Deccan Chronicles Holdings LTD v. UOI

1
IN THE HIGH COURT OF JUDICATURE AT MADRAS

Dated :
08.05.2014
Coram
The Honourable Mr.JUSTICE N.PAUL VASANTHAKUMAR
and
The Honourable Mr.Justice M.M.SUNDRESH
Writ Petition Nos.5897, 5898, 7296 to 7299, 7390, 7653, 7654,
7806, 8090, 8091, 8457, 8458, 8593 to 8596, 8746, 8747, 8766, 8942,
8970, 9019, 9073, 9123, 9124, 9183, 9420, 9421, 9573, 9611, 9649, 9671,
9690, 9774, 9825, 10007, 10304, 10656, 10665, 10766, 11042, 11078,
11317, 11471 to 11474, 12318, 12462, 12506 and 12508 of 2014
W.P.Nos.5897 and 5898 of 2014:
M/s Deccan Chronicles Holdings Limited,
A company incorporated under the
Companies Act, 1956, having Office at
P-3, Developed Plot, Industrial Estate,
Guindy, Chennai 600 032
rep.by its Assistant General Manager,
R.Guruprasad.
Vs.
1. The Union of India,
represented by its Joint Secretary,
Ministry of Finance,
Department of Economic Affairs,
Room No.34-C,
New Delhi 110 001 (India)
2. Reserve Bank of India,
represented by its Chairman and
Managing Director,
6, Parliament Street,
New Delhi 110 001
3. Canara Bank,
..
Petitioner
through its Authorised Officer,

Prime Corporate Bank,
T.S.R.Complex, S.P.Road,
Secunderabad 500 003.
.. Respondents
W.P.Nos.7296 and 7297 of 2014:

Summer India Textile Mills P.Ltd.,
rep.by its General Manager Finance
Shri S.S.Prabhaakaran
No.176.2-A, Kozhikkalantham Road,
Tiruchengode 637 211.
... Petitioner
Vs.
1. Union of India,
rep. by its Joint Secretary
Ministry of Finance Department of
Economic Affairs, Room No.34-c
New Delhi 110 001
represented by its
Chairman and Managing Director,
New Delhi 110 001
3. State Bank of India,
rep.by its Authorized Officer,
Commercial Branch,
C.D.Building, 78/79,
Park Road, Erode 638 003
4. State Bank of Patiala,
MID Corporate Branch, Whbites Road,
Thousand Lights, Chennai 600 014
W.P.Nos.7298 and 7299 of 2014:
...
Respondents
K.S.Rangaswamy
Vs.
... Petitioner
1. Union of India,
New Delhi 110 001
represented by its
New Delhi 110 001
Commercial Branch,
C.D.Building, 78/79,
Park Road, Erode 638 003
4. State Bank of Patiala,

MID Corporate Branch, Whbites Road,
Thousand Lights, Chennai 600 014
5. Summer India Textiles Mills P.Ltd.,
No.176/2-A, Kozhikkalanatham Road,
Tiruchengode 637 211.
...
Respondents
....
Petitioner
W.P.No.7390 of 2014:
Ravi Shankar Mangipudy
Vs.
1. Union of India,
rep. by the Secretary
to Government,
Economic Affairs,( Banking Division)
North Block Room No.34-c
New Delhi.
2. Central Bank of India, rep.by its
Manager, Mid Corporate Branch,
48/49, Monteith Road, Egmore,
Chennai 600 008
3. The Authorised Officer,

Central Bank of India,
Mid Corporate Branch,
48/49, Monteith Road, Egmore,
Chennai 600 008
4. M/s.General Nice Mineral Trading Pvt.Ltd.,
rep.by its Manager,
General Nice Tower, 4th Floor,
NO.90, Old NO.87, Chamiers Road,
Chennai 600 018
5. M/s.General Nice Resources (Hong Kong) Ltd.,
7th and 20th Floor,
Lippo Leighton Tower,
103, Leighton Road,
Causeway Bay,
Hong Kong.
6. The Governor
The Reserve Bank of India,
Central Office,
Mumbai.
.... Respondents
W.P.Nos.7653 and 7654 of 2014:

M/s.Gangotri Textiles Ltd.,
rep.by Mr.Manoj Kumar Tibrewal,
No.35, Robertson Road,
R.S.Puram, Coimbatore.
Vs.
1. Union of India,
New Delhi 110 001
represented by its
New Delhi 110 001
...
Petitioner

Sam Branch, Cross Building,
32, Monteith Road, Egmore,
Chennai 600 008.
...
Respondents
...
Petitioner
W.P.No.7806 of 2014:
Mr.A.Azariah
Vs.
1. Union of India,
rep.by the Secretary to Government
Economic Affairs (Banking Division),
North Block,
New Delhi
2. The Governor,
Central Office, Mumbai
M/s.Corporation Bank,
Velandipalayam Branch
Saibaba Colony, Coimbatore 641 105
4. Royal Educational Trust,
No.16/177, Marappalam
Madukkarai,
Coimbatore 641 105
5. A.Jebasingh Prasad
6. A.Gunasingh
7. G.Flowrence Jasmine Bharathy
....
Respondents
W.P.Nos.8090 and 8091 of 2014:

M/s.Sekar Stores Home Mart,
represented by its Partner
Mr.S.V.Manivannan,
S/o.S.V.S.Pandian,
all having Office at No.37,
Arcot Road, Kodambakkam,
Chennai 24.
....
Petitioner
...
Respondents
Vs.
rep.by Secretary to Government,
Economic Affairs (Banking Division),
North Block,
New Delhi.
M/s.Pridhiv Asset Reconstruction
and Securitisations Company Limited,
Rajaprasadmu, 4th Floor, Wing No.1,
Plot No.6, 6A, 6B, Masjid Bandar Road,
Kondapur, Hyderabad 500 084
No.16, Rajaji Salai,
Chennai 600 001
M/s.Axis Bank Limited,
Karumuthu Nilayam,
2nd Floor, No.192,
Anna Salai, Chennai 600 002.
W.P.Nos.8457 and 8458 of 2014:
M/s.Sri Devi Oil Pvt.Ltd.,
A Company Registered under the
Companies Act, having its place of
business at No.279/6, Villipalayam village,
Namakkal 637 206
rep.by its Director,

