KIRANDEVI BANSAL Vs. DEPUTY GENERAL MANAGER

JUDGEMENT

(1.) THE question, we have been called upon to decide on a reference made by the learned Single Judge, is "whether the time limit of one week provided in sub-section (3a) of Section 13 of The Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002 (for short the Securitisation Act) for communicating the non-acceptance of the representation/objections made by the borrower in response to a notice issued under sub-section (2) of Section 13. is mandatory or directory?

(2.) A learned Single Judge of this Court in Special Civil Application No. 4045 of 2007 took the view that the same is a mandatory requirement, and non-compliance of that mandatory requirement within one week of the receipt of the representation/objections filed by the borrower would vitiate the proceedings initiated by the secured creditor under section 13 (4) of the Securitisation Act. When this case came up for hearing before another Judge, learned Judge took the view that the obligation cast upon the secured creditor is only to consider the objections filed by the borrower and take appropriate decision before taking any action under section 13 (4) of the Act. Learned Judge took the view that when there is substantial compliance of the provisions of sub-section (3a) of Section 13 of the Securitisation Act read with Rule 3a of The Security Interest (Enforcement) Rules, 2002 (for short the rules'), it cannot be said that merely because 7 days have expired or the decision was not taken within a period of 7 days and was taken at a later date, further action under Section 13 (4) of the Securitisation act would not be vitiated. We have heard learned counsel for the parties at length.

(3.) SECURITISATION Act was enacted to regulate Securitisation and reconstruction of financial assets and enforcement of security interest and matters connected thereto. The Act enables the Banks and financial Institutions to realise long-term assets, manage problem of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction. The Act further provides for setting up of asset reconstruction companies which are empowered to take possession of secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realise the secured assets and take over the management of the business of the borrower.