2004 (4) TMI 294 - SC - Indian Laws

Whether it is open to challenge the statute on the ground that it was not necessary to enact it in the prevailing background particularly when another statute was already in operation?

Whether provisions as contained under sections 13 and 17 of the Act provide adequate and efficacious mechanism to consider and decide the objections/disputes raised by a borrower against the recovery, particularly in view of bar to approach the civil court under section 34 of the Act?

Whether the remedy available under section 17 of the Act is illusory for the reason it is available only after the action is taken under section 13(4) of the Act and the appeal would be entertainable only on deposit of 75% of the claim raised in the notice of demand?

Whether the terms or existing rights under the contract entered into by two private parties could be amended by the provisions of law providing certain powers in one sided manner in favour of one of the parties to the contract?

Whether provision for sale of the properties without intervention of the Court under section 13 of the Act is akin to the English mortgage and its effect on the scope of the bar of the jurisdiction of the civil court?

Whether the provisions under sections 13 and 17(2) of the Act are unconstitutional on the basis of the parameters laid down in different decisions of this Court?

Whether the principle of lender’s liability has been absolutely ignored while enacting the Act and its effect?

Held that:- The borrowers would get a reasonably fair deal and opportunity to get the matter adjudicated upon before the Debt Recovery Tribunal. The effect of some of the provisions may be a bit harsh for some of the borrowers but on that ground the impugned provisions of the Act cannot be said to be unconstitutional in view of the fact that the object of the Act is to achieve speedier recovery of the dues declared as NPAs and better availability of capital liquidity and resources to help in growth of economy of the country and welfare of the people in general which would subserve the public interest.

Therefore uphold the validity of the Act and its provisions except that of sub-section (2) of section 17 of the Act, which is declared ultra vires of Article 14 of the Constitution of India.

Thus where a secured creditor has taken action under section 13(4) of the Act, in such cases it would be open to borrowers to file appeals under section 17 of the Act within the limitation as prescribed therefor, to be counted with effect from today. The transfer cases, appeals and the petitions thus stand partly allowed limited to the extent indicated above. For the rest of the reliefs, they stand dismissed.