Mr.V.Janarthana Guptha
Vs.
....
Petitioner
....
Respondents
....
Petitioner
1. Union of India,
rep. by its Joint Secretary,
Room No.34c,
New Delhi 110 001
2. The Reserve Bank of India,
rep.by its Chairman and
Managing Director,
New Delhi 110 001
rep. by its Authorised Officer
Commercial Branch
# 232, NSC Bose Road,
Chennai.
W.P.Nos.8593 and 8596 of 2014:
M/s.Sri Devi Extractions Pvt.Ltd.,
No.50A, Salem Road,
Namakkal 637 001
rep.by its Director,
Mr.V.Janarthana Guptha
1. Union of India,
Room No.34c,
New Delhi 110 001
rep.by its Chairman and
Managing Director,
Vs.
New Delhi 110 001
rep.by its Authorised Officer
- Asst.General Manager,
Commercial Branch
Chennai.
....
Respondents
....
Petitioner
....
Respondents
....
Petitioner
W.P.Nos.8594 and 8595 of 2014:

M/s.Global Trading Impex P.Ltd.,
NO.5, 1st Floor, No.50A, Salem Road,
Namakkal- 637 001
rep.by its Director Mr.V.Janarthana Guptha
1. Union of India,
Room No.34c,
New Delhi 110 001
Vs.

rep. by its Chairman and
Managing Director,
New Delhi 110 001
rep. by its authorised Officer
- Asst.General Manager,
Commercial Branch
Chennai.
W.P.Nos.8746 and 8747 of 2014:
S.Vijayalakshmi
Vs.

New Delhi 110 001
represented by its
Board of Directors,
New Delhi 110 001
Uco Bank,
Pondicherry Main Branch,
Rue Mahe De Labourdonais,
Pondicherry 605 001.
...
Respondents
W.P.No.8766 of 2014:
M/s.Sri Sivaram Spinning mIll
represented by Parter K>R.Guruswami,
No.674/1C, Kulathur Road,
Venkatapuram Post
Coimbatore- 641 014.
Vs.
1. Union of India,
Economic Affairs,
New Delhi.
represented by its
Chairman/Managing Director,
....
Petitioner
10
New Delhi
rep.by its Chief Manager,
Commercial Branch,
Veerappan Complex,
24, Stanes Road,
Thirupur 641 602.
...
Respondents
....
Petitioner
W.P.No.8942 of 2014:
M/s.Alpride Medics
represented by Partner
Mr.Ragunath, L-5, Industrial Estate,
Ambattur, Chennai.
Vs.
1. Union of India,
rep. by the Secretary to Government,
Ministry of Finance, Department of Economic
Affairs, (Banking Division), North Block,
New Delhi
The South Indian Bank Limited,
Regional Office, Niagra Apartments,
No.1, Sterling Road,
Nungambakkam, Chennai 34.
3. The Governor,
Reserve Bank of India,
Central Office
Mumbai.
W.P.No.8970 of 2014:
M/s.Riverside Infrastructure (India) Pvt.Ltd.,
(RIPL), having Regd.Office at
4/318, MARG Axis, Rajiv Gandhi Salai,
...
Respondents
11
Kottivakkam, Chennai
rep.by its Managing Director
Mr.G.R.K.Reddy
....
Petitioner
....
Respondents
...
Petitioner
Vs.
1. Union of India,
New Delhi
State Bank of Patiala,
Commercial Branch, Atlanta,
1st Floor, Nariman Point,
Mumbai 400 021
3. M/s. LIC Housing Finance Ltd.,
Harrington Chambers,
No.30/1A, Block C, II Floor,
Abdul Razack, 1st Street,
Saidapet, Chennai 600 015
4. Syndicate Bank,
Corporate Finance Branch,
No.170, Eldams Road,
Chennai 600 018
5. The Governor,
Central Office,
Mumbai.
W.P.No.9019 of 2014:
Mr.G.Golpalakrishnan
Vs.
1. Union of India,
12

New Delhi
Dena Bank,
Retail Asset Branch,
NO.83, TTK Road,
Alwarpet, Chennai 18.
3. The Governor,
Central Office
Mumbai.
....
Respondents
....
Petitioner
W.P.No.9073 of 2014:
Mrs.K.Amsavalli
Vs.
1. Union of India,
New Delhi
Indian Bank, CMDA Branch,
CMDA Towers, 1, Gandhi Irwin Road,
Egmore, Chennai 600 008.
3. The Governor,
Central Office, Mumbai.
W.P.No.9123 of 2014:
M/s MARG Ltd.,
Registered office at MARG Axis,
4/318, Rajive Gandhi Salai,
....
Respondents
13
Kottivakkam, Chennai-600 041

having its Corporate Office at
MARG Pancham,
Block-B, NO.334,Futura Tech Park,
Rajive Gandhi Salai, (OMR),
Sholinganallur, Chennai-600 119.
rep. By its Senior Manager (Legal)
Vs.
1. Union of India,
rep. by the Secretary to Government
(Banking Division) North Block,
New Delhi
....
Petitioner
....
Respondents.
....
Petitioner
2.The Authorised Officer,

The South Indian Bank Ltd.,
Regional Office, Niakara Apartments,
1, Sterling Road, Nungambakkam,
Chennai-600 034.
3. The Governor,
Central Office,
Mumbai
W.P.No.9124 of 2014:
Mrs.R.Vimala
Vs.
1. Union of India,
New Delhi

Punjab National Bank, Circle Office,
Trichy, PNB House, Kailasapuram P.O.,
14
Trichy-620 014.
3. The Governor,
Central Office,
Mumbai
....
Respondents.
....
Petitioner
....
Respondents.
...
Petitioner
W.P.No.9183 of 2014:
B.N.Sridhar
Vs.
1. Union of India,
New Delhi

Canara Bank, Asset Recovery Management
Branch, Spencers Towers II,
III Floor, 770-A, Anna Salai,
Chennai-600 002.
3. The Governor,
Central Office,
Mumbai
W.P.Nos.9420 and 9421 of 2014:
M/s.V.M.E.Precast Pvt.Ltd.,
rep.by its Chairman
No.364, Pillaiayar Koil Street
Pancer Nagar, Mugappair West,
Chennai 600 037
Vs.

