Madrasdated High Court · 2007

2. M/s. Rukmani Exports P. Ltd,C-4 Rams Building,No.21, Raja Annamalai Road,Chenna-843. S.Ramasamy4. S. Muthukaruppan5. S. Palaniappan6. PSL Property Development Ltd,No.28 Alagappa Road,Chennai-84... Petitioner in W.P.11244/2007Petitioners 2, 1 and 5 in W.P.8196/07P. Sengottaiyansole ProprietorBharathy Sago Factory andBharathy Modern Rice MillSarvoy Villate and PostAttur Taluk, Salem District... Petitioner n W.P.1797/2007M/s. M.A. Ismail & CoRep by its PartnerShabeer Ahmed122, MBT RoadRanipet.... Petitioner n W.P.22241/20071.K. Muralidharan2.Anantharaman3.Pushpavalli4.Sumathi5.M. Puzhazhendhi6.S. Ramabadran... Petitioner n W.P.10977/2007P. Parivallal... Petitioner n W.P.10571/2007Mrs. Muthulakshmi alias Lakshmi... Petitioner n W.P.10532/2007M/s. Anandha Ganapathy MahalRep by thiru G. RajagopalNo.390 Nagai Main RoadThanjavur.... Petitioner n W.P.10116/20071. M/s. Tamilnadu chormates and Chemicals LimitedRep by its Authorised Signatory Mr.G. Sunderrajan https://hcservices.ecourts.gov.in/hcservices/ 109, Mahatma Gandhi Road,4th FloorChennai-34.2. Ashok Balasubramanian3. Rajeswari Balasubramanian... Petitioner in W.P.2443/2007D. SelvarajManaging PartnerSree Lakshmi Foundary9/74 Uthupalayam ArasurCoimbatore- 641 407.... Petitioner n W.P.13198/20071. M/s. Ramco Super leathers Ltd,rep by its Director,(Formerly known as M/s. RSL Industries Ltd,Sethur HouseNo.28 Dr Alagappa Road,PurasawalkkamChennai-84... Petitioner 2 in W.P.8196/07 Petitioner 1 in W.P.11078/072. M/s. Rukmani Exports P.Ltd.,rep by its Director Sethur HouseNo.28 Dr alagappa Road,PurasawalkkamChennai-84... Petitioner1 in W.P.8196/07... Petitioner2 in W.P.11078/073. S. Ramaswamy... Petitioner5 in W.P.8196/07... Petitioner3 in W.P.11068/074. S. Palaniappan... Petitioner5 in W.P.11068/075. R.M. Angammal6. S. Kamalam7. D. Muthukarupppan... Petitioner4 in W.P.11068/078. M. Manimegalai... Petitioners in W.P.11079/2007A.P. Veerappan... Petitioner in W.P.15192/2007P. Muthu... Petitioner in W.P.12090/2007 https://hcservices.ecourts.gov.in/hcservices/ M/s. Sathya Foundations Private Ltd,rep by its Director C. Sathya SamuelWest Tambaram, Chennai-45.... Petitioner in W.P.2433/20073. M/s. Yem Pee Yem Investments P. Ltd,No.28 Dr. Alagappa RoadChennai-844. M/s. G.P. Asia Ltd,No.5 Kumarappa Chetty StreetPeriamet, Chennai-34.... Petitioners 3 and 4 in W.P.8196/2007M/s. Hamosons Exports Private Ltd,rep. by its Managing DirectorMoosa Ahmed, H.M. Centre, I Floor, No.15-A, Nungambakkam High RoadChennai-34.2. M/s. T.S. Hajee Moosa & Corep by its PartnerMoosa AhmedPlot No.33 & 34Thiru Vi ka Industrial EstateGuindy, Chenai-32.... Petitioner in W.P.12099/20071. M/s. Famex Exports Private Ltd,rep by its Managing DirectorMoosa Ahmed, No.33 Kalaimagal NagarGuindy Industrial EstateEkkattuthangalChennai-97.2. M/s. H.M. TextilesRep by its ProprietorsM/s. Amex Garments Private LtdNo.74 Godown StreetChennai-1.... Petitioner in W.P.12054/2007Mrs. Tasneem Rizwan... Petitioner in W.P.3895/2007 https://hcservices.ecourts.gov.in/hcservices/ M/s. Blue Bell Textiles LtdMulvoy Villagerep by its Managing DirectorN. Venugopal... Petitioner in W.P.3746/2007M/s. Envee ConstructionsNo.9 6th Street,T.N. Nagar.,PalanipetArakkonam-2rep by its Managing PartnerMrs. Vasantha Venugopal... Petitioner in W.P.3747/20071. M/s. Venus Mrketing Services P Ltd,rep by its DirectorsC-26 Anna Nagar EastChennai-1022. T.S. Mani alias Mr.T.s. Pitchumani3. P. Saraswathi4. M/s. MBO Computers India (P) Ltdrep by its Director C-26 Anna Nagar EastChennai-102.... Petitioners 1 to 4 in W.P.4820/2007Petitioners 4,2,3 and 1 in W.P.4821/07S. PrabhuSole Proprietor M/s. Palaniappa Sago and Starch IndustryVadakumarak VillageSarovoy P.oAttur TalukSalem District. 636 121.... Petitioner in W.P.4321/2007Mr. Sathi Reddy... Petitioner in W.P.10051/2007N. Gajendran... Petitioner in W.P.1681/2007N. Somasundaram... Petitioner in W.P.5345/2007Mrs. Soroj Jain... Petitioner in W.P.5655/2007Mr. Babulal Surana... Petitioner in W.P.9904/2007Smt. Lalitha Kanwar... Petitioner in W.P.9905/2007Vs https://hcservices.ecourts.gov.in/hcservices/ Canara Bankrepresented by its Chief ManagerNo.131, A.N. StreetChennai-79... Respondent in W.P.Nos.8517, 8518, 92911. Union of Indiarepresented by its Secretaryto Government Ministry of financeDepartment of FinanceNew Delhi.... Respondent in W.P.42496/2006R1 in W.P.10571/07R1 in W.P.46476/06R1 in W.P.2433/07 and R2 nilR1 in W.P.12741/07R1 in W.P.12733/07R2 nilR1 in W.P.11244/07R1 in W.P.1797/07 and R2 nilR1 in W.P.10977/07 and R2 nilR1 in W.P.13198/07R1 in W.P.11079/07R1 in W.P.8196/07R1 in W.P.11078/07R1 in W.P.12099/07R1 in W.P.12054/07R1 in W.P.4321/07R1 in W.P.3895/07R1 in W.P.3746 & 3747/07R1 in W.P.5345/07R1 in W.P.5655/072. Union Bank of IndiaRegional Office 649/50 Oppanakara StreetCoimbatore... R2 in W.P.42496/06Authorised OfficersIndian Overseas BanksMylapore BranchNo.177 Lay Church Road,Mylapore, Chenna-4... R2 in W.P.46476/2006 https://hcservices.ecourts.gov.in/hcservices/ The Authorised Officer The karur Vysya Bank Ltd,Main Branch315 Kumaran RoadTirupur... R2 in W.P.12741/20072. Reserve