Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 14 – Constitution of India, Article 226 -- Second writ petition – Maintainability of-- Cause of action -- Only additional issue raised by the petitioner is that after withdrawing the writ petition, another amount of Rs.6,50,000/- has been deposited by the petitioner -- On the same cause of action, the earlier writ petition with identical prayer was withdrawn with liberty to take recourse to the remedies available to the petitioner – Second writ petition has been filed without availing the alternative remedies -- Held, second writ petition on the same cause of action not maintainable.

(Para 8-10)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(4), 13(8) -- Security Interest (Enforcement) Rules, 2002, Rule 9 – Auction sale – Confirmation of sale -- From which date the period of fifteen days would start for making the deposit of remaining 75 percent; from the date of communication of confirmation of sale or from the date of the auction – Held, it is only after the confirmation is made under Rule 9(4) that amount has to be deposited and on failure to deposit the amount, twenty-five percent amount has to be forfeited and property has to be resold.

(Para 5-9)

A. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(3A) -- Objection u/s 13(3A) of SARFAESI Act – Communication of rejection – Requirement of -- Court see no reason to marginalize or dilute the impact of the use of the imperative ‘shall’ by reading it as ‘may’ -- Word ‘shall’ invariably raises a presumption that the particular provision is imperative -- A provision which requires reasons to be furnished must be considered as mandatory -- Such a provision is an integral part of the duty to act fairly and reasonably and not fancifully -- The provision must nonetheless be treated as ‘mandatory’.

 (Para 28-31)

B. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(3A) – Constitution of India, Article 226 -- Objection u/s 13(3A) of SARFAESI Act – Non-communication of rejection – Writ jurisdiction -- Creditor was induced by the debtor not to take action against them through assurances and promises -- Many opportunities were granted by the creditor to the debtor to repay the debt which were all met by proposals for extension of time -- Eventually, the debtor even executed “A Letter of Undertaking acknowledging the right of IFCI to sell the assets in the case of default – Held, failure to furnish a reply to the representation is not of much significance since the Court is satisfied that the creditor has undoubtedly considered the representation and the proposal for repayment made therein and has in fact granted sufficient opportunity and time to the debtor to repay the debt without any avail -- Debtor is not entitled to the discretionary relief under Article 226 of the Constitution which is indeed an equitable relief.

(Para 34)

C. Acknowledgment of liability – Without prejudice -- Mere introduction of the words “without prejudice” have no significance and the debtor clearly acknowledged the debt even after action was initiated under the Act and even after payment of a smaller sum, the debtor has consistently refused to pay up.

(Para 35, 36)

D. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(3A) -- Section 2(zf), 31(i) – Security interest -- Agricultural land – Mortgage of -- Exemption protects agriculturists from losing their source of livelihood and income i.e. the agricultural land, under the drastic provision of the Act – Security interest was created in respect of several parcels of land, which were meant to be a part of single unit i.e. the five star hotel in Goa -- Since no security interest can be created in respect of agricultural lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and that the debtor offered the land as security on this basis – Land in question is not an agricultural land.

(Para 37-44)

E. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 31(i) – Challenge to -- Validity of Section 31(i) which in any case deals with security interest created over agricultural land and not agricultural land itself, is an integral part of the Act and cannot be questioned on the ground of legislative competence.

(Para 42,43)

F. Limitation Act, 1963 (36 of 1963), Article 144 – Limitation to take possession -- Adverse possession -- Delivery of symbolic possession amounted to an interruption of adverse possession of a party and the period of limitation for the application of Article 144 of the Limitation Act would start from such date of the delivery.

(Para 47)

G. Transfer of Property Act, 1882 (4 of 1882), Section 8 -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 14 -- Secured Creditor – Auction sale – Application by Creditor for possession -- Maintainability of -- Creditor have only a constructive or symbolic possession -- Transfer of the secured asset by the creditor therefore cannot be construed to be a complete transfer as contemplated by Section 8 of the Transfer of Property Act -- Creditor nevertheless had a right to take actual possession of the secured assets and must therefore be held to be a secured creditor even after the limited transfer to the auction purchaser under the agreement -- Creditor remained a secured creditor in the Act.

