MISONS LEATHER LTD Vs. CANARA BANK

JUDGEMENT

(1.) THE constitutional validity of provisions of Section 17 of the securitisation and Reconstruction of Financial Assets and enforcement Security Interest Act, 2002 as amended by the Enforcement of Security Interest and Recovery of debts Laws (Amendment Act) Ordinance, 2004 (Act 30 of 2004) is challenged in these writ petitions under Article 226 of the Constitution of India.

(2.) THE Securitisation and Reconstruction of Financial Assets and Enforcement of security Interest Act, 2002, (hereinafter referred to as 'the Act') has been enacted to regulate Securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected thereto. The Act enables the banks and financial institutions to realise long-term assets, manage problems of liquidity, asset liability mis-match 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 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. In mardia Chemicals Limited v. Union of India, 2004 (4) SCC 311 : (AIR 2004 SC 2371, para 80), the constitutional validity of the act, except the provisions of sub-section (2)of Section 17 of the Act, has been upheld by the Supreme Court. The findings of the Supreme Court, as summed up in paragraph 80 of the judgment, read as follows :-

(3.) SECTION 17 of the Act prior to the amendment reads as follows :-SECTION 17 - Right to appeal :