Bank of IndianCentral Office BuildingShahid Bhagtsingh RoadBombay- 400 001...R2 in W.P.12733 of 2007 R2 in W.P.11244 of 2007 R3 nilR2 in W.P.10571 of 2007 R3 nilR2 in W.P.2443 of 2007 R2 in W.P.11079 of 2007 R2 in W.P.8196 of 2007 R2 in W.P.11068 of 2007 R3 in W.P.3895 of 2007 R4 in W.P.3746 and 3747 of 2007 3. The Chief Manager and Authorised Officers Bank of IndiaCoimbatore Zone324, Oppanakara StreetCoimbatore- 641 001R3 in W.P.12733/073. The Debt Recovery Tribunal ISpencer TowersAnna Salai, Chennai-2.... R3 in W.P.11244 of 2007 ... R3 in W.P.11079 of 2007 ... R3 in W.P.11068 of 2007 4. State Bank of TravancoreMount Road Branch162, Anna Salai,Chennai-2... R4 in W.P.11244/07Punjab National BankRegional OfficeSalem.... R2 in W.P.1797/20071. The Debts Recovery Tribunal IVI FloorSpencers towersMadras-2. https://hcservices.ecourts.gov.in/hcservices/

2. The Authorised OfficerState Bank of Indiancommercial BranchPalar Towers MBT RoadWalajapet....respondents 1 and 2 in W.P.22241/20062. Repco Home Finance Ltd,No.2897 and 2898 , south Mada StreetThanjavur- 613 009.3. Tha Authorised officer Repco Home FinanceRepco Towers, North Usman RoadT. Nagar, Chennai... RR2 and 3 in W.P.10977/073. The Authoised OfficerIndian Bank Circle Office, Dharmapuri...R3 in W.P.10571/07The Authorised OfficeSyndicate BankOppanakara Street,Coimbatore... Respondent in W.P.10532 of 2007 1. The Union of Indiarepresented by the Secretary toGovernment, Banking and Law,New Delhi. 110 0012. The Lakshmi Vilas Bankrepresented by its Chief ManagerSalem Main Road,Karthaparai, Karur- 639 006.RR1 and 2 in W.P.10116 of 2007 3. Chief ManagerIndian Bank Asset Recovery managementBranch, 4 FloorCircle Office Building, 55 Ethiraj Salai,Chennai-8.4. Indian Bank Ranipet Branch rep by itsAssistant General ManagerVellore Region Ranipet Industrial Complex Ranipet, Vellore district... RR3 and 4 in W.P.2443/07 https://hcservices.ecourts.gov.in/hcservices/

2. The Authorised officerState Bank of IndiaRedfields Coimbatore- 641 018R2 in W.P.13198/074. The Federal Bank Ltd,Registered office at Alwaye (Kerala) Having Branch Officeat Mount Road, Chennai-2.... R4 in W.P.11079/071. The Debt Recovery Tribunal IIAnna Salai, Chennai2. Tamilnadu Mercantile Bank Ltd,George Town BranchChennai-1.3. M/s. G.D. Nadar Paper Co,No.39 Anderson Street, ISt FloorChenna-14. Mr.K. Dhinakaran PartnerM/s. G.D. Nadar Paper Co7 Friends AvenueArumbakkam, Chennai.... RR1 to 4 in W.P.15192/20071. State Bank of India Region IIZonal office, No.21/86 Rajaji SalaiChennai-1.2. The Authorised Officer State Bank of India No.34 Kosamada StreetThiruvannamalai- 6060 601.3. The Chief ManagerState Bank of IndiaThiruvannamalai... RR1 to 3 in W.P.12090 of 20071. Ind bank Housing Ltd,rep by its Company SecretaryAuthorsed Officer Corporate Office at480 anna Salai, III floorNandanam, Chennai- 35. https://hcservices.ecourts.gov.in/hcservices/

2. Union of Indiarep by the Secretary to GovernmentMinistry of FinanceNorth Block, New Delhi.... Respondents 1 and 2 in W.P.2433/073. UTI Bank Ltd,Central OfficeMarket Towers F13th Floor,Cuffe ParadeColaba, Mumbai-5.4. UTI Bank Ltd,No 82 Dr. Radhakrishnan SalaiChennai-4.RR3 and 4 in W.P.8196/074. UCO BankInternational Banking Branch328 Thambu Chetty StreetChennai-1.. R4 in W.P.11068 of 20072. The Debts Recovery Tribunal IINo.770A Anna Salai, Spencer's Towers4th Floor, Chennai-23. M/s. Canara Bankrep by its Authorised Officer Asset Recovery management BranchSpencer's Towers -IIFirst FloorNo.770-A, Anna SalaiChennai- 600 002... RR2 and 3 in W.P.12099/07 and 12054/07.R2. The Authorised OfficerState Bank of IndiaSpecial Housing Finance BranchNo.157 Anna Salai, Chennai-2.R4. K.V. Narendran... RR2 and 4 in W.P.3895 / 072. The Authorised OfficerIndian BankVellore Circle Office Vellore District https://hcservices.ecourts.gov.in/hcservices/

3. The Senior ManagerIndian BankArakkonam BranchArakkonam, Vellore District... RR2 and 3 in W.P.3746 & 3747 of 2007The Authorised OfficerING Vysya Bank Ltd,SME Regional Office ChennaiApex Chamber III Floor20 Sri Thyagaayar RoadT. Nagar, Chennai-17... Respondents in W.P.Nos. 4820 and 4821/2007The Indian Overseas Bank rep by its Branch Managercum Authorised OfficerLeigh Bayar BranchSalem - 639 009.... R2 in W.P.4321/071. Union of Indiarepresented by its Secretary to Government Ministry of Finance Department of Economic AffairsBanking Division,New Delhi- 110 001.2. State Bank of IndiaAmbattur Branch represented by its Chief ManagerNo.73- 74CMTH Road,VenkatapuramAmbattur, Chennai-53.... Respondents 1 and 2 in W.P.10051/071. The Chief Managercum Authorised OfficerState Bank of India Arni Branch, ArniThiruvannamalai District.2. The Chief ManagerState Bank of India V Zonal OfficeChennai-1.... Respondents 1 and 2 in W.P.1681/07 https://hcservices.ecourts.gov.in/hcservices/