(Para 45-50)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 2(d), 2(m), 2(1)(f), 2(1)(zb), 2(1)(zf),2(1)(zd) – Loan by non-banking company or financial institution – Merger with Financial Institution under SERFAESI Act -- Borrower – Security arrangement – Security interest – Secured Creditor – Meaning of – Held, there is only a procedural change in respect of forum for recovery of debt and no substantive rights are affected -- Argument of the respondents predicated on Sections 69 and 69A of the Transfer of Property Act is without any substance – Respondent No.1 would be treated as ‘borrower’ within the meaning of Section 2(1)(f) of the SARFAESI Act; the arrangement would be classified as ‘security arrangement’ under Section 2(1) (zb); the agreements created ‘security interest’ under Section 2(1) (zf); and the appellant became ‘secured creditor’ within the meaning of Section 2(1)(zd) of SARFAESI Act.

(Para 2, 38-44)

Constitution of India, Article 226 -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2), 13(3A), 13(4), 17 -- Security Interest (Enforcement) Rules, 2002, Rule 8 – Notice under SARFAESI Act – Writ jurisdiction – Ex-parte stay -- Discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law -- It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled -- In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order – Writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the Bank to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum – Impugned orders are therefore contrary to the law laid down by this Court under Article 141 of the Constitution and unsustainable.

(Para 6-19)

A. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(4), 17(2) -- Security Interest (Enforcement) Rules, 2002, Rule 9(4)(5) -- Auction purchaser – Forfeiture of amount – Remedy of -- Action of secured creditor in forfeiting the deposit made by the auction purchaser is a part of the measures taken by the secured creditor under Section 13(4) -- Measures taken under Section 13(4) commence with any of the action taken in clauses (a) to (d) and end with measures specified in Rule 9 -- Auction purchaser is one such person, who is aggrieved by the action of the secured creditor in forfeiting their money, therefore, falls within the expression “any person” as specified under Section 17(1) and hence is entitled to challenge the action of the secured creditor before the DRT by filing an application under Section 17(1) of the SARFAESI Act.

(Para 27-31)

B. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(4), 17(2) -- Security Interest (Enforcement) Rules, 2002, Rule 9(4)(5) -- Auction purchaser – Forfeiture of amount – Writ jurisdiction -- Remedy of -- Writ Court as also the Appellate Court were justified in dismissing the appellant's writ petition on the ground of availability of alternative statutory remedy of filing an application under Section 17(1) of SARFAESI Act before the concerned Tribunal to challenge the action of the PNB in forfeiting the appellant's deposit under Rule 9(5).

(Para 34)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13,14 – Constitution of India, Article 226 -- Contempt of Courts Act, 1971 (70 of 1971), Section 12 – Undertaking before Court – Non-compliance of – Punishment for contempt -- Respondent furnished an unconditional undertaking before the court that cheque dated 25.06.2016 would be honoured on presentation -- In view of same, certain reliefs were granted to him, however, the cheque was dishonoured -- Court granted opportunities to the respondent to purge the contempt, but he failed to do so -- Respondent is convicted for committing offence u/s 12 of the Contempt of Courts Act and sentenced to S.I. for a period of six months.

(Para 5, 6)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(9), 31B – Auction by Bank – Auction purchaser – Right of -- Due of some amount towards Central Excise Department – Liability of -- Petitioner purchased the property in e-auction under Section 13(9) of the SARFAESI Act being the highest bidder, believing that the property was free from all encumbrances and charges -- Thus, there was no obligation on the part of the petitioner to discharge liability of the outstanding dues towards the previous owner.

(Para 9,10)

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), Section 3, 8 – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), Section 2(1)(a), 2(1)(i) – Debt Recovery Tribunal – Debt Recovery Appellate Tribunal – Infrastructure of -- Debt Recovery Tribunals and Appellate Tribunals suffer from a lack of adequate infrastructure, manpower and resources -- Having due regard to the important adjudicatory function which is entrusted to these Tribunals, the efficacy of parliamentary legislation will depend in a large measure on the efficiency with which the Tribunals discharge their duties -- Direction given to Union Government to file an affidavit specifically dealing with the following issues :

(i)    Whether the timelines set down in the amended legislation are capable of being achieved with the existing infrastructure including judicial personnel and staffing pattern of the Debt Recovery Tribunals and Debt Recovery Appellate Tribunals;

(ii)   The underlying basis, if any, upon which the revised timelines have been stipulated and whether any scientific study has been conducted on the availability of infrastructure;

(iii)  Whether, and if so, what steps the Union government intends to adopt to enhance the infrastructure of Debt Recovery Tribunals and the Appellate Tribunals in terms of physical infrastructure, judicial manpower and non-judicial personnel required for the efficacious functioning of the Tribunals;

(iv)  The specific plan of action including time-schedules within which the existing infrastructure would be upgraded so as to achieve the time frame for disposal indicated in the amended legislation; and

(v)   Empirical data on the pendency of cases for more than ten years and the list of corporate entities where the amount outstanding is in excess of Rs.500 crore.

