TaxTMI 
TaxTMI 
2007 (9) TMI 697
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....nal on 4-10-2006. The petitioners appealed to the Debts Recovery Appellate Tribunal. During the pendency of the proceedings before the Debts Recovery Appellate Tribunal, the Apex Court decided Greater Bombay Co-op. Bank Ltd v. United Yarn Tex, Pvt. Ltd. and Ors. AIR2007SC1584 , and Transcore v. Union of India and Anr. AIR2007SC712 . The Debts Recovery Appellate Tribunal, however, dismissed the petitioners' appeal on 20-7-2007 leaving to the petitioners liberty to argue before the Debts Recovery Tribunal the question of Bank's right to pursue parallel remedies. 3. The petitioners have, therefore, rushed to this Court challenging the constitutional validity of Notification dated 28-1-2003 issued in exercise of powers under Section 2(1)(c)(v) of the Securitisation Act and consequently the correctness of the judgment dated 20-7-2007 of the Debts Recovery Appellate Tribunal. 4. The challenge to the validity of the Securitisation Act before the Supreme Court was negatived on 8-4-2004. The Supreme Court struck down only Sub-section (2) of section 17 of the Securitisation Act as unconstitutional. The remedy of an appeal before the Debts Recovery Tribunal under Section 17 of the S....
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....enumbra of the said Notification. The discussion to follow would show that the challenge raised in this petition too has no force. 10. We have considered the contentions raised before us carefully. Apart from what has been held by the Division Bench of this Court sitting at Aurangabad, in Writ Petition No. 2672 of 2007, we would observe that the petitioners herein are confused about the terms "Bank" and "Banking Company" defined separately in Clauses (c) and (d) of Section 2(1) of the Securitisation Act and also Clauses (d) and (e) Section 2 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (for short, hereinafter referred to as "the RDB Act"), which will show that the law docs not require that every Bank has to be a Banking Company though every Banking Company may be a Bank. 11. The definitions of "Bank" and "Banking Company" in Clauses (c) and (d) of Section 2(1) of the Securitisation Act, which are reproduced below, would bring out the distinction between the meaning of terms "Bank" and "Banking Company". (c) "bank" means (i) a banking company; or (ii) a corresponding....
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....ause (zd) of section 5 of the Securitisation Act. A creditor seeking recovery under the provisions of the RDB Act need not necessarily have a secured interest on the basis of which he could claim realization of the debt while under the Securitisation Act, he would claim liquidation of debt on the strength of secured asset. It has to be noted that the scheme emerging through the Securitisation Act has not come up as a Chapter added to the RBD Act, and scheme of the Securitisation Act cannot be narrowed down and limited by taking aid of the RDB Act. 16. The distinction in the expression used in Section 37 of the Securitisation Act and Sub-section (2) of Section 34 of the RDB Act, which has been underlined by the Division Bench of this Court at Aurangabad in Writ Petition No. 2672 of 2007 squarely debunks the arguments of the learned Advocate for the petitioners. These sections may be usefully reproduced for ready reference as under: Section 37 of the Securitization Act: Application of other laws not barred.--The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regula....
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....3 has lost its force, because of the judgment of the Apex Court in Greater Bombay Co-op. Bank Ltd. v. United Yarn Tex. Pvt. Ltd. and Ors. referred to above, has to be rejected, because it has been considered and negatived by a Division Bench of this Court, sitting at Aurangabad, in Writ Petition No. 2672 of 2007 and we see no reason to take a different view. 20. The learned Advocate for the petitioner contended that insertion of a provision like the one in the Securitisation Act was beyond the legislative competence of the State Legislature. Since the State Legislature could not have provided such a remedy to Co-operative Banks covered under the Maharashtra Co-operative Societies Act, the Central Government too could not have created such a remedy. This contention as well has been duly considered by the Division Bench of this Court at Aurangabad in Writ Petition No. 2672 of 2007 and we would merely reproduce paras 31 to 34 of the said judgment to underscore our rejection of this contention. The said paras 31 to 34 read as under: 31. The submission is based on Schedule VII List I Entry 43 and Schedule VII List II Entry 32 of the Constitution, which read as under: Schedule 7 List....