2. The Authorised officerCanara Bank of IndiaRegional Office Kancheepuram3. Canara Bank of India Panapakkam BranchArakkonam Taluk,Vellore District... Respondents 2 & 3 in W.P.5345 of 20072. The Authorised OfficerIndian Overseas BankAssert Recovery ManagementCentral Office Annexure buildingNo.763 Anna Salai, Chennai-23. The Indian Overseas BankSowcarpet Branch, Devi Complex1st Floor No.143 NSC Bose Road Chennai.... RR2 and 3 in W.P.5655/07The Authorised OfficerUnited Bank of India217 R.K. Mutt Road Mylapore, Chennai-4.... Respondents in W.P.9904 and9905 of 2007Writ Petitions filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari calling for the recordsrelating to the notice of the Respondent ARM.MIS.184 2006-HSRdated 28.2.2006 issued under Section 13 (4) of the Securitisationand Reconstruction of Financial Assets and Enforcement of SecurityInterest Act 2002 quash the same (W.P.No.8517 of 2006) 8518 of2006 , 9291 of 2006.2. notice ref.No.Nil dated 7.2.2006 issued by the Secondrespondent and quash the same (W.P.No.22241 of 2006)Writ of Declaration declaring sub Sections 2 to 7 of Section17 of the Securitisation and reconstruction of Financial Assetsand Enforcement of security interest Act 2002 as amended andsubstituted by Section 10 (b) 06 the Enforcement of Security ofInterest and Recovery of debts Laws (Amendment) Act 2004 and 30of 2004 as ultra vires unconstitutional and illegal inW.P.42496/2006, 46476 of 2006, 12741 of 2007, 1797 of 2007,10977/2007, 10532 of 2007, 4820 and 4821/ 2007, 4321/2007, 9904and 9905 of 2007. https://hcservices.ecourts.gov.in/hcservices/

2. declaring Sections 17 (2) to 17(4) and 17(2) to 17(7 ) ofSecuritisation and Re-constructions of Financial Assets andEnforcement of Security Interest Act 2002 as ultra viresunconstitutional and illegal in (W.P.12733/2007 and W.P.11244 of2007, 10571/2007, 2443/07, 13198/07, W.P.11079/07, W.P.8196/07,11068/07, 12099/07, W.P.12054/2007, 3895/07, 3746 and 3747/07,5345/07, 5655/07.2.a. (Act 54 of 2002) as substituted by Section 10 of theEnforcement of Security of Interest and Recovery of Debt LawsAmendment Act 2004 as constitutional (W.P.2433/07)3. declaring that Sec 17 of Securitization Act and reconstructionof Financial Assets and Enforcement of Security interest Act asunconstitutional illegal W.P.10116/2007.4. declaring Sub Section (2) (3) and (4) of Section 17 of theSecuritisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act 2002 as amended andSubstituted by Section 10 (b) of the enforcement of Security ofInterest and Recovery of Debts laws (Amendment) Act 2004 and thenotice dated 9.6.2006 issued by the Second Respondent andpossession notices dated 13.2.2007 issued by the second respondentin ultra vires unconstitutional invalid and illegal (W.P.12090/07)Writ Petitions filed under Section 226 of the Constitution ofIndia to issue a writ of Certiorarified Mandamus (i) to call forthe proceedings of the first respondent dated on 8.3.2007 holdingthat two other witnesses 1. Mr. Varuvel (2) Kamaraj are notnecessary for cross Examination by the Petitioner (ii) And theproceedings dated 26.3.2007 containing insufficient evidence ofCross Examination of PW1 Mr. Anbalagan certaining blanks scored byCross marks and to quash those interlinked proceedings directingthe Ist respondent to make PW 1 Mr. Anbalagan for CrossExamination afresh and to make Mr. Varuvel and Mr. Kamaraj forCross Examination inO.A.No.159 of 2003 on the of D.R.T.II Chennaiand directing to grant a certified copy of the complete record ofevidence after cross Examination in. (W.P.No.5192 of 2007)Writ Petition filed under Article 226 of the Constitution ofIndia to issue a writ of Mandamus directing the second respondentto regularise and accept one time settlement of the loan accountNo.10403031969 of the Petitioner with the second respondent inW.P.10051 of 2007.Writ of certiorarified Mandamus to call for the recordspertaining to the issue of possession notice dated 6.11.2006 duly https://hcservices.ecourts.gov.in/hcservices/ issued under Rule 8 (1) of the Security Interest (Enforcement)Rules 202 and the consequent issue of sale notice dated 15.11.2006under Section 8(6) of the Security interest(enforcement) Rules2002 duly issued by the Chief Manager cum Authroized Officer StateBank of India Arani Branch Arani, Thiruvannamalai District namelyIst Respondent and quash the same and direct the respondents torelease the Petitioners properties from the clutches of thesarfaesi Act (W.P.1681 of 2007)Mr. Vijay Narayan SCfor M/s. Narmadha Sampathand A. Saravanan... Petitioner in W.P.8517, 8518,9291/2006 W.P.11244/2007,2443/2007, 11079/2007,8196/2007, 11068/2007MR.K. Venkatachalapathy SCfor M/s. M. KamalanathanR. KamarajK.B. Vivekananthan...Petitioner IN W.P.42496/2006M/s. Geetha Rajasekar... Petitioner in W.P.46476/2006Mr. B. Raviraja... Petitioner in W.P.12741/2007Mr.K. Venkatasubbaraju... Petitioner in W.P.12733/2007M/s. D. Meera and Swaminathan... Petitioner in W.P.1797/2007, 10977/07, 10532/07, 4820 and 4821/07, 4321/07, 9904 and 9905/07M/s. V. Kalyanaramanand Shanmugasundaram... Petitioner in W.P.22241/06Mr.K. Moorthy... Petitioner in W.P.10571/07Mr.P. Seshubalan Raja...Petitioner in W.P.10116/07MR. T.L. Thirumalaiswamy... Petitioner in W.P.13198/07Mr.K. Selvaraj... Petitioner in W.P.15192/07Mr.P.V.S. Giridhar Associates... Petitioner in W.P.12090/07Mr. Sathish Parasaran... Petitioner