BABU GANESH SINGH DEEPNARAYAN Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONER has challenged constitutional validity Of the Second Proviso to Section 18 of securitisation and Reconstruction of financial Assets and Enforcement Of Security interest Act, 2002 (hereinafter called "securitisatuion Act"), on the ground that it is violative of Article 14 of the Constitution of India.

(2.) LEARNED counsel Mr. K. I. Shah, appearing for the petitioner submitted that proviso which insists pre-deposit of any amount for entertaining an appeal is not in consonance with the object and purpose of the Act, which makes remedy of appeal illusory. Learned counsel submitted that such a stipulation is oppressive and onerous. Counsel further submitted that secured assets or its management with transferable interest has already been taken over by the secured creditor and it is under its control and therefore, there is no reason to insist for payment of any amount as a condition precedent for filing appeal. Learned counsel further submitted that secured creditor can only proceed against secured assets and after having taken control of the secured assets, there is no justification in directing the aggrieved party to deposit any amount as a pre-condition for filing appeal. Learned counsel further submitted that even if any amount is deposited as a condition precedent for entertaining an appeal and ultimately if appeal is dismissed, the amount deposited cannot be appropriated by secured creditor and hence, there is no justification in directing aggrieved person to deposit any amount as a pre-condition for filing an appeal. Learned counsel placed heavy reliance on the judgment of the Apex Court in Mardia chemicals Ltd. v. Union of India, AIR 2004 sc 2371 and submitted that when proviso to Section 17 of Securitization Act was challenged the Apex Court took the view that such a condition is onerous and unreasonable and violative of Article 14 of the constitution of India. Learned counsel therefore, submitted that same principle would apply when a challenge made to the proviso to section 18 of the Act as well.

(3.) LEARNED Assistant Solicitor General Mr. Harin Raval, appearing for the Union of india submitted that right of appeal is not an inherent right, but a creature of the statute, and the legislature can impose conditions under which such a right is to be exercised. Further learned counsel submitted that second proviso to Section 18 of the securitization Act does not require that entire debt amount to be deposited, and only 50% thereof, which can in a given case be further reduced to a minimum of 25% of the sum. Learned counsel also submitted that there are similar provisions in many other enactments, the validity of those provisions have been upheld by the Apex Court reliance was also placed on the decision of the delhi High Court in R. V. Saxena v. Union of India - AIR 2006 Delhi 96, in which the division Bench has upheld validity of the second proviso to Section 18 (1) of the securitization Act.