INDIAN BANK Vs. HAMOSONS APPARELS PRIVATE LTD

JUDGEMENT

(1.) C.R.P. (PD) Nos.1591 of 2007 filed against the order dated 7th May, 2007, made in IN (SA) No.173 of 2007 on the file of the Debts Recovery Appellate Tribunal.C.R.P. (PD) No.3301 of 2007 filed against the order dated 27th Sept., 2007, made in I.A. No.866 of 2007 in O.A. (S) No.42 of 2005 on the file of the Debts Recovery Tribunal, Coimbatore.W.P. No.17009 of 2007 filed for the issuance of a writ of declaration declaring that the provision of law under Section 18 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as void, arbitrary, unconstitutional and ultra vires Article 14 of the Constitution of India, insofar as the petitioner is concerned.Common OrderS.J. Mukhopadhaya, J.Common question of law being involved, though the cases were heard separately, they are disposed of by this common judgment.

(2.) IN both the cases, the borrowers, while raised question of Debts Recovery Appellate Tribunal's (hereinafter referred to as 'Appellate Tribunal') jurisdiction to pass conditional interim orders, they have also challenged the validity of Section 18 (1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security INterests Act (hereinafter referred to as 'NPA Act').

(3.) ACCORDING to learned counsel for the borrower, the provision of Section 18 (1) imposing condition of pre-deposit for preferring appeal are onerous and economic blockade is created upon borrower denying him the right to prefer appeal. While Section 13 (13) imposes a restraint, 2nd and 3rd proviso to Section 18 (1) imposes a financial burden upon already overburdened borrower. The appeal provided u/s 18 is nothing but a mirage for the borrower and imposition of condition under 2nd and 3rd proviso to Section 18 (1) without being heard on merit on the quantum of amount claimed by the secured creditor could never have been intended by the Legislature as it would amount to denial of natural justice and ultra vires the Constitution, being arbitrary, rendering the legal remedy beyond the reach of the borrower. The Supreme Court embarked on a process to correct the unconstitutional or onerous condition, which were found u/s 17 (2), but the very same provisions have been inserted as 2nd and 3rd proviso to Section 18 (1) even where no determination of quantum is done by the Tribunal. ACCORDING to learned counsel, the following condition set out in para-64 of Mardia Chemicals case are also applicable in the present case :-i) The action u/s 13 (4) of NPA Act is taken even while adjudication of the debt due is pending before the Debts Recovery Tribunal, which is the authority of the first instanceii) There is no determination of the amount due by the DRTiii) The secured assets are under the control of the secured creditor insofar as they have issued notice u/s 13 (2) and taken action under Section 13 (4) of the Act in view of Section 13 (13) andiv) There is no special reason for double security in respect of an amount yet to be determined and settled.Stand of the Guarantor - Ms.Shirin Iqbal (in the 1st set of cases) :