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TMI Blog2003 (5) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... d the learned counsel for the parties. 3. The petitioner No. 1 is a private limited company. The petitioner No. 1 took loans from respondent No. 1 (the State Bank of India) and U.P. Financial Corporation. It is alleged that the present secured loan outstanding from U.P. Financial Corporation is Rs. 137.89 lakhs as principal amount, and from respondent No. 1 is Rs. 39 lakhs as principal amount. The petitioner No. 1 was having a total cash credit limit of Rs. 37 lakhs from the respondent No. 1. A dispute arose between the petitioners and the respondent No. 1 in June 1995 owing to clean bill limits (discounting) facility and the Bank stopped accepting the same for discounting. It is alleged that for this reason the company stopped operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In April 2002 the BIFR allowed conducting proceedings before the Debt Recovery Tribunal but restrained it from taking any recovery till the pendency of the reference. On 2-1-2003 the State Bank of India issued six draft notices to the petitioners under section 13(4) of the Act. 6. In paragraph 14 of the writ petition it is alleged that the total loan component of State Bank of India constitutes less than 75 per cent and it proceeded without having consent of the main lender U.P. Financial Corporation whose dues comes to Rs. 4.50 crores. It is contended that in view of section 13(9) of the Act no secured creditor is entitled to exercise any right under section 13(4) of the Act unless such right is agreed upon by secured creditors represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 8. We are of the opinion that there is no merit in the challenge to section 13(4) of the Act. It may be mentioned that there is always a presumption in favour of the constitutional validity of an Act vide Chiranjit Lal v. Union of India 1950 SCR 869, Madhu Limaye v. Sub-Divisional Magistrate AIR 1971 SC 2486, Hamdard Dawakhana (Wakf) Lal Kuan v. Union of India [1960] 2 SCR 671, Sunil Batra v. Delhi Administration [1978] 4 SCC 494, Rt. Rev. Msgr. Mack Netto v. State of Kerala [1979] 1 SCC 23 etc. A heavy burden lies on the person who challenges the constitutional validity of a statute. We do not see any constitutional invalidity in section 13 of the Act. 9. No doubt section 13 is a drastic provision but it appears to have been en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4). 12. In the Maharashtra State Financial Corpn. v. Suvarna Board Mills JT 1994 (5) SC 280 it was held by the Supreme Court that where a notice is given to a defaulter to pay the dues failing which possession of the property will be taken, no further show-cause notice is required. Such notice itself fulfils the requirements of natural justice. 13. The aforesaid decision of the Supreme Court is a clear proposition that once a notice is given to the borrower to pay his dues failing which possession of the property will be taken, this itself amounts to compliance of the principles of natural justice. In response to this notice it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the executive will choose which cases are to be tried under the special procedure will not affect the validity of the statute. Hence the contention that the mere availability of two procedures will vitiate one of them is not supported by reason or authority. 16. In the present case the impugned Act itself mentions the class of cases which will be covered by section 13 of the Act. In the first place, there must be a secured interest created in favour of a secured creditor. Secondly there must be a secured agreement under which the borrower will have the liability. Thirdly the borrower must make a default for repayment of a secured debt or any instalment thereof and then again such debt has to be classified by the secured creditor as a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romptly money will not remain in circulation, and the banks and financial institutions may get into trouble. In fact already many banks and financial institutions are in financial difficulty due to non-repayment of the loans. 21. We see no constitutional invalidity in section 13 of the Act No. 54 of 2002. Rather, it serves a Salutary purpose, the challenge to the aforesaid provision, therefore, fails. 22. However, as regards the petitioners' plea relating to section 13(9) of the Act, the provision itself makes it clear that where there are more than one secured creditors, no secured creditor can exercise the right under section 13(4) unless the secured creditors representing not less than three-fourth of the outstanding amount agree. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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