15

New Delhi 110 001
represented by its
New Delhi 110 001
3. Uco Bank,
rep. by its Authorized Officer,
Midcorporate Branch,
NO.67, Burkit Road,
T.Nagar, Chennai 600 017
Fax: 044-24357478
...
Respondents
...
Petitioner
W.P.No.9573 of 2014:
SKAT INDIA Cloth Apparels (P) Ltd.,
rep.by Mr.K.V.Naidu Managing Director,
Regd.Office and Unit-I, No.536 (No.1057),
Poonamallee High Road, Arumbakkam,
Chennai 600 106.
VS.
1. Union of India,
New Delhi
2. The Governor,
3. Allahabad Bank,
Asset Recovery Management Branch,
Vaairams, 112, Sir Thyagaraja Road,
T.Nagar, Chennai 600 017
Allahabad Bank, Industrial Finance Branch,
nna Theatre Building,
16
No.41, Mount Road, Chennai 600 002.
...
Respondents
....
Petitioner
.....
Respondents
....
Petitioner
W.P.No.9611 of 2014:
M/s LGP Enterprises,
Rep. By its Proprietor L.Gajendran,
No.35, Second Main Road,
Lakshmi Nagar, Velacherry,
Chennai-600 042.
Vs.
1. Union of India,
Ministry of Fiannce
(Banking Division) North Block, New Delhi,
M/s. Indian Bank Porur Branch,
No.225, Trunk Road,
Porur, Chennai 600 116
3. The Governor
Central Office,
Mumbai.
W.P.No.9649 of 2014:
M/s Uthrakaliamman Infrastructures (P) Ltd.,
Rep. by its Director Mr.V.Manikanda Raju
Alozz Abdul Kalam Azad Street,
Pollachi-642 001.
Vs.
1. Union of India,
(Banking Division), North Block,
New Delhi.
17
2. The Governor,
M/s State Bank of India,
Stressed Assets Management Branch,
Now at 1112, Raja Plaza, First Floor,
Lakshmi Mills Bus Stop,
Avanashi Road, Coimbatore.
.. Respondents
W.P.No.9671 of 2014:
M/s Karpaga Vinayagar Cosntructions,
Represented by its Proprietor Mrs.M.Aruvi,
No.2/32, Arunagirinathar Street,
New perungalathur, Chennai-600 063.
.. Petitioner
Vs.
1. Union of India,
New Delhi.
M/s Punjab National Bank,
Teynampet Branch, No.152,
Eldams Road, Teynampet,
Chennai-600 018.
Department of Banking Operations
and Development, Central Office,
Mumbai-400 001.
W.P.No.9690 of 2014:
.. Respondents
18
M/s Mangai Interiors,

Represented by its Proprietor
Mr.L.Alagappan, Plot No.107,
Kambar Cross Street,
Gandhi Nagar, Virugambakkam,
Chennai-600 092.
.. Petitioner
Vs.
1. Union of India,
represented by the Secretary to Government,
New Delhi.
Teynampet Branch, No.152,
Eldams Road, Teynampet,
Chennai-600 018.
rep. By its Chief General Manager,
Mumbai-400 001.
.. Respondents
W.P.No.9774 of 2014:
M/s.Current Trends,
No.28/15, M.K.Building,
Indira Nagar, 1st Street,
Behind CSI Church, Avinashi Road,
Gandhi Nagar Post, Tiruppur 641 603.
rep. by its Managing Partner
S.Krishnakumar
Vs.
1. Union of India,
rep.by the Secretary to Government,
..,,
Petitioner
19
New Delhi
2. The Governor,
Central Office, Mumbai,
Maharashtra
3. The Authorised Officer &
Assistant General Manager,
State Bank of India,
Red Cross Building,
32, Montieth Road,
Egmore, Chennai 600 008
4. The Authorised Officer &
1112, Raja Plaza
Avinashi Road,
Colimbatore 641 037
5. The Manager,
Specialized Commercial Branch,
Tiruppur, Tiruppur District.
....
Respondents
..
Petitioner
W.P.No.9825 of 2014:
M/s Everwin Textile Mill (P) Ltd.,
Rep. by its Managing Director,
K.Periasamy, No.4/12, Chittappa Avenue,
Royapuram Main Road, Tiruppur-641 601.
Vs.
1. Union of India,
20
New Delhi
2. The Governor,
3. The Assistant General Manager,
No.54, Sabari Street,
Tiruppur-641 601.
4. The Chief Manager,
The State Bank of Mysore,
Tiruppur Branch,
No.72, Appachi Nagar Main Road,
Kongur Nagar, Tiruppur-641 607.
... Respondents
W.P.No.10007 of 2014:
M/s Eurostyle Tex,
Rep. by Mr.S.Gughan,
Managing Partner,
No.9, Poonthottam,
Murugampalayam,
Gandhi Nagar Post,
Tiruppur-641 603.
.. Petitioner
Vs.
1. Union of India,
New Delhi
2. The Governor,
M/s Uco Bank, Nos.55 & 56,
21
Sakthi Towers, Ground Floor,

Vallipalayam 3rd Street,
Tiruppur-641 603
.. Respondents
W.P.No.10304 of 2014:
M/s Tribune Textiles (India) Pvt. Ltd.,
Rep. by its Director Mr.G.Surendra Gupta,
No.284/2, Sanapudur, Manellore Post-601 202.
Gummidipoondi Taluk,
Thiruvallur District(T.N.)
.. Petitioner
Vs.
1. Union of India,
New Delhi
2. The Governor,
3. City Union Bank Limited,
by its Branch Manager,
Achari Street, Nellore.
4.India SME Asset Reconstruction Company
Ltd.(ISARC), M.S.M.E. Development Centre,
C-11, G. Block, Bandra-Kurla Complex,
Bandra East,
Mumbai-400 051.
....
W.P.No.10656 of 2014:
M/s. Satyam Educational Trust,
Respondents
22
Rep. By its Chairman A.Thinagar,

II Floor, S.D.S. Building,
Court Road, Nagercoil-629 001.
....
VS.
Petitioner

rep.by its Joint Secretary,
Room No.34-C, New Delhi-110 001.
rep. By Governor,
No.6, Parliament Street,
New Delhiu-110 001.
3. The Authorised Officer/