in W.P.2433/07Mr. Jayesh Dolia for M/s. M.S. Shanmugha Sundaram... Petitioner in W.P.12099/07 https://hcservices.ecourts.gov.in/hcservices/ Mr.M.S. Shanmugaseundarm... Petitioner in W.P.12054/07Mr.G. Jeremiah... Petitioner in W.P.3895/07, 3746 and 3747/07 , 5345/07, 5655/07Mr.K. Mohana Murali... Petitioner in W.P.10051/07Mr.D. Ashok Kumar... Petitioner in W.P.1681/07Mr.V. Paul Doss for Mr.N. SrinivasanM/s. Sampath Kumar Associatesfor Respondent ... Respondent in W.P.8517, 8518, 9291M/s. K. Rajasekar... R2 in W.P.42496/2006 R1 in No AppearanceMr.V.T. Gopalan SG and SCfor Mr.F.B. Benjamin GeorgeR2 in W.P.46476 of 2006 R1 not readyR1 in W.P.12741 of 2007 R2 NRR3 in W.P.12733 of 2007 NR 1 and 2R1 in W.P.11244 of 2007NR R2, RR 3 and 4 No. Appearance R1 in W.P.22241/2006 (R2 NR)R1 in W.P. 13198/2006 R1 & R2 no appearanceR1 in W.P.12054/2007RR2 and 3 NAR2 in W.P.4321/2007 R1 N.ARR2 and 3 in W.P.5655/2007NR R1Respondent in W.P.9904, 9905/07Mr.V.T. Gopalan, SG and SC for M/s. T. Srinivasa Mohanfor RR2 and 3 in NR W.P.5345/2007 R1 in W.P.12099/07 https://hcservices.ecourts.gov.in/hcservices/ Mr.M. Sathyanarayanan R2 in W.P.1797 of 2007R1 NARR1 and 3 No. AppearanceR2 NR in W.P.10977/07R1 No appearance RR2 and 3 NRW.P.10571/2007No app. in W.P.10532/2007MR.V. Radhakrishnan.. R2 , R1 No app.Mr.Jayesh B. Doliafor M/s. Aiyar and Dolia .. R3 in W.P.2443/20071, 2 & 4 NRRespondent in W.P.2433/2007 R4in W.P.3746 and 3747 of 2007 R2 NA RR1 and 3 NRMr. Srinath Sridevan... R4 i W.P.11079 of 2007R3 TribunalRR 1 and 2 NRR4 in W.P.11068/2007RR1to 3 NAM/s. Sethuraman.. R2 in W.P.15192/07 and 1,3, & 4 NRM/s. Ramalingam Associates .. Respondents in W.P.12090/07M/s. V.V. SivakumaranChitra Narayan... for R4 in W.P.8196/2007 R1 NA, RR2 and 3 NRMr.S.Sethuramanand M/s. V.R. Gopalrathinam... R2 in W.P.3895/2007 1,3, and 4 NRP. Raghunathan for M/s. T.S. Gopalan and Co... Respondent in both W.Ps. 4820, 4821/07MR.P.D. Audikesavalu... R2 in W.P.10051/2007 R1 NR,Respondent in W.P.1681/2007 https://hcservices.ecourts.gov.in/hcservices/ O R D E R(Order of the Court was made by Hon'bleTheChief Justice)The constitutional validity of provisions of Section 17of the Securitisation and Reconstruction of Financial Assets andEnforcement Security Interest Act, 2002 as amended by theEnforcement of Security Interest and Recovery of Debts Laws(Amendment Act) Ordinance 2004 (Act 30 of 2004) is challenged inthese writ petitions under Article 226 of the Constitution ofIndia. 2. The Securitisation and Reconstruction of Financial Assetsand Enforcement of Security Interest Act, 2002, (hereinafterreferred to as 'the Act') has been enacted to regulatesecuritisation and reconstruction of financial assets andenforcement of security interest and for matters connectedthereto. The Act enables the banks and financial institutions torealise long-term assets, manage problems of liquidity, assetliability mis-match and improve recovery by exercising powers totake possession of securities, sell them and reduce non-performingassets by adopting measures for recovery or reconstruction. TheAct further provides for setting up asset reconstruction companieswhich are empowered to take possession of secured assets of theborrower including the right to transfer by way of lease,assignment or sale and realise the secured assets and take overthe management of the business of the borrower. In MardiaChemicals Limited vs. Union of India, 2004 (4) S.C.C 311, theconstitutional validity of the Act, except the provisions of Sub-section (2) of Section 17of the Act, has been upheld by theSupreme Court. The findings of the Supreme Court, as summed up inparagraph-80 of the judgment, read as follows: -"80. Under the Act in consideration, wefind that before taking action a notice of 60days is required to be given and after themeasures under Section 13(4) of the Act havebeen taken, a mechanism has been provided underSection 17 of the Act to approach the DebtsRecovery Tribunal. The abovenoted provisionsare for the purpose of giving some reasonableprotection to the borrower. Viewing the matterin the above perspective, we find what emergesfrom different provisions of the Act, is asfollows:1. Under sub-section (2) of Section 13 itis incumbent upon the secured creditor to serve60 days' notice before proceeding to take anyof the measures as provided under sub-section https://hcservices.ecourts.gov.in/hcservices/ (4) of Section 13 of the Act. After service ofnotice, if the borrower raises any objection orplaces facts for consideration of the securedcreditor, such reply to the notice must beconsidered with due application of mind and thereasons for not accepting the objections,howsoever brief they may be, must becommunicated to the borrower. In connectionwith this conclusion we have already held adiscussion in the earlier part of the judgment.The reasons so communicated shall only be forthe purposes of the information/ knowledge ofthe borrower without giving rise to any rightto approach the Debts Recovery Tribunal underSection 17 of the Act, at that stage.2. As already discussed earlier, onmeasures having been taken