keshavlal khemchand and sons private ltd. v. union of india.pdf

8/9/2019 Keshavlal Khemchand and Sons Private Ltd. v. Union of India.pdf

http://slidepdf.com/reader/full/keshavlal-khemchand-and-sons-private-ltd-v-union-of-indiapdf 1/52

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO. 901 OF 2014

KESHAVLAL KHEMCHAND AND SONS PVT. LTD.

& OTHERS … Petitioners

Versus

UNION OF INDIA & OTHERS … Respondents

ITH

RIT PETITION !C" NO. #$% OF %$'

RIT PETITION !C" NO. #$( OF %$'

RIT PETITION !C" NO. #$' OF %$'

RIT PETITION !C" NO. #$) OF %$'

RIT PETITION !C" NO. #$* OF %$'

RIT PETITION !C" NO. #%) OF %$'

RIT PETITION !C" NO. #%+ OF %$'

RIT PETITION !C" NO. #(* OF %$'

RIT PETITION !C" NO. #(, OF %$'

RIT PETITION !C" NO. #(# OF %$'

RIT PETITION !C" NO. #'$ OF %$'

RIT PETITION !C" NO. #') OF %$'

RIT PETITION !C" NO. #'+ OF %$'

RIT PETITION !C" NO. #'* OF %$'

RIT PETITION !C" NO. #', OF %$'



CIVIL APPEAL NO. %($ OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%%($ o/ %$'"

CIVIL APPEAL NO. %( OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%$$, o/ %$'"

CIVIL APPEAL NO. %(( OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%)( o/ %$'"

CIVIL APPEAL NO. %(' OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%%(( o/ %$'"

CIVIL APPEAL NO. %() OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%%++ o/ %$'"

CIVIL APPEAL NO.%(+ OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%(+, o/ %$'"

CIVIL APPEAL NO. %(* OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%'$, o/ %$'"

CIVIL APPEAL NO.%(, OF %$)!Arisin- ot o/ SLP !Ci0i1" No. %'') o/ %$'"

CIVIL APPEAL NO.%(# OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%'+ o/ %$'"

CIVIL APPEAL NO.%'$ OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%)$# o/ %$'"

CIVIL APPEAL NO.%' OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%),' o/ %$'"

CIVIL APPEAL NO.%'% OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%),) o/ %$'"

CIVIL APPEAL NO. %'( OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%),, o/ %$'"

CIVIL APPEAL NO.%'' OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%),# o/ %$'"

CIVIL APPEAL NO.%') OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%)#$ o/ %$'"

CIVIL APPEAL NO. %'+ OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%)#% o/ %$'"

CIVIL APPEAL NO. %'* OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%)#( o/ %$'"

2



CIVIL APPEAL NO.%', OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%)#' o/ %$'"

CIVIL APPEAL NO.%'# OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%)#+ o/ %$'"

CIVIL APPEAL NOS.%)$2%) OF %$)!Arisin- ot o/ SLP !Ci0i1" Nos. (*$+2(*$* o/ %$'"

CIVIL APPEAL NO.%)% OF %$)!Arisin- ot o/ SLP !Ci0i1" No.'$$ o/ %$'"

CIVIL APPEAL NO.%)( OF %$)!Arisin- ot o/ SLP !Ci0i1" No.'%)# o/ %$'"

CIVIL APPEAL NO.%)' OF %$)!Arisin- ot o/ SLP !Ci0i1" No.'('( o/ %$'"

CIVIL APPEAL NOS.%))2)+ OF %$)!Arisin- ot o/ SLP !Ci0i1" Nos. '(')2'('+ o/ %$'"

CIVIL APPEAL NO.%)* OF %$)!Arisin- ot o/ SLP !Ci0i1" No.'(), o/ %$'"

CIVIL APPEAL NO.%), OF %$)!Arisin- ot o/ SLP !Ci0i1" No.''$* o/ %$'"

CIVIL APPEAL NO.%)# OF %$)!Arisin- ot o/ SLP !Ci0i1" No.'), o/ %$'"

CIVIL APPEAL NO.%+$ OF %$)!Arisin- ot o/ SLP !Ci0i1" No.')+) o/ %$'"

CIVIL APPEAL NO.%+ OF %$)!Arisin- ot o/ SLP !Ci0i1" No.)$*+ o/ %$'"

CIVIL APPEAL NO.%+% OF %$)!Arisin- ot o/ SLP !Ci0i1" No.)$) o/ %$'"

CIVIL APPEAL NO. %+( OF %$)!Arisin- ot o/ SLP !Ci0i1" No.)*)+ o/ %$'"

CIVIL APPEAL NO.%+' OF %$)!Arisin- ot o/ SLP !Ci0i1" No.),, o/ %$'"

CIVIL APPEAL NOS.%+)2++ OF %$)!Arisin- ot o/ SLP !Ci0i1" Nos.),()2),(+ o/ %$'"

CIVIL APPEAL NOS. %+*2+, OF %$)

3



!Arisin- ot o/ SLP !Ci0i1" Nos.),(*2),(, o/ %$'"

CIVIL APPEAL NOS. %+#2*$ OF %$)!Arisin- ot o/ SLP !Ci0i1" Nos.),'2),'% o/ %$'"

CIVIL APPEAL NO.%* OF %$)

!Arisin- ot o/ SLP !Ci0i1" No.)#+( o/ %$'"

CIVIL APPEAL NO.%*% OF %$)!Arisin- ot o/ SLP !Ci0i1" No.)#+' o/ %$'"

CIVIL APPEAL NO. %*( OF %$)!Arisin- ot o/ SLP !Ci0i1" No.++( o/ %$'"

CIVIL APPEAL NO. %*' OF %$)!Arisin- ot o/ SLP !Ci0i1" Nos.++' o/ %$'"

CIVIL APPEAL NO.%*) OF %$)

!Arisin- ot o/ SLP !Ci0i1" No.++) o/ %$'"

CIVIL APPEAL NO.%*+ OF %$)!Arisin- ot o/ SLP !Ci0i1" No.,'*, o/ %$'"

CIVIL APPEAL NO. %** OF %$)!Arisin- ot o/ SLP !Ci0i1" No.,*)+ o/ %$'"

CIVIL APPEAL NO.%*, OF %$)!Arisin- ot o/ SLP !Ci0i1" No.,#'# o/ %$'"

CIVIL APPEAL NO. %*# OF %$)

!Arisin- ot o/ SLP !Ci0i1" No. %%(% o/ %$'"

CIVIL APPEAL NO. %,$ OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%%#, o/ %$'"

CIVIL APPEAL NOS. %,2,% OF %$)!Arisin- ot o/ SLP !Ci0i1" Nos. %'')2%'')% o/ %$'"

CIVIL APPEAL NO. %,( OF %$)!Arisin- ot o/ SLP !Ci0i1" No. %)*)% o/ %$'"

CIVIL APPEAL NO. %,' OF %$)!Arisin- ot o/ SLP !Ci0i1" No. %,*#+ o/ %$'"

CIVIL APPEAL NOS. %,)2,+ OF %$)!Arisin- ot o/ SLP !Ci0i1" Nos. %#*%%2%#*%( o/ %$'"

CIVIL APPEAL NO.%,* OF %$)!Arisin- ot o/ SLP !Ci0i1" No.%#*#% o/ %$'"

4



CIVIL APPEAL NO. %,, OF %$)!Arisin- ot o/ SLP !Ci0i1" No. ($#+ o/ %$'"

CIVIL APPEAL NO. %,# OF %$)!Arisin- ot o/ SLP !Ci0i1" No. %)''' o/ %$'"

CIVIL APPEAL NO. %#$ OF %$)!Arisin- ot o/ SLP !Ci0i1" No. %)'') o/ %$'"

CIVIL APPEAL NOS. %#2#% OF %$)!Arisin- ot o/ SLP !Ci0i1" Nos. (%$%,2(%$%# o/ %$'"

AND

CIVIL APPEAL NO. %#( OF %$)!Arisin- ot o/ SLP !Ci0i1" No. (($#+ o/ %$'"

J U D G M E N T

Che!"e#$!%& J.

. Le30e -r3nted in 311 t4e SLPs.

%. T4e Se5ritis3tion 3nd Re5onstr5tion o/ Fin3n5i31 Assets 3nd

En/or5e6ent o/ Se5rit7 Interest A5t8 %$$%8 !4erein3/ter re/erred to 3s

t4e 9A5t:"8 ;3s 63de <7 t4e P3r1i36ent in t4e 7e3r %$$%. T4e

St3te6ent o/ O<=e5ts 3nd Re3sons 3ppended to t4e A5t e>p13ined t4e

prpose <e4ind t4e en35t6ent 3s /o11o;s?2

@T4ere is no 1e-31 pro0ision /or /35i1it3tin- se5riti3tion o/ /in3n5i313ssets o/ <3nBs 3nd /in3n5i31 instittions. Frt4er8 n1iBe intern3tion31

<3nBs8 t4e <3nBs 3nd /in3n5i31 instittions in Indi3 do not 430e po;erto t3Be possession o/ se5rities 3nd se11 t4e6. Or e>istin- 1e-31/r36e;orB re13tin- to 5o66er5i31 tr3ns35tions 43s not Bept p35e ;it4t4e 543n-in- 5o66er5i31 pr35ti5es 3nd /in3n5i31 se5tor re/or6s. T4is43s res1ted in s1o; p135e !sic p35e" o/ re5o0er7 o/ de/31tin- 1o3ns3nd 6ontin- 1e0e1s o/ non2per/or6in- 3ssets o/ <3nBs 3nd /in3n5i31instittions.

5



T4e en35t6ent ;3s pre5eded <7 t4ree Co66ittee Reports t;o

4e3ded <7 Mr. M. N3r3si6436 3nd t4e t4ird <7 Mr. T.R.

And473r=in3

%

.

(. Re5o0er7 o/ 6one7 /ro6 3 de<tor <7 resortin- to t4e /i1in- o/ 3

sit t3Bes p3in/117 1on- ti6e in t4is 5ontr78 /or 03rios re3sons(.

H-e 36onts o/ 6one7 3re 1ent <7 03rios <3nBs 3nd ot4er /in3n5i31

instittions. Speed7 re5o0er7 o/ t4e 6onies de to s54 instittions is

3n i6port3nt e1e6ent deter6inin- t4e e//i5ien57 not on17 o/ s54

instittions <t 31so <e5o6es 3n i6port3nt /35tor /or t4e /in3n5i31

4e31t4 o/ t4e 5ontr7.

'. In order to /35i1it3te <3nBs 3nd /in3n5i31 instittions !4erein3/ter

5o11e5ti0e17 re/erred to 3s @CREDITORS /or t4e s3Be o/ 5on0enien5e"

to speedi17 re5o0er t4e 6onies de to t4e6 /ro6 t4e <orro;ers8

P3r1i36ent 63de 3 13; 5311ed 9T4e Re5o0er7 o/ De<ts de to 3nBs

3nd Fin3n5i31 Instittions A5t8 ##(: !) o/ ##(" nder ;4i54 <3nBs

1 Ex. Governor, Reserve Bank of India2 Senior Advocate, Supree !ourt of India3 1.31 "#ere #as $een a perception, and not %it#out reason, t#at our &e'a& s(ste #ave not kept pace %it# easures offinancia& sector refor and indeed econoic refors ore 'enera&&(. As far as t#e $ankin' sector is concerned, t#ere is

continuin' need for an appropriate &e'a& frae%ork to #e&p enforce contracts and protect t#e interests of secured creditors

especia&&( in $ankruptc( proceedin's. Soe of our &a%s are outdated and &e'a& procedures are cu$ersoe and tie

consuin'. Even %#ere !ourt decrees are o$tained t#eir enforceent #as $een arked $( de&a(s. )ur experience %it#t#e *e$t Recover( "ri$una&s #as not $een a&to'et#er satisfactor( in vie% of t#e &e'a& issues t#at #ave $een raised. )ur &a%s

indeed see arked $( a $asic as(etr( in t#eir protection of creditors as distinct fro $orro%ers %#ic# coes in t#e

%a( of t#e proper and soot# functionin' of $ankin' and credit s(stes. + See: Introduction : The Issues, Report of t#e

!oittee on Bankin' Sector Refors Apri& 1--/, !#.I pa'e 0

0



3nd /in3n5i31 instittions 5o1d 3ppro354 3 tri<n31 5onstitted nder

t4e s3id A5t. It de31s e>51si0e17 ;it4 t4e 513i6s /or t4e re5o0er7 o/

t4e 6onies de /ro6 t4e <orro;ers to t4e CREDITORS. Ap3rt /ro6

5re3tin- s54 3n e>51si0e /or68 t4e A5t 31so pro0ided /or 3 6ore

si6p1er pro5edre /or t4e 3d=di53tion o/ t4e 1e-31it7 o/ t4e 513i6s

<ro-4t <e/ore it <7 t4e CREDITOR 3nd 3 pro5edre /or speed7

re5o0er7 o/ s6s so 3d=di53ted.

