seeking for the relief of issuance of Writ of
Declaration to declare Section 2(1)(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and clause 2.1 of Prudential norms on Income Recognition, Asset
Classification and Provisioning pertaining to Advances issued by the 2nd
respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 3rd respondent from
continuing the proceedings initiated under the provisions of Securitization
and Reconstruction of Financial Assets and Enforcement of Security
Enforcement Act, 2002 as against the petitioner with regard to the subject
property.
Writ Petition in W.P.No.12462 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of Writ of
Declaration by declaring that Section 2(1)(o) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 and Clause 2.1 of prudential norms on income Recognition, Asset
Classification and Provision and Provision pertaining to Advances issued by
the 2nd respondent as ultra vires the Constitution of India, void ab initio,
illegal and unconstitutional and consequently forbear the 3rd and 4th
respondent Bank from continuing the proceedings initiated under the provision
of Section 13(2) and 13(4) sale notice dated 10.4.2012, 26.12.2012,
24.10.2013 and 21.4.2014 of Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 as against the
Petitioner, herein with reference to the subject properties.
Writ Petition in W.P.No.12506 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of writ of
declaration to declare Section 2(1)(o) of the Secularization and
Reconstruction of Financial Assets and Enforcement of Securities Act, 2002
and clause 2.1 of prudential norms on income Recognition, Asset
Classification and provision pertaining to Advances issued by the 2nd
respondent as ultra vires the constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 3rd respondent bank from
continuing the proceedings initiated under the provisions of Section 13(2)
notice dated 10.08.2013 of Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 as against the
petitioner herein with reference to the subject properties.
For Petitioner in W.P.Nos.
5897 and 5898 of 2014
:
Mr.Anirudh Krishnan
For Petitioner in W.P.Nos.7296: Mr.K.Gowtham Kumar
and 7297 of 2014
For Petitioner in W.P.No.7298
and 7299 of 2014
For Petitioner
of 2014
:
in W.P.No.7390 :
Mr.P.R.Renganath for
Mr.N.Murali
Mr.AR.L.Sundaresan,
Senior Counsel for
Mr.P.Satish
For Petitioner in W.P.No.7653,:
7654, 8593 to 8596, 8457 and
8458 of 2014
Mr.S.V.Pravin Rathinam
For Petitioner in W.P.No.8746
and 8747 of 2014
Mr.S.Seshadri
:
For Petitioner in W.P.No.8766,:
9774 and 12318 of 2014
Mr.A.V.Raja
For Petitioner in W.P.Nos.8942,: Mr.E.Ramachandran
9073,9124 and 10766 of 2014
For Petitioner in W.P.Nos.8970: Mr.A.Swaminathan
9019, 9123, 9183 and 10665 of
2014
For Petitioner in W.P.Nos.9420: Mr.V.Ayyadurai
and 9421 of 2014
For Petitioner in W.P.No.9573, :Mr.S.N.Kirubanandam
9649, 9825, 10007, 10304, 11042,
11078, 12462 and 12506 of 2014
For Petitioner in W.P.No.9611 :
of 2014
For Petitioner in W.P.No.9671,
9690 and 11471 to 11474
of 2014
For Petitioner in W.P.No.10656
of 2014
For Petitioner in W.P.No.7806
of 2014
For Petitioner in W.P.No.8090
and 8091 of 2014
Mr.Venkatesh Mohanraj
: Mr.R.Kannan
: Mr.S.Regu
: Mr.A.Selvendran
: Mr.V.Girish Kumar
For Petitioner in W.P.No.11317 : Ms.Anuradha Balaji
of 2014
For Petitioner in W.P.No.12508 : Mr.R.Sugumaran
of 2014
and Mr.A.V.Arun
For 1st Respondent in W.P.Nos :
8746, 8747, 8942, 8970, 9019,
9073, 9123, 9124, 9183, 9573,
9611, 9649, 9671, 9690, 9825,
10007, 10304, 10656, 10665,
10766, 11042, 11078, 11317 &
11471 to 11474 of 2014
For 1st Respondent in W.P.Nos:
7296, 7297, 7653, 7654, 8090,
8091, 8457, 8458, 8593 to
8596, 8766, 9420, 9421, 9774
and 12318, 12462, 12506 &
12508 of 2014
Mr.G.Masilamani,
Addl. Solicitor General for
Mr.S.Udayakumar, ASGSC,
Mr.G.Masilamani,
Addl. Solicitor General for
Mr.G.Arul Murugan,ACGSC.
For 1st respondent in W.P.Nos :
Mr.G.Masilamani,
5897, 5898, 7298, 7299 and
Addl. Solicitor General for
7390
o
For 1st Respondent in W.P.No : Mr.G.Masilamani,
7806 of 2014
Addl. Solicitor General for
Mr.S.Ravichandran,CGSC.,
For 2nd respondent in W.P.Nos : Mr.T.Poornam
5897, 5898, 7296 to 7299,
7653,7654,7806, 8457,
8458, 8593, 8596, 8746, 8747,
8766, 9420, 9421, 9573, 9649,
9774, 9825, 10007, 10304,
10656, 11042,11078, 12318,
12462, 12506 and 12508 of 2014,
for 3rd respondent in WP.Nos.8090,
8091, 8942, 9019, 9073, 9123, 9124
9183, 9611, 9671, 9690, 10665,
10766, 11317 & 11471 to 11474
of 2014, for 5th respondent in WP.No.
8970 of 2014 and for 6th respondent in
WP.No.7390 of 2014
For 3rd respondent in W.P.Nos:
5897 and 5898 of 2014 and 2nd
Respondent in WP.No.9183
of 2014
Mr.T.S.Golpalan & Co
For respondents 2 & 3 in W.P.No.: Mr.F.B.Benjamin Goerge
7390 of 2014, for 2nd respondent
in W.P.Nos.9611 & 11317 of 2014
& for 3rd respondent in WP.Nos.
12506 and 12508 of 2014
For 2nd respondent in W.P.Nos.:
8942, 9073 and 9124 of 2014
For respondents 2
10665 of 2014
in W.P.Nos.:
Mr.V.Girishkumar
Mr.Om Prakash for
For 2nd respondent in W.P.Nos.: Mr.M.LGanesh
9671, 9690 and 11471 to 11474
of 2014 and
for 3rd respondent in
W.P.Nos.7653, 7654, 8457, 8458,
8593
to 8596, 8766, 9573, 9649,
9825, 10007, 10304, 11042,11078
& 12318 of 2014, for Respondents 3
& 4 in WP.No.12462 of 2014 and
for Respondents 3 to 5 in W.P.
No.9774 of 2014
For 2nd respondent in W.P.No. :
8090 & 8091 of 2014
Mr.Srinath Sridevan
For 2nd respondent in W.P.No. :
10766 of 2014
Mr.T.Sundar Rajan
For respondents 3 & 4 in W.P.:
Nos.7296 to 7299 of 2014
Mr.Shivakumar &
Mr.Suresh
8970, 9
For
respondents 3 & 4
:
Mr.N.V.Srinivasan,
S.C., for
in W.P.No.9573 of 2014
M/s NVS & Associates
For 3rd respondent in
WP.No.7806 of 2014
:
Mr.S.Sethuraman
For 3rd respondent in
W.P.Nos.9420 and 9421
of 2014
:
Mr.K.S.Viswanathan
COMMON ORDER
M.M.SUNDRESH,J.
The common thread that runs across all these cases is to the constitutionality of Section 2(1)(o)
of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002, (Act No.54 of 2002), (in short, SARFAESI Act) as well as the guidelines issued by
the Reserve Bank of India pertaining to the classification of assets as Non-Performing Assets.
2. In all these cases, the petitioners have borrowed monies from the respective respondent Banks.
They did not repay the amounts borrowed. Thereafter, the Banks initiated proceedings under the
SARFAESI Act, 2002 after declaring the assets as "Non Performing Assets" in view of the
guidelines issued by way of the Circular by the Reserve Bank of India.