under sub-section(4) of Section 13 and before the date ofsale/auction of the property it would be openfor the borrower to file an appeal (petition)under Section 17 of the Act before the DebtsRecovery Tribunal.3. That the Tribunal in exercise of itsancillary powers shall have jurisdiction topass any stay/interim order subject to thecondition as it may deem fit and proper toimpose.4. In view of the discussion already heldin this behalf, we find that the requirement ofdeposit of 75% of the amount claimed beforeentertaining an appeal (petition) under Section17 of the Act is an oppressive, onerous andarbitrary condition against all the canons ofreasonableness. Such a condition is invalidand it is liable to be struck down.5. As discussed earlier in this judgment,we find that it will be open to maintain acivil suit in civil court, within the narrowscope and on the limited grounds on which theyare permissible, in the matters relating to anEnglish mortgage enforceable withoutintervention of the court."3. Section 17 of the Act prior to the amendment reads as https://hcservices.ecourts.gov.in/hcservices/ follows: -SECTION 17 – Right to appeal:"(1) Any person (including borrower),aggrieved by any of the measures referred to insub-section (4) of Section 13 taken by thesecured creditor or his authorised officerunder this Chapter, may prefer an appeal to theDebts Recovery Tribunal having jurisdiction inthe matter within forty five days from the dateon which measures had been taken.(2) Where an appeal is preferred by aborrower, such appeal shall not be entertainedby the Debts Recovery Tribunal unless theborrower has deposited with the Debts RecoveryTribunal seventy-five per cents of the amountchaired in the notice referred to in Sub-section (2) of Section 13. Provided that theDebts Recovery Tribunal may, for reasons to berecorded in writing, waive or reduce the amountto be deposited under this section.(3) Save as otherwise provided in thisAct, the Debts Recovery Tribunal shall, as faras may be, dispose of the appeal in accordancewith the provisions of the Recovery of DebtsDue to Banks and Financial Institutions Act,1993 (51 of 1993) and rules made thereunder."4. Section 17 of the Act was amended by Act 30 of 2004in the light of the decision in Mardia Chemical's case and theamended provisions were brought into force with effect from29.12.2004. The provisions of Section 17 of the Act, after theamendmen, read as follows: -"(1) Any person (including borrower),aggrieved by any of the measures referred to insub-section (4) of Section 13 taken by thesecured creditor or his authorised officerunder this Chapter, (may make an applicationalong with such fee, as may be prescribed) tothe Debts Recovery Tribunal having jurisdictionin the matter within forty five days from thedate on which measures had been taken.(Provided that different fees may beprescribed for making the application by theborrower and the person other than thenborrower). https://hcservices.ecourts.gov.in/hcservices/ (Explanation: For the removal of doubts itis hereby declared that the communication ofthe reasons to the borrower by the securedcreditor for not having accepted hisrepresentation or objection or the likelyaction of the secured creditor at the stage ofcommunication of reasons to the borrower shallnot entitle the person (including borrower) tomake an application to the Debts RecoveryTribunal under sub-section (1) of Section 17).(2) The Debts Recovery Tribunal shallconsider whether any of the measures referredto in sub-section (4) of Section 13 taken bythe secured creditor for enforcement ofsecurity are in accordance with the provisionsof the Act and the rules made thereunder.(3) The Debts Recovery Tribunal, afterexamining the facts and circumstances of thecase and evidence produced by the parties,comes to the conclusion that any of themeasures referred to in sub-section (4) ofSection 13, taken by the Secured creditor arenot in accordance with the provisions of thisAct and the rules made there under, and requirerestoration of the management of the securedassets to the borrower or restoration ofpossession of the secured assets to theborrower, it may be order, declare the recourseto any one or more measures referred to in sub-section (4) of Section 13 taken by the securedcreditors as invalid and restore the possessionof the secured assets to the borrower orrestore the management of the secured assets tothe borrower, as the case may be, and pass suchorder as it may consider appropriate andnecessary in relation to any of the recoursetaken by the secured creditor under sub-section(4) of Section 13.(4) If, the Debts Recovery Tribunaldeclares the recourse taken by a securedcreditor under sub-section (4) of Section 13,is in accordance with the provisions of thisAct and the rules made thereunder, then,notwithstanding anything contained in any otherlaw for the time being in force, the securedcreditor shall be entitled to take recourse to https://hcservices.ecourts.gov.in/hcservices/ one or more the measures specified under sub-section (4) of Section 13 to recover hissecured debt.