). A/ter 3 de53de o/ ;orBin- o/ t4e tri<n31s 5onstitted nder A5t

) o/ ##(8 t4e P3r1i36ent /e1t t43t e0en 6354iner7 3nd pro5edre

est3<1is4ed nder t4e A5t ) o/ ##( is not 3<1e to prod5e t4e

desired res1t o/ e//i5ient17 re5o0erin- 6onies /ro6 t4e <orro;ers.

T4e P3r1i36ent8 t4ere/ore8 63de t4e A5t. T4e 5r> o/ t4e A5t is t43t

3n7 9se5rit7 interest:' 5re3ted in /30or o/ 3 9CREDITOR:)8 ;4o <7

de/inition nder t4e A5t <e5o6es 3 9SECURED CREDITOR:8 53n <e

en/or5ed ;it4ot t4e inter0ention eit4er o/ t4e 5ort or tri<n31+

4 Section 2f/ securit( interest eans ri'#t, tit&e and interest of an( kind %#atsoever upon propert(, created in favour of

an( secured creditor and inc&udes an( ort'a'e, c#ar'e, #(pot#ecation, assi'nent ot#er t#an t#ose specified in section 31

5 Section 2d/ secured creditor eans an( $ank or financia& institution or an( consortiu or 'roup of $anks

or financia& institutions and inc&udes

i/ de$enture trustee appointed $( an( $ank or financia& institution or

ii/ securitisation copan( or reconstruction copan(, %#et#er actin' as suc# or ana'in' a trust set up $( suc#

securitisation copan( or reconstruction copan( for t#e securitisation or reconstruction, as t#e case a( $e or

iii/ an( ot#er trustee #o&din' securities on $e#a&f of a $ank or financia& institution in %#ose favour securit(

interest is created for due repa(ent $( an( $orro%er of an( financia& assistance

0 Section 13. Enforcement of security interest.- 1/ 6ot%it#standin' an(t#in' contained in section 0- or section 0-A of

t#e "ransfer of 7ropert( Act, 12 4 of 12/, an( securit( interest created in favour of an( secured creditor a(

8



3nd !iii" t43t t4e 355ont in respe5t o/ s54 de<t is 513ssi/ied <7 t4e

se5red 5reditor 3s 3 9non2per/or6in- 3sset: !4erein3/ter re/erred to

3s @NPA"

*. S<2se5tion !(" stip13tes# t43t noti5e re/erred to in s<2se5tion

!%" s4311 -i0e t4e det3i1s o/ t4e 36onts p373<1e <7 t4e <orro;er 3nd

det3i1s o/ t4e se5red 3ssets intended to <e en/or5ed <7 t4e se5red

5reditor in t4e e0ent o/ <orro;er not 5o6p17in- ;it4 t4e de63nd

63de in t4e noti5e.

,. S<2se5tion !'" pro0ides t43t in t4e e0ent o/ t4e <orro;er /3i1in-

to dis543r-e 4is 1i3<i1it7 in spite o/ noti5e nder s<2se5tion !%"8 t4e

se5red 5reditor 637 t3Be re5orse to 3n7 one or 6ore o/ t4e

6e3sres indi53ted nder s<2se5tion (!'"$.

- Section 13(3) : "#e notice referred to in su$:section 2/ s#a&& 'ive detai&s of t#e aount pa(a$&e $( t#e $orro%er and t#e

secured assets intended to $e enforced $( t#e secured creditor in t#e event of non:pa(ent of secured de$ts $( t#e

$orro%er.

1; Section 134/ In case t#e $orro%er fai&s to disc#ar'e #is &ia$i&it( in fu&& %it#in t#e period specified in su$:section 2/, t#e

secured creditor a( take recourse to one or ore of t#e fo&&o%in' easures to recover #is secured de$t, nae&(<::

a/ take possession of t#e secured assets of t#e $orro%er inc&udin' t#e ri'#t to transfer $( %a( of &ease, assi'nentor sa&e for rea&isin' t#e secured asset

$/ take over t#e ana'eent of t#e $usiness of t#e $orro%er inc&udin' t#e ri'#t to transfer $( %a( of &ease,

assi'nent or sa&e for rea&isin' t#e secured asset<

7R)=I*E* t#at t#e ri'#t to transfer $( %a( of &ease, assi'nent or sa&e s#a&& $e exercised on&( %#ere t#esu$stantia& part of t#e $usiness of t#e $orro%er is #e&d as securit( for t#e de$t<

7R)=I*E* >?R"@ER t#at %#ere t#e ana'eent of %#o&e of t#e $usiness or part of t#e $usiness is

severa$&e, t#e secured creditor s#a&& take over t#e ana'eent of suc# $usiness of t#e $orro%er %#ic# is re&ata$&e to t#e

securit( or t#e de$t.c/ appoint an( person #ereafter referred to as t#e ana'er/, to ana'e t#e secured assets t#e possession of %#ic#

#as $een taken over $( t#e secured creditor

d/ re9uire at an( tie $( notice in %ritin', an( person %#o #as ac9uired an( of t#e secured assets fro t#e

$orro%er and fro %#o an( one( is due or a( $ecoe due to t#e $orro%er, to pa( t#e secured creditor, so uc# of t#e

one( as is sufficient to pa( t#e secured de$t.

-



#. Anot4er i6port3nt 3spe5t o/ t4e A5t is t43t t4e 35ti0it7 o/ t4e

Se5ritis3tion Co6p3nies !SC" 3nd Re5onstr5tion Co6p3nies !RC" 3re

-i0en 3 st3ttor7 re5o-nition. T4eir 35ti0it7 is re-13ted nder

Se5tions ( 3nd ' o/ t4e A5t. Under Se5tion ( s54 5o6p3nies 3re

reired to <e re-istered ;it4 t4e RI. S54 re-istr3tion is 1i3<1e /or

53n5e113tion nder Se5tion ' on t4e 43ppenin- o/ 3n7 one o/ t4e

e0ents spe5i/ied t4erein. Se5tion ) 5on/ers st3ttor7 3t4orit7 pon

SCs 3nd RCs to 35ire t4e @/in3n5i31 3ssets o/ 3n7 CREDITOR.

Se5tion )!%"% /rt4er pro0ides t43t pon s54 35isition o/ 3n 3sset8

t4e SC or RC8 3s t4e 53se 637 <e8 steps into t4e s4oes o/ t4e ori-in31

SECURED CREDITOR /ro6 ;4o6 t4e 3sset is 35ired.

$. Under t4e A5t8 SCs 3nd RCs 3re 31so tre3ted to <e SECURED

CREDITORS <7 de/inition. See Se5tion %!"!d"

11 21/&/ financia& asset eans de$t or receiva$&es and inc&udes:

i/ a c&ai to an( de$t or receiva$&es or part t#ereof, %#et#er secured or unsecured or

ii/ an( de$t or receiva$&es secured $(, ort'a'e of, or c#ar'e on, iova$&e propert( or

iii/ a ort'a'e, c#ar'e, #(pot#ecation or p&ed'e of ova$&e propert( oriv/ an( ri'#t or interest in t#e securit(, %#et#er fu&& or part under&(in' suc# de$t or receiva$&es or

v/ an( $eneficia& interest in propert(, %#et#er ova$&e or iova$&e, or in suc# de$t, receiva$&es,

%#et#er suc# interest is existin', future, accruin', conditiona& or contin'ent or

vi/ an( financia& assistance

12 52/ If t#e $ank or financia& institution is a &ender in re&ation to an( financia& assets ac9uired under su$:section 1/ $(

t#e securitisation copan( or t#e reconstruction copan( suc# securitisation copan( or reconstruction copan( s#a&&, on

suc# ac9uisition, $e deeed to $e t#e &ender and a&& t#e ri'#ts of suc# $ank or financia& institution s#a&& vest in suc#

copan( in re&ation to suc# financia& assets.

1;



Fro6 ;43t is oted 3<o0e8 it is ite e0ident t43t-ide1ines 3s 13id do;n <7 Reser0e <3nB o/ Indi3 ;4i54 3re in 6ore

det3i1s <t not ne5ess3r7 to <e reprod5ed 4ere8 137 do;n t4eter6s 3nd 5onditions 3nd 5ir56st3n5es in ;4i54 t4ede<t is to <e 513ssi/ied 3s non2per/or6in- 3sset 3s51e3r17 3s possi<1e. T4ere/ore8 ;e /ind no s<st3n5e in t4es<6ission 63de on <e431/ o/ t4e petitioners t43t t4ere 3re no-ide1ines /or tre3tin- t4e de<t 3s 3 non2per/or6in- 3sset.

(. Se5tion %!"!o" o/ t4e A5t de/ines NPA. T4e s3id de/inition 536e

to <e 36ended <7 A5t ($ o/ %$$'. It is t4e 36ended de/inition ;4i54

is t4e s<=e5t 63tter o/ dispte in t4is <n54 o/ 63tters. T4e s3id

36ended de/inition 536e to <e 54311en-ed in 03rios Hi-4 Corts.

'. T4e Hi-4 Cort o/ =3r3t8 <7 3 5o66on =d-6ent d3ted %'.'.'

in 3 <3t54 o/ ;rit petitions8 4e1d t43t t4e 36ended Se5tion %!"!o" o/

t4e A5t is n5onstittion31.

@)). In 0ie; o/ t4e 3<o0e2dis5ssions8 t4e ;rit 3pp1i53tion is p3rt17311o;ed <7 4o1din- t43t t4e 36ended pro0isions o/ Se5tion %!"!o" o/t4e Se5ritis3tion A5t 3re ultra vires t4e Arti51e ' o/ t4e Constittion3nd t4e o<=e5t o/ t4e 3<o0e A5t itse1/ 3nd 5onseent178 ;e restoret4e pro0isions ;4i54 e>isted e3r1ier8 i.e.8 prior to t4e 36end6ent o/%$$' 3nd e>isted 3t t4e ti6e o/ de5ision o/ t4e Spre6e Cort in t4e53se o/ Mardia Chemicals !spr3". e8 4o;e0er8 p4o1d t4e-ide1ines o/ t4e RI 54311en-ed in t4is 3pp1i53tion.

). On t4e ot4er 43nd8 in 3not4er 5o66on =d-6ent d3ted ,.).'

in 3 <3t54 o/ ;rit petitions8 t4e M3dr3s Hi-4 Cort re=e5ted t4e

54311en-e.

12



+. Hen5e t4ese 3ppe31s <7 t4e 03rios 3--rie0ed p3rties8 eit4er t4e

<orro;ers or t4e SECURED CREDITORS. V3rios ;rit petitions

in0oBin- Arti51e (% o/ t4e Constittion 31so 536e to <e /i1ed <7 so6e

<orro;ers 3-3inst ;4o6 pro5eedin-s nder Se5tion ( o/ t4e A5t

;ere initi3ted drin- t4e penden57 o/ t4e 3ppe31s /ro6 t4e t;o

=d-6ents re/erred to 3<o0e.

*. Sin5e t4e <one o/ 5ontention in t4is <n54 o/ 63tters is t4e

36ended Se5tion %!"!o" o/ t4e A5t8 ;e dee6 it 3ppropri3te to e>tr35t

t4e pro0ision 3s it e>isted <ot4 prior to 3nd 3/ter t4e 36end6ent.

"@E SE!?RI"ISA"I)6 A6*

RE!)6S"R?!"I)6 )> >I6A6!IA

ASSE"S A6* E6>)R!EFE6" )>SE!?RI" I6"ERES" A!", 2;;2

"@E E6>)R!EFE6" )> SE!?RI"

I6"ERES" A6* RE!)=ER )> *EB"S

ACS AFE6*FE6"/ A!", 2;;4

2. *efinitions

1/ In t#is Act, un&ess t#e context

ot#er%ise re9uires<

o/ 6on:7erforin' Asset eans an

asset or account of a $orro%er, %#ic# #as

$een c&assified $( a $ank or financia&institution as su$:standard, dou$tfu& or &oss

assets, in accordance %it# t#e directions or

under 'uide&ines re&atin' to assets

c&assification issued $( t#e Reserve Bank.