3. Being a Court of record, we would like to record the earlier proceedings. The cases were heard
at length before the other Bench in which one of us (M.M.Sundresh,J.) was a party. After
conclusion of the arguments, the judgment was reserved. Thereafter, on the next working day,
two memos have been filed by the counsels on behalf of two petitioners stating that the challenge
made to the Circular was decided by the other learned judge sitting single and the matter requires
a fresh hearing before some other Bench in which he may not be a party. Accordingly, the cases
have been posted before us giving the pleasure of hearing the counsels once over by one of us,
who was the party to the earlier Bench.
4. Heard Mr.AR.L.Sundaresan and Mr.N.V.Srinivasan, learned Senior Counsels and
Mr..Anirudh Krishnan, Mr.K.Gowtham Kumar, Mr.N.Murali, Mr.S.V.Pravin Rathinam,
Mr.S.Seshadri, Mr.A.V.Raja, Mr.E.Ramachandran, Mr.A.Swaminathan, Mr.V.Ayyadurai,
Mr.S.N.Kirubanandam, Mr.Venkatesh Mohanraj, Mr.R.Kannan, Mr.S.Regu, Mr.A.Selvendran,
Mr.V.Girish Kumar, Ms.Anuradha Balaji, Mr.R.Sugumaran, Mr.A.V.Arun, the learned counsels
appearing for the petitioners and Mr.G.Masilamani, learned Additional Solicitor General,
Mr.N.Ramesh and Mr.S.Ravichandran, learned Central Government Standing Counsels,
Mr.G.Arul Murugan and Mr.S.Udayakumar, learned Additional Central Government Standing
Counsels, Mr.T.Poornam, Mr.V.Karthik, Mr.F.B.Benjamin Goerge, Mr.V.Girishkumar, Mr.Om
Prakash, Mr.G.R.Lakshmanan, Mr.S.R.Sumathy, Mr.M.LGanesh, Mr.Srinath Sridevan,
Mr.T.Sundar Rajan, Mr.Shivakumar, Mr.S.Sethuraman and Mr.K.S.Viswanathan, learned
counsel appearing for respondents. We have also perused at length the various documents filed,
judgments relied upon as well as the provisions of enactments.
5. Since number of counsels made their submissions on behalf of both petitioners and the
respondents, for the sake of brevity, we summarise the submissions as a whole instead of
referring them individually.
6. Role of Reserve Bank of India:When a mission was sent by then British Government, which was wobbling in its last leg, not
satisfied with the offers made, the father of the Nation has rejected the same by saying that the
sleuth of measures offered would constitute a post-dated cheque on a falling Bank. Averting such
a situation is precisely the role of the Reserve Bank of India in maintaining, monitoring,
improving and developing health of the Banking Companies and Banking in India. A stable
vibrant Banking system is a sine qua non of a country's economy. This important function has
been bestowed upon the Reserve Bank of India as a Central Bank for the country, being the
Bankers' Bank. The Reserve Bank of India is the monitoring regulator empowered to form the
Banking policy. Such is the policy being evolved in the interest of Banking system, monetary
stability and sound economic growth. The role of the Reserve Bank of India has been recognised
by the Supreme Court in JOSEPH KARUVILLA VELLUKUNNEL VS. THE RESERVE
BANK OF INDIA AND OTHERS, (AIR 1962 SC 1371), wherein it was held as under:
13. The power conferred on the Reserve Bank, by the section is said to be had under Article 14,
because it enables a discrimination between a banking company and any other company by
prescribing different laws for their respective winding up, and is bad under Art.19(1)(f) and (g)
as amounting to an unreasonable restriction on the holding of property and the right to carry on
business as a banking company. To amplify the first it is argued that under S.433 of the Indian
Companies Act, when an application is made to wind up a company, the High Court has to be
satisfied after a fair trial that an order to wind up the company is called for, and the Judge, who is
independent of executive control, is completely free to reach a decision after the Company has
shown cause and there is a right of appeal against the decision, if adverse to the company. But
under the procedure laid down in S.38 of the Banking Companies Act the banking company
proceeded against has no opportunity to show cause either before or after the winding up order,
the Reserve Bank records no reasons in writing or communicates them, there is no access to
Court and no hearing before the Court to determine whether the proposed action is justified, and
no redress if a mistake were made. Under the exercise of that power, it is said, any banking
company can be suppressed by the Reserve Bank or by the Central Government and the Courts
are powerless, since the opinion of the Reserve Bank and/or the Central Government is not
justiciable and there is no appeal against the decision of the Reserve Bank or of the Court acting
on the application of the Reserve Bank.
7. In PEERLESS GENERAL FINANCE AND INVESTMENT CO.LTD. AND ANOTHER VS.
RESERVE BANK OF INDIA, (AIR 1962 SC 1033), the following passage of the Supreme
Court would be apposite.
53. ....... Thus, the R.B.I. occupies place of pre-eminence to ensure monetary discipline and to
regulate the economy or the credit system of the country as an expert body. It also advices the
Government in public finance and monetary regulations. The banks or non-banking institutions
shall have to regulate their operations in accordance with, not only as per the provisions of the
Act but also the rules and directions or instructions issued by the RBI in exercise of the power
thereunder..... The Reserve Bank of India Act, 1934:8. The Reserve Bank of India came into existence by the introduction of a pre-Independence
enactment viz., Reserve Bank of India Act, 1934. It was introduced with the avowed object of
securing monetary stability and to operate the relationship and credit system of the country to its
advantage. The objects and reasons enshrined in Amendment Act 54 of 1953 would show that it
was meant to ensure more effective supervision and management of monitoring and credit
system to give any financial institution or institutions directions. Thereafter, several amendments
have been made from time to time explaining the jurisdiction of the Reserve Bank of India.
These amendments have been made taking into consideration of the then prevailing situation and
the steady progress that the country is making in the field of economy. It was also necessitated as
the Indian financial markets have now more products, participants and better liquidity than
before. The necessity to go with any unforeseen eventualities in future has also been taken note
of. Thus, the Reserve Bank of India is a statutory corporation constituted as monitoring and the
Banking Authority under the Reserve Bank of India Act, 1934.
The Banking Regulation Act, 1949:9. The Banking Regulation Act, 1949 (Act No.10 of 1949) was enacted to consolidate and amend
the laws relating to India. The need for enacting the Banking Regulation Act was felt owning
partly to the abuse of powers by persons controlling some banks and the absence of measures for
safeguarding the interest of depositors of banking companies in particular and partly to the
economic interest of the country in general. The collapse of a bank can affect a vast multitude of
depositors. In view of these considerations, banking business has been a highly regulated area all
over the world. In view of the various provisions of Banking Regulation Act and the Reserve
Bank of India Act, the Reserve Bank is obliged to see that the banking business is carried on
sound principles. The Banking Regulation Act is a special law regulating the banking activities
of banking companies in India. Section 2 of Banking Regulation Act provides that, the
provisions of this Act shall be in addition to, and not, save as hereinafter expressly provided, in
derogation of the Companies Act, 1956, (1 of 1956), and any other law for the time being in
force. The primary objective of the Companies Act is to safeguard the interest of the
shareholders, but the protection of interest of depositors of banks is not dealt with by the
Companies Act. Hence, a separate legislation for regulation of banking companies in India was
enacted by the Parliament with an intention to protect the interest of depositors, public and
banking business. Section 5(ca) of Banking Regulation Act, 1949 defines Banking policy, which
means any policy which is specified from time to time by the Reserve Bank in the interest of the
banking system or in the interest of monetary stability or sound economic growth, having due
regard to the interests of the depositors, the volume of deposits and other resources of the bank
and the need for equitable allocation and the efficient use of these deposits and resources.
