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Issues:
Challenge to legality and constitutional validity of provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; Arbitrary actions by respondents under the Act; Violation of fundamental rights and protections; Allegations of improper creation of mortgage documents; Lack of guidelines from Union of India and Reserve Bank of India; Conflict between provisions of different Acts; Interpretation of guidelines issued by Reserve Bank of India. Analysis: The petitioners in various writ petitions challenged the legality and constitutional validity of provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, along with the Security Interest (Enforcement) Rules, 2002. Financial institutions alleged defaults by petitioners and initiated actions under section 13 of the Act to attach and potentially sell mortgaged properties. Petitioners raised concerns about arbitrary actions by respondents, including dispossessing them from residential properties and improper mortgage document creation. In some cases, financial institutions had already initiated civil proceedings or proceedings before debt recovery tribunals, which petitioners argued should preclude recourse to the Act's provisions at that stage. Allegations were made regarding the lack of guidelines from the Union of India and Reserve Bank of India for exercising powers under the Act, leading to arbitrary actions by authorised officers. Petitioners cited judgments supporting their contentions, emphasizing the need for proper guidelines for enforcement of provisions. The respondents defended the provisions, stating they were not arbitrary and were necessary due to defaults by petitioners. The issue of fundamental rights and protections was raised, along with concerns about legal bias, lack of opportunity for petitioners to be heard, and conflicts between different Acts' provisions. The Union of India and Reserve Bank of India were criticized for not providing clear guidelines for authorised officers, leading to potential misuse of powers under the Act. During the proceedings, a circular from the Reserve Bank of India was presented, outlining guidelines and directions for asset reconstruction and securitisation. The interpretation of these guidelines in relation to the Act's provisions was debated between the parties. The court emphasized the importance of balancing industrial growth with recovery of public money, suggesting a cautious approach in applying the Act's powers to avoid arbitrary actions. Given the pendency of similar matters before the Supreme Court, the High Court decided to await the apex court's decision on the issues raised in the writ petitions. Interim orders granted by the Supreme Court were extended to the petitioners, and authorities were urged to consider formulating proper guidelines and policies regarding the exercise of powers by secured creditors and their officers. The writ petitions were adjourned sine die with the liberty to revive after the Supreme Court's judgment, maintaining the interim orders granted.
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