The Chief Manager,
Bank of Maharastra,
Chennai Zonal Office,
No.4, Sivagnanam Road,
T.Nagar, Chennai-600 017.
....
Respondents
W.P.No.10665 of 2014:
B.Gnanasambandan @ Rajakumar,
No.10, Sundaravinayagar Koil Street,
Saint Simonpet, Muthialpet,
Pondicherry-605 003.
Vs.
1. Union of India,
New Delhi.
Uco Bank, Pondicherry Main Branch,
.. Petitioner
23
No.7, Rue Mahe De Labourdonnais,

Pondicherry-605 001.
3. The Governor,
.. Respondents
W.P.No.10766 of 2014:
M.Shanthikumar
.. Petitioner
Vs.
1. Union of India,
New Delhi.
Indian Bank, Chengalpattu Branch,
No.7, G.S.T. Road, Chengalpattu,
Kancheepuram District.
3. The Governor,
.. Respondents
W.P.No.11042 of 2014:
M/s Deepa Panels Private Limited,
Represented by its Managing Director
Mr.Pradeep Chirakal,
No.184/3C, Mettupalayam-Parivakkam Road,
Mettupalayam, Thiruverkadu Road Post,
Chennai-600 007.
Vs.
.... Petitioner
24
1. Union of India,
New Delhi
2. The Governor,

No.32, Montieth Road, Indian Red Cross
Society Buildings, Egmore,
Chennai-600 008.
4. The Divisional Manager,
New India Assurance Company Ltd.,
Bancassurance Divisional Officer 712300
Mac Millan House, IInd Floor, B Wing,
No.21, Pattullos Road, Chennai-600 002.
.. Respondents
W.P.No.11078 of 2014:
M/s Fine Furniture (P) Ltd.,
Rep. By its Managing Director
Mr.Pradeep Chirakal,
No.48, Varadarayapuram Trunk Road,
Poonamallee, Chennai-600 056.
Vs.
1. Union of India,
New Delhi
.... Petitioner
25
2. The Governor,
3.The Authorised Officer/Chief Manager
& Relationship Manager, Overseas Branch,
No.86, Rajaji Salai,
Chennai-600 001.
.. Respondents
W.P.No.11317 of 2014:
Mr.S.B.Sanyasi Rao
.... Petitioner
Vs.
1. Union of India,
New Delhi.
Indian Bank, Yanam Branch,
Jaladangi Street, Yanam-533 464.
3. The Governor,
.. Respondents
W.P.Nos.11471 to 11474 of 2014:

M/s Karpaga Vinayagar Electricals,
Represented by its Proprietor Mr.T.R.Mahadevan,
New Perungalathur, Chennai-600 063.
M/s Sri Venkateswara Enterprises,
.... Petitioner in
WP.11471/2014
26
Represented by its Proprietor Mr.T.R.Pandian,

.... Petitioner in
WP.11472/2014
M/s Sapthagiri Enterprises,

Represented by its Proprietor Mr.T.R.Ellappan,
.... Petitioner in
WP.11473/2014
M/s Shri Lanco Enterprises,

Represented by its Proprietor Mr.S.Deenadayalan,
No.C17, K.P.Towers, 159, Arcot Road,
Vadapalani, Chennai-600 026.
Vs.
.... Petitioner in
WP.11474/2014
1. Union of India,
New Delhi.
Teynampet Branch,
No.152, Eldams Road, Teynampet,
Chennai-600 018.

Represented by its Chief General Manager,
Department of Banking Operations and Development,
Central Office, Mumbai-400 001.
.. Respondents in
all WPs.
W.P.No.12318 of 2014:
M/s.Nyle Garments
rep.by its Managing Partner
M.Duraisamy, Son of Subramaniam
1/223, Amman Thottam
Kalampalayam, Pongupalayam Post
Tiruppur District.
....
Petitioner
27
Vs.
1. Union of India,
rep.by the Secretary to Government,
New Delhi
2. The Governor
Central Office,
Mumbai, Maharashtra
Punjab National Bank
No.54, Sabari Salai,
Binny Compound,
Tiruppur, Tiruppur District.
....
Respondents
....
Petitioner
W.P.No.12462 of 2014:
M/s.Gowtham Industries,
a partnership firm
represented by its Partners
Vijaykumar and V.Ponnuthai
1. Union of India
represented by the Secretary
to Government,
Department of Economic Affairs
(Banking Division) North Block
New Delhi
Vs.
2. The Governor,
Central Office,
Mumbai
3. Lakshmi Vilas Bank Limited,
represented by its Authorised Officer,
28
LVB Platinum Jubilee Building,

No.68, Oppanakara Street,
IInd Floor, Coimbatore 641 001
4. Chairman and Managing Director,

Lakshmi Vilas Bank Limited,
Administrative Office,
Chennai.
....
Respondents
....
Petitioner
W.P.No.12506 of 2014:
M/s.Trinity Textiles
rep.by G.Sunitha
Cypress, B/103, Prince Green Woods
NO.66, Vanagaram Road,
Chennai 600 058
Vs.
1. Union of India,
New Delhi
2. The Governor,
3. Indian Overseas Bank,
No.2, Kirupashankar Street,
West Mambalam,
Chennai 600 033.
....
Respondents.
W.P.No.12508 of 2014:
D.John
1. Union of India,
rep.by its Joint Secretary,
Vs.
....
Petitioner
29
Room No.34-C
New Delhi 110 001
rep.by its Board of Directors,
New Delhi 110 001
Bank of India,
120/174, Luz Church Road,
Mylapore, Chennai 600 004.
...
respondents
Prayer: Writ Petition in W.P.Nos.5897 and 7654 of 2014 are filed

under Article 226 of the Constitution of India seeking for the relief of
issuance of a Writ of Declaration to declare that the provisions of Section
2(1)(o) of the Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Act, 2002 as arbitrary, unconstitutional and
opposed to public policy, null and void and the same being ultra vires the
Constitution of India.
Writ Petition in W.P.No.5898 of 2014 is filed under Article 226 of
the Constitution of India seeking for the relief of issuance of a Writ of
Declaration
declaring
the
guidelines
No.DBOD.No.BP.BC.9/
21.04.048/2012-13 dt. 2.7.2012 qua classification of account as Nonperforming asset as arbitrary, unconstitutional and opposed to public
policy, null and void and the same being ultra vires the Constitution of
India.
Writ Petition in W.P.Nos.7296, 7298, 8746 and 12508 of 2014 are
filed under Article 226 of the Constitution of India seeking for the relief of
issuance of writ of declaration to declare that the provisions of Section
2(1)(o) of the Securitization and Reconstruction of Financial Assets and
Enforcement of Securities Act, 2002 as being ultra vires the provisions of
the Constitution of India and thus null and void.
Writ Petition in W.P.Nos.7297 and 8747 of 2014 are filed under
Article 226 of the Constitution of India seeking for the relief of issuance of
a
Writ
of
Declaration
to
declare
the circular/guideline
30
No.DBOD.No.BP.BC.9/ 21.04.048/2012-13 issued by the Reserve Bank of