Section 6 of Banking Regulation Act specifies the forms of business in which banking
companies may engage. Section 21 of Banking Regulation Act states that if the Reserve Bank is
satisfied that it is necessary or expedient in public interest or in the interests of depositors or
banking policy so to do, it may determine the policy in relation to advances to be followed by
banking companies generally or by any banking company in particular and the banking company
concerned, as the case may be, shall be bound to follow the policy as so determined. Section 22
of the Banking Regulation Act states that no company can carry on banking business in India,
unless, it holds a license in this behalf issued by the Reserve Bank. Section 22(4) of the Banking
Regulation Act empowered the Reserve Bank to cancel the license of the banking company
granted to carry on banking business, in the facts and circumstances stated therein. Section 35 of
the Banking Regulation Act conferred the powers on the Reserve Bank to carry on statutory
inspection of books of accounts of any banking company or cause a scrutiny into the affairs of a
banking company. Section 35-A of the Banking Regulation Act confers the powers on the
Reserve Bank to issue directions to banking companies in general or any banking company in
particular in the public interest or in the interest of the banking policy or to prevent the affairs of
the banking company being conducted in a manner detrimental to the interest of its depositors or
in a manner prejudicial to the banking company etc. The Banking Regulation Act envisages
action to be taken by the Reserve Bank when the Revenue Bank is satisfied that circumstances
warrant such action.
10. Thus, a conjoint reading of Section 5(ca), Section 21 and Section 35-A would lead us to the
necessary conclusion that the Reserve Bank of India has got ample powers to issue appropriate
directions to the Banking Companies. Considering the scope and ambit of Section 21 and Section
35-A of the Banking Regulation Act, 1949, it has been held by the Supreme Court in CENTRAL
BANK OF INDIA VS. RAVINDRA AND OTHERS, ((2002) 1 SCC 367) as under:
55. ........ (5) The power conferred by Sections 21 and 35A of the Banking Regulation Act, 1935
is coupled with duty to act. Reserve Bank of India is prime banking institution of the country
entrusted with a supervisory role over banking and conferred with the authority of issuing
binding directions, having statutory force, in the interest of public in general and preventing
banking affairs from deterioration and prejudice as also to secure the proper management of any
banking company generally. Reserve Bank of India is one of the watchdogs of finance and
economy of the nation. It is, and it ought to be, aware of all relevant factors, including credit
conditions as prevailing, which would invite its policy decisions........ Master Circular:
11. The prudential norms issued by the Reserve Bank of India were introduced in the year 1992,
vide Circular DBOD No.BC.129/21.04.043/92 dated April 27, 1992 on 'Income Recognition,
Asset Classification, Provisioning and Other Related Matters. In terms of the said circular, For
the year ending 31 March 1993, a term loan will be treated as NPAif interest remains past due
for a period of four quarters as on that date. For the year ending 31 March, 1994 and 31 March,
1995 and onwards, a loan will be treated as "NPA" if interest remains past due for three quarters
and two quarters respectively Similar norms were prescribed for other kinds of credit facilities.
However, in order to align the prudential norms with the international benchmarks the Reserve
Bank had stipulated, vide Circular DBOD.No.BP.BC.116/21.04.048/2000-2001 dated May 2,
2001 that, with effect from March 31, 2004, a non-performing asset (NPA) shall be a loan or an
advance interest and/or installment of principal remain overdue for a period of more than 90 days
in respect of a term loan. Further, similar norms were issued for other types of credit facilities
also. Reserve Bank's norms for asset classification have evolved over a period and 90 days
delinquency norms were brought in through a calibrated manner in an effort to benchmark the
Reserve Bank's prudential regulations to the international standards. These prudential norms are
one of the building blocks for financial soundness of Indian banks and any deviation would
render the banking system weaker. These guidelines are applicable to all banks. Further, any
delay in recognition of deterioration in asset quality removes pressure on the banks to deal
promptly with the problem.
12. These norms have been amended from time to time and consolidated into a Master Circular
once in a year. These Master Circulars have been issued in exercise of the powers conferred and
mandated under Sections 21 and 35-A of the Banking Regulation Act, 1949. The latest Master
Circular was updated on July 1, 2013. There is no dispute that these Master Circulars have got
statutory flavour as held by the Supreme Court in ICICI BANK LTD. VS. OFFICIAL
LIQUIDATOR OF APS STAR INDUSTRIES LIMITED AND OTHERS, ((2010) 10 SCC 1).
13. Paras 2 and 4.2.4 of the Circular defines Non Performing Asset as under:2. DEFINITIONS.
2.1 Non performing Assets 2.1.1 An asset, including a leased asset, becomes non performing
when it ceases to generate income for the bank.
2.1.2 A non performing asset (NPA) is a loan or an advance where;
i. interest and/or instalment of principal remain overdue for a period of more than 90 days in
respect of a term loan, ii. the account remains 'out of order' as indicated at paragraph 2.2 below,
in respect of an Overdraft/Cash Credit (OD/CC), iii. the bill remains overdue for a period of
more than 90 days in the case of bills purchased and discounted, iv. the instalment of principal or
interest thereon remains overdue for two crop seasons for short duration crops, v. the instalment
of principal or interest thereon remains overdue for one crop season for long duration crops.
vi. the amount of liquidity facility remains outstanding for more than 90 days, in respect of a
securitisation transaction undertaken in terms of guidelines on securitisation dated February 1,
2006.
vii. in respective of derivative transactions, the overdue receivables representing positive mark-to
market value of a derivative contract, if these remain unpaid for a period of 90 days from the
specified due date for payment.
2.1.3 In case of interest payments, banks should, classify an account as NPA only if the interest
due and charged during any quarter is not serviced fully within 90 days from the end of the
quarter.
2.1.4 In addition, an amount may also be classified as NPA in terms of paragraph 4.2.4 of this
Master Circular.
2.2 'Out of Order' status:
An account should be treated as 'out of order' if the outstanding balance remains continuously in
excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the
principal operating account is less than the sanctioned limit/drawing power, but there are no
credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to
cover the interest debited during the same period, these accounts should be treated as 'out of
order'.
2.3 'Overdue' Any amount due to the bank under any credit facility is 'overdue' if it is not paid on
the due date fixed by the bank.
3. ........
4. ASSET CLASSIFICATION 4.1 ......
4.2. .....
4.2.4 Accounts with temporary deficiencies The classification of an asset as NPA should be
based on the record of recovery. Bank should not classify an advance account as NPA merely
due to the existence of some deficiencies which are temporary in nature such as non-availability
of adequate drawing power based on the latest available stock statement, balance outstanding
exceeding the limit temporarily, non-submission of stock statements and non-renewal of the
limits on the due date, etc., in the matter of classification of accounts with such deficiencies
banks may follow the following guidelines:
i) Banks should ensure that drawings in the working capital accounts are covered by the
adequacy of current assets, since current assets are the first appropriated in times of distress.
Drawing power is required to be arrived at based on the stock statement which is current.
However, considering the difficulties of large borrowers, stock statements relied upon by the
banks for determining drawing power should not be older than three months. The outstanding in
the account based on drawing power calculated from stock statements older than three months,
would be deemed as irregular.
A working capital borrowal account will become NPA if such irregular drawings are permitted in
the account for a continuous period of 90 days even though the unit may be working or the
borrower's financial positi9on is satisfactory.
ii) Regular and ad hoc credit limits need to be reviewed/regularised not later than three months
from the due date/date of ad hoc sanction. In case of constrains such as non-availability of
financial statements and other data from the borrowers, the branch should furnish evidence to
show that renewal/review of credit limits is already on and would be completed soon in any case,
delay beyond six months is not considered desirable as a general discipline. Hence, an account
where the regular/ ad hoc credit limits have not been reviewed/renewed within 180 days from the
due date/date of ad hoc sanction will be treated as NPA.
14. Such accounts classified as "Non Performing Assets" would be upgraded in terms of 4.2.5 of
the Master Circular, provided the arrears of interest and principle are paid by the borrower. In
such a case, the accounts should no longer be treated as Non performing and may be classified as
Standard Accounts.