(Para 4,5)

A. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13, 17 – Security Interest (Enforcement) Rules, 2002, Rule 8, 9 – Petition pending before DRT/High court – Auction sale by Bank -- Held, undue haste was made by the creditor bank in holding the auction -- Creditor bank could have waited for some time when the proceedings were pending before the Tribunal as well as the High Court before conducting the auction and confirming the sale.

(Para 23)

B. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13, 17 – Security Interest (Enforcement) Rules, 2002, Rule 8, 9 -- Issuance of notice -- Sale of property in auction – Cause of action are different -- Second application before DRT – Maintainability of – Held, at an earlier point of time, the issuance of notice as well as notice for sale of the flat had been challenged, whereas the subsequent application had been filed after the auction had been held -- The cause of action in respect of both the applications was not same and therefore, the second application for a different cause of action was maintainable.

(Para 24)

C. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13, 17 -- Auction purchaser – Setting aside of sale – Refund of amount with interest -- Bank directed to refund the amount already paid by the auction purchaser with simple interest at the rate of 10% till the said amount is paid.

(Para 25)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13, 17, 34 – Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), Section 1(4) -- Notice u/s 13 of SARFAESI Act for amount less than Rs.10 lacs – Jurisdiction of Civil Court – Jurisdiction of Debt Recovery Tribunal -- There is a difference between the Tribunal’s original jurisdiction under the provisions of the DRT Act and the appellate jurisdiction under the 2002 Act – Act was enacted in 2002 and the legislature is presumed to have knowledge about the provisions of Section 1(4) of the DRT Act -- So harmonious reading of both the aforestated Sections would not be contrary to any of the legal provisions -- Application submitted by the appellant bank under Order VII Rule 11 of the CPC should have been granted by the trial Court as, according to Section 34 of the Act, a Civil Court has no jurisdiction to entertain any appeal arising under the Act – Held, D.R.T. has jurisdiction to entertain an appeal as per Section 17 of the 2002 Act even if the amount involved is less than Rs.10 lakh.

(Para 23-28)

A. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 1 – Object of SARFAESI Act -- SARFAESI Act was intended to facilitate easy and faster recovery of loans advanced by banks and financial institutions, the ordinary recovery mechanism was not considered sufficient -- The Act incorporates a system whereby direct action for recovery of secured debt may be initiated against the secured assets of a borrower after the debt is declared to be a non performing asset (NPA).

(Para 8)

B. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2)(3)(11) – Recovery of secured debts – Rights of Bank -- Under the scheme of the SARFAESI Act, a secured creditor is entitled to proceed against the borrower for the purpose of recovering his secured debt by taking action against the secured assets, in case the borrower fails to discharge his liability in full within the period specified in the notice issued under Section 13(2) of the Act -- It is the mandate of Section 13(3) of the Act that the notice issued u/s 13(2) should contain details of the amount payable by the borrower and also the secured assets intended to be enforced by the secured creditor in the event of non-payment of the dues as per Section 13(2) notice -- Thus, the secured creditor is entitled to proceed only against the secured assets mentioned in the notice under Section 13(2) -- However, in terms of Section 13(11) of the Act, the secured creditor is also free to proceed first against the guarantors or sell the pledged assets.

(Para 15)

C. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2)(4), 17 – Proceedings u/s 13 of SARFAESI Act -- Right to appeal -- Appeal is like a trial – Though Section 17 of the Act is titled as a ‘Right to appeal’, the liberty granted to the aggrieved person is to make an application to the DRT and the parties are at a liberty to lead evidence before the tribunal – And thus, it is actually a trial before the DRT on the grievances of the aggrieved persons in the respect of the measures taken by the secured creditor for recovery of dues of the borrower in proceeding against the secured assets.

