C. BRIGHT Vs. DISTRICT COLLECTOR

JUDGEMENT

(1.) The challenge in the present appeal is to an order passed by the Division Bench of the Kerala High Court of 19.7.2019, whereby it was held that Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002[1] mandating the District Magistrate to deliver possession of a secured asset within 30 days, extendable to an aggregate of 60 days upon reasons recorded in writing, is a directory provision. The High Court held as under:

(2.) The High Court examined Section 14 of the Act as amended, which reads thus:

(3.) The Act was enacted in the year 2002 for reasons that the legal framework relating to commercial transactions had not kept pace with the changing commercial practices. Further, financial sector reforms resulted in a slow pace of recovery of defaulting loans and mounting level of non-performing assets of banking and financial institutions. The objectives behind the Act, recognised that unlike international banks, banks and financial institutions in India, did not have power to take possession of securities and sell them. The provisions of the Act were upheld by this Court except that of subsection (2) of Section 17 which provided that the Debt Recovery Tribunal shall not entertain an appeal preferred by a borrower unless seventy-five per cent of the amount claimed has been deposited before it[2]. Thereafter, the question as to whether the withdrawal of an application filed under the Recovery of Debts due to Banks and Financial Institutions Act, 1993[3] is a condition precedent to take recourse to the Act was examined by this Court.[4] This Court observed that when Civil Courts failed to expeditiously decide suits filed by the banks, the DRT Act was enacted, however it did not provide for assignment of debts to Securitisation companies. The Act which was enacted thereafter in 2002 sought to further empower the banks and facilitate the recovery of debt. It proceeded on the basis that once the liability of a borrower to repay crystallises; it becomes due and that on account of delay, the account of such borrower becomes substandard and no n- performing.