15. Under the present Master Circular, the impugned Paragraphs restrict the period to treat the
asset or an account as a Non Performing after the expiry of 90 days. This Circular has been
issued by the Reserve Bank of India by taking into consideration of the two reports of the Expert
Committee by name M.Narasimham Committee upon taking note of the public interest of
depositors, transparency, uniformity and stability of the Banking system as well as the prevailing
International practice. Thus, the Reserve Bank of India has introduced Circular in exercise of
powers conferred under Banking Regulation Act, 1949.
16. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002:The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002, (Act No.54 of 2002), (in short, SARFAESI Act), as it is called in the abbreviated
form, has been has been introduced by taking note of the slow process of recovery of defaulting
loans and mounting levels of Non Performing Assets of Banks and Financial Institutions. It has
also taken into consideration of two reports of the Narasimham Committee as well as that of
Andhyarujina Committee constituted by Central Bank of India for the purpose of examining
Banking Sector Reforms. The enactment is a novel mechanism addressing the need of the ever in
making timely recovery. Section 2(1)(ha), which is a provision containing definition of debt
borrows the meaning assigned to it in Clause (g) of section 2 of the Recovery of Debts due to
Banks and Financial Institutions Act, 1993 (Act No.51 of 1933). Section 2(1)(o) defines "Non
Performing Asset" in the following manner:
non-performing asset means an asset or account of a borrower, which has been classified by a
bank or financial institution as sub-standard. Doubtful or loss asset.
17. Under Section 2(1)(o), which is once again a definition clause, a classification of a "Non
Performing Asset" will have to be done in accordance with the directions or guidelines relating
to Assets Classification issued by the Reserve Bank of India from time to time. When once asset
is treated as a Non-performing Asset, in accordance with the guidelines issued by the Supreme
Court of India by the respective Banks pertaining to borrowers, then the rigour of the recovery
machinery in Chapter III, which deals with Enforcement of Security Interestwould be put into
action. It is this provision, which adopts the directions/guidelines relating to assets Classification
issued by the Reserve Bank of India, has been put to challenge before us as unconstitutional.
Other Enactments:18. Much prior to Act No.54 of 2002, the Recovery of Debts due to Banks and Financial
Institutions Act, 1993 (Act No.51 of 1993) came into being. Even though the object of this
enactment is akin to the object as enshrined in Act No.54 of 2002, the mode of recovery is
different. Under this Act, in order to recover a debt, a Bank or a Financial Institution will have to
have its recourse through a Tribunal constituted. Section 2(g) of Act No.51 of 1993 defines debt
and the definition of the word debt therein is rather exhaustive. It encompasses any liability,
inclusive of interest and such a debt will have to be a liability on the part of the borrower, which
is required to be a legally recoverable one on the date of the application. This definition of 'debt'
as envisaged under Act 51 of 1993 has been borrowed and adopted by Act No.54 of 2002. There
are other enactments like Sick Industrial Companies (Special Provisions) Act, 1985, The
Competition Act, 2002, The Companies Act, 1956, etc., The objects and reasoning of these
enactments are totally different. The objects of these enactments is not with respect of the
recovery. Therefore, they have their own internal mechanism to deal with the object sought to be
achieved such as helping a Company from being sick, regulate the competition and proper
administration of the companies.
Relevant Judicial Pronouncements:19. The Supreme Court in Mardia Chemicals Limited and others Vs. Union of India and others,
((2004) 4 SCC 311) upheld the challenge made to the validity of Act No.54 of 2002. One of the
contentions raised was as to whether on the whims and fancies of the financial institutions,
classification of assets as Non-Performing Assets can be made. While dealing with the said issue,
the Supreme Court took note of the Reserve Bank of India's prudential norms of Income
Recognition, Asset Classification and Provisioning pertaining to advances to the Circular dated
30.8.2001 and said that in view of the said guidelines it cannot be said that there are no
parameters for treating the 'debt' as a "Non Performing Asset". Accordingly, we believe that the
challenge made to these enactments will have to be seen in the light of the ratio laid down by the
Supreme Court. Further, the very same provision, which is sought to be declared as
unconstitutional before us Section 2(1)(o) of Act No.54 of 2002 has been challenged by the
borrowers before the Delhi as well as the Gujarat High Courts. Both these High Courts have
upheld this provision in HOLYSTAR NATURAL RESOURCES PVT.LTD. AND ANOTHER
VS. UNION OF INDIA AND ANOTHER, (MANU/DE/0130/2014 = AIR 2014 DELHI 60)
(W.P (C) No.7505/2013) of Delhi High Court dated 17.01.2014 and IONIK METALLICS AND
OTHERS VS. UNION OF INDIA in SCA.No.14908 of 2012 etc., batch dated 24.4.2014 of High
Court of Gujarat at Ahmedabad.
20. Submissions of the petitioners:Learned counsels appearing for the petitioners submitted that issuing directions or guidelines
relating to Asset Classification is essential legislative function and therefore it cannot be
delegated. A delegate cannot formulate a policy. A delegated legislation, if exercised, is liable to
be struck down as unconstitutional. The decisions rendered in Mardia Chemicals Limited and
others Vs. Union of India and others, ((2004) 4 SCC 311) does not cover the issues raised in
these writ petitions. The said decision cannot be termed as a binding precedent. The issues,
which have not been decided on conscious consideration, cannot be termed as binding
precedents. The observations made by the Supreme Court are obiter. Therefore, the said decision
cannot be termed as a ratio decidendi. The guidelines issued by the Reserve Bank of India cannot
be used for defining a "Non Performing Asset" under the SARFAESI Act. There has to be a
separate legislation, as provided under Section 38 of the SARFAESI Act. Considering the rigour
of Act No.54 of 2002, the definition of "Non Performing Asset" as mentioned in the guidelines
of Reserve Bank of India cannot be imported. The High Court of Delhi has misconstrued itself
on the scope and the decision rendered by the Supreme Court. The question of excessive
delegation has not been considered by the Gujarat High Court. If there is no delegated
legislation, then the doctrine of legislation by reference or incorporation would apply. Even in
such a case, the subsequent decision made by way of Circular by the Reserve Bank of India
cannot be made applicable. The word legally recoverable debt has not been defined in both Act
No.54 of 2002 and Act No.51 of 1993. A mere liability cannot be termed as a 'debt'. Interest
component cannot be added into a 'debt'.
21. It is further contended on behalf of the petitioners that the Circular, which defines "Non
Performing Asset" is very vague. There is ambiguity between the different classifications of the
circular. "Non Performing Asset" has been defined first and thereafter the classifications have
been made. There is no necessity to challenge Sections 21 and Section 35-A of the Banking
Regulation Act, 1949. Even otherwise, they do not empower the Reserve Bank of India to issue
the impugned Circular. Even assuming that an enactment was constitutional at an earlier point of
time there is no bar to challenge its constitutionality based upon subsequent facts. There is no
basis for the classification made. The international market alone cannot be a criteria to fix "Non
Performing Asset" without considering the local conditions. In support of the said contentions,
learned counsels have made reliance upon the following judgments:
(1)HAMDARD DAWAKHANA VS. UNION OF INDIA, (AIR 1960 SC 554), (2)
VASANTLAL MAGANBHAI VS. STATE OF BOMBAY, (AIR 1961 SC 4), (3) B.SHARMA
RAO VS. U.T. OF PONDICHERRY, (AIR 1967 SC 1480), (4) DEVI DASS GOPAL
KRISHNAN VS. STATE OF PUNJAB, (AIR 1967 SC 1895), (5)HARAK CHAND
RATANCHAND VS. UNION OF INDIA, ((1969) 2 SCC 166 = AIR 1970 SC 1453),
(6)GULABCHAND BAPLAL VS. MUNICIPAL CORPORATION OF AHMEDABAD,
((1971) 1 SCC 823), (7)GWALIOR RAYON VS. ASST.COMMISSIONER OF SALES TAX,
((1974) 4 SCC 98), (8)M.K.PAPIAH VS. THE EXCISE COMMISSIONER, (1975) 1 SCC 492),
(9)MAHE BEACH TRADING CO. VS. U.T. OF PONDICHERRY, ((1996) 3 SCC 741), (10)
HOLYSTAR NATURAL RESOURCES VS. UNION OF INDIA, (AIR 2014 DELHI 60), (11)
AIR INDIA VS. NARGESH MEERZA ((1981) 4 SCC 335), (12) KRISHNA MOHAN VS.