(Para 16)

D. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2)(4), 17, 18 – Proceedings u/s 13 of SARFAESI Act -- Appeal u/s 18 of SARFAESI Act -- Any person aggrieved by the order of the DRT u/s 17 of the SARFAESI Act, is entitled to prefer an appeal along with the prescribed fee within the permitted period of 30 days -- For ‘preferring’ an appeal, a fee is prescribed, whereas for the Tribunal to ‘entertain’ the appeal, the aggrieved person has to make a deposit of fifty per cent of the amount of debt due from him as claimed by the secured creditors or determined by the DRT, whichever is less -- This amount can, at the discretion of the Tribunal, in appropriate cases, for recorded reasons, be reduced to twenty- five per cent of the debt.

(Para 19)

E. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 18 – Appeal before DRAT -- Pre-deposit made before DRAT in appeal – Right of refund on disposal of appeal -- Deposit before the DRAT as a pre-condition for considering the appeal on merits in terms of Section 18 of the Act, is not a secured asset -- On disposal of the appeal, either on merits or on withdrawal, or on being rendered infructuous, in case, the appellant makes a prayer for refund of the predeposit, the same has to be allowed and the pre-deposit has to be returned to the appellant, unless the Appellate Tribunal, on the request of the secured creditor but with the consent of the depositors, had already appropriated the pre-deposit towards the liability of the borrower, or with the consent, had adjusted the amount towards the dues, or if there be any attachment on the pre-deposit in any proceedings under Section 13(10) of the Act read with Rule 11 of The Security Interest (Enforcement) Rules, 2002, or if there be any attachment in any other proceedings known to law.

(Para 22)

F. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 18 -- Indian Contract Act, 1872 (9 of 1872), Section 148, 171 -- Pre-deposit made before DRAT in appeal – whether lien or bailment – No -- Bank has no lien on the pre-deposit made under Section 18 of the SARFAESI Act in terms of Section 171 of The Indian Contract Act, 1872 -- It is not a bailment with the bank as provided under Section 148 of The Indian Contract Act, 1872.

(Para 23, 24)

G. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 18 -- Pre-deposit made before DRAT – Right of withdrawal of amount -- Appellant before DRAT sought withdrawal of the appeal, since the Bank had already proceeded against the secured assets by the time the appeal came up for consideration on merits -- There is neither any order of appropriation during the pendency of the appeal nor any attachment on the pre-deposit -- Therefore, the deposit made by the appellant before DRAT is liable to be returned to him.

(Para 25)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), Section 13 – Security Interest (Enforcement) Rules, 2002, Rule 12 -- Registration Act, 1908 (16 of 1908), Section 17 – Auction purchase of immovable property from Bank – Registration – Requirement of -- Auction purchaser of the immoveable property sold by the authorized officer of the State Bank of Patiala – Authorized officer would not be a civil or revenue officer and thus the sale certificate issued by him would require registration. M/s P.M. Associates, Udhagamandalam’s case 2014(10) RCR (Civil) 1861 relied.

(Para 7-9)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), Section 13, 35 – Transfer of Property Act, 1882 (4 of 1882), Section 106 – Rent Control Legislation -- Provisions of the SARFAESI Act cannot be used to override the provisions of the Rent Control Act – A non obstante clause (Section 35 of the SARFAESI Act) cannot be used to bulldoze the statutory rights vested on the tenants under the Rent Control Act -- Neither the landlord nor the banks can be permitted to exploit the fact of non registration of the tenancy deed against the tenant -- Once tenancy is created, a tenant can be evicted only after following the due process of law, as prescribed under the provisions of the Rent Control Act -- A tenant cannot be arbitrarily evicted by using the provisions of the SARFAESI Act as that would amount to stultifying the statutory rights of protection given to the tenant.

(Para 24-30)

A. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 17, 34 -- Code of Civil Procedure, 1908 (V of 1908), Section 9 – Constitution of India, Article 226 – Proceedings under SARFAESAI Act – Jurisdiction of Civil court – Writ Jurisdiction -- Section 34 bars jurisdiction of the civil court in matters relating to actions where provisions of SARFAESI Act have been invoked -- It cannot be said that wherever any authority acts in a discriminatory or unreasonable manner, the aggrieved party would be without any remedy either by way of civil suit or by invoking writ jurisdiction of the High Court -- In such circumstances, it cannot be held action by a Scheduled Bank enjoys immunity from the extraordinary writ jurisdiction of this Court under Article 226 of the Constitution of India only because provisions of SARFAESI Act are applicable and have been invoked by it.