2. *efinitions

1/ In t#is Act, un&ess t#e context ot#er%ise

re9uires<

o/ 6on:7erforin' Asset eans an asset

or account of a $orro%er, %#ic# #as $een

c&assified $( a $ank or financia& institution,as su$:standard, dou$tfu& or &oss asset.:

a/ In case suc# $ank or financia&

institution is adinistered or re'u&ated $(an( aut#orit( or $od( esta$&is#ed,

constituted or appointed $( an( &a% for t#e

tie $ein' in force, in accordance %it# t#e

directions or 'uide&ines re&atin' to assetsc&assifications issued $( suc# aut#orit( or

13



$od(

$/ In an( ot#er case, in accordance %it#

t#e directions or 'uide&ines re&atin' to

assets c&assifications issued $( t#e Reserve

Bank.

,. It 53n <e seen /ro6 t4e 3<o0e8 t43t prior to its 36end6ent <7

A5t ($ o/ %$$'8 NPA is de/ined 3s 93n 355ont o/ 3 <orro;er ;4i54 43s

<een 513ssi/ied: <7 3 CREDITOR eit4er 93s 3 s<2st3nd3rd 3sset or 3

do<t/1 3sset or 3 1oss 3sset: o/ t4e CREDITOR 3nd s54 3

513ssi/i53tion is reired to <e 63de in 355ord3n5e ;it4 t4e dire5tions

or -ide1ines re13tin- to 3ssets 513ssi/i53tion issed <7 t4e Reser0e

3nB.

#. t8 nder t4e 36ended de/inition8 s54 3 513ssi/i53tion o/ t4e

355ont o/ 3 <orro;er <7 t4e CREDITOR is reired to <e 63de in

355ord3n5e ;it4 t4e dire5tions or -ide1ines issed <7 3n @3t4orit7

or <od7 eit4er est3<1is4ed or 5onstitted or 3ppointed <7 3n7 13; /or

t4e ti6e <ein- in /or5e8 in 311 t4ose 53ses ;4ere t4e CREDITOR is

eit4er 3d6inistered or re-13ted <7 s54 3n 3t4orit7 !4erein3/ter

re/erred to 3s t4e @REULATOR". I/ t4e CREDITOR is not

3d6inistered or re-13ted <7 3n7 s54 REULATOR t4en t4e

CREDITOR is reired to 513ssi/7 t4e 355ont o/ 3 <orro;er 3s NPA in

14



355ord3n5e ;it4 t4e -ide1ines 3nd dire5tions issed <7 t4e Reser0e

3nB o/ Indi3.

%$. In ot4er ;ords8 <7 t4e 36end6ent8 t4e P3r1i36ent 63de it

possi<1e t43t di//erent sets o/ -ide1ines 63de <7 di//erent <odies 637

<e /o11o;ed <7 di//erent CREDITORS dependin- pon t4e /35t 3s to

;4o is t4e 3d6inisterin- or re-13tin- 3t4orit7 o/ s54 CREDITOR.

Hen5e8 t4e 54311en-e to t4e 36ended pro0ision.

%. e/ore ;e e>36ine t4e 03rios s<6issions 63de 3t t4e 3r8 ;e

dee6 it 3ppropri3te to -i0e 3 <rie/ 3n317sis o/ t4e =d-6ents o/ t4e

M3dr3s Hi-4 Cort 3s ;e11 3s t4e =3r3t Hi-4 Cort.

%%. T4e Hi-4 Cort o/ M3dr3s re=e5ted t4e s<6ission o/ t4e

petitioners t43t t4e i6p-ned pro0ision s//ers /ro6 t4e vires o/

e>5essi0e de1e-3tion.

!3" T4e Hi-4 Cort tooB note o/ t4e /35t t43t t4e Reser0e 3nB o/

Indi3 introd5ed in t4e 7e3r ##% t4e prdenti31 nor6s o/ @in5o6e

re5o-nition8 3sset 513ssi/i53tion8 pro0isionin- 3nd ot4er re13ted

15



63tters 3nd s54 nor6s ;ere re0ised periodi53117 Beepin- in 6ind

03rios de0e1op6ents in t4e <3nBin- s7ste68 <ot4 n3tion3117 3nd

intern3tion3117. T4e Hi-4 Cort tooB note o/ t4e pr35ti5e o/ t4e

Reser0e 3nB o/ issin- 63ster 5ir513rs 3nn3117 ;4i54 5ont3in t4e

5onso1id3ted instr5tions issed <7 t4e Reser0e 3nB /ro6 ti6e to

ti6e on t4e 3<o0e26entioned 63tters.

!<" T4e Hi-4 Cort tooB note o/ t4e /35t t43t t4e Reser0e 3nB o/

Indi3 in e>er5ise o/ t4e st3ttor7 3t4orit7 nder Se5tion % 3nd

Se5tion ()A o/ t4e 3nBin- Re-13tion A5t8 #'# pres5ri<es nor6s /or

t4e 03rios 3spe5ts o/ <3nBin- spe5i/ied nder t4e A5t.

!5" T4e Hi-4 Cort 4e1d t43t t4e P3r1i36ent8 ;4i1e de/inin- 3 non2

per/or6in- 3sset nder Se5tion %!"!o" o/ t4e A5t8 on17 3dopted t4e

nor6s pres5ri<ed /ro6 ti6e to ti6e <7 t4e Reser0e 3nB o/ Indi3 /or

t4e prpose o/ identi/7in- t4e NPA.(

@('.….In t4is 53se8 t4e Le-is13tre 43s 1e/t t4e =o< o/ de/inin- @non2per/or6in- 3sset: in t4e 43nds o/ Reser0e 3nB o/ Indi3. T4ere/ore8;4en on5e t4e Le-is13tre 43s 3ppro0ed t4e po;er o/ Reser0e 3nB

13 2-. @o%ever, t#e 9uestion for consideration $efore us is as to %#et#er t#ere is indeed an( de&e'ated &e'is&ation or not.

Ce are of t#e vie% t#at t#ere is no de&e'ated &e'is&ation invo&ved in t#e case on #and. As discussed a$ove, t#e po%er

exercised $( t#e Reserve Bank of India in a separate enactent #as $een taken note of $( t#e e'is&ature in t#e su$se9uent

one. It is on&( a definition c&ause, %#ic# #as $een adopted $( t#e e'is&ature. "#is #as $een done to put its ac#iner( intouse to%ards its avo%ed o$Dect of activit( H appropriate recover(. "#erefore, %e do not find an( de&e'ated &e'is&ation

invo&ved and t#erefore contentions raised on t#e po%er of de&e'ation and t#ereafter it is excessive, #as no force. Ce on&(

o$serve for t#e sake of cop&etion, t#at even assuin' t#at t#ere is a de&e'ated &e'is&ation invo&ved, t#e sae is not

excessive as t#ere are sufficient 'uide&ines avai&a$&e in t#e ear&ier enactent and $ased upon %#ic# t#e !ircu&ar #as $een

issued $( t#e Reserve Bank of India, $ein' a specia&ied $od(.

10



o/ Indi3 on t4e 513ssi/i53tion o/ 3ssets8 t4e res1t3nt 5onseen5e;o1d <e t43t 3 s<seent 36end6ent pert3inin- to s54 3513ssi/i53tion ;o1d 3pp17 ;it4 its 0i-or 3nd /or5e to t4e ne; A5t 3s;e11.

(). In t4e 1i-4t o/ t4e dis5ssions 63de 3<o0e8 ;e 3re o/ t4e 0ie;t43t it is 3 53se o/ 3n 3doption in0o10ed in t4e present 53se. T4ere/ore it 53n on17 <e ter6ed 3s 1e-is13tion <7 re/eren5e 3nd 4en5et4e i6p-ned Cir513r is 031id in 13;.

%(. On t4e ot4er 43nd8 t4e =3r3t Hi-4 Cort opined t43t t4e

36ended de/inition o/ t4e e>pression 9NPA: 5re3tes t;o 513sses o/

<orro;ers. In t4e 5onte>t o/ t4e 513ssi/i53tion o/ t4e 355ont o/ 3

<orro;er 3s 3 NPA o/ t4e CREDITOR8 ;4i1e one 513ss o/ <orro;ers 3re

-o0erned <7 t4e -ide1ines issed <7 t4e Reser0e 3nB o/ Indi38 t4e

ot4er 513ss o/ <orro;ers 3re -o0erned <7 t4e -ide1ines issed <7

di//erent 3t4orities.' T4e Hi-4 Cort 31so p135ed re1i3n5e on t4e

st3te6ent o/ o<=e5ts 3nd re3sons o/ t4e A5t8 3s it ;3s ori-in3117

en35ted8 ;4i54 inter alia st3ted 3s?

@!4" e6po;erin- <3nBs 3nd /in3n5i31 instittions to t3Be possessiono/ se5rities -i0en /or /in3n5i31 3ssist3n5e 3nd se11 or 1e3se t4e s36eor t3Be o0er 63n3-e6ent in t4e e0ent o/ de/31t8 i.e. 513ssi/i53tion o/t4e <orro;er:s 355ont 3s non2per/or6in- 3sset in 355ord3n5e ;it4t4e dire5tions -i0en or -ide1ines issed <7 t4e Reser0e 3nB o/ Indi3/ro6 ti6e to ti6e.

3nd re5orded 3 5on51sion t43t t4e P3r1i36ent de0i3ted /ro6 t4e

ori-in31 3i6s 3nd o<=e5ts proponded <7 it. It 31so tooB note o/ t4e

14 23. "#us, $orro%ers are divided into t%o different c&asses >irst, t#e $orro%ers in respect of t#e Banks and >inancia&

Institutions %#ic# are adinistered or re'u&ated $( an aut#orit( or $od( esta$&is#ed, constituted or appointed $( an( &a% for

t#e tie $ein' in force, and in t#ose cases, it %i&& $e for t#at aut#orit( or $od( to frae t#e 'uide&ines for asset c&assification

and, second&(, t#e $orro%ers in respect of a&& ot#er cases not covered $( c&ause a/, and in respect of t#ose cases, it %i&& $e

in accordance %it# t#e directions or 'uide&ines issued $( t#e Reserve Bank for asset c&assification.

18



/35t t43t t4is Cort in Mardia Chemicals !spr3" repe11ed t4e 3tt35B

on t4e ori-in31 de/inition o/ 3 NPA on t4e -rond t43t t4e CREDITORS

3re <ond <7 t4e po1i57 -ide1ines issed <7 t4e Reser0e 3nB o/

Indi38 3nd t4ere/ore8 t4ere is no possi<i1it7 o/ t4e CREDITORS

3r<itr3ri17 or ;4i6si53117 513ssi/7in- t4e 355ont o/ 3n7 <orro;er 3s 3

NPA.

T4e Hi-4 Cort t4ere/ore opined t43t t4e de0i3tion /ro6 t4e ori-in31

o<=e5ts 3nd re3sons ;o1d <e 0io13ti0e o/ Arti51e ' o/ t4e Constittion

o/ Indi3.

%'. Le3rned 5onse1 3ppe3rin- /or t4e <orro;ers 3r-ed t43t t4e

36ended Se5tion %!"!o" is n5onstittion31 /or t4e /o11o;in- re3sons?

!" t43t t4e P3r1i36ent8 <7 3t4oriin- t4e 03rios <odies to /r36e

t4e -ide1ines in 355ord3n5e ;it4 ;4i54 t4e 355ont o/ 3

<orro;er 5o1d <e 513ssi/ied 3s 3 NPA 3<di53ted its essenti31

1e-is13ti0e /n5tion <7 63Bin- 3n e>5essi0e de1e-3tionG

!%" t43t ;4i1e t4e n236ended Se5tion %!"!o" pro0ided /or 3 ni/or6

st3nd3rd <7 ;4i54 3n 355ont o/ 3 <orro;er is to <e 513ssi/ied 3s

NPA o/ t4e CREDITOR <7 3pp17in- t4e -ide1ines issed <7 t4e

Reser0e 3nB8 t4e 36ended pro0ision en3<1es di//erent

1



CREDITORS to 3dopt di//erent -ide1ines ;4i54 pres5ri<e

di//erent st3nd3rds /or 3rri0in- 3t 3 5on51sion t43t t4e 355ont

o/ 3 <orro;er is NPA. S54 3 pro0ision 355ordin- to t4e

<orro;ers8 is 0io13ti0e o/ Arti51e ' o/ t4e Constittion o/ Indi3 3s

it 36onts to 3 513ss 1e-is13tion /or<idden <7 Arti51e 'G

!(" Sin5e t4e A5t re5o-nies t4e possi<i1it7 o/ 35isition o/ 3

@/in3n5i31 3sset) o/ 3 CREDITOR <7 eit4er 3 @se5riti3tion

5o6p3n7+ or 3 @re5onstr5tion 5o6p3n7* it introd5es 3 -re3t

de31 o/ n5ert3int7 in t4e 63tter o/ t4e 3pp1i53tion o/ t4e

-ide1ines 3ppropri3te /or 513ssi/i53tion o/ 3n 355ont o/ 3

<orro;er 3s 3 NPA. It 311 depends on t4e /35t 3s to ;4o is t4e

5rrent 4o1der o/ s54 /in3n5i31 3sset ;4en t4e pro5eedin-s

nder Se5tion ( 3re so-4t to <e in0oBed.