MUNICIPAL CORPORATION OF DELHI, ((2003) 7 SCC 151), (13) UNION OF INDIA VS.
BHANA MAL ((1960) 2 SCR 627), (14) MARDIA CHEMICALS VS. UNION OF INDIA,
((2004) 4 SCC 311), (15) SANJEEVANI DYEING MILLS VS. UNION OF INDIA (Spl.Leave
to Appeal (c) No.26889 of 2013), dated 8.7.2013 of Supreme Court, in S.C.A.No.10494 of 2013
of High Court of Gujarat at Ahmedabad.), (16) ZEE TELEFILMS LTD. AND ANOTHER VS.
UNION OF INDIA AND OTHERS, ((2005) 4 SCC 649), (17) PURBANCHAL CABLES AND
CONDUCTORS PVT.LTD VS. ASSAM STATE ELECTRICITY BOARD AND ANOTHER,
((2012) 7 SCC 462), (18) MUNICIPAL CORPORATION OF DELHI VS. GURNAM KAUR,
((1989) 1 SCC 101), (19) ARNIT DAS VS. STATE OF BIHAR, ((2000) 5 SCC 488), (20) TIKA
RAM VS. STATE OF U.P. AND OTHERS, ((2009) 10 SCC 689), (21) LANCASTER MOTOR
COMPANY LIMITED VS. BREMITH LIMITED, ((1941) 1 K.B. 675), (22) VISHNU
TRADERS VS. STATE OF HARYANA AND OTHERS, ((1995) SUPP (1) SCC 461) and (23)
STATE OF U.P. VS. STATE OF HARYANA AND OTHERS, ((2011) 5 SCC 305).
Submissions of Respondents:
22. The Writ Petitions are not maintainable either on facts and law. The issues raised are no
longer res integra and they are already covered by the decision rendered by the Supreme Court in
Mardia Chemicals Limited and others Vs. Union of India and others, ((2004) 4 SCC 311) and
therefore it is not open to the petitioners to re-agitate the same. The constitutionality of an Act
once upheld by the Supreme Court would bring about finality and hence the same is not open to
be challenged on new grounds. Once an Act as a whole is upheld, its provisions cannot be
independently challenged. The Supreme Court has recognised rule making powers of the
Reserve Bank of India giving statutory flavour. There is no delegated legislation, reference
legislation or legislation by incorporation involved. The enactment merely borrows a definition
clause from the Circular. Declaring a "Non Performing Asset" is an accounting concept. It
includes both secured and unsecured assets. There is a presumption towards the constitutionality
of the enactments. Therefore, both Act No.54 of 2002 and Act No.10 of 1949 are constitutionally
valid. The petitioners indirectly seek to challenge Sections 21 and 35A of Act 10 of 1949, which
is impermissible in law. If Section 2(1)(o) is a legislation by reference, even then, there is no
unconstitutionality. The legislation has got power to create an authority with the legislating
powers. It has not been demonstrated as to how the constitutional provisions have been violated.
A delegated legislation cannot be set aside only on the ground of uncontrolled and vague powers
on the delegate. It cannot also be set aside as excessive delegation without considering the
attending factors. When it comes to economic matters, a greater latitude is required and the Court
of law shall not venture into the specialised field by acting as superior authority. In support of the
said contentions, the following decisions have been relied upon.
(1)JOSEPH KURUVILLA VELLUKUNNEL VS. RESERVE BANK OF INDIA, (AIR 1962 SC
1371(1)), (2)PEERLESS GENERAL FINANCE AND INVESTMENT CO.LTD. AND
ANOTHER VS. RESERVE BANK OF INDIA, (AIR 1962 SC 1033), (3) THE REGISTRAR
OF COOPERATIVE SOCIETIES AND ANOTHER VS. K.KUNJAMBU AND OTHERS, (AIR
1980 SC 350), (4) THE CONSUMER ACTION GROUP VS. STATE OF TAMIL NADU,
((2000) 7 SCC 425), (5) KISHAN PRAKASH SHARMA AND OTHERS VS. UNION OF
INDIA AND OTHERS, ((2001) 5 SCC 212), (6) UNION OF INDIA VS. AZADI BACHOO
ANDOLAN AND ANOTHER, ((2004) 10 SCC 1), (7)GOVERNMENT OF A.P. AND
OTHERS VS. P.LAXMI DEWVI (SMT), ((2008) 4 SCC 720), (8)BANGALORE
DEVELOPMENT AUTHORITY VS. AIRCRAFT EMPLOYEES COOPERATIVE SOCIETY
LIMITED AND OTHERS, ((2012) 3 SCC 442), (9) R.K.GARG VS. UNION OF INDIA,
((1981) 4 SCC 675), (10) MARDIA CHEMICALS LTD. AND OTHERS VS. UNION OF
INDIA AND OTHERS, ((2004) 4 SCC 311);
(11)DELHI CLOTH AND GENERAL MILLS LTD. VS. SHAMBUNATH MUKHERJI AND
OTHERS ( 1977) 4 SCC 415);
(12) BANK OF BARODA VS. REDNAM NAGACHAYA DEVI, ((1989) 4 SCC 470), (13)
DIRECTOR OF SETTLEMENTS A.P. AND OTHERS VS. M.R.APPARAO AND ANOTHER,
((2002) 4 SCC 638), (14) K.RAKKIANNA GOUNDER VS. THE STATE OF TAMIL NADU,
SOCIAL WELFARE DEPARTMENT AND ANOTHER, (CDJ 2009 MHC 1919), (15)
K.R.CHANDRASEKARAN AND OTHERS VS. UNION OF INDIA, (CDJ 2012 MHC 2078),
(16) CENTRAL BANK OF INDIA VS. RAVINDRA AND OTHERS, ((2002) 1 SCC 367), (17)
ICICI BANK LTD. VS. OFFICIAL LIQUIDATOR OF APS STAR INDUSTRIES LIMITED
AND OTHERS, ((2010) 10 SCC 1);
(18) SUDHIR SHANTILAL MEHTA VS. CENTRAL BUREAU OF INVESTIGATION
((2009) 8 SCC 1), (19) RAKESH VIJ VS. RAMINDER PAL SINGH SETHI AND OTHERS,
((2005) 8 SCC 504), (20) SNEH ENTERPRISES VS. COMMISSIONER OF CUSTOMS
((2006) 7 SCC 714), (21) SINGHAI RAKESH KUMAR VS. UNION OF INDIA AND
OTHERS, ((2001) 1 SCC 364), (22) B.KRISHNA BHAT VS. STATE OF KARNATAKA,
((2001) 4 SCC 227), (23) ST.JOHNS TEACHER TRAINING INSTITUTE VS. REGIONAL
DIRECTOR, NATIONAL COUNCIL FOR TEACHER EDUCATION AND OTHERS, ((2003)
3 SCC 321), (24) STATE OF M.P. AND ANOTHER VS. BHOLA ALIAS BHAIRON
PRASAD (RAGHUVANSHI ((2003) 3 SCC 1), (25) T.VELAYUDHAN ACHARI AND
ANOTHER VS. UNION OF INDIA, ((1993) 2 SCC 582), (26) K.T.PLANTATION PRIVATE
LIMITD AND ANOTHER VS. STATE OF KARNATAKA, ((2011) 9 SCC 1), (27)
BANGALORE DEVELOPMENT AUTHORITY VS. AIRCRAFT EMPLOYEES COOPERATIVE SOCIETY AND OTHERS, ((2012) 3 SCC 442), (28) CANARA BANK VS.