(Para 10)

B. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 17, 34 -- Code of Civil Procedure, 1908 (V of 1908), Section 9 – Constitution of India, Article 226 – Proceedings under SARFAESAI Act – One time Settlement with Bank -- Extension of time – Writ Jurisdiction -- Time expired for payment – High Court while exercising jurisdiction under Article 226 of the Constitution of India, can extend time to repay the settled amount under OTS – For the delay in repayment of the settled amount, respondent bank can be duly compensated by payment of interest for the period of delay -- At the same time, the auction purchasers can be compensated by refund of the amount(s) deposited by them, together with interest for the period during which they have been deprived of user of the deposited amounts.

(Para 10)

A. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 18(2) --  Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), Section 20(3) -- Appeal under SARFAESI Act – Delay in appeal -- Condonation of delay -- Appellate Tribunal under the SARFAESI Act has the power to condone the delay in filing an appeal before it by virtue of Section 18(2) SARFAESI Act and proviso to Section 20(3) of the RDB Act.

(Para 8)

B. Interpretation of amending Statute -- When an amending Act alters the language of the principal statute, the alteration must be taken to have been made deliberately.

(Para 10)

C. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 18(2) --  Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), Section 20(3) – Limitation Act, 1963 (36 of 1963), Section 5, 14, 29(2) – Applicability of Section 14 – Section 29(2) of the Limitation Act has no absolute application, as the statute in question impliedly excludes applicability of provisions of Limitation Act to the extent a different scheme is adopted -- Even though Section 5 of the Limitation Act may be impliedly inapplicable, principle of Section 14 of the Limitation Act can be held to be applicable even if Section 29(2) of the Limitation Act does not apply.

(Para 12-14)

Transfer of Property Act, 1882 (4 of 1882), Section 130 – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 5(3), 13, 17 – Proceedings under SARFAESI Act -- Assignment/Transfer of debt – Permissibility of -- Intended assignment of debt by a secured creditor is an independent transaction, which does not affect either the liability or the rights of the borrower -- Any transfer of debt by a secured creditor will not either diminish or enlarge liability of the borrower -- Transferee in terms of Section 5(3) of the Act is bound by the rights and liabilities of the transferor -- Reserved price fixed by the secured creditor is the valuation for transfer of debt -- It has no co-relation with the market value or the saleable value of the asset -- Notice for sale of the property and transfer of a debt by the secured creditor are independent of each other -- Merely for the reason that an application u/s 17 of the SARFAESI Act against the sale notice is pending before the Debt Recovery Tribunal, is not a ground for interference in exercise of the writ jurisdiction of this Court against the transfer of debt by the secured creditor.

(Para 12)

Transfer of Property Act, 1882 (4 of 1882), Section 58, 65-A, 108, 111 -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 17 -- Mortgage property – Possession taken by Bank – Right of Lessee – Right of mortgagee -- Lease for a period of five years after mortgage could not be inducted without express consent of the mortgagee – Such lease does not affect the rights of the mortgagee.

(Para 9)

A. Specific Relief Act, 1963 (47 of 1963), Section 20, 22 -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), Section 13 -- Agreement for sale of property executed under SARFAESI Act -- Suit for specific performance for issuance of Sale Certificate – Sale Certificate itself contemplates delivery of immovable property – Held, delivery of possession was an implicit one -- Adcon Electronics’ case (2001) 7 SCC 698 would not apply and suit was held to be indeed a suit for land.

(Para 10-14)

B. Specific Relief Act, 1963 (47 of 1963), Section 20, 22 -- Suit for specific performance -- Exclusive jurisdiction -- Clause 5 of the Agreement says “The payment/cheque shall be drawn and made payable in Mumbai. The jurisdiction shall be Courts of Mumbai.” -- Clause 9(e)(viii) of the Agreements further reads as “Disputes, if any, shall be subject to the jurisdiction of Mumbai Court/Tribunals only” -- It is clear from these two clauses that the intention of the parties to the Agreement was to restrict limitation to the forums/courts of Mumbai only – No reason to create any exception to the intention of the parties -- Jurisdiction of the Court at Calcutta is clearly ousted as per law -- Plaint will have to be returned by the Calcutta High Court as it does not have the jurisdiction.