(5) Any application made under sub-section(1) shall be dealt with by the Debts RecoveryTribunal as expeditiously as possible anddisposed of within sixty days from the date ofsuch application:Provided that the Debts Recovery Tribunal may,from time to time, extend the said period forreasons to be recorded in writing, so however,that the total period of pendency of theapplication with the Debts Recovery Tribunal,shall not exceed four months from the date ofmaking such application made under sub-section(1)(6) If the application is not disposed ofby the Debts Recovery Tribunal within theperiod of four months as specified in sub-section (5), any party to the application maymake an application, in such form as may beprescribed, to the Appellate Tribunal fordirecting the Debts Recovery Tribunal forexpeditious disposal of the application pendingbefore the Debts Recovery Tribunal and theAppellate Tribunal may, on such application,make an order for expeditious disposal of thepending application by the Debts RecoveryTribunal.(7) Save as otherwise provided in thisAct, the Debts Recovery Tribunal, shall, as faras may be, dispose of application in accordancewith the provisions of the Recovery of DebtsDue to Banks and Financial Institutions Act,1993 (51 of 1993) and land the rules madethereunder." 5. It is seen that by the amendment, the legislature hasdeleted sub Section (2) of Section 17 of the Act, which was heldto be unconstitutional by the Supreme Court in Mardia Chemical'scase and sub sections 2 to 6 were inserted in section 17 of theAct and original sub section (3) is renumbered as sub section (7).The principal contention of the petitioners is that the amendedprovisions of Section 17 of the Act are contrary to the judgmentof the Supreme Court in Mardia Chemical's case. https://hcservices.ecourts.gov.in/hcservices/

6. The contention is that the remedy of the application filedunder Section 17 of the Act, which is declared to be in nature ofsuit by the Supreme Court is totally taken away by the amendmentand in any event, the remedy is now reduced to only an emptyformality and does not protect the rights of the borrowers,mortgagers and guarantors. The contention is that the scope ofthe jurisdiction of the Debt Recovery Tribunal under Section 17 ofthe Act has been restricted only to ascertain the compliance ofthe provisions of the Act alone and therefore the amendment iswholly arbitrary and violative of Article 14 of the Constitutionof India. 7. We have heard Mr. Vijay Narayan, learned senior counsel,Mr. K. Venkatapathy, learned senior counsel, Mr. SathishParasaran, Ms. D. Meera, Mr.M.S.Shanmugasundaram, Mr. K.Selvaraj, Mr. K. Venkatasubbaraju, Mr.G. Jeremiah, Mr.K.MohanaMurali, Mr. K. Moorthy, Mr.T.L.Thirumalaisamy, Mr. V.Kalyanaraman, Mr. P. Seshubalan and Mr.B.Ravi Raja, learnedcounsel appearing for the petitioners in the respective writpetitions and Mr. V.T. Gopalan, learned Additional SolicitorGeneral appearing for Union of India, Mr.T.S.Gopalan, Mr. SrinathSridevan, Mr. V. Paul Doss, Mr. N.V. Srinivasan, Mr.K.Rajasekaran,Mr. Jayesh Dolia, Mr.S.Sethuraman, Mr.V.V. Sivakumar, Mr. P.D.Audikesavalu, Mr. V. Radhakrishnan and Mr. M. Sathyanaranan,learned counsel appearing for the respondents/banks and financialinstitutions in the respective writ petitions.8. Learned counsel appearing for the petitioners strenuouslycontended that in Maridia Chemical's case, the Supreme Court hasclearly held that the proceedings under Section 17 of the Act arein lieu of Civil Suit, which remedy is already available butbarred under Section 34 of the Act. Our attention was drawn tothe observations in paragraphs 59, 62 and 71 of the judgment,which read as follows:-"59. We may like to observe thatproceedings under Section 17 of the Act, infact, are not appellate proceedings. It seemsto be a misnomer. In fact it is the initialaction which is brought before a forum asprescribed under the Act, raising grievanceagainst the action or measures taken by one ofthe parties to the contract. It is the stageof initial proceeding like filing a suit incivil court. As a matter of fact proceedingsunder Section 17 of the Act are in lieu of acivil suit which remedy is ordinarilyavailable but for the bar under Section 34 of https://hcservices.ecourts.gov.in/hcservices/ the Act in the present case. We may refer toa decision of this court in GANGA BAI v. VIJAYKUMAR where in respect of original andappellate proceedings a distinction has beendrawn as follows: (SCC p.397, para 15):There is a basic distinction between theright of suit and the right of appeal. Thereis an inherent right in every person to bringa suit of civil nature and unless the suit isbarred bty statute one may at one's peril,bring a suit of one's choice. It is no answerto a suit, howsoever frivolous to claim, thatthe law confers no such right to sue. A suitfor its maintainability requires no authorityof law and it is enough that no statute barsthe suit. But the position in regard toappeals is quite the opposite. The right ofappeal inheres in no one and therefore anappeal for its maintainability must have