Securitisation Act applies to co-operative banks; Article 14 challenge, notice-quantum objection, and competence challenge all failed.

The Securitisation Act was held to extend to co-operative banks through the statutory definition of "bank" and the relevant notification, and the challenge on arbitrariness under Article 14 failed because Section 17 provides an effective post-measure remedy and the secured creditor must consider objections. A Section 13 notice was not invalid merely because it did not state the exact final quantified debt, since the Act is designed to enforce security interests rather than adjudicate the debt. The Court also held that Parliament had legislative competence on the banking field, the Act could operate alongside the Maharashtra Co-operative Societies Act, and writ petitions against co-operative banks were not maintainable.

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Issues: (i) whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 applies to co-operative banks; (ii) whether the Act is arbitrary or violative of Article 14 of the Constitution of India for want of an adequate mechanism to challenge action taken under Section 13; (iii) whether a notice under Section 13 is invalid unless it mentions the exact amount and whether final adjudication of the quantum of claim is a condition precedent to action under the Act; (iv) whether Parliament lacked legislative competence to enact the Act in its application to co-operative banks and whether the Act overrides the Maharashtra Co-operative Societies Act, 1960; (v) whether the writ petitions were maintainable against co-operative banks.

Issue (i): whether the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 applies to co-operative banks.

Analysis: The Act defines "bank" to include any other bank specified by the Central Government by notification. The notification issued under Section 2(1)(c)(v) expressly specified co-operative banks. The Banking Regulation Act, 1949, as extended by Section 56, separately defines co-operative banks. Read together, the statutory scheme brought co-operative banks within the Act. The decision in Greater Bombay Co-operative Bank did not displace this position; on the contrary, the distinction drawn there between the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation Act supported the conclusion that co-operative banks were included under the latter.

Conclusion: The Act applies to co-operative banks. This contention was rejected.

Issue (ii): whether the Act is arbitrary or violative of Article 14 of the Constitution of India for want of an adequate mechanism to challenge action taken under Section 13.

Analysis: The challenge to the scheme of Sections 13 and 17 was already answered by the Supreme Court in Mardia Chemicals, which upheld the Act while striking down only the deposit requirement then contained in Section 17(2). The later amendment to Section 13 inserted a duty to consider objections and communicate reasons, and the substituted Section 17 provided a substantive remedy before the Debts Recovery Tribunal. The Tribunal's jurisdiction was not clerical; it extended to examining the legality of the secured creditor's measures and granting appropriate relief. The Court also relied on later Division Bench authority recognising the efficacy of the remedy under Section 17.

Conclusion: The Act is not arbitrary on this ground, and the challenge under Article 14 failed.

Issue (iii): whether a notice under Section 13 is invalid unless it mentions the exact amount and whether final adjudication of the quantum of claim is a condition precedent to action under the Act.

Analysis: The object of the Act is enforcement of security interest without court intervention, not adjudication of the debt as such. Proceedings under Section 17 are concerned with the validity of the secured creditor's measures under Section 13, not with final determination of the borrower's indebtedness. If the secured assets do not fully satisfy the dues, Section 13(10) contemplates separate recovery proceedings for the balance. The Court held that neither the text nor the scheme of the Act requires the notice under Section 13 to state the exact mathematically final amount due, and the asserted necessity of prior final adjudication was inconsistent with the statutory structure.

Conclusion: The contention was rejected; exact prior adjudication of the claim was not a condition precedent, and the notice was not bad merely because it did not state the exact amount.

Issue (iv): whether Parliament lacked legislative competence to enact the Act in its application to co-operative banks and whether the Act overrides the Maharashtra Co-operative Societies Act, 1960.

Analysis: Applying the presumption of constitutionality and the doctrine of pith and substance, the Court held that the Act is referable to the field of banking and enforcement of security interests. Co-operative banks are included only incidentally within that banking framework, which does not convert the legislation into one on co-operative societies. Section 37 makes the Act in addition to, and not in derogation of, other laws, but the statutory scheme and the later authority relied upon showed that the mechanism under the Act operates independently of the State recovery framework. The Court also rejected the ejusdem generis argument and held that there was no warrant to confine the reference to "any other law" to Central enactments only.

Conclusion: Parliament had legislative competence, and the challenge based on conflict with the Maharashtra Co-operative Societies Act failed.

Issue (v): whether the writ petitions were maintainable against co-operative banks.

Analysis: The respondent banks were co-operative societies and not State or instrumentalities of the State for Article 12 purposes. Binding precedent had already held that such petitions against co-operative banks were not maintainable, and the Court followed that position.

Conclusion: The writ petitions were not maintainable.

Final Conclusion: The constitutional and statutory challenges to the action under the Securitisation Act failed, and the petitions were dismissed, with only a short protective arrangement continued for a limited period.

Ratio Decidendi: A statute enforcing security interests may validly include co-operative banks by express notification under its definition clause, and such inclusion, when the legislation is in pith and substance a banking measure with a substantive post-measure remedy, does not violate Article 14 or exceed legislative competence merely because co-operative societies are incidentally affected.

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