SARTHAK BUILDERS PVT LTD Vs. ORISSA RURAL DEVELOPMENT

JUDGEMENT

(1.) The question referred for consideration of this Bench is whether provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 can be invoked with reference to the loan transaction entered into prior to coming into force of the said Act.?

(2.) A Division Bench of this Court in Subash Chandra Panda vs. State of Orissa & others, 2008 AIR(Ori) 88held in the negative while contra view has been taken by Uttaranchal High Court and Allahabad High Court in Unique Engineering Works vs. Union of India & ors, 2004 2 BankCas 241 and Pradeep Kumar Gupta and Anr. v. State of U. P. and Ors., 2010 AIR(All) 3 respectively.

(3.) It may be necessary to advert to some basic facts giving rise to the question. The Orissa Rural Housing Development Corporation Limited (ORHDC) advanced loan to the petitioner-builder against mortgage of property in the year 1998. SARFAESI Act came into force on 17.12.2002 replacing the corresponding provisions of ordinance which came into force from 21.6.2002. The Act inter alia provides for enforcing of Security Interest by a Secured Creditor without the intervention of court. The term 'Secured creditor' means a bank or 'financial institution' and other entities as defined under Section 2(zd). The financial institution is defined under Section 2 (m) of the Act to mean institutions specifically described therein and any other institution which may be so specified by a notification by the Central Government. The Central Government has notified several financial institutions under the said provision from time to time, including ORHDC. ORHDC was so notified on 10.11.2003. Thereafter, ORHDC invoked provisions of Section 13 of the SARFAESI Act and issued impugned notices dated 8.12.2004 and 18.4.2005 under Section 13(2) and 13(4) of the Act, followed by sale notice dated 25.6.2005. The said notices have been impugned by the affected parties.