theclear authority of law. That explains why theright of appeal is described as a creature ofstatute."62. As indicated earlier, the position ofthe appeal under Section 17 of the Act is likethat of a suit in the court of the firstinstance under the Code of Civil Procedure.No doubt, in suits also it is permissible, ingiven facts and circumstances and under theprovisions of the law to attach the propertybefore a decree is passed or to appoint areceiver and to make a provision by way ofinterim measure in respect of the property insuit. But for obtaining such orders a casefor the same is to be made out in accordancewith the relevant provisions under the law.There is no such provision under the Act.""71. Arguments have been advanced as to howfar principles of lender's liability areapplicable. Whatever be the position, however,it cannot be denied that the financialinstitutions, namely, the lenders owe a duty toact fairly and in good faith. There has to be afair dealing between the parties and financingcompanies/institutions are not free to ignoreperformance of their part of the obligation as aparty to the contract. They cannot be free from https://hcservices.ecourts.gov.in/hcservices/ it. Irrespective of the fact as to whatever mayhave been held in decisions of some Americancourts, in view of the facts and circumstancesand the terms of the contract and other detailsrelating to those matters, that may or may notstrictly apply, nonetheless, even in absence ofany such decisions or legislation, it isincumbent upon such financial institutions to actfairly and in good faith complying with theirpart of obligations under the contract. This isalso the basic principle of the concept oflender's liability. It cannot be a one-sidedaffair shutting out all possible and reasonableremedies to the other party, namely, borrowersand assumes all drastic powers for speedierrecovery of NPAs. Possessing more drastic powerscalls for exercise of higher degree of good faithand fair play. The borrowers cannot be leftremediless in case they have been wronged againstor subjected to unfair treatment violating theterms and conditions of the contract. They canalways plead in defence deficiencies on the partof the banks and financial institutions."9. Relying on the above observations, it is contendedthat by virtue of amendment, the scope of Section 17 of the Act isrestricted as to the compliance of the provisions of the Act aloneand various other grounds such as demand of amount has beenrecovered and failure to follow the mandatory guildelines ofReserve Bank of India and offer of one time settlement,calculation of interest and nature of secured creditors and allthe incidental questions cannot be gone into by the Debt RecoveryTribunal. 10. We are afraid that the contention is totally mis-conceived. The provisions of Section 17(1) of the Act providesremedy for the borrower/guarantor/mortgagor to challenge theaction of the Bank under Section 13(4) of the Act before the DebtRecovery Tribunal. The Debt Recovery Tribunal is required todecide whether the action of the Bank/Financial Institutions,under Section 13(4) is in accordance with the provisions of theAct and the rules framed thereunder. It is open to theborrower/guarantor/mortgagor to demonstrate before the DebtRecovery Tribunal that resort to Section 13 of the Act is notpermissible by law. In a given case, the claim of theBank/Financial Institutions may be barred by limitation or theremay be cases, where the adjustment of the amount paid is notreflected in the notice or the calculation of interest may not bein accordance with the contract between the parties. Needless to https://hcservices.ecourts.gov.in/hcservices/ say that all such grounds, which render the action of theBank/Financial Institutions illegal can be raised in theproceedings under Section 17 of the Act before the Debt RecoveryTribunal. 11. Learned Additional Solicitor General and the learnedcounsel appearing for banks and financial instituions fairlystated that all the objections which can be legally raised in thereply to the notice under Section 13(2) of the Act can also beraised in the proceedings under Section 17(1) of the Act. It wouldbe for the Debt Recovery Tribual to decide in each case whetherthe action of the bank is in accordance with the provisions of theAct and is legally sustainable. 12. In our opinion, the writ petitions are devoid ofmerit and hereby dismissed with liberty to the writ petitioners toraise all the contentions before the Debt Recovery Tribunal aspermissible by law. No costs. Consequently, connectedmiscellaneous petitions are closed. Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.To1. The Chief ManagerCanara BankNo.131, A.N. StreetChennai-792. The Secretary to Government Union of IndiaMinistry of financeDepartment of FinanceNew Delhi. https://hcservices.ecourts.gov.in/hcservices/