15 Section 2. *efinitions 1/ In t#is Act, un&ess t#e context ot#er%ise re9uires,:: &/ financia& asset eans de$t or

receiva$&es and inc&udes::i/ a c&ai to an( de$t or receiva$&es or part t#ereof, %#et#er secured or unsecured or

ii/ an( de$t or receiva$&es secured $(, ort'a'e of, or c#ar'e on, iova$&e propert( or

iii/ a ort'a'e, c#ar'e, #(pot#ecation or p&ed'e of ova$&e propert( or

iv/ an( ri'#t or interest in t#e securit(, %#et#er fu&& or part under&(in' suc# de$t or receiva$&es or v/ an( $eneficia& interest in propert(, %#et#er ova$&e or iova$&e, or in suc# de$t, receiva$&es, %#et#er suc#

interest is existin', future, accruin', conditiona& or contin'ent or

vi/ an( financia& assistance

10 Section 2a/ securitisation copan( eans an( copan( fored and re'istered under t#e !opanies Act, 1-50 1 of

1-50/ for t#e purpose of securitisation

18 Section 2v/ reconstruction copan( eans a copan( fored and re'istered under t#e !opanies Act, 1-50 1 of

1-50/ for t#e purpose of asset reconstruction

1-



/35i1ities e>tended <7 t4e 03rios CREDITORS to di//erent

53te-ories o/ <orro;ers 3nd on di//erent ter6s 3nd 5onditions.

(. T4e t4ird s<6ission 63de on <e431/ o/ t4e <orro;ers is

so-4t to <e repe11ed on t;o -ronds?

i" t43t8 it is 3 pre17 47pot4eti531 s<6ission in t4e 5onte>t

o/ t4e present set o/ 53ses 3s in none o/ t4e 53ses t4e

ori-in31 SECURED CREDITOR tr3ns/erred t4e /in3n5i31

3sset in /30or o/ 3n7 ot4er <od7G

ii/ 3ss6in- /or t4e s3Be o/ 3r-6ent t43t t4ere is 3

possi<i1it7 o/ 3n 3sset o/ t4e SECURED CREDITOR <ein-

35ired eit4er <7 3 se5riti3tion 5o6p3n7 or 3

re5onstr5tion 5o6p3n7 3nd t4ere/ore 3re -o0erned <7

t4e -ide1ines !/or t4e deter6in3tion o/ t4e estion

;4et4er 3n 35ired 3sset 43s <e5o6e 3 non2per/or6in-

3sset" ot4er t43n t4ose pro61-3ted <7 t4e Reser0e

3nB o/ Indi38 it 43s not <een de6onstr3ted in 3n7 one o/

t4ese 53ses t43t s54 -ide1ines 3re 1ess /30or3<1e to

t4e <orro;ers t43n t4e -ide1ines o/ t4e Reser0e 3nB o/

Indi3.

21



%+. e ;o1d 1iBe to 63Be it 51e3r t43t ;e 3re not ndert3Bin- t4e

e>36in3tion o/ 3 se5ond rond o/ 3tt35B on t4e 5onstittion31it7 o/ t4e

A5t in its entiret7. It is no<od7:s 53se t43t =d-6ent o/ t4is Cort in

Mardia Chemicals !spr3" reires re5onsider3tion. As pointed ot

<7 t4e <orro;ers8 t4e de/inition o/ t4e e>pression @NPA nder

Se5tion %!"!o" nder;ent 3n 36end6ent s<seent to t4e de5ision

in Mardia Chemicals8 t4e 031idit7 o/ s54 3n 36end6ent on17 is

reired to <e e>36ined in t4ese 63tters.

%*. e 430e 31re3d7 noti5ed t43t nder Se5tion ( o/ t4e A5t t4e

ri-4t to in0oBe t4e pro0isions o/ t4e A5t /or en/or5e6ent o/ 3 se5rit7

interest is per6issi<1e on17 on t4e s3tis/35tion o/ t4e t4ree 5onditions

spe5i/ied nder Se5tion (!%" o/ t4e A5t. One o/ t4e6 <ein- t43t t4e

355ont o/ t4e <orro;er is 513ssi/ied <7 t4e SECURED CREDITOR 3s 3

non2per/or6in- 3sset !NPA" o/ t4e CREDITOR.

%,. T4e e>pression 93sset: is not de/ined nder t4e A5t. t t4e

e>pressions 9/in3n5i31 3sset:, 3nd 9non per/or6in- 3sset: 3re de/ined

nder Se5tion %!"!1" 3nd %!"!o" o/ t4e A5t. T4e 513i6 o/ 3 CREDITOR

to 3n7 de<t or re5ei03<1es et5. /ro6 t4e <orro;er <e5o6es t4e

1 >ootnote 11 supra

22



/in3n5i31 3sset o/ t4e CREDITOR. Under t4e n36ended de/inition8 3n

3sset !o/ t4e CREDITOR i.e.8 t4e 355ont o/ t4e <orro;er" ;4i54 is

513ssi/ied <7 t4e CREDITOR 3s @s<2st3nd3rd8 do<t/1 or 1oss 3sset

in 355ord3n5e ;it4 t4e dire5tion or -ide1ines re13tin- to t4e 3ssets

513ssi/i53tion issed <7 t4e Reser0e 3nB <e5o6es 3n NPA. T4e

36ended de/inition 4o;e0er de/ines 3 NPA 3s 3n 3sset 513ssi/ied <7

t4e CREDITOR 3s @s<2st3nd3rd8 do<t/1 or 1oss 3sset in 355ord3n5e

;it4 t4e re1e03nt -ide1ines issed <7 t4e 3ppropri3te <od7. In t4e

53se o/ t4e CREDITORS @3d6inistered or re-13ted <7 3n7 3t4orit7 or

<od7 est3<1is4ed8 5onstitted or 3ppointed <7 3n7 13; /or t4e ti6e

<ein- in /or5e8 s54 9REULATOR:8 3nd ;it4 re/eren5e to CREDITORS8

not so 3d6inistered or re-13ted8 t4e Reser0e 3nB 3re t4e

3ppropri3te 3t4orities.

%#. e 430e 31re3d7 noti5ed t43t one o/ t4e t;o 63in prposes o/

t4e A5t is to /35i1it3te t4e SECURED CREDITORS# to re5o0er t4e

1- "#e expression SE!?RE* !RE*I")R $( definition under t#e Act takes %it#in its s%eep H i/ a $ank, ii/ a financia&

institution, consortiu or 'roup of $anks or financia& institutions, 4/ de$entures trustees appointed $( an( $ank or financia&

institution, 5/ a securitisation copan(, 0/ reconstruction copan( etc. )nce a'ain t#e expression $ankJ $( definitiontakes %it#in its s%eep six cate'ories of entities specified under Section 21/c/. "#e expression financia& institutionJ, $(

definition under t#e Act, takes %it#in its s%eep four cate'ories of $odies specified under Section 21//. "#e activities of

a&& t#e a$ove entioned cate'ories of entities are priari&( 'overned $( soe in:#ouse ana'eria& $od( %#ic#, in turn, are

su$Dect to t#e contro& and re'u&ation eit#er $( t#e Reserve Bank of India or soe ot#er statutor( $od( or aut#orit(, %#ic#are a&so su$Dect to t#e overa&& supervisor( contro& of t#e Reserve Bank of India. >or exap&e, t#e 6ationa& @ousin' Bank, a

$ank esta$&is#ed under t#e Act 6o.53 of 1-8 of t#e 7ar&iaent, t#ou'# is an autonoous $od( to operate as a financia&

a'enc( to proote #ousin' finance institutions %it# vast po%ers to re'u&ate t#e #ousin' finance activit( in t#e countr(, it

is sti&& o$&i'ed under Section 55/ of t#e Act 53 of 1-8 to $e 'uided $( t#e directions 'iven $( t#e Reserve Bank of India.

23



36onts de to t4e6 /ro6 t4e <orro;ers <7 en/or5in- t4e se5rit7

interest 5re3ted <7 t4e <orro;ers ;it4ot t4e inter0ention o/ t4e 5i0i1

5ort or t4e tri<n31.

($. e t4inB t43t it is ne5ess3r7 to tr35e ot t4e 4istor7 o/ t4e

5on5epts o/ !i" NPA 3nd !ii" 1o3n tr3ns35tion /or t4e <etter 3ppre5i3tion

o/ t4e 5ontro0ers7 <e/ore s.

(. On 't4 A-st8 ##8 t4e o0ern6ent o/ Indi3 3ppointed 3 nine2

6e6<er Co66ittee 4e3ded <7 Mr. M. N3r3si64368 !(t4 o0ernor o/

t4e Reser0e 3nB o/ Indi3" to e>36ine 03rios 3spe5ts re13tin- to t4e

str5tre8 or-3ni3tion8 /n5tions 3nd pro5edres o/ t4e <3nBin-

s7ste6. T4e s3id Co66ittee 536e to <e 3ppointed in t4e <35Bdrop

o/ t4e 313n5e o/ P376ent Crisis ;4i54 t4e 5ontr7 ;3s /35in- 3t t43t

point o/ ti6e.

(%. T4e Co66ittee s<6itted its st Report on t4e +t4 No0e6<er8

##. 4i1e e>36inin- t4e 03rios 3spe5ts o/ t4e /in3n5i31 s7ste68

The National Housing Bank Act 1!"# (No.$3 of 1!"#) - Section $($). In t#e disc#ar'e of itsfunctions under t#is Act, t#e 6ationa& @ousin' Bank s#a&& $e 'uided $( suc# directions in atters of

po&ic( invo&vin' pu$&ic interest as t#e !entra& 'overnent, in consu&tation %it# t#e Reserve Bank, or t#e

Reserve Bank, a( 'ive in %ritin'.

Ce are infored at t#e $ar $( t#e &earned counse& appearin' for t#e Reserve Bank of India t#at t#ere are soe 4-

entities %e dou$t t#e accurac( of t#e stateent $ut it does not ake an( difference for t#is decision on #and/, suc# as, 1

State >inancia& !orporations, Exi Bank, 6ationa& @ousin' Bank, 6ABAR* etc., %#ic# fa&& %it#in t#e definition of t#e

expression $ank or financia& institution as defined under t#e SAR>AESI Act %#ic# fa&& %it#in t#e s%eep of Section

21/o/a/ of t#e said Act.

24



t4e s3id Co66ittee 5onsidered t4e /n5tionin- o/ t4e <3nBin- s7ste6

in t4e 5ontr7. It tooB note o/ t4e e>istin- -ide1ines issed <7 t4e

Reser0e 3nB o/ Indi3 /ro6 ti6e to ti6e 3nd 31so t4e 03rios pr35ti5es

o/ t4e <3nBin- indstr7. T4e Co66ittee ;3s o/ t4e 0ie; t43t t4e

@r3tio o/ 53pit31 /nds in re13tion to <3nB:s deposits or its 3ssets is 3

;e11 Bno;n 3nd ni0ers3117 355epted 6e3sre o/ t4e stren-t4 3nd

st3<i1it7 o/ t4e instittion.

((. It tooB note o/ t4e 53pit31 3de357 st3nd3rds pres5ri<ed <7 t4e

Co66ittee Bno;n 3s 3s1e Co66ittee%$ 3nd opined t43t it is

ne5ess3r7 t43t t4e Indi3n <3nBs 31so 5on/or6 to t4ose st3nd3rds.

t 3s 3 pre1de to t4e 5o6p1i3n5e ;it4 t4e IS st3nd3rds8 t4e

Co66ittee opined t43t t4e <3nBs s4o1d 430e t4eir 3ssets re031ed

on 3 6ore re31isti5 <3sis 3nd on t4e <3sis o/ t4eir re31i3<1e 031e.

