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Issues: (i) Whether the pre-deposit condition in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended, was violative of Articles 14 and 19(1)(g) of the Constitution of India. (ii) Whether the third proviso to section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, as introduced by the securitisation regime, was unconstitutional for conferring unguided and arbitrary power on secured creditors and for offending Articles 14, 19(1)(g) and 21 of the Constitution of India.
Issue (i): Whether the pre-deposit condition in section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended, was violative of Articles 14 and 19(1)(g) of the Constitution of India.
Analysis: The amended appellate framework required deposit of fifty per cent of the debt due as claimed by the secured creditor or determined by the Debts Recovery Tribunal, whichever was less, with power to reduce it to not less than twenty-five per cent. The requirement operated at the appellate stage after determination by the Tribunal, unlike the earlier invalidated deposit condition at the initial stage under the unamended regime. The Court treated the right of appeal as a statutory right capable of being conditioned, and held that the deposit requirement was linked to an adjudicated debt, was moderated by the Tribunal's power of reduction, and was not so onerous as to render the remedy illusory.
Conclusion: The pre-deposit condition in section 18 was held to be constitutionally valid and not violative of Articles 14 or 19(1)(g).
Issue (ii): Whether the third proviso to section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, as introduced by the securitisation regime, was unconstitutional for conferring unguided and arbitrary power on secured creditors and for offending Articles 14, 19(1)(g) and 21 of the Constitution of India.
Analysis: The proviso caused abatement of a pending reference only where secured creditors representing not less than three-fourth in value of the outstanding secured debt had taken measures under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Court read the provision in the context of the object of the securitisation law and the legislative policy to ensure speedy recovery and economic efficiency. It held that the three-fourth value threshold and the statutory trigger supplied adequate guidance and intelligible differentia, and that the provision did not amount to an arbitrary deprivation of revival rights. The plea under Article 21 was also found unsupported by pleadings or substance.
Conclusion: The third proviso to section 15(1) was upheld as constitutionally valid and not violative of Articles 14, 19(1)(g) or 21.
Final Conclusion: Both constitutional challenges failed, and the writ petition was dismissed in its entirety, leaving the impugned statutory provisions intact.
Ratio Decidendi: A statutory appeal may be conditioned by a pre-deposit requirement that is tied to an adjudicated liability and is not so oppressive as to make the remedy illusory, and a creditor-triggered abatement provision is valid if the statute itself supplies adequate guidance and an intelligible differentia in the context of a purposive economic legislative scheme.
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