P.R.N.UPADHYAYA AND OTHERS, ((1998) 6 SCC 526), (29) SARDAR ASSOCIATES
AND OTHERS VS. PUNJAB & SIND BANK AND OTHERS, ((2009) 8 SCC 257), (30)
SIGNAL APPARELS PVT.LTD. VS. CANARA BANK, ((2010) 5 SCC 337), (31) COMMON
CAUSE VS. UNION OF INDIA, ((2010) 11 SCC 528), (32) HOLYSTAR NATURAL
RESOURCES VS. UNION OF INDIA, (AIR 2014 DELHI 60), (33) TIKA RAM VS. STATE
OF U.P. AND OTHERS, ((2009) 10 SCC 689), (34) JYOTI PERSHAD VS. THE
ADMINISTRATOR FOR THE UNION TERRITORY OF DELHI, (AIR 1961 SC 1602), (35)
TATA IRON AND STEEL CO.LTD. VS. THE WORKMEN AND OTHERS, (AIR 1972 SC
1917), (36) SRI SRINIVASA RICE AND FLOOR MILL VS. AUTHORIZED OFFICER,
STATE BANK OF INDIA AND ANOTHER, (AIR 2007 AP 252), (37) SHRI MULRAJ
JAYANTILAL SHETH VS. THE GOVERNOR, RESERVE BANK OF INDIA AND
ANOHTER, (AIR 2003 BOMBAY 318), (38) TRANSCORE VS. UNION OF INDIA, (AIR
2007 Supreme Court 712), (39) A.KASINATHAN VS. THE BRANCH MANAGER, CANARA
BANK, (2012 WRIT LR 640), (MADURAI BENCH OF MADRAS HIGH COURT), (40) DEVI
ISPAT LIMITED AND ANOTHER VS. STATE BANK OF INDIA AND OTHERS, (SLP (C)
NO.19466 OF 2013) and, (41) RAJAN AGARWAL AND ANOTHER VS. THE
AUTHORISED OFFICER FOR ING VYSYA BANK LTD. AND OTHERS (W.P.NO.1066 OF
2012, DT.10.4.2012 OF KARNATAKA HIGH COURT AT BANGALORE.
Discussion:
(a) Ratio decidendi:23. The Supreme Court in Mardia Chemicals Limited and others Vs. Union of India and others,
((2004) 4 SCC 311) dealt with the submissions made on the lack of guidelines in declaring asset
classifications. Taking note of the Circular dated 30.8.2001 issued by he Reserve Bank of India,
the Supreme Court came to the conclusion that the financial institutions are not fixing their own
norms in view of the specific directions issued by Reserve Bank of India. From the said
observation, it is therefore clear that the guidelines of Reserve Bank of India, which are also
sought to be impugned before us, have been taken into consideration. Similarly, the scope and
ambit of Act No.54 of 2002 has also been discussed and approved by the Supreme Court.
Therefore, on these two issues, the decisions referred supra would govern the cases. However,
we note that there was no challenge to the constitutionality of Section 2(1)(o) pertaining to the
power of the external agency vis-a-vis the adoption by the Legislature. We are also of the view
that the High Courts of Delhi and Gujarat after holding that the decision in Mardia Chemcials,
((2004) 4 SCC 311) would hold the field, none the less went into the merits. In the same way, as
we propose to go into the contentions raised on merits, we do not venture into the submissions
made on the binding nature of the decision rendered by the Supreme Court referred supra. We
only observe that atleast to the extent of the availability of guidelines, the object of the enactment
and the rigour of recovery mechanism would be binding on us, while deciding the issues raised.
In such view of the matter, we are also not willing to go into the submission made that the
constitutionality of the Act upheld earlier can be challenged subsequently based upon new facts.
(b) The SARFAESI Act, 2002 and The Banking Regulation Act, 1949:24. Admittedly, Reserve Bank of India is the only body, which can formulate the Banking
policies. Definition of Banking Policy under Section 5(ca) of the Banking Regulation Act is
rather wide and extensive. Such a policy is to be evolved by Reserve Bank of India in the interest
of Banking System or monetary stability or sound economic growth, having due regard to the
interests of the depositors, the volume of deposits, other resources of the Bank, the need for
equitable allocation and the efficient use of deposits and resources. It only means that the control
of the Reserve Bank of India is all pervasive. Any other interpretation would defeat the very
object of Act No.10 of 1949. The Reserve Bank of India Act is made in public interest and with a
mandatory duty to formulate a statutory, comprehensive and formal structure of banking
regulations and supervisions.
25. We have already discussed the scope and ambit of Section 21 read with Section 35A of the
Act No.10 of 1949. Admittedly, the said provisions have not been challenged as unconstitutional
or ultra vires the Constitution. The SARFAESI Act, 2002 as well as the Banking Regulation Act,
1949 act on different fields. The objects and reasons, as discussed above, enshrined in both the
enactments, are totally different. When it comes to issuing direction to the Banks as well as the
Financial Institutions, the power is vested only with the Reserve Bank of India alone. Such a
power has already been in existence much prior to the existence of SARFAESI Act, 2002. The
subsequent enactment has taken into consideration of the earlier enactment. As seen from the
preamble of the enactment, two of the Narasimhan Committee reports have been taken into
consideration. Therefore, it is a conscious decision by the Legislature to adopt the definition of
"Non Performing Asset" as decided by the Reserve Bank of India into the subsequent enactment.
The subsequent enactment does not deal with the definition of "Non Performing Asset", which is
not its object and intent. On the contrary, it merely provides for a mechanism to recover the debt.
The Legislature has taken into consideration of serious prevailing situation of ever mounting
debts. Admittedly, it has a chain reaction on the economy of the country affecting millions of
people. Unless a recovery is made, a loan cannot be given for a needy project.
26. The SARFAESI Act, 2002 merely recognises the powers of Reserve Bank of India.
Therefore, once a validly exercised power is recognised, which has been given to an expert body
constituted for that purpose, then the consequence would follow. The consequence would not
trickle upon the mechanism provided under the earlier Act, but the subsequent one as well. There
is no bar in law that the subsequent enactment cannot borrow a classification, which is available
in exercise of the power conferred under the earlier Act. The Legislature has deliberately thought
fit to avoid repugnancy. The Legislature has also in its wisdom has thought that having
constituted a specialised body, it cannot take its role in a different form for the implementation of
a different purpose. After all, there is little room for any arbitrariness on the policy of the
Reserve Bank of India, which is based upon empirical data and materials. When under law both
the enactments are presumed to be valid, then they have to be allowed to operate in their own
fields. The formulation of a policy regarding classification of an asset does not do anything with
the SARFAESI Act, 2002. The subsequent enactment merely borrows the definition. Therefore,
there is no necessity for the Legislature to classify an asset as "Non Performing Asset" in view of
the specific provision contained in the other enactment.
27. Section 2(1)(o) of the SARFAESI Act, 2002 merely deals with the definition of "Non
Performing Asset". This definition will have to be construed only for the purpose of recovery.
Even though an attempt has been made to compare Chapter II and Chapter III of Act No.54 of
2002, it is apparently very clear that they operate in their own spheres. The determination of
asset classification is required only for the purpose of recovery. There cannot be two definitions
of non-performing asset applicable to the same banks. Similarly, the argument made that there is
a discrepancy between the definition of "Non Performing Asset" under the enactment as against
the Asset Classification made under the Master Circular with respect to sub-standard asset,
doubtful asset or loss asset cannot be countenanced, as the same cannot be the basis for declaring
the enactment as unconstitutional. It is no doubt that a sub-standard, doubtful or loss asset would
become a "Non Performing Asset". Therefore, the definition of "Non Performing Asset" under
the Master Circular and the subsequent categorisation of a sub-standard, doubtful or loss asset
would not make the provision ultra vires nor it would make the norms as unconstitutional.