('. It 31so tooB note o/ t4e /35t t43t t4e <3nBs 3nd de0e1op6ent

/in3n5i31 instittions !DFIs" 43d not <een /o11o;in- 3 ni0ers31 pr35ti5e

;it4 re-3rd to t4e in5o6e re5o-nition8 0313tion o/ in0est6ents or

2; "#e Bas&e !oittee on Bankin' Re'u&ations and Supervisor( 7ractices appointed $( t#e Bank of Internationa&

Sett&eents BIS/ #as prescri$ed certain capita& ade9uac( standards to $e fo&&o%ed $( coercia& $anks and t#esestandards #ave $een accepted for ip&eentation $( severa& countries. "#e BIS standard, as it is popu&ar&( kno%n, seeks to

easure capita& ade9uac( as t#e ratio of capita& to risk %ei'#ted assets. It #as prescri$ed %ei'#ta'es for different cate'ories

of assets %#ic# inc&ude certain off:$a&ance s#eet ites as %e&&. "#e !oittee $e&ieves t#at it is necessar( t#at $anks in

India a&so confor to t#ese standards in a p#ased anner. +See: Capital Adequacy, Accounting Policies and Other Related

Matters, Report of t#e !oittee on t#e >inancia& S(ste 6ove$er 1--1/, !#.= pa'e 51

25



pro0isionin- 3-3inst do<t/1 de<ts. It is in t4is <35B-rond8 t4e

Co66ittee re5o66ended 3s /o11o;s?2

.."#e internationa& practice is t#at an asset is treated as non:perforin' %#en interest

is overdue for at &east t%o 9uarters. In respect of suc# non:perforin' assets interest isnot reco'nied on accrua& $asis $ut is $ooked as incoe on&( %#en actua&&( received.

"#e !oittee is of t#e vie% t#at a sii&ar practice s#ou&d $e fo&&o%ed $( $anks and

financia& institutions in India and accordin'&( recoends t#at interest on non: perforin' assets s#ou&d not $e $ooked as incoe on accrua& $asis. "#e non:

perforin' assets %ou&d $e defined as an advance %#ere, as on t#e $a&ance s#eet date

a/ in respect of ter &oans, interest reains past due for a period of oret#an 1; da(s.

$/ in respect of overdraft and cas# credits, accounts reain out of orderfor a period of ore t#an 1; da(s,

c/ in respect of $i&&s purc#ased and discounted, t#e $i&& reains overdueand unpaid for a period of ore t#an 1; da(s,

d/ in respect of ot#er accounts, an( aount to $e received reains past

due for a period of ore t#an 1; da(s.

An aount is considered past due %#en it reains outstandin' 3; da(s $e(ond

t#e date.

KKKK KKKK KKKK KKKK

"#e !oittee is of t#e vie% t#at for t#e purposes of provisionin', $anks and

financia& institutions s#ou&d c&assif( t#eir assets $( copressin' t#e @ea&t#!odes into t#e fo&&o%in' $road 'roups<

i" Standard

ii" Su$:standard

iii" *ou$tfu& and

i0" oss

"#e RBI s#ou&d prescri$e c&ear and o$Dective definitions for t#ese 4 cate'ories toensure a unifor, consistent and &o'ica& $asis for c&assification of assets.

Broad&( stated, su$:standard assets %ou&d $e t#ose %#ic# ex#i$it pro$&es and

%ou&d inc&ude assets c&assified as non:perforin' for a period not exceedin' t%o

(ears. *ou$tfu& assets are t#ose non:perforin' assets %#ic# reain as suc#for a period exceedin' t%o (ears and %ou&d a&so inc&ude &oans in respect of

%#ic# insta&ents are overdue for a period exceedin' 2 (ears. oss assets are

20



accounts %#ere &oss #as $een identified $ut t#e aounts #ave not $een %ritten

off.

(). N3r3si6436 Co66ittee Report on 3sset 513ssi/i53tion <7 t4e

CREDITORS ;3s 355epted <7 t4e Reser0e 3nB o/ Indi3 3nd -ide1ines

3re <ein- issed /ro6 ti6e to ti6e. Di//erent instr5tions 516in3tin-

into di//erent @M3ster Cir513rs ;it4 respe5t to 03rios 513sses o/

<3nBs 3nd /in3n5i31 instittions 536e to <e issed <7 t4e Reser0e

3nB /ro6 ti6e to ti6e. For e>36p1e8 t4e Reser0e 3nB o/ Indi3

issed instr5tions de31in- ;it4 t4e Non 3nBin- Fin3n5i31 Co6p3nies

!NFCs"% 3nd 31so t4e Se5ritis3tion Co6p3nies 3nd Re5onstr5tion

Co6p3nies. Ori-in3117 s54 -ide1ines ;ere 6e3nt on17 to en3<1e t4e

CREDITORS to 430e 3 r3tion31 0ie; o/ t4eir @3ssets/in3n5i31 3ssets

/or t4e <etter 3d6inistr3tion o/ t4eir /nds 3nd t4e <3nBin- <siness.

T4e P3r1i36ent t4o-4t it /it to 3dopt t4e 3<o0e26entioned -ide1ines

issed <7 t4e Reser0e 3nB o/ Indi3 e0en /or t4e prpose o/

identi/7in- NPAs nder t4e A5t.

21 Se5tion ')2I!/" 99non2<3nBin- /in3n5i31 5o6p3n7:: 6e3ns!i" 3 /in3n5i31 instittion ;4i54 is 3 5o6p3n7G!ii" 3 non2<3nBin- instittion ;4i54 is 3 5o6p3n7 3nd ;4i54 43s 3s its prin5ip31 <siness

t4e re5ei0in- o/ deposits8 nder 3n7 s54e6e or 3rr3n-e6ent or in 3n7 ot4er 63nner8 or 1endin- in3n7 63nnerG

!iii" s54 ot4er non2<3nBin- instittion or 513ss o/ s54 instittions8 3s t4e 3nB 6378;it4 t4e pre0ios 3ppro031 o/ t4e Centr31 o0ern6ent 3nd <7 noti/i53tion in t4e O//i5i31 3ette8

specif(.

28



(+. No;8 ;e pro5eed to e>36ine ;43t e>35t17 is 3 1o3n tr3ns35tion

t4e ri-4ts 3nd o<1i-3tions 3risin- ot o/ 3 1o3n tr3ns35tion 3nd t4e

i6p35t o/ t4e A5t on s54 ri-4ts 3nd o<1i-3tions.

(*. T4e e>pression 91o3n:8 t4o-4 not de/ined nder t4e A5t8 43s 3

;e112sett1ed 5onnot3tion i.e.8 3d03n5in- o/ 6one7 <7 one person to

3not4er nder 3n 3-ree6ent <7 ;4i54 t4e re5ipient o/ t4e 6one7

3-rees to rep37 t4e 36ont on s54 3-reed ter6s ;it4 re-3rd to t4e

ti6e o/ rep376ent 3nd t4e 1i3<i1it7 to p37 interest.

%efinition of loan. A contract of &oan of one( is a contact %#ere$( one person &ends

or a'rees to &end a su of one( to anot#er, in consideration of a proise express or

ip&ied to repa( t#at su on deand, or at a fixed or deterina$&e future tie, orconditiona&&( upon an event %#ic# is $ound to #appen, %it# or %it#out interest.

: !#itt( on !ontracts, =o&.II 3;t# Edn., p.-;-

(,. T4e person 3d03n5in- t4e 6one7 is -ener3117 5311ed 3 CREDITOR

3nd t4e person re5ei0in- t4e 6one7 is -ener3117 5311ed 3 <orro;er.

T4e 6ost si6p1e /or6 o/ 3 1o3n tr3ns35tion is 3 5ontr35t <7 ;4i54 t4e

<orro;er 3-rees to rep37 t4e 36ont <orro;ed on de63nd <7 t4e

5reditor ;it4 s54 interest 3s stip13ted nder t4e 3-ree6ent. S54 3

1o3n tr3ns35tion 637 <e 3ttended <7 3n7 3rr3n-e6ent o/ 3 se5rit7

1iBe 3 6ort-3-e or p1ed-e et5. dependin- pon t4e 3-ree6ent o/ t4e

p3rties.

2



(#. T4e A5t pro0ides /or 3 6ode o/ speed7 re5o0er7 o/ t4e 6onies

de /ro6 t4e <orro;ers to one 513ss o/ 5reditors ;4o 3re <3nBs 3nd

/in3n5i31 instittions !CREDITORS". Ad03n5es1o3ns 63de <7

CREDITORS to <siness6en 3nd indstri31ists 3re -ener3117 not

rep373<1e on de63nd <t rep373<1e in 355ord3n5e ;it4 3 /i>ed ti6e

s54ed1e 3-reed pon <7 t4e p3rties Bno;n 3s @ter6 1o3ns.

Term loans. A &oan a( $e ade for a specified period a ter &oan/. In suc# a caserepa(ent is due at t#e end of t#e specified period and, in t#e a$sence of an( express

provision or ip&ication to t#e contrar(, no furt#er deand for repa(ent is necessar(.: !#itt( on !ontracts, =o&.II 3;t# Edn., p.-13

In ot4er ;ords8 s54 1o3ns 3re rep373<1e in inst316ents o0er 3 period

o/ ti6e t4e ter6s o/ ;4i54 3re e0iden5ed <7 3 ;ritten 3-ree6ent

<et;een t4e p3rties. A de/31t in t4e rep376ent8 !in ter6s o/ t4e

3-reed s54ed1e" -ener3117 pro0ides 3 53se o/ 35tion /or t4e

CREDITOR to initi3te 1e-31 pro5eedin-s /or t4e re5o0er7 o/ t4e entire

36ont de 3nd otst3ndin- /ro6 t4e <orro;er. Nor63117 s54 ter6

1o3ns 3re 31so 355o6p3nied <7 so6e 9se5rit7 interest: in 3 9se5red

3sset: o/ t4e <orro;er. S54 3 re5o0er7 is to <e 63de nor63117 <7

instittin- 3 sit /or re5o0er7 o/ t4e 36onts <7 en/or5in- t4e

9se5rit7 interest:. T4e Re5o0er7 o/ De<ts de to 3nBs 3nd Fin3n5i31

Instittions A5t8 ##( 5re3ted 3n e>51si0e /or6 /or 3 speed7

3s5ert3in6ent o/ t4e 36onts 35t3117 de /ro6 t4e de/31tin-

2-



<orro;er 3nd 31so pro0ided /or 3 6e543nis6 /or speed7 re5o0er7 o/

t4e 36onts so 3s5ert3ined /ro6 s54 <orro;ers.

'$. Sin5e s54 3 s7ste6 ;3s 31so /ond to <e in3de3te /or t4e

speed7 re5o0er7 o/ t4e 6onies de /ro6 t4e <orro;ers to t4e

CREDITORS8 t4e P3r1i36ent 63de t4e A5t nder ;4i54 t4e pro5ess o/

3s5ert3in6ent o/ t4e 36onts de /ro6 3 <orro;er <7 3n

independent 3d=di53tor7 <od7 is dispensed ;it4. T4e SECURED

CREDITOR is 63de t4e so1e =d-e o/ t4e 36ont de 3nd otst3ndin-

/ro6 3 <orro;er s<=e5t to 3n 3ppe31 nder Se5tion * o/ t4e A5t.

'. e t43t 3s it 6378 s54 3n 3s5ert3in6ent o/ 36ont de 3nd

otst3ndin- is not t4e on17 5riteri3 on t4e <3sis o/ ;4i54 t4e SECURED

CREDITOR is entit1ed to initi3te pro5eedin-s nder Se5tion (!'" o/ t4e

A5t8 <t t4e SECURED CREDITOR is 31so reired to 513ssi/7 t4e

355ont o/ t4e <orro;er !3sset o/ t4e CREDITOR" 3s 3n NPA.

'%. De hors t4e A5t8 ;4en t4e <orro;er o/ 3 ter6 1o3n de/31ts in t4e

rep376ent8 t4e CREDITOR 53n initi3te 1e-31 pro5eedin- str3i-4t 3;37

/or re5o0er7 o/ t4e 36onts de 3nd otst3ndin- /ro6 t4e <orro;er.

