9911796707
TMI Blog2005 (6) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... forcement of Security Interests and Recovery of Debts Laws Amendment Act, 2004, is the question that has come up for consideration in this case. 2. Bank of India, respondent herein, filed O.A. No 318 of 2001 before the Debt Recovery Tribunal on 23-11-2001 for realisation of an amount of Rs. 4,81,92,595.74 from the writ petitioners and others jointly, severally and personally together with interest at 18 per cent per annum with quarterly rests from 23-11-2001 till date of payment and also for costs of the proceeding. While the O.A. was pending, the Bank invoked the provisions of section 13(2) of the Securiti- sation Act vide notice dated 23-1-2004 informing them that an amount of Rs. 6,33,65,539 is outstanding and that the said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled a detailed counter affidavit submitting that the proviso added to section 19 of the RDB Act would not be a bar in initiating action under section 13(2) of Securitisation Act. Proviso to section 19 only enables the Bank to seek permission of the Debt Recovery Tribunal to withdraw the application if no action has been taken under the Securitisation Act. Even if the application is not withdrawn, there is no bar in initiating action under the Securitisation Act. Further it is also stated that section 37 of the Securitisation Act makes it clear that provisions of the Act are in addition to the RDB Act and, therefore, both the Acts are supplementary to each other and exclusive to each other. Further it is also stated that Ext. P2 notice unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bank to initiate action under the Securitisation Act. In any view of the matter, counsel submitted that the Bank has already invoked the provisions of the Securitisation Act with notice under section 13 dated 23-1-2004 and the amendment came into force only on 11-11-2004 with prospective operation. 8. Validity of the Securitisation Act was challenged before the Apex Court in Mardia Chemicals Ltd. v. Union of India [2004] 4 SCC 311. While upholding the validity of the Act, Apex Court held as follows : ". . . As discussed earlier as well, it may be observed that though the transaction may have the character of a private contract yet the question of great importance behind such transactions as a whole having far reaching effect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emedy under section 17 of the RDB Act before the Debts Recovery Tribunal. Therefore, it is felt that borrowers will get a reasonably fair deal and opportunity to get the matter adjudicated upon before Debts 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 as non-performing assets and better avail- ability 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. 9. The fact that the Bank or Financial Institu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Securitisation Act, the pendency of the proceeding under the RDB Act is of no consequence. But contention was raised that by virtue of the proviso introduced by the Amendment Act that unless and until permission of the Debts Recovery Tribunal is obtained, Banks or Financial Institutions cannot invoke the provisions of the Securitisation Act. In this connection we may extract section 19(1), as amended by Act 54 of 2004 for easy reference. "19. Application to the Tribunal. (1) Where a bank or a financial institution has to recover any debt from any person, it may make an application to the Tribunal within the local limits of whose jurisdiction ( a )the defendant, or each of the defendants where there are more than o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) lays down the procedure with regard to the manner in which application is to be submitted before the Tribunal for recovery of any debt from any person. It also indicates the local limits or jurisdiction of the Tribunals. Various other clauses of section 19 lay down the procedure as to how the Tribunal has to act once the application is received by it. It also lays down the procedure enabling the defendants to claim set off and also other incidental reliefs. In other words, section 19 is not a substantive provision but only a procedural provision. Proviso was added by Amendment Act, 2004 only to appraise the Tribunal of the intention of the Bank or Financial Institution to invoke the provisions of the Securitisation Act. It is not mandato ..... X X X X Extracts X X X X X X X X Extracts X X X X
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