India dt. 2.7.2012 qua classification of accounts as a Non-performing asset
as being arbitrary, unconstitutional and null and void.
the Constitution of India seeking for the relief of issuance of writ of
declaration declaring that Section 2(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 and Clause 2.1 of prudential norms on income Recognition,
Asset Classification and provisioning pertaining to Advances issued by the
6th respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 2nd and 3rd respondents
from continuing the proceedings initiated under the provisions of
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 as against the petitioner herein with reference to
the subject property more specifically set out in the petition schedule.
Article 226 of the Constitution of India seeking for the relief of issuance of a
Writ of Declaration declaring the guidelines bearing No.DBOD.No.BP.BC.9/
21.04.048/2012-13 dt. 2.7.2012 issued by the Reserve Bank of India
relating to the classification of accounts as Non-performing assets as
arbitrary, unconstitutional, opposed to public policy, null and void and ultra
vires the Constitution of India.
2nd respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 3rd respondent from
continuing the proceedings initiated under the provisions of Securitization
and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 as against the petitioner herein with reference to the
subject property more specifically set out in the petition schedule.
Writ Petitions in W.P.Nos.8090 and 8091 of 2014 are filed under
writ of declaration declaring that Section 2(o) of the Securitization and
31

3rd respondent Reserve Bank of India as ultra vires the Constitution of
India, void ab initio and consequently forbear the 2nd respondent from
Interest Act, 2002 as against the petitioner herein with reference to the
property at No.37, Arcot Road, Kodambakkam, Chennai 24.
Declaration to declare that Section 2(1)(o) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Securities Act is
ultra vires and null and void.
Writ Petition in W.P.No.8458 and 8593 of 2014 are filed under
Article 226 of the Constitution of India seeking for the relief of issuance of a
Writ of Declaration declaring the guidelines bearing DBOD.No.BP.BC.9/
21.04.048/2012-13 dt. 2.7.2012 issued by the Reserve Bank of India
relating to the classification of accounts as Non-performing assets as
arbitrary, unconstitutional, opposed to public policy, null and void and ultra
vires the provisions of the Constitution of India.
a Writ of Declaration
to declare that the Section 2(1)(o) of the
Securities Act, 2002 as arbitrary, unconstitutional, opposed to public policy,
null and void and ultra vires the provisions of the Constitution of India.
Declaration declaring the guidelines issued by the Reserve Bank of India
vide DBOD.No.BP.BC.9/ 21.04.048/2012-13 dt. 2.7.2012 relating to the
classification of accounts as Non-performing assets (NPA) as arbitrary,
unconstitutional and null and void and opposed to public policy.
32

3rd respondent as ultra vires the Constitution of India, void ab initio, illegal
and unconstitutional and consequently forbear the 2nd respondent Bank
the subject property.
5th respondent as ultra vires the Constitution of India, void ab initio, illegal
Writ Petition in W.P.No.9073 of 2014 is filed under Article 226 of the
Constitution of India seeking for the relief of issuance of writ of declaration
declaring that Section 2(o) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 and
Clause 2.1 of prudential norms on income Recognition, Asset Classification
and provisioning pertaining to Advances issued by the 3rd respondent
Reserve Bank of India as ultra vires the Constitution of India, void ab initio
33
and consequently forbear the 2nd respondent Bank from continuing the
proceedings initiated under the provisions of Securitization and
Act, 2002 as against the petitioner herein with reference to the subject
property.
Writ Petitions in W.P.Nos.9123, 9124 and 9183 of 2014 are filed
under Article 226 of the Constitution of India seeking for the relief of
issuance of writ of declaration declaring that Section 2(o) of the
Security Interest Act, 2002 and Clause 2.1 of prudential norms on income
Recognition, Asset Classification and provisioning pertaining to Advances
issued by the 3rd respondent as ultra vires the Constitution of India, void
ab initio and consequently forbear the 2nd respondent from continuing the
properties.
Constitution of India seeking for the relief of issuance of Writ of
Certiorarified Mandamus to call for the records pertaining to the Master
Circular-Prudential norms on Income Recognition, Asset Classification and
provisioning pertaining to advances as issued by Reserve Bank of India in
RBI/2012-2013/39;DBOD.No.BP.BC.9/21.04.048/2012-13 dt. 2.7.2012 on
the file of the respondent and quash the same and consequently forbear
the respondents from taking any further action pursuant to the notice
issued by UCO Bank, Midcorproate Branch, T.Nagar, Chennai 17/3rd
respondent dated 28.1.2014.
declaration declaring that Sec.2(1)(o); Sec.2(ha) of the Securitization and
Act, 2002 as arbitrary, unconstitutional, discriminatory and opposed to
public policy.
Constitution of India seeking for the relief of issuance of writ of declaration
declaring that Section 2(o) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 and
Clause 2.1 of prudential norms on income Recognition, Asset Classification
34
and provisioning pertaining to Advances issued by the 2nd respondent as