T4e A5t p135es 3n 3ddition31 1e-31 o<1i-3tion on t4e CREDITOR to

3;



e>36ine 3nd de5ide ;4et4er t4e 355ont o/ t4e <orro;er 43s <e5o6e

3n NPA <e/ore initi3tin- 35tion nder t4e A5t.

'(. T4e estion ;47 did t4e P3r1i36ent i6pose s54 3n 3ddition31

o<1i-3tion on t4e CREDITORS ;4i1e proposin- to 5re3te 3 6e543nis6

/or t4e e>peditios re5o0er7 o/ t4e 6one7 de to t4e SECURED

CREDITORS reires e>36in3tion. T4e 3ns;er 3ppe3rs to <e t43t

nder t4e s54e6e o/ Se5tion (!'" t4e 9se5red 3sset: !-ener3117 t4e

3ssets o/ 3n indstri31 5on5ern8 1iBe p13nt 3nd 6354iner7 et5." 5o1d

<e t3Ben possession o/ 3nd 5o1d eit4er <e so1d or t4e 63n3-e6ent

5o1d <e t3Ben o0er et5. S54 3n 35tion i/ not t3Ben 3/ter 3n

3ppropri3te de1i<er3tion in 3 -i0en 53se 5o1d res1t in t4e disrption

o/ indstri31 prod5tion 3nd 5onseent17 res1tin- in ne6p1o76ent

3nd 1oss o/ DP et5. i6p35tin- 13r-er interests o/ t4e n3tion.

T4ere/ore8 P3r1i36ent 6st 430e t4o-4t t43t t4e SECURED

CREDITORS 3re reired to 3ssess ;4et4er t4e de/31t in rep376ent

<7 t4e <orro;er is de to 3n7 /35tor ;4i54 is 3 te6por3r7

p4eno6enon 3nd t4e s36e 5o1d <e 63n3-ed <7 t4e <orro;er i/

so6e 355o66od3tion is -i0en.

31



''. T4e 3<o0e 3n317sis o/ t4e s54e6e o/ Se5tion ( o/ t4e A5t ;o1d

deri0e spport /ro6 t4e /35t t43t e0en prior to t4e 5o6in- into /or5e

o/ t4e A5t8 t4e CREDITORS ;ere 513ssi/7in- t4e 355onts o/ t4e

<orro;ers 3s NPAs nder t4e st3ttor7 -ide1ines issed <7 t4e RI.

e 430e 31re3d7 noti5ed t43t nder t4e s3id -ide1ines FINANCIAL

ASSETS 3re s<2di0ided into ' 53te-ories i.e. !i" st3nd3rd8 !ii" s<2

st3nd3rd8 !iii" do<t/18 3nd !i0" 1oss. Dependin- pon t4e 1en-t4 o/

t4e period /or ;4i54 t4e inst3116ent o/ 6one7 is o0er de8 s54 3ssets

3re 513ssi/ied 3s NPA. As t4e 1en-t4 o/ t4e period o/ o0er de

in5re3sed8 t4e 355ont o/ t4e <orro;er is pro-ressi0e17 513ssi/ied /ro6

@s<2st3nd3rd to @1oss.

'). T4e s36e 513ssi/i53tion is 3dopted <7 t4e P3r1i36ent ;4i1e

en35tin- t4e A5t. T4ere/ore8 311 NPAs do not <e1on- to t4e s36e 513ss.

T4eir 543r35ters 03r7 dependin- on t4e 1en-t4 o/ ti6e /or ;4i54 t4e7

re63ined NPAs.

'+. In or 0ie;8 s54 3 513ssi/i53tion is re1e03nt 3nd 3ss6es

i6port3n5e in t4e de5ision 63Bin- pro5ess o/ t4e SECURED CREDITOR

nder Se5tion (!%" 3s to ;4i54 one o/ t4e steps 5onte6p13ted nder

Se5tion (!'" s4o1d <e resorted to in t4e 53se o/ 3 -i0en de/31tin-

32



<orro;er. e 43sten to 3dd t43t it 637 not <e t4e on17 /35tor ;4i54

deter6ines t4e 53se o/ 35tion to <e t3Ben <7 t4e SECURED

CREDITOR. T4e 63-nitde o/ t4e 36ont de 3nd otst3ndin- in 3

-i0en 53se8 t4e re3sons ;4i54 pro6pted t4e <orro;er to de/31t in t4e

rep376ent s54ed1e8 t4e n3tre o/ t4e <siness 53rried on <7 t4e

de/31tin- <orro;er8 t4e o0er311 prospe5ts o/ t4e de/31ter:s <siness8

n3tion31 3nd intern3tion31 63rBet 5onditions re1e03nt to t4e <siness

o/ 3 de/31ter in or opinion8 3re so6e o/ t4e /35tors ;4i54 3re

-er63ne to 3 de5ision t43t 35tion nder Se5tion (!'" is reired to

<e t3Ben 3-3inst 3 de/31tin- <orro;er. E0en in 3 53se ;4ere on

r3tion31 3nd o<=e5ti0e 5onsider3tion o/ 311 t4e re1e03nt /35tors

in51din- t4e represent3tionso<=e5tions re/erred to nder Se5tion

(!(A"8 t4e CREDITOR 5o6es to 3 5on51sion t43t steps 5onte6p13ted

nder Se5tion (!'" 3re reired to <e t3Ben in t4e 53se o/ 3

p3rti513r de/31ter8 t4e /rt4er estion 3s to ;4i54 one o/ t4e steps

5onte6p13ted nder Se5tion (!'" is reired to <e t3Ben or ;o1d

6eet t4e ends o/ =sti5e is 3 63tter /or 3 /rt4er r3tion31 de5ision on

t4e p3rt o/ t4e SECURED CREDITOR.

33



'*. T4e intern3tion31 pr35ti5e 2 noted <7 N3r3si6436 Co66ittee is

t43t @3n 3sset is tre3ted 3s non2per/or6in- ;4en interest is o0erde

/or 3t 1e3st t;o 3rters. S54 3 pr35ti5e o/ 513ssi/7in- t4e 3sset /or

t4e 3d6inistr3ti0e prposes o/ t4e 3nBs on17 indi53tes t43t 3

<orro;er:s 355ont is not tre3ted 3s 3 ;ritten o// 3sset8 t4e 6o6ent

t4ere is 3 de/31t. CREDITORS Beep 3 ;3t54 on s54 355ont 3nd

6onitor t4e per/or63n5e o/ t4e <orro;er:s 35ti0it7 to ensre t4e

re5o0er7 o/ t4e 36onts de 430in- re-3rd to t4e needs o/ t4e

indstri31 se5tor o/ t4e 5ontr7 3nd t4e i6port3n5e o/ prote5tin- t4e

indstr7 3s /3r 3s possi<1e in t4e 13r-er interest o/ t4e e5ono67 o/ t4e

St3te.

',. T4e <3si5 de/inition nder t4e 03rios 5ir513rs o/ t4e Reser0e

3nB o/ Indi3 3nd 31so ot4er REULATORS o/ 3 NPA is 3n 3sset ;4i54

5e3ses to -ener3te in5o6e /or t4e CREDITORS !<3nBs or /in3n5i31

instittions" i.e. 3 1o3n or 3d03n5es 63de <7 t4e <3nBs on ;4i54

interest 3ndor inst316ent o/ prin5ip31 36ont is o0erde /or 3

spe5i/ied period dependin- pon t4e n3tre o/ t4e 1o3n or 3d03n5e 2

;4et4er t4e 1o3n or 3d03n5e is 3 ter6 1o3n or 3-ri51tr31 1o3n8 6one7

3d03n5ed on <i11 dis5ontin- et5.

34



'#. To 63Be 3n7 3tte6pt to de/ine t4e e>pression 9non2per/or6in-

3sset: 031id /or t4e 6i11ions o/ 53ses o/ 1o3n tr3ns35tions o/ 03rios

53te-ories o/ 1o3ns 3nd 3d03n5es8 1ent or 63de <7 di//erent 53te-ories

o/ CREDITORS /or 311 ti6e to 5o6e ;o1d not on17 <e 3n i6pr35ti53<1e

t3sB <t 5o1d 31so si6p17 p3r317se t4e entire <3nBin- s7ste6 t4ere<7

prod5in- res1ts ;4i54 3re 5onter prod5ti0e to t4e o<=e5t 3nd t4e

prpose so-4t to <e 354ie0ed <7 t4e A5t.

)$. Re31isin- t4e s36e8 t4e P3r1i36ent 1e/t it to t4e Reser0e 3nB o/

Indi3 3nd ot4er REULATORS to pres5ri<e -ide1ines /ro6 ti6e to

ti6e in t4is re-3rd. T4e Reser0e 3nB o/ Indi3 is t4e e>pert <od7 to

;4i54 t4e responsi<i1it7 o/ 6onitorin- t4e e5ono6i5 s7ste6 o/ t4e

5ontr7 is entrsted nder 03rios en35t6ents 1iBe t4e RI A5t8 #('8

t4e 3nBin- Re-13tion A5t8 #'#. V3rios <3nBs 1iBe t4e St3te 3nB

o/ Indi38 N3tion31 Hosin- 3nB8 ;4i54 3re t4o-4 <odies 5re3ted

nder di//erent 13;s o/ P3r1i36ent en=o7in- 3 13r-e 36ont o/

3tono678 3re sti11 s<=e5t to t4e o0er311 5ontro1 o/ t4e Reser0e 3nB

o/ Indi3.

35



). Re-13tion o/ 6onet3r7 s7ste6 3nd <3nBin- <siness is one o/

t4e /nd36ent31 responsi<i1ities o/ 3n7 6odern St3te 3nd essenti31 /or

t4e e5ono6i5 3nd po1iti531 st3<i1it7 o/ t4e St3te. T4e 03st in5re3se o/

5o66er5e <ot4 n3tion31 3nd t4e intern3tion31 63de e3s7 <7 t4e

tre6endos de0e1op6ents o/ te54no1o-78 renders s54 re-13tion 3

0er7 5o6p1i53ted 63tter ;it4 5o6p1e> 03ri3<1es. T4e sp3n o/ e354

03ri3<1e 5o1d 03r7 /ro6 6intes to 7e3rs. T4ere/ore8 it reires

5onst3nt 6onitorin- on d3i17 <3sis so6eti6e e0en on 6inte to

6inte <3sis. In 1ie o/ t4e i6port3n5e 3nd 5o6p1e>ities8 t4e Reser0e

3nB8 t4e pri6e re-13tor o/ t4e Indi3n e5ono67 3nd <3nBin- s7ste68

43s <een issin- -ide1ines 3nd dire5tions /ro6 ti6e to ti6e not on17

to t4e <3nBs <t to 03rios ot4er /in3n5i31 instittions ;4i54 3re

36en3<1e to its =risdi5tion. S54 instr5tions -i0en /ro6 ti6e to ti6e

3re 5onso1id3ted 3nn3117 3nd p<1is4ed in t4e /or6 o/ @M3ster

Cir513rs. One o/ s54 5ir513r d3ted ($.$,.%$$ ;3s t3Ben note o/

<7 t4is Cort in Mardia Chemicals. In5ident31178 t4e 3t4orit7 o/ t4e

Reser0e 3nB to isse s54 instr5tions ;3s 5onsidered <7 t4is Cort

in ICICI Bank Limited v. Official Liquidator of A! !tar

Industries Limited & Others8 !%$$" $ SCC 8 3nd t4is Cort 4e1d

30



t43t t4e Reser0e 3nB did 430e s54 3t4orit7 <7 0irte o/ Se5tions

% 3nd ()2A o/ t4e 3nBin- Re-13tion A5t8 #'#%%.

)%. T4e estion is ;4et4er in 63Bin- s54 3 pres5ription8 t4e

P3r1i36ent 43s de1e-3ted 3n7 essenti31 1e-is13ti0e /n5tion To

3ns;er t4e estion it is reired to nderst3nd ;43t is 3n essenti31

1e-is13ti0e /n5tion 3nd ;43t 3re t4e 1i6its s<=e5t to ;4i54 s54

/n5tion 5o1d <e de1e-3ted.

