TaxTMI 
TaxTMI 
2017 (1) TMI 1693
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....T SOLICITOR GENERAL, ADV. SRI. K. S. DILIP, ADV. SRI. ROSHIN IPE JOSEPH, SMT. S. AMBILY AND SRI. K. PAUL KURIAKOSE JUDGMENT SATHISH NINAN, J. In Mardia Chemicals v. Union of India ([2004] 4 SCC 311), the constitutional validity of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the Act") was upheld by the Apex Court. As per Act 1 of 2013, Section 13(5A) was incorporated into the Act with effect from 15.01.2013, permitting the secured creditor to bid for the secured assets. The vires of Section 13(5A) is under challenge in this writ proceedings on the ground that it is violative of Articles 300A and 21 of the Constitution of India. 2. Heard Shri P.Chandrasekhar....
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.... by Section 13(5A) of the Act in so far as it is left to the whims and fancies of the secured creditor to purchase for itself the property that is mortgaged to secure a financial assistance availed from the bank. It would be relevant to refer to Article 300A: "300A. Persons not to be deprived of property save by authority of law.- No person shall be deprived of his property save by authority of law." A citizen could be deprived of his property only under authority of law. It is beyond cavil that an involuntary sale of the property of a citizen by a mode permitted by law, necessitated for realisation of a legally recoverable debt, is a process under the authority of law. The provisions of the Act, in addition to the other remedie....
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....led, but are also duty bound to recover the debts by adopting all legally permissible methods, since the bank is a trustee of the public funds. 6. It would be profitable to refer to the bill introduced to amend the Act for incorporating Section 13(5A) along with a few other provisions. The Statement of Objects and Reasons, the relevant portions of which, are as under: "The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was enacted with a view to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto. The aforesaid Act enables the banks and financial institutions to realis....
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.......................... (d) empower the banks or financial institutions to accept the immovable property in full or partial satisfaction of the claim of the bank against the defaulting borrower; .................................................................................................. 6. The Bill seeks to achieve the above objects." 7. The reason behind the introduction of the said provision in the Act is obvious. For realisation of debt, when the secured assets were brought to sale, occasions would be many where there are no bidders to purchase the property for the reserve price fixed by the secured creditor. Even when the sales are adjourned to a subsequent date, the situation might often remain the sa....
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....c ) by holding public auction; or (d) by private treaty." In terms of Rule 8(5) of the Rules, the authorised officer of the secured creditor is to get the secured assets valued by an approved valuer and accordingly fix the reserve price of the property. The secured assets could be brought for sale only after fixing the reserve price as above. Rule 8(6) of the Rules provides that sufficient public notice be given regarding the sale of the secured assets, in the manner as stated therein. Therefore, the interest of the debtor is adequately guarded and protected. In terms of Section 13(5A) of the Act, the secured creditor is entitled to participate in the bid, only in the absence of any bidders for a value equal to or above the rese....