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2015 (2) TMI 686 - SUPREME COURTThe Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002-The Constitutional validity of the amendment of the definition of the expression 'non-performing asset' under Section 2(1) (o)- under the amended definition, such a classification of the account of a borrower by the CREDITOR is required to be made in accordance with the directions or guidelines issued by an "authority or body either established or constituted or appointed by any law for the time being in force", in all those cases where the CREDITOR is either administered or regulated by such an authority (hereinafter referred to as the "REGULATOR"). If the CREDITOR is not administered or regulated by any such REGULATOR then the CREDITOR is required to classify the account of a borrower as NPA in accordance with the guidelines and directions issued by the Reserve Bank of India. Held that- We are of the firm opinion that it is not necessary that legislature should define every expression it employs in a statute. If such a process is insisted upon, legislative activity and consequentially governance comes to a standstill. It has been the practice of the legislative bodies following the British parliamentary practice to define certain words employed in any given statute for a proper appreciation of or the understanding of the scheme and purport of the Act. But if a statute does not contain the definition of a particular expression employed in it, it becomes the duty of the courts to expound the meaning of the undefined expressions in accordance with the well established rules of statutory interpretation. Therefore, in our opinion, the function of prescribing the norms for classifying a borrower's account as a NPA is not an essential legislative function. The laying down of such norms requires a constant and close monitoring of the financial system demanding considerable amount of expertise in the areas of public finance, banking etc., and the norms may require a periodic revision. All that activity involves too much of detail and promptitude of action. Therefore, the submission that the amendment of the definition of the expression 'non-performing asset' under Section 2(1) (o) is bad on account of excessive delegation of essential legislative function, in our view, is untenable and is required to be rejected. - Coming to the submission that by authorizing different REGULATORS to prescribe different norms for the identification of a NPA with reference to different CREDITORS amount to unreasonable classification is also required to be rejected for the reason that all the CREDITORS do not form a uniform/homogenous class. Appeal of the borrowers dismissed.
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