)(. T4e /irst 63=or de5ision o/ t4is Cort on t4e s<=e5t o/ t4e 031idit7

o/ de1e-3ted 1e-is13tion is In re Art. "#$% Constitution of India and

elhi La's Act (")"*+ etc.8 AIR #) SC ((%8 <7 3 Constittion

<en54 o/ *2d-es. Se0en sep3r3te =d-6ents ;ere de1i0ered. It ;3s

3 53se ;4ere Se5tion * o/ t4e De14i L3;s A5t 3t4oried t4e pro0in5i31

-o0ern6ent to e>tend <7 3 noti/i53tion in t4e o//i5i31 -3ette to t4e

pro0in5es o/ De14i8 3n7 en35t6ent ;4i54 ;3s in /or5e in 3n7 p3rt o/

ritis4 Indi3 3s on t4e d3te o/ s54 noti/i53tion. Si6i13r pro0isions

;ere 5ont3ined in t;o ot4er en35t6ents. One o/ t4e estions ;3s

;4et4er s54 5on/er6ent o/ po;er on t4e e>e5ti0e 36onted to

22 3-. "#e Guide&ines issued $( RBI dated 13.8.2;;5 itse&f aut#ories t#e $anks to dea& inter se in 67As. "#ese'uide&ines #ave $een issued $( t#e re'u&ator in exercise of t#e po%ers conferred $( Sections 21 and 35:A of t#e Act.

LLLLLLL. A&& t#is coes %it#in t#e a$it of Section 21 %#ic# ena$&es RBI to frae t#e po&ic( in re&ation to

advances to $e fo&&o%ed $( t#e $ankin' copanies under Section 212/. "#ese 'uide&ines and directions fo&&o%in' t#e

#ave a statutor( force.

38



)). In e1i as 2opal ,rishnan etc. v. !tate of un3ab &

Others8 AIR #+* SC ,#)8 3not4er Constittion en54 t4o-4 str5B

do;n t4e i6p-ned pro0ision on t4e -rond o/ e>5essi0e de1e-3tion8

re5o-nied t4e need o/ de1e-3tin- 3nd t4is Cort opined 3s /o11o;s?2

LLL But in vie% of t#e u&tifarious activities of a %e&fare State, it cannot presua$&( %ork out a&& t#e detai&s to suit t#e var(in' aspects of a cop&ex situation. It

ust necessari&( de&e'ate t#e %orkin' out of detai&s to t#e executive or an( ot#er

a'enc(. But t#ere is dan'er in#erent in suc# a process of de&e'ation. An over:$urdened

&e'is&ature or one contro&&ed $( a po%erfu& executive a( undu&( overstep t#e &iits of

de&e'ation. It a( not &a( do%n an( po&ic( at a&& it a( dec&are its po&ic( in va'ue and'enera& ters it a( not set do%n an( standard for t#e 'uidance of t#e executive it

a( confer an ar$itrar( po%er on t#e executive to c#an'e or odif( t#e po&ic( &aiddo%n $( it %it#out reservin' for itse&f an( contro& over su$ordinate &e'is&ation. "#us

se&f effaceent of &e'is&ative po%er in favour of anot#er a'enc( eit#er in %#o&e or in

part is $e(ond t#e perissi$&e &iits of de&e'ation. It is for a court to #o&d on a fair,'enerous and &i$era& construction of an ipu'ned statute %#et#er t#e &e'is&ature

exceeded suc# &iits.

But t#e said &i$era& construction s#ou&d not $e carried $( t#e courts to t#e extent

of a&%a(s tr(in' to discover a dorant or &atent &e'is&ative po&ic( to sustain an ar$itrar( po%er conferred on executive aut#orities. It is t#e dut( of t#e court to strike do%n%it#out an( #esitation an ar$itrar( po%er conferred on t#e executive $( t#e &e'is&ature.

)+. In #+,8 3 Constittion en54 o/ *2d-es in Municipal

Corporation of elhi v. Birla Cotton% !pinnin- and 4ea1in-

Mills% elhi & Another 8 AIR #+, SC %(% 5onsidered t4e estion

;4et4er Se5tion )$ o/ t4e De14i Mni5ip31 Corpor3tion A5t !++ o/

#)*" is n5onstittion31 on t4e -rond t43t it pro0ided /or

i6per6issi<1e de1e-3tion o/ t4e 9essenti31 1e-is13ti0e /n5tion:. On 3n

3-



e>36in3tion o/ t4e 3<o0e6entioned 3t4orities8 3p3rt /ro6 ot4ers8

C4ie/ sti5e 3n54oo8 spe3Bin- /or 4i6se1/ 3nd sti5e S4e13t8 4e1d 3s

/o11o;s?

2. LL "#e &e'is&ature ust retain in its o%n #ands t#e essentia& &e'is&ative

functions and %#at can $e de&e'ated is t#e task of su$ordinate &e'is&ation necessar( forip&eentin' t#e purposes and o$Dects of t#e Act. C#ere t#e &e'is&ative po&ic( is

enunciated %it# sufficient c&earness or a standard is &aid do%n, t#e courts s#ou&d not

interfere. <C#at 'uidance s#ou&d $e 'iven and to %#at extent and %#et#er 'uidance #as $een 'iven in a particu&ar case at a&& depends on a consideration of t#e provisions of t#e

particu&ar Act %it# %#ic# t#e !ourt #as to dea& inc&udin' its prea$&e. >urt#er it

appears to us t#at t#e nature of t#e $od( to %#ic# de&e'ation is ade is a&so a factor to $e taken into consideration in deterinin' %#et#er t#ere is sufficient 'uidance in t#e

atter of de&e'ation.

T4e Cort 4e1d t43t t4ere ;3s no i6per6issi<1e de1e-3tion o/

1e-is13ti0e po;er.

)*. sti5e Hid373t11348 spe3Bin- /or 4i6se1/ 3nd /or sti5e

R363s;36i8 3-reed ;it4 t4e 5on51sion re354ed 3t <7 t4e C4ie/

sti5e8 t4o-4 on s1i-4t17 di//erent re3sons.

),. In M.,. apiah & !ons v. /he 56cise Commissioner &

Another 8 !#*)" SCC '#%8 t4is Cort on5e 3-3in 5onsidered t4e

estion o/ de1e-3ted 1e-is13tion in t4e 5onte>t o/ 3 pro0ision in t4e

M7sore E>5ise A5t ;4i54 pro0ided /or t4e 1e07 o/ e>5ise dt7 @3t s54

r3te or r3tes 3s t4e o0ern6ent 637 pres5ri<e on e>5is3<1e -oods.

4;



S54 3 pro0ision ;3s 54311en-ed 3s n5onstittion31 on t4e -rond

t43t it ;3s 3 53se o/ 3<di53tion o/ essenti31 1e-is13ti0e /n5tion <7 t4e

1e-is13tre. T4e Cort 3/ter re0ie;in- t4e n6<er o/ e3r1ier de5isions

4e1d t4e i6p-ned pro0ision to <e 031id. P135in- re1i3n5e on 3

=d-6ent o/ t4e Pri07 Con5i1 in t4e 53se o/ Cobb & Co. v. ,ropp

#+* AC '8 t4is Cort 4e1d 3s /o11o;s?2

23. "#e point to $e ep#asied H and t#is is rat#er crucia& H is t#e stateent of t#eirords#ips t#at t#e e'is&ature preserved its capacit( intact and retained perfect contro&

over t#e !oissioner for "ransport inasuc# as it cou&d at an( tie repeal thelegislation and withdraw the authority and discretion it had vested in hi, and,t#erefore, t#e e'is&ature did not a$dicate its functions.

In ot4er ;ords8 t4e 0er7 /35t t43t t4e 1e-is13tre 43s t4e po;er to

repe31 3nd ;it4dr3; t4e 3t4orit7 o/ t4e de1e-3te 3nd t4e dis5retion

0ested in t4e de1e-3te8 s4o1d 1e3d to t4e 5on51sion t43t t4e

1e-is13tre did not 3<di53te its essenti31 /n5tions.

)#. A55ordin- to Seer03i8 <7 its =d-6ent in M.,. apiahs case

!spr3"8 t4is Cort after t%ent( five (ears of %anderin' in t#e &e'a& ae of its o%n creation

LL coe round to t#e vie% expressed $( t#e 7riv( !ounci& in 18 i.e. 7ueen v. Burah

,*, !)" Ind App *,.

41



!iii" I/ t4e p3rent en35t6ent enn5i3tes t4e 1e-is13ti0e po1i57 ;it4

s//i5ient 513rit78 de1e-3tion o/ t4e po;er to 63Be s<ordin3te

1e-is13tion to 53rr7 ot t4e prpose o/ t4e p3rent en35t6ent is

per6issi<1e.

!i0" 4et4er t4e po1i57 o/ t4e 1e-is13tre is s//i5ient17 51e3r to

-ide t4e de1e-3te depends pon t4e s54e6e 3nd t4e

pro0isions o/ t4e p3rent A5t.

!0" T4e n3tre o/ t4e <od7 to ;4o6 t4e po;er is de1e-3ted is 31so

3 re1e03nt /35tor in deter6inin- @;4et4er t4ere is s//i5ient

'*!+,e in t4e 63tter o/ de1e-3tion.

44



+'. 4et4er de/inin- e0er7 ;ord e6p1o7ed in 3 st3tte is re3117

ne5ess3r7 3nd ;4et4er it is 3 p3rt o/ t4e essenti31 1e-is13ti0e /n5tion

;3s ne0er t4e s<=e5t 63tter o/ de<3te in 3n7 o/ t4ese 53ses.

+). e 3re o/ t4e /ir6 opinion t43t it is not ne5ess3r7 t43t 1e-is13tre

s4o1d de/ine e0er7 e>pression it e6p1o7s in 3 st3tte. I/ s54 3

pro5ess is insisted pon8 1e-is13ti0e 35ti0it7 3nd 5onseenti3117

-o0ern3n5e 5o6es to 3 st3ndsti11. It 43s <een t4e pr35ti5e o/ t4e

1e-is13ti0e <odies /o11o;in- t4e ritis4 p3r1i36ent3r7 pr35ti5e to de/ine

5ert3in ;ords e6p1o7ed in 3n7 -i0en st3tte /or 3 proper 3ppre5i3tion

o/ or t4e nderst3ndin- o/ t4e s54e6e 3nd prport o/ t4e A5t. t i/ 3

st3tte does not 5ont3in t4e de/inition o/ 3 p3rti513r e>pression

e6p1o7ed in it8 it <e5o6es t4e dt7 o/ t4e 5orts to e>pond t4e

6e3nin- o/ t4e nde/ined e>pressions in 355ord3n5e ;it4 t4e ;e11

est3<1is4ed r1es o/ st3ttor7 interpret3tion.

++. T4ere/ore8 in or opinion8 t4e /n5tion o/ pres5ri<in- t4e nor6s

/or 513ssi/7in- 3 <orro;er:s 355ont 3s 3 NPA is not 3n essenti31

1e-is13ti0e /n5tion. T4e 137in- do;n o/ s54 nor6s reires 3

5onst3nt 3nd 51ose 6onitorin- o/ t4e /in3n5i31 s7ste6 de63ndin-

5onsider3<1e 36ont o/ e>pertise in t4e 3re3s o/ p<1i5 /in3n5e8

45



<3nBin- et5.8 3nd t4e nor6s 637 reire 3 periodi5 re0ision. A11 t43t

35ti0it7 in0o10es too 654 o/ det3i1 3nd pro6ptitde o/ 35tion. T4e

5r> o/ t4e i6p-ned A5t is t4e pres5ription t43t 3 SECURED

CREDITOR 5o1d t3Be steps 5onte6p13ted nder Se5tion (!'" on t4e

@de/31t%( o/ t4e <orro;er. T4e e>pression @de/31t is 51e3r17

de/ined nder t4e A5t. E0en i/ t4e A5t ;ere not to <e on t4e st3tte

<ooB8 nder t4e e>istin- 13; 3 CREDITOR 5o1d initi3te 1e-31 35tion /or

t4e re5o0er7 o/ t4e 36onts de /ro6 t4e <orro;er8 t4e 6o6ent

t4ere is 3 <re354 o/ t4e ter6s o/ t4e 5ontr35t nder ;4i54 t4e 1o3n or

3d03n5e is -r3nted. T4e stip13tion nder t4e A5t o/ 513ssi/7in- t4e

355ont o/ t4e <orro;er 3s NPA 3s 3 5ondition pre5edent /or en/or5in-

t4e se5rit7 interest is 3n 3ddition31 o<1i-3tion i6posed <7 t4e A5t on

t4e CREDITOR. In or opinion8 t4e <orro;er 53nnot <e 4e3rd to

5o6p13in t43t de/inin- o/ t4e 5onditions s<=e5t to ;4i54 t4e

CREDITOR 5o1d 513ssi/7 t4e 355ont 3s NPA8 is p3rt o/ t4e essenti31

1e-is13ti0e /n5tion. I/ t4e P3r1i36ent did not 54oose to de/ine t4e

e>pression @NPA 3t 3118 Cort ;o1d <e <ond to interpret t43t

e>pression 3s 1on- 3s t43t e>pression o55rs in Se5tion (!%". In s54

23 Section (1) (*) defau&t eans non:pa(ent of an( principa& de$t or interest t#ereon or an( ot#er aount pa(a$&e $( a

$orro%er to an( secured creditor conse9uent upon %#ic# t#e account of suc# $orro%er is c&assified as non:perforin' asset

in t#e $ooks of account of t#e secured creditor

40



513ssi/i53tion is 31so reired to <e re=e5ted /or t4e re3son t43t 311 t4e

CREDITORS do not /or6 3 ni/or64o6o-enos 513ss.