3. Union Bank of IndiaRegional Office 649/50 Oppanakara StreetCoimbatore -1.4.The Authorised OfficersIndian Overseas BankMylapore BranchNo.177 Lay Church Road,Mylapore, Chenna-45.The Authorised Officer The karur Vysya Bank Ltd,Main Branch315 Kumaran RoadTirupur6.Reserve Bank of IndianCentral Office BuildingShahid Bhagtsingh RoadBombay- 400 0017. The Chief Manager and Authorised Officer, Bank of IndiaCoimbatore Zone324, Oppanakara StreetCoimbatore- 641 0018.The Debt Recovery Tribunal IVI Floor,Spencer TowersAnna Salai, Chennai-2.9. State Bank of TravancoreMount Road Branch162, Anna Salai,Chennai-210.Punjab National BankRegional OfficeSalem.11.The Authorised OfficerState Bank of Indiacommercial BranchPalar Towers MBT RoadWalajapet https://hcservices.ecourts.gov.in/hcservices/

12.Repco Home Finance Ltd,No.2897 and 2898 south Mada StreetThanjavur- 613 009.13.Tha Authorised officer Repco Home FinanceRepco TowersNorth Usman RoadT. Nagar, Chennai14. The Authoised OfficerIndian Bank Circle Office, Dharmapuri15.The Authorised OfficeSyndicate BankOppanakara Street,Coimbatore16. The Secretary to Government The Union of IndiaBanking at Law,New Delhi. 110 00117.The Chief Manager Lakshmi Vilas BankSalem Main Road,Karthaparai, Karur- 639 006.18. Chief ManagerIndian Bank Asset Recovery managementBranch, 4 FloorCircle Office Building, 55 Ethiraj Salai,Chennai-8.19.The Assistant General ManagerIndian Bank Ranipet Branch Vellore Region,Ranipet Industrial Complex Ranipet, Vellore district20.The Authorised officerState Bank of IndiaRedfields Coimbatore- 641 018 https://hcservices.ecourts.gov.in/hcservices/

21. The Federal Bank Ltd,Registered office at Alwaye (Kerala) Having Branch Officeat Mount Road, Chennai-2.22.The Debt Recovery Tribunal II770 A Anna Saai, Spencer Towers 4th FloorChennai. 223.Tamilnadu Mercantile Bank Ltd,George Town BranchChennai-1.24.State Bank of Indian Region IIZonal officeNo.21/86 Rajaji SalaiChennai-1.25.. The Authorised Officer State Bank of India No.34 Kosamada StreetThiruvannamalai- 6060 601.26. The Chief ManagerState Bank of IndiaThiruvannamalai27.Ind bank Housing Ltd,the Company Secretary/Authorsed Officer Corporate Office at480 Anna Salai, Chennai- 35.28.UTI Bank Ltd,Central OfficeMarket Towers F13th Floor,Cuffe ParadeColaba, Mumbai-5.29.UTI Bank Ltd,No 82 Dr. Radhakrishnan SalaiChennai-4. https://hcservices.ecourts.gov.in/hcservices/

30.UCO BankInternational Banking Branch328 Thambu Chetty StreetChennai-131. The Authoised OfficerCanara BankAsset Recovery Management BranchSpencer Towers II First FloorNo.770A Anna Salai, Chennai-2.32. The Authorised OfficerState Bank of IndiaSpecial Housing Finance BranchNo.157 Anna Salai, Chennai-2.33. The Authorised OfficerIndian BankVellore Circle Office Vellore District34. The Senior ManagerIndian BankArakkonam BranchArakkonam, Vellore District35.The Authorised OfficerING Vysya Bank Ltd,SME Regional Office ChennaiApex Chamber III Floor20 Sri Thyagaayar RoadT. Nagar, Chennai-1736.The Branch Managercum Authorised Officer Indian Overseas Bank Leigh Bayar BranchSalem - 639 009.37. The Secretary to Government Ministry of Finance Department of Economic AffairsBanking Division,New Delhi- 110 001. https://hcservices.ecourts.gov.in/hcservices/

38. The Chief Manager, State Bank of IndiaAmbattur Branch No.73- 74CMTH Road,VenkatapuramAmbattur, Chennai-53.39.The Chief Managercum Authorised OfficerState Bank of India Arni Branch, ArniThiruvannamalai District.40. The Chief ManagerState Bank of India,V Zonal OfficeChennai-1.41. The Authorised officerCanara Bank of IndiaRegional Office Kancheepuram42.Canara Bank of India Panapakkam BranchArakkonam Taluk,Vellore District43.The Authorised OfficerIndian Overseas BankAssert Recovery ManagementCentral Office Annexure buildingNo.763 Anna Salai, Chennai-244. The Indian Overseas BankSowcarpet Branch, Devi Complex1st Floor No.143 NSC Bose Road Chennai.45.The Authorised OfficerUnited Bank of India217 R.K. Mutt Road Mylapore, Chennai-4.1 cc to M/s. Srinath Sridevan, Advocate, sr. 344072 ccs to RM. B. Sundar, Advcoate, sr. 342953 ccs to Mr. J. Srinivasa Mohan, Advocate, sr. 34415 to 34417 https://hcservices.ecourts.gov.in/hcservices/ 4 ccs to M/s. Sampath Kumar, Associates, Sr. 34239, 34246 to 342481 cc to Mr. B. Raviraja, Advocate, sR. 342272 ccs to M/s. Rangarajan, and Prabhakharan, Advocate, Sr. 341301 cc to Mr.K. Moorthy Advocate, sr. 340142 ccs to M/s. Ramalingam and Associates, sr. 339761 cc to M/s. T.S. Gopalan, and Co, Sr. 339613 ccs to M/s.Narmadha Sampath, Advocate, sr. 33868, 33872, 338734 ccs to Mr.A. Saravanan, Advocate, SR. 33869 to 33871 and 338741 cc to Mr.T.L. Thirumalaisamy, Advocate, Sr. 338031 cc to Mr. Geetha Rajashekaran, Advocate, sr. 337564 ccs to M/s. G. Jeremiah and D. Rajalakshmi Sr. 33757 to 33759,351571 cc to Mr.M. Kamalanathan, Advocate, Sr. 336951 cc to mr.M. Sathyanarayanan, Advocate, sr. 335912 ccs to Mr.P.D. Audikesavalu, Advocate, Sr. 33499, 335005 ccs to MR. F.B. Benjamin George, Advocate, Sr. 33491 to 33493,33496, 334979 ccs to Mr.D. Meera, Advocate, Sr.34001 to 34009W.P. Nos.8517, 8518, 9291, 42496, 46476 of 2006 and 12741, 12733, 11244, 1797, 22241, 10977, 10571, 10532, 10116, 2443, 13198, 11079, 15192, 12090, 2433, 8196, 11068, 12099, 12054, 3895, 3746, 3747, 4820, 4821, 4321, 10051, 1681, 5345, 5655, 9904 and 9905 of 2007VC (CO)kk 13/8