ultra vires the Constitution of India, void ab initio, illegal and
unconstitutional and consequently forbear the 3rd and 4th respondent Banks
the subject properties.
Writ Petitions in W.P.Nos.9611, 10766 and 11317 of 2014 are
filed under Article 226 of the Constitution of India seeking for the relief of
issuance of writ of declaration declaring that Section 2(o) of the
Security Interest Act, 2002 and Clause 2.1 of prudential norms on income
Recognition, Asset Classification and provisioning pertaining to Advances
issued by the 3rd respondent as ultra vires the Constitution of India, void
ab initio, illegal and unconstitutional and consequently forbear the 2nd
respondent Bank from continuing the proceedings initiated under the
provisions of Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 as against the petitioner herein
with reference to the subject properties.
2nd and 3rd respondents as ultra vires the Constitution of India, void ab
initio, illegal and unconstitutional and consequently forbear the 2nd
provisions of Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 as against the petitioner herein
Writ Petitions in W.P.No.9671 and 9690 of 2014 are filed under
writ of declaration declaring that Section 2(o) of SARFAESI Act and
Enforcement of Security Interest Act, 2002 and Clause 2.1 of prudential
norms on income Recognition, Asset Classification and provisioning
pertaining to Advances issued by the 3rd respondent-RBI as ultra vires the
Constitution of India, void ab initio, illegal and unconstitutional and
consequently forbear the 2nd respondent Bank from continuing the
35

Act, 2002 as against the petitioner herein with reference to the properties
bearing Door No.2/32, Arunagirinathar Street, New Perungalathur,
Chennai-600 063 measuring an extent of 1706 sq.ft., comprised in
S.No.145-B, Perungalathur Village, Tambaram Taluk, Kancheepuram
District and plot No.104, measuring an extent of 1657 sq.ft., and bearing
plot No.107, measuring an extent of 1840 sq.ft., Gandhi Nagar, Kambar
Street, Virugambakkam, Chennai-600 092, comprised in R.S.No.163, Part
of Virugambakkam Village, Mambalam-Guindy Taluk, Chennai District
respectively.
the Constitution of India seeking for the relief of issuance of Writ of
Declaration declaring Section 2(o) of the Securitization and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 and
Clause 2.1 of Prudential norms on Income Recognition, Assets
Classification and Provisioning pertaining to Advocates issued by the 2nd
respondent as ultra vires and Constitution of India, void ab initio, illegal and
unconstitutional and consequently forbear the 3rd to 5th respondents from
Enforcement Act 2002 as against the petitioner with regard to the subject
property.
Declaration by declaring that Section 2(o) of the Securitisation and
Asset Classification and Provision and Provision pertaining to Advances
issued by the 3rd respondent as ultra vires the Constitution of India, void ab
initio, illegal and unconstitutional and consequently, forbear the 3rd and 4th
respondent Banks from continuing the proceedings initiated under the
provisions of Section 13(2) dated 18.05.2013 and 22.05.2013 and 13(4)
notices of Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 as against the Petitioner herein
36

2nd respondent as ultra vires the Constitution of India, void ab initio and
consequently forbear the 3rd
respondent-Bank from continuing the
properties.
2nd respondent as ultra vires the Constitution of India, void ab initio and
consequently forbear the 3rd and 4th respondent-Banks from continuing the
properties.
Declaration to declare Section 2(1)(o) and 2(1)(ha) of the Securitization
Interest Act, 2002(54 of 2002) and the Master Circular-Prudential Norms on
Income Recognition, Asset Classification and Provisioning pertaining to
Advances as issued by the 2nd respondent in RBI/2012-13/39; DBOD
No.BP.BC.9/21.04.048/2012-13 dated 02.07.2012
as ultra vires the
Constitution of India, void ab initio, illegal and unconstitutional and
consequently forbear the respondents from taking any further action
pursuant
to
the notice issued by the third respondent
in
AX48/Legal/Sec/Satyam/2013 dated 18.12.2013.

37

3rd respondent as ultra vires the Constitution of India, void ab initio and
consequently forbear the 2nd
respondent-Bank from continuing the
Act, 2002 and consequent auction notice dated 04.03.2014 as against the
petitioner herein with reference to the subject property.
Declaration by declaring that Section 2(1)(o) of the Securitisation and
issued by the 2nd respondent as ultra vires the Constitution of India, void ab
initio, illegal and unconstitutional and consequently forbear the 3rd
provision of Section 13(2) dated 12.7.2013 and 28.12.2013 and 13(4)
notices of Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 as against the Petitioner, herein
initio, illegal and unconstitutional and consequently forbear the 3rd
provisions of Section 13(2) notice dated 20.08.2013 of Securitization and
Act, 2002 as against the Petitioner, herein with reference to the subject
properties.
declaration declaring that Section 2(o) of SARFAESI Act and Enforcement
38
of Security Interest Act, 2002 and Clause 2.1 of prudential norms on

income Recognition, Asset Classification and provisioning pertaining to
Advances issued by the 3rd respondent-RBI as ultra vires the Constitution
of India, void ab initio and consequently forbear the 2nd respondent Bank
SARFAESI Act 2002 as against the petitioner herein with reference to the
properties namely All that piece and parcel under S.No.145/B, building
thereon at Plot No.135 AB, Door No.4/31, Arunagirinathar Street, New
Perungalathur, Chennai-600 063, measuring an extent of 2165 sq.ft., and
all that piece and parcel of vacant house site bearing Plot No.5, measuring
an extent of 1040 sq.ft., bearing Plot No.6, measuring an extent of 1020
sq.ft., and bearing Plot No.7, measuring an extent of 1020, known as
Dakshin Avenue-II, comprised in S.No.75/2 as per Patta No.146, Re
S.No.75/2C, 76/1A, 85/5C2, 85/5C3 and 85/6, situated
in No.12,
Unaimancheri Village, Kanchipuram District, total measuring an extent of
3080 sq.ft. In respect of the cash credit Account No.253008700167876
and Term Loan-Vehicle Account No.25300NG02380677.
properties namely all that piece and parcel of vacant residential land
measuring 2340 sq.feet bearing Plot Nos.390 and 2340 sq.feet bearing
Plot No.391, in all admeasuring 4680 sq.feet, Sreeram Nagar, comprised in
S.Nos.300/2 and 301/4 of Pazhanthandalam Village, Sriperumbudur
Taluk, Kancheepuram District, in respect of the Cash Credit Account
No.253008700168006
and
Term
Loan-Vehicle
Account
No.25300NG02380686.
39