(c) Delegated Legislation, Legislation by reference and Legislation by Incorporation:28. Much arguments have been made by the petitioners' counsels that there cannot be any
delegated legislation and if it is permissible, it would be excessive, as the essential legislative
functions cannot be delegated. Law on this subject has been crystallised for quite some time. We
do not like to reiterate the said position of law by once again undertaking the exercise already
done through various pronouncements of the Supreme Court as well as the High Courts of Delhi
and Gujarat. We just take note of the settled position of law that a delegated legislation is
constitutionally permissible. A delegated legislation permits utilisation of experience and
consultation of interest effected by the practical operation of statutes. An excessive delegation
will have to be decided having regard to the subject matter, scheme, provisions of the statute
including its preamble and the facts and circumstances of the background of which the statute is
enacted. The authority to whom it is delegated is also an important factor to be noted. It is not
possible for the Legislature to enact laws with minute details to deal with increasing complexity
of governance in a political democracy, that too, in economic matters. Useful reference can be
made to the following decisions:
1.B.KRISHNA BHAT VS. STATE OF KARNATAKA, ((2001) 4 SCC 227),
2.ST.JOHNS TEACHER TRAINING INSTITUTE VS. REGIONAL DIRECTOR, NATIONAL
COUNCIL FOR TEACHER EDUCATION AND OTHERS, ((2003) 3 SCC 321),
3.K.T.PLANTATION PRIVATE LIMITD AND ANOTHER VS. STATE OF KARNATAKA,
((2011) 9 SCC 1) and
4.BANGALORE DEVELOPMENT AUTHORITY VS. AIRCRAFT EMPLOYEES COOPERATIVE SOCIETY AND OTHERS, ((2012) 3 SCC 442).
29. However, the question for consideration before us is, as to whether there is indeed any
delegated legislation or not. We are of the view that there is no delegated legislation involved in
the case on hand. As discussed above, the power exercised by the Reserve Bank of India in a
separate enactment has been taken note of by the Legislature in the subsequent one. It is only a
definition clause, which has been adopted by the Legislature. This has been done to put its
machinery into use towards its avowed object of activity appropriate recovery. Therefore, we do
not find any delegated legislation involved and therefore contentions raised on the power of
delegation and thereafter it is excessive, has no force. We only observe for the sake of
completion, that even assuming that there is a delegated legislation involved, the same is not
excessive as there are sufficient guidelines available in the earlier enactment and based upon
which the Circular has been issued by the Reserve Bank of India, being a specialised body.
30. Coming to the question of legislation by reference, or incorporation, we are of the view that
there is no express reference of any statute under section 2(1)(o). While the discussion made
earlier would apply to this issue as well, there is no difficulty in appreciating the fact that the
Legislature has taken note of the earlier enactment. A reference can also be by way of adoption.
When an adoption is made, the mechanism available under the earlier enactment would ipso
facto apply to subsequent one with its future changes. A legislation by incorporation would
involve uplifting the words from one statute applying to the second and that is not the situation
before us. As we observed earlier, the power available under the earlier enactments has been
taken note of in the subsequent enactment. We do not find how it becomes unconstitutional as a
definition is merely made by the Legislature when the job of doing the same is already conferred
to an authority in the other enactment. The question of using or introducing a definition is one of
convenience. In other words, there is no law which mandates that an enactment should have the
definition on its own. An attempt will have to be made always by the Courts to reconcile the
enactments.
31. The determination, whether a Legislation is one of incorporation or reference is more a
matter of construction. A Court of law will have to see whether a law made by the Legislature is
meant for a public purpose. In this connection, useful reference can be made to the decision
rendered by the Supreme Court in RAKESH VIJ VS. RAMINDER PAL SINGH SETHI AND
OTHERS, ((2005) 8 SCC 504), wherein it was held as under:
28. Adopting or applying an earlier or existing Act by competent Legislature to a later Act is an
accepted device of Legislation. If the adopting Act refers to certain provisions of an earlier
existing Act, it is known as legislation by reference. Whereas if the provisions of another Act are
bodily lifted and incorporated in the Act, then it is known as legislation by incorporation. The
determination whether a legislation was by way of incorporation or reference is more a matter of
construction by the courts keeping in view the language employed by the Act, the purpose of
referring or incorporating provisions of an existing Act and the effect of it on the day-to-day
working. Reason for it is the courtsprime duty to assume that any law made by the Legislature is
enacted to serve public purpose.
32. The question was considered by a Three Judge Bench of the Supreme Court in Nagpur
Improvement Trust etc. vs. Vasantrao & Ors. [(2002) 7 SCC 657], and observed as under:"...... The law on the subject is well settled. When an earlier Act or certain of its provisions are
incorporated by reference into a later Act, the provisions so incorporated become part and parcel
of the later Act as if they had been bodily transposed into it. The incorporation of an earlier Act
into a later Act is a legislative device adopted for the sake of convenience in order to avoid
verbatim reproduction of the provisions of the earlier Act into the later. But this must be
distinguished from a referential legislation which merely contains a reference or the citation of
the provisions of an earlier statute. In a case where a statute is incorporated, by reference, into a
second statute, the repeal of the first statute by a third does not affect the second. The later Act
along with the incorporated provisions of the earlier Act constitutes an independent legislation
which is not modified or repealed by a modification or repeal of the earlier Act. However, where
in a later Act there is a mere reference to an earlier Act, the modification, repeal or amendment
of the statute that is referred, will also have an effect on the statute in which it is referred. It is
equally well settled that the question whether a former statute is merely referred to or cited in a
later statute, or whether it is wholly or partially incorporated therein, is a question of
construction."
The said decision was followed by the Supreme Court in Kanak (SMT) & Anr. vs. U.P. Avas
Evam Vikas Parishad & Ors. [(2003) 7 SCC 693] and Sneh Enterprises Vs. Commissioner of
Customs, New Delhi, [(2006) 7 SCC 714].
33. The Supreme Court in Bajaya v. Gopikabai, (1978) 2 SCC 542), held as follows:
"Broadly speaking, legislation by referential incorporation falls in two categories. First, where a
statute by specific reference incorporates the provisions of another statute as of the time of
adoption. Second, where a statute incorporates by general reference the law concerning a
particular subject, as a genus. In the case of the former, the subsequent amendments made in the
referred statute cannot automatically be read into the adopting statute. In the case of latter
category, it may be presumed that the legislative intent was to include all the subsequent
amendments also made from time to time in the generic law on the subject adopted by general
reference. This principle of construction of a reference statute has been neatly summed up by
Sutherland, thus :
A statute which refers to the law of a subject generally adopts the law on the subject as of the
time the law is invoked. This will include all the amendments and modifications of the law
subsequent to the time the reference statute was enacted.
Corpus Juris Secundum also enunciates the same principle in these terms :
....Where the reference in an adopting statute is to the law generally which governs the particular
subject, and not to any specific statute or part thereof, ... the reference will be held to include the
law as it stands at the time it is sought to be applied, with all the changes made from time to
time, at least as far as the changes are consistent with the purpose of the adopting statute."
The said decision was followed by the Supreme Court in Singhai Rakesh Kumar Vs. Union of
India and others, ((2001) 1 SCC 364).
34. What is required to be seen is the intention of the Legislature at the time of enactment. In this
case, the Legislature has left the job of defining non-performing asset' in the hands of Reserve
Bank of India. Therefore, when once the Legislature has approved the power of Reserve Bank of
India on the classification of assets, the resultant consequence would be that a subsequent
amendment pertaining to such a classification would apply with its vigour and force to the new
Act as well.
35. in the light of the discussions made above, we are of the view that it is a case of an adoption
involved in the present case. Therefore it can only be termed as legislation by reference and
hence the impugned Circular is valid in law.