+,. T4ere 3re inn6er3<1e di//eren5es 36on- t4e CREDITORS.

Di//eren5es <3sed on t4e 1e-31 str5tre o/ t4e CREDITORS:

or-3ni3tion8 di//eren5es <3sed pon t4e n3tre o/ t4e 1o3n 3d03n5ed

<7 t4e68 3nd di//eren5es <3sed on t4e ter6s 3nd 5onditions s<=e5t

to ;4i54 s54 1o3ns or 3d03n5es 3re 63de <7 e354 o/ t4ose

CREDITORS8 et5. For e>36p1e8 t4e E>i6 3nB 1o3ns 3re -ener3117 in

/orei-n 5rren5ies. Si6i13r178 1o3ns -r3nted <7 Hosin- Fin3n5e

CREDITORS ;4i54 3re in trn re-13ted <7 t4e N3tion31 Hosin- 3nB

3re 1o3ns ;4i54 3re ter6 1o3ns /or re13ti0e17 1on-er periods t43n ot4er

1o3ns. T4ere is not4in- ni/or6 3<ot t4ese CREDITORS or t4eir

35ti0ities.

+#. It is s<6itted <7 1e3rned 5onse1 /or t4e RI 2

@Prior to t4e 36end6ent in %$$'8 NPA ;3s de/ined 3s s<2st3nd3rd8do<t/1 or 1oss 3sset in 355ord3n5e ;it4 t4e dire5tions or nder-ide1ines re13tin- to 3ssets 513ssi/i53tion issed <7 t4e Reser0e 3nB.Irrespe5ti0e o/ ;4et4er t4e /in3n5i31 entit7 ;3s re-13ted <7 RI ornot8 /or t4e prposes o/ SARFAESI A5t8 t4e 3sset 513ssi/i53tionstip13ted <7 RI ;3s 3pp1i53<1e. T4o-4 t4e re-13tor 5on5erned o/t4e /in3n5i31 entit7 43d stip13ted di//erent st3nd3rds /or re-13tor7prposes8 t4e entities 43d to 3pp17 t4e 5riteri3 stip13ted <7 RI /or3sset 513ssi/i53tion so /3r 3s SARFAESI A5t ;3s 5on5erned. T4e36end6ent <ro-4t 3<ot in %$$' 3ddresses t4is isse 3nd <rin-s inni/or6it7 in t4e 513ssi/i53tion o/ 3ssets <7 /in3n5i31 entities8 <ot4 /ort4e prposes o/ 5o6p17in- ;it4 t4e dire5tions isses <7 t4eir o;n

4



re-13tions 3nd /or t4e prposes o/ SARFAESI A5t. As s548 3sit3tion ;4ere 3n 3sset is not 3n NPA 3s per t4e spe5i/i53tions o/ t4ere-13tor <t t4e s36e 3sset is 3n NPA /or t4e prposes o/ SARFAESIA5t or 0i5e 0ers3 does not 3rise 3/ter t4e 36end6ent 63de in %$$'.

*$. T4e Union o/ Indi3 /i1ed 3 5onter 3//id30it !t4ro-4 Dire5tor8

Dep3rt6ent o/ Fin3n5i31 Ser0i5es8 Ministr7 o/ Fin3n5e" <e/ore t4e Hi-4

Cort o/ =3r3t in Spe5i31 Ci0i1 App1i53tion No.%#$ o/ %$( re-3rdin-

t4e prpose /or ;4i54 t4e i6p-ned 36end6ent ;3s <ro-4t in. It is

st3ted in t4e 5onter 3//id30it 3s /o11o;s?

@#. I st3te 3nd s<6it t43t t4e 36end6ent in Se5tion %!"!o" o/SARFAESI A5t8 %$$% ;3s 63de in %$$' to e>tend t4e 513ssi/i53tionnor6s o/ non2per/or6in- 3ssets stip13ted <7 !sic <7" t4e 5on5ernedre-13tor ;4o is 3d6inisterin- or re-13tin- s54 entit7 or t4eReser0e 3nB o/ Indi3 ;4en t4e s3id instittion is not re-13ted <73n7 re-13tor in Indi3. T4ere 3re /in3n5i31 instittions s54 3s Hosin-Fin3n5e 5orpor3tions noti/ied <7 Centr31 o0ern6ent nder SARFAESIA5t8 ;4i54 3re re-13ted <7 N3tion31 Hosin- 3nB. T4e non2per/or6in- 3ssets o/ t4ese instittions 3re 513ssi/ied 3s per -ide1inespres5ri<ed <7 N3tion31 Hosin- 3nB. T4e A5t 5o0ers 5ert3in ot4erinstittions s54 3s Asi3n De0e1op6ent 3nB 3nd 3ssets 3re 513ssi/ied3s per t4e -ide1ines pres5ri<ed <7 Reser0e 3nB o/ Indi3. T4e 3<o0e36end6ents in t4e A5t ;ere 63de so t43t t4e -ide1ines issed <75on5erned re-13tor 3s 3pp1i53<1e to t4e6 3re 5o0ered /or t4eprpose o/ re5o0er7 nder t4e A5t.

$. I /rt4er st3te 3nd s<6it t43t t4e 36end6ent 5o0ered t4eentities nder t4e A5t re-13ted <7 di//erent re-13tors s54 3sReser0e 3nB o/ Indi38 N3tion31 Hosin- 3nB et5. ;4o 43d stip13tedt4eir o;n -ide1ines /or t4e prpose. At t4e s36e ti6e8 t4e36end6ent 31so 5o0ered t4e entities 1iBe Asi3n De0e1op6ent 3nB8;4i54 did not /311 ;it4in t4e pr0ie; o/ 3n7 re-13tor in Indi3. T4ere/ore8 t4e 36end6ent ;3s 63de in t4e A5t to t3Be 53re o/ t4esesit3tions 3nd t4ese 36end6ents ;ere ne5ess3r7 to 5o0er t4ede/i5ien5ies noti5ed in t4e A5t.

4-



*. T4ere/ore8 to s37 t43t en3<1in- t4e6 to /o11o; di//erent nor6s

;o1d <e 0io13ti0e o/ Arti51e '8 in or 0ie;8 ;o1d <e ;4o117

nten3<1e.

*%. Co6in- to t4e t4ird s<6ission o/ t4e <orro;er8 ;e ;o1d not

1iBe to de31 ;it4 t4is s<6ission in t4e inst3nt <3t54 o/ 53ses 3s t4ere

3re /e; 53ses ;4ere /35t3117 t4e SECURED ASSETS 430e <een

tr3ns/erred <7 t4e ORIINAL CREDITORS. T4ose 53ses 430e <een de2

t3--ed /ro6 t4is <3t54 to <e 4e3rd sep3r3te17.

*(. Co6in- to t4e /ort4 s<6ission o/ t4e <orro;er8 it 6st /3i1 on

t4e <3sis o/ e>press 13n-3-e o/ Se5tion (!(A"%' ;4i54 o<1i-3tes t4e

SECURED CREDITORS to e>36ine t4e represent3tiono<=e5tion8 i/ 3n78

63de <7 t4e <orro;er on t4e re5eipt o/ noti5e 5onte6p13ted nder

Se5tion (!%" 3nd 5o66ni53te t4e re3sons to t4e <orro;er i/ s54 3

represent3tion is not 355epted <7 t4e SECURED CREDITORS. e 430e

31re3d7 indi53ted in or =d-6ent8 in p3r3 no. ',8 t43t t4e

represent3tiono<=e5tion 5onte6p13ted nder Se5tion (!(A" is

24 Section 133A/. If, on receipt of t#e notice under su$:section 2/, t#e $orro%er akes an( representation or raises an(

o$Dection, t#e secured creditor s#a&& consider suc# representation or o$Dection and if t#e secured creditor coes to t#e

conc&usion t#at suc# representation or o$Dection is not accepta$&e or tena$&e, #e s#a&& counicate %it#in fifteen da(s of

receipt of suc# representation or o$Dection t#e reasons for non:acceptance of t#e representation or o$Dection to t#e $orro%er.

7rovided t#at t#e reasons so counicated or t#e &ike&( action of t#e secured creditor at t#e sta'e of

counication of reasons s#a&& not confer an( ri'#t upon t#e $orro%er to prefer an app&ication to t#e *e$ts Recover(

"ri$una& under section 18 or t#e !ourt of *istrict Mud'e under section 18A.

5;



reired to <e e>36ined o<=e5ti0e17. Se5tion ( o<1i-3tes t4e

SECURED CREDITOR to 5o66ni53te t4e re3sons /or non2355ept3n5e

o/ t4e represent3tion or o<=e5tions to t4e <orro;ers.

*'. e/ore 51osin- t4ese 63tters8 ;e 637 31so de31 ;it4 one 3spe5t

o/ t4e =d-6ent o/ t4e =3r3t Hi-4 Cort. T4e =3r3t Hi-4 Cort

re5orded t43t t4e i6p-ned 36end6ent is ultra vires t4e o<=e5t o/

t4e A5t. e pres6e /or t4e s3Be o/ t4is =d-6ent t43t t4e

i6p-ned 36end6ent is not stri5t17 in 5onson3n5e ;it4 t4e o<=e5ts

enn5i3ted ;4en t4e A5t ;3s initi3117 63de. e /3i1 to nderst3nd 3s

to 4o; s54 in5onsisten57 ;i11 render t4e A5t n5onstittion31. T4e

o<=e5ts 3nd re3sons 3re not 0oted pon <7 t4e 1e-is13tre. I/ t4e

en35t6ent is ot4er;ise ;it4in t4e 5onstittion3117 per6issi<1e 1i6its8

t4e /35t t43t t4ere is 3 di0er-en5e <et;een t4e o<=e5ts 3ppended to

t4e i11 3nd t4e tenor o/ t4e A5t8 in or opinion8 53nnot <e 3 -rond /or

de513rin- t4e 13; n5onstittion31.

*). In 0ie; o/ or 3<o0e6entioned 5on51sions8 ;e do not propose to

e>36ine ot4er s<6issions re-3rdin- t4e 5orre5tness o/ t4e =3r3t

Hi-4 Cort:s de513r3tion t43t t4e n36ended de/inition o/ t4e

e>pression @NPA ;o1d 5ontine to -o0ern t4e sit3tion in 0ie; o/

51



t4e =3r3t Hi-4 Cort:s 5on51sion t43t t4e 36ended de/inition o/

NPA is n5onstittion31.

*+. A11 t4e ;rit petitions 3nd t4e 3ppe31s 3re disposed o/ de513rin-

t43t t4e 36ended de/inition o/ t4e e>pression @NPA nder Se5tion

%!"!o" o/ t4e A5t is 5onstittion3117 031id.

**. In t4e res1t8 311 t4e ;rit petitions eit4er /i1ed <e/ore t4is Cort or

/i1ed <e/ore t4e M3dr3s 3nd =3r3t Hi-4 Corts 3nd t4e 3ppe31s o/

t4e <orro;ers st3nd dis6issed. T4e 3ppe31s o/ t4e CREDITORS 3re

311o;ed. E354 o/ t4e ;rit petitioners<orro;ers s4311 p37 5osts to t4e

respe5ti0e CREDITORS 531513ted 3t o/ t4e 36ont otst3ndin- on

t4e d3te o/ t4e noti5e nder Se5tion (!%" o/ t4e A5t in e354 o/ t4e

53ses.

………………………………….M. (J. CHELAMESWAR)

………………………………….M. (S.A. -O-DE)

Ne; De14iG 3n3r7 %,8 %$)

keshavlal khemchand and sons private ltd. v. union of india.pdf

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