properties namely all that piece and parcel of vacant residential land
measuring 2340 sq.feet bearing Plot Nos.387 and 2340 sq.feet bearing
Plot No.388, in all admeasuring 4680 sq.feet, Sreeram Nagar, comprised in
S.Nos.300/2 and 301/4 of Pazhanthandalam Village, Sriperumbudur
Taluk, Kancheepuram District, in respect of the Cash Credit Account
No.253008700167991
and
Term
Loan-Vehicle
Account
No.25300IB02295555.
properties namely All that piece and parcel of Southern portion of land
measuring 1925 sq.feet out of 5835 sq.feet, bearing Plot No.31, Part in
Venkateswara Nagar, New Perungalathur, Chennai-600 063, comprised
in old S.No.211 and 213, Re S.Nos.211/1B and 213/1B of Perungalathur
Village, Tambaram Taluk, Kancheepuram District, measuring 1860 sq.ft.,
bearing Plot No.22, Venkateswara Nagar, New Perungalathur, Chennai600 063, comprised in S.No.213 of Perungalathur Village, Tambaram
Taluk, Kanceepuram District.
Declaration to declare Section 2(1)(o) of the Securitization and
Act, 2002 and clause 2.1 of Prudential norms on Income Recognition,
Asset Classification and Provisioning pertaining to Advances issued by the
and unconstitutional and consequently forbear the 3rd respondent from
Enforcement Act, 2002 as against the petitioner with regard to the subject
property.
40

initio, illegal and unconstitutional and consequently forbear the 3rd and 4th
provision of Section 13(2) and 13(4) sale notice dated 10.4.2012,
26.12.2012, 24.10.2013 and 21.4.2014 of Securitization and
Act, 2002 as against the Petitioner, herein with reference to the subject
properties.
declaration to declare Section 2(1)(o) of the Secularization and
Reconstruction of Financial Assets and Enforcement of Securities Act,
2002 and clause 2.1 of prudential norms on income Recognition, Asset
Classification and provision pertaining to Advances issued by the 2nd
respondent as ultra vires the constitution of India, void ab initio, illegal and
unconstitutional and consequently forbear the 3rd respondent bank from
continuing the proceedings initiated under the provisions of Section 13(2)
notice dated 10.08.2013 of Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 as against the
petitioner herein with reference to the subject properties.
For Petitioner in W.P.Nos.
5897 and 5898 of 2014
: Mr.Anirudh Krishnan
For Petitioner in W.P.Nos.7296: Mr.K.Gowtham Kumar

and 7297 of 2014
For Petitioner in W.P.No.7298 : Mr.P.R.Renganath for
and 7299 of 2014
Mr.N.Murali
For Petitioner in W.P.No.7390 : Mr.AR.L.Sundaresan,
of 2014
Senior Counsel for
Mr.P.Satish
For Petitioner in W.P.No.7653,: Mr.S.V.Pravin Rathinam
7654, 8593 to 8596, 8457 and
8458 of 2014
41
For Petitioner in W.P.No.8746 : Mr.S.Seshadri

and 8747 of 2014
For Petitioner in W.P.No.8766,: Mr.A.V.Raja
9774 and 12318 of 2014
For Petitioner in W.P.Nos.8942,: Mr.E.Ramachandran
9073,9124 and 10766 of 2014
For Petitioner in W.P.Nos.8970: Mr.A.Swaminathan
9019, 9123, 9183 and 10665 of
2014
For Petitioner in W.P.Nos.9420: Mr.V.Ayyadurai
and 9421 of 2014
For Petitioner in W.P.No.9573, :Mr.S.N.Kirubanandam
9649, 9825, 10007, 10304, 11042,
11078, 12462 and 12506 of 2014
For Petitioner in W.P.No.9611 : Mr.Venkatesh Mohanraj
of 2014
For Petitioner in W.P.No.9671,
9690 and 11471 to 11474
of 2014
: Mr.R.Kannan
For Petitioner in W.P.No.10656 : Mr.S.Regu

of 2014
For Petitioner in W.P.No.7806 : Mr.A.Selvendran
of 2014
For Petitioner in W.P.No.8090
and 8091 of 2014
: Mr.V.Girish Kumar
For Petitioner in W.P.No.11317 : Ms.Anuradha Balaji

of 2014
For Petitioner in W.P.No.12508 : Mr.R.Sugumaran
42
of 2014
and Mr.A.V.Arun
For 1st Respondent in W.P.Nos : Mr.G.Masilamani,

8746, 8747, 8942, 8970, 9019, Addl. Solicitor General for
9073, 9123, 9124, 9183, 9573, Mr.S.Udayakumar, ASGSC,
9611, 9649, 9671, 9690, 9825,
10007, 10304, 10656, 10665,
10766, 11042, 11078, 11317 &
11471 to 11474 of 2014
For 1st Respondent in W.P.Nos: Mr.G.Masilamani,
7296, 7297, 7653, 7654, 8090, Addl. Solicitor General for
8091, 8457, 8458, 8593 to
Mr.G.Arul Murugan,ACGSC.
8596, 8766, 9420, 9421, 9774
and 12318, 12462, 12506 &
12508 of 2014
For 1st respondent in W.P.Nos : Mr.G.Masilamani,
5897, 5898, 7298, 7299 and
Addl. Solicitor General for
7390 of 2014
Mr.N.Ramesh,CGSC
For 1st Respondent in W.P.No : Mr.G.Masilamani,
7806 of 2014
Addl. Solicitor General for
Mr.S.Ravichandran,CGSC.,
For 2nd respondent in W.P.Nos : Mr.T.Poornam
5897, 5898, 7296 to 7299,
7653,7654,7806, 8457,
8458, 8593, 8596, 8746, 8747,
8766, 9420, 9421, 9573, 9649,
9774, 9825, 10007, 10304,
10656, 11042,11078, 12318,
12462, 12506 and 12508 of 2014,
for 3rd respondent in WP.Nos.8090,
8091, 8942, 9019, 9073, 9123, 9124
9183, 9611, 9671, 9690, 10665,
10766, 11317 & 11471 to 11474
of 2014, for 5th respondent in WP.No.
8970 of 2014 and for 6th respondent in
WP.No.7390 of 2014
For 3rd respondent in W.P.Nos: Mr.T.S.Golpalan & Co
43
5897 and 5898 of 2014 and 2nd