(Para 15, 16)

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13, 71, 72 -- Registration Act, 1908 (16 of 1908) , Section 17 -- Sale deed – Registration of -- Sale certificate under SARFAESI Act issued by Bank to auction purchaser – Suit for specific performance pending before civil court against the borrower by third party – Effect of – In case sale deed is not registered in favour of auction purchaser than harm caused to auction purchaser cannot be compensated – Ld. Single Judge has rightly observed that registration of the sale deed in favour of the auction purchaser will always be subject to the outcome of the civil suit.

(Para 3-8)

A. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2), 13(4) -- Non Performing Assets – Proceedings under SRFAESI Act -- Financial Assets are sub-divided into 4 categories i.e. (i) standard, (ii) substandard, (iii) doubtful, and (iv) loss, depending upon the length of the period for which the installment of money is over due, such assets are classified as NPA -- Such a classification is relevant and assumes importance in the decision making process of the secured creditor u/s 13(2) -- Magnitude of the amount due and outstanding in a given case, the reasons which prompted the borrower to default in the repayment schedule, the nature of the business carried on by the defaulting borrower, the overall prospects of the defaulter’s business, national and international market conditions relevant to the business of a defaulter are some of the factors which are germane to a decision that action u/s 13(4) is required to be taken against a defaulting borrower -- Even in a case where on rational and objective consideration of all the relevant factors including the representations/objections referred to under Section 13(3A), the CREDITOR comes to a conclusion that steps contemplated under Section 13(4) are required to be taken in the case of a particular defaulter, the further question as to which one of the steps contemplated under Section 13(4) is required to be taken or would meet the ends of justice is a matter for a further rational decision on the part of the secured creditor.

(Para 44-46)

B. Interpretation of Statute -- Definitions -- 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 -- 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.

(Para 65)

C. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 2(1)(o) – Constitution of India, Article 14, 312 -- Non Performing Assets – Definition – Challenge to -- Function of prescribing the norms for classifying a borrower’s account as a NPA is not an essential legislative function -- 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 – If the Parliament chose to define a particular expression by providing that the expression shall have the same meaning as is assigned to such an expression by a body which is an expert in the field covered by the statute and more familiar with the subject matter of the legislation, the same does not amount to any delegation of the legislative powers – Contention that 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 is untenable and is required to be rejected -- 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 required to be rejected for the reason that all the CREDITORS do not form a uniform/homogenous class -- To say that enabling them to follow different norms would be violative of Article 14 would be wholly untenable -- Definition of the expression “NPA” under Section 2(1)(o) of the Act is constitutionally valid.

(Para 66-71, 76)

D. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (54 of 2002), Section 13(2), 13(3A), 13(4) -- Representation/objection contemplated under Section 13(3A) is required to be examined objectively -- Section 13 obligates the SECURED CREDITOR to communicate the reasons for non-acceptance of the representation or objections to the borrowers.

(Para 73)

E. Constitution of India, Article 13 – Object and reasons of Bill -- Objects and reasons are not voted upon by the legislature -- If the enactment is otherwise within the constitutionally permissible limits, the fact that there is a divergence between the objects appended to the Bill and the tenor of the Act, cannot be a ground for declaring the law unconstitutional.

(Para 14)

Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), Section 13(2), 13(4), 17 -- Proceedings under SARFAESI Act – Writ jurisdiction -- One-time settlement -- Writ of mandamus declaring account of the petitioner as a NPA as illegal and also directing the Bank to offer benefit of non-discriminatory ‘One Time Settlement’ scheme -- Petitioner was served with a notice u/s 13(2) of the SARFAESI Act -- Petitioner have filed objections to the said notice which were dismissed – Held, after the reasons are communicated in terms of Section 13(3A) of the Act, the petitioners have a right to invoke the jurisdiction of the Debts Recovery Tribunal in terms of Section 17 of the SARFAESI Act after action under Section 13(4) of the aforesaid Act is taken by the Bank -- Since no action has been taken, the writ petition is not maintainable -- As and when the Bank initiates proceedings under Section 13(4) of the SARFAESI Act, the petitioners will have a right to seek statutory remedy, which will be dealt with by the Tribunal in accordance with law.

(Para 1-4)