(d) SARFAESI Act, 2002 (Act N0.54 of 2002) and Recovery of Debts due to Banks and
Financial Institutions Act, 1993 (Act No.51 of 1993):36. A submission has been made that both the enactments do not refer to legally recoverable
debt. We are afraid that neither the definition of 'debt' under the Act No.54 of 2002 nor under
Act No.51 of 1993 is put into challenge. Act No.54 of 20012 merely borrows definition from Act
No.51 of 1993. Even in the said Act, under the definition of debt under Section 2(g) is very
exhaustive as discussed above. The provision treats a liability inclusive of interest as a debt. We
do not find any unconstitutionality in the same. There is no necessity for defining a legally
recoverable debt. If the contention of the learned counsel for the petitioner is accepted, then it
amounts to a striking down Part III of Act No.54 of 2002, which has been upheld already. A
legally recoverable debt is a one, which is permissible under law. Therefore, there is no necessity
to define the same. Furthermore, if a recovery is sought to be made de hors the definition of a
'debt' as mentioned in Act No.51 of 1993, then a forum is available to the borrower in such a
case. Therefore, the said submission is rejected.
(e) Validity of the Master Circular:37. In the light of the discussion made above, we do not find any merit in the challenge made to
the impugned Master Circular. The Master Circulation has been made by taking into
consideration of the global economy, the prevailing situation, the intention to create transparency
and uniformity with the Banking system, to provide stability and to protect the interests of
depositors. When such a decision has been made based upon analysis of material factors, the
same cannot be set aside as arbitrary. We do not also find any force in the submissions that
Section 21 read with Section 35A of the Act No.10 of 1949 do not authorise the introduction of
the impugned Master Circular. The said policy has been in vogue for quote some time. We do
not wish to reiterate the scope and extent of power that is available to the Reserve Bank of India
under the provisions. As observed by the Supreme Court, the said provisions impose a duty upon
the Reserve Bank of India, which is public in nature. Similarly, in the impugned Master Circular,
we do not find any vagueness contained in paragraph No.2.1.1, which deals with an asset, when
it ceases to generate income for the Bank. 2.1.2 deals with a loan or an advance. 2.1.3 deals with
interest payments. Similarly, 4.2.4 only deals with Accounts with temporary deficiencies.
Therefore, they are all various classifications. Accordingly, we do not find any vagueness or
confusion involved.
38. We also find no force in the submission made that the objects of two enactments being same,
the definition made in the earlier Act cannot be imported into the subsequent one, since the
subsequent one merely deals with recovery. Therefore, we do not find any reason to strike out
the impugned Master Circular. Accordingly, its validity is upheld.
(f) Judicial Review:
39. While dealing with a legislation pertaining to a specialised field, that too, a one like
economy, the Court should adopt a dignified reluctance. While exercising its power of judicial
review, a good deal of latitude is permissible in case of economic statutes. The Court should be
aware of the fact that the Legislature is dealing with complex problems. The economic
mechanism is highly sensitive and therefore we should constantly remind ourselves of our own
limit. We do not like to take the role of a higher authority to review a decision made by an expert
body on the materials placed before it. The said attempt is to be avoided, as neither the counsels
nor the Court can claim a better expertise. Such an attempt would be akin to a search by a
visually impaired person to find a black cat during night time in a dark room when the cat itself
is not there. In this connection, we only quote the settled position of law as held by the
Honourable Apex Court in T.VELAYUDHAN ACHARI AND ANOTHER VS. UNION OF
INDIA, ((1993) 2 SCC 582), which reads as under:
28. In examining the various submissions addressed on behalf of the appellants and the
petitioners we propose to examine the same in the following background since it is a law relating
to regulation of economic activities.
29. In R.K. Garg case, (1981) 4 SCC 675), it is held: (SCC pp. 690-91, para 8) "Another rule of
equal importance is that laws relating to economic activities should be viewed with greater
latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said
by no less a person than Holmes, J. that the legislature should be allowed some play in the joints,
because it has to deal with complex problems which do not admit of solution through any
doctrinaire or strait-jacket formula and this is particularly true in case of legislation dealing with
economic matters, where, having regard to the nature of the problems required to be dealt with,
greater play in the joints has to be allowed to the legislature. The court should feel more inclined
to give judicial deference to legislative judgment in the field of economic regulation than in other
areas where fundamental human rights are involved. Nowhere has this admonition been more
felicitously expressed than in Morey v. Doud, (354 US 457= 1 L Ed 2d 1485 (1957), where
Frankfurter, J. said in his inimitable style:
'In the utilities, tax and economic regulation cases, there are good reasons for judicial selfrestraint if not judicial deference to legislative judgment. The legislature after all has the
affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When
these are added to the complexity of economic regulation, the uncertainty, the liability to error,
the bewildering conflict of the experts, and the number of times the judges have been overruled
by events self-limitation can be seen to be the path to judicial wisdom and institutional prestige
and stability.' The court must always remember that legislation is directed to practical problems,
that the economic mechanism is highly sensitive and complex, that many problems are singular
and contingent, that laws are not abstract propositions and do not relate to abstract units and are
not to be measured by abstract symmetry; that exact wisdom and nice adaptation of remedy are
not always possible and that judgment is largely a prophecy based on meagre and uninterpreted
experience. Every legislation particularly in economic matters is essentially empiric and it is
based on experimentation or what one may call trial and error method and therefore it cannot
provide for all possible situations or anticipate all possible abuses. There may be crudities and
inequities in complicated experimental economic legislation but on that account alone it cannot
be struck down as invalid."
At page 706, para 19 it is held:
"...That would depend upon diverse fiscal and economic consideration based on practical
necessity and administrative expediency and would also involve a certain amount of
experimentation on which the court would be least fitted to pronounce. The court would not have
the necessary competence and expertise to adjudicate upon such an economic issue. The court
cannot possibly assess or evaluate what would be the impact of a particular immunity or
exemption and whether it would serve the purpose in view or not. There are so many
imponderables that would hazard an opinion where even economists may differ. The court must
while examining the constitutional validity of a legislation of this kind , be resilient, not rigid
forward looking not static, liberal, not verbal and the court must always bear in mind the
constitutional proposition enunciated by the Supreme court of the United States in Munn v.
Illinois, (94 US 113 = 24 L Ed 77 (1875) namely, that courts do not substitute their social and
economic beliefs for the judgement of legislative bodies. The court must defer to legislative
judgement in matters relating to social and economic policies and must not interfere, unless the
exercise of legislative judgement appears to be palpably arbitrary. The court should constantly
remind itself of what the supreme court of the United State said in Metropolis theater Co. v. City
of chicago, (228 US 61 = 57 L Ed 730 (1912)):
The problems of government are practical ones and may justify, if they do not require, rough
accommodations, illogical it may and unscientific. But even such criticism should not be hastily
expressed. What is best is not always discernible, the wisdom of any choice may be disputed or
condemned. Mere errors of government are not subject to our judicial review."
Conclusion:40. In the light of the discussion made, we do not find any merit in these writ petitions.
Accordingly, the writ petitions are dismissed. However, there is no order as to costs.
Consequently, the connected miscellaneous petitions are also dismissed.
(N.P.V.,J.) (M.M.S.,J.) 08.05.2014 Index:Yes/No Internet:Yes/No Note to Office:
Issue order copy today usk To
1. The Secretary to Government Ministry of Finance, Department of Economic Affairs, (Banking
Division), Union of India, North Block, New Delhi.
2. The Joint Secretary, Ministry of Finance, Department of Economic Affairs, Union of India,
Room No.34-C, New Delhi 110 001 (India)
3. The Governor, Reserve Bank of India, Central Office, Mumbai
4. The Chief General Manager, Reserve Bank of India, Department of Banking Operations and
Development, Central Office, Mumbai 400 001.
5. The Board of Directors, Reserve Bank of India, No.6, Parliament Street, New Delhi 110 001.
N.PAUL VASANTHAKUMAR,J.
AND M.M.SUNDRESH,J.
usk PRE-DELIVERY COMMON ORDER IN W.P.NO.5897 OF 2014 ETC., BATCH
08.05.2014