JOGESH RADIA Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) The short grievance of the petitioners is that within five days of the respondent bank issuing a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, it issued a letter to the petitioners informing them that certain fixed deposits and other collateral securities had been encashed.

(2.) The petitioners raise a legal issue. According to the petitioners, since Section 13(2) of the Act provides a 60-day period for a notice to revert to the bank, a secured creditor cannot be permitted to encash deposits or other collateral security furnished by the constituent in the interregnum.

(3.) Section 13 is at the heart of the said Act and provides the manner of enforcement of security interest by a secured creditor. Section 13(2) of the Act requires a secured creditor to issue notice to a defaulting borrower, who is under a liability to the secured creditor under a security agreement, to enable the borrower to discharge the entirety of the liabilities to the secured creditor within 60 days of the date of the notice; or else, suffer the measures enumerated in Section 13(4) to be adopted by the secured creditor. "Secured asset" is defined at Section 2(zc) of the Act as the property on which security interest is created. "Property" under Section 2(t) of the Act includes moveable property, receivables and any debt or right to receive payment of money whether secured or unsecured. Section 2(zf) defines "security interest" to mean the right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation and assignment other than those specified in Section 31 of the Act.