Respondent in WP.No.9183
of 2014
For respondents 2 & 3 in W.P.No.: Mr.F.B.Benjamin Goerge
7390 of 2014, for 2nd respondent
in W.P.Nos.9611 & 11317 of 2014
& for 3rd respondent in WP.Nos.
12506 and 12508 of 2014
For 2nd respondent in W.P.Nos.: Mr.V.Girishkumar
8942, 9073 and 9124 of 2014
For respondents 2 in W.P.Nos.: Mr.Om Prakash for
8970, 9019, 9123 and
Ramalingam Associates
10665 of 2014
For 2nd respondent in W.P.Nos.: Mr.M.LGanesh
9671, 9690 and 11471 to 11474
of 2014 and for 3rd respondent in
W.P.Nos.7653, 7654, 8457, 8458,
8593 to 8596, 8766, 9573, 9649,
9825, 10007, 10304, 11042,11078
& 12318 of 2014, for Respondents 3
& 4 in WP.No.12462 of 2014 and
for Respondents 3 to 5 in W.P.
No.9774 of 2014
For 2nd respondent in W.P.No. : Mr.Srinath Sridevan
8090 & 8091 of 2014
For 2nd respondent in W.P.No. : Mr.T.Sundar Rajan
10766 of 2014
For respondents 3 & 4 in W.P.: Mr.Shivakumar &
Nos.7296 to 7299 of 2014
Mr.Suresh
For respondents 3 & 4
in W.P.No.9573 of 2014
: Mr.N.V.Srinivasan, S.C., for

M/s NVS & Associates
For 3rd respondent in

WP.No.7806 of 2014
: Mr.S.Sethuraman
44
For 3rd respondent in

W.P.Nos.9420 and 9421
of 2014
: Mr.K.S.Viswanathan
COMMON ORDER
M.M.SUNDRESH,J.
The common thread that runs across all these cases is to the
constitutionality of Section 2(1)(o) of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002, (Act
No.54 of 2002), (in short, SARFAESI Act) as well as the guidelines issued
by the Reserve Bank of India pertaining to the classification of assets as
Non-Performing Assets.
2. In all these cases, the petitioners have borrowed monies from the
respective respondent Banks. They did not repay the amounts borrowed.
Thereafter, the Banks initiated proceedings under the SARFAESI Act, 2002
after declaring the assets as "Non Performing Assets" in view of the
guidelines issued by way of the Circular by the Reserve Bank of India.
3. Being a Court of record, we would like to record the earlier

proceedings. The cases were heard at length before the other Bench in
which one of us (M.M.Sundresh,J.) was a party. After conclusion of the
arguments, the judgment was reserved. Thereafter, on the next working
45
day, two memos have been filed by the counsels on behalf of two
petitioners stating that the challenge made to the Circular was decided by
the other learned judge sitting single and the matter requires a fresh
hearing before some other Bench in which he may not be a party.
Accordingly, the cases have been posted before us giving the pleasure of
hearing the counsels once over by one of us, who was the party to the
earlier Bench.
4. Heard
Mr.AR.L.Sundaresan and Mr.N.V.Srinivasan, learned
Senior Counsels and
Mr..Anirudh Krishnan, Mr.K.Gowtham Kumar,
Mr.N.Murali, Mr.S.V.Pravin Rathinam, Mr.S.Seshadri,

Mr.E.Ramachandran,
Mr.S.N.Kirubanandam,
Mr.A.Swaminathan,
Mr.Venkatesh
Mr.S.Regu, Mr.A.Selvendran,
Mr.A.V.Raja,
Mr.V.Ayyadurai,
Mohanraj,
Mr.R.Kannan,
Mr.V.Girish Kumar, Ms.Anuradha Balaji,
Mr.R.Sugumaran, Mr.A.V.Arun, the learned counsels appearing for the

petitioners and Mr.G.Masilamani, learned Additional Solicitor General,
Mr.N.Ramesh and Mr.S.Ravichandran, learned Central Government
Standing Counsels, Mr.G.Arul Murugan and Mr.S.Udayakumar, learned
Additional Central Government Standing Counsels,
Mr.T.Poornam,
Mr.V.Karthik, Mr.F.B.Benjamin Goerge, Mr.V.Girishkumar, Mr.Om Prakash,

Mr.G.R.Lakshmanan,
Mr.S.R.Sumathy,
Sridevan, Mr.T.Sundar Rajan,
Mr.M.LGanesh,
Mr.Srinath
Mr.Shivakumar, Mr.S.Sethuraman and
46
Mr.K.S.Viswanathan, learned counsel appearing for respondents. We have

also perused at length the various documents filed, judgments relied upon
as well as the provisions of enactments.
5. Since number of counsels made their submissions on behalf of

both petitioners and the respondents, for the sake of brevity, we summarise
the submissions as a whole instead of referring them individually.
6. Role of Reserve Bank of India:When a mission was sent by then British Government, which was
wobbling in its last leg, not satisfied with the offers made, the father of the
Nation has rejected the same by saying that the sleuth of measures offered
would constitute a post-dated cheque on a falling Bank. Averting such a
situation is precisely the role of the Reserve Bank of India in maintaining,
monitoring, improving and developing health of the Banking Companies
and Banking in India. A stable vibrant Banking system is a sine qua non
of a country's economy. This important function has been bestowed upon
the Reserve Bank of India as a Central Bank for the country, being the
Bankers' Bank. The Reserve Bank of India is the monitoring regulator
empowered to form the Banking policy. Such is the policy being evolved in
the interest of Banking system, monetary stability and sound economic
growth. The role of the Reserve Bank of India has been recognised by the
47
Supreme Court in JOSEPH KARUVILLA VELLUKUNNEL VS. THE

RESERVE BANK OF INDIA AND OTHERS, (AIR 1962 SC 1371), wherein
it was held as under:
13. The power conferred on the Reserve Bank, by the
section is said to be had under Article 14, because it enables
a discrimination between a banking company and any other
company by prescribing different laws for their respective
winding up, and is bad under Art.19(1)(f) and (g) as
amounting to an unreasonable restriction on the holding of
property and the right to carry on business as a banking
company. To amplify the first it is argued that under S.433 of
the Indian Companies Act, when an application is made to
wind up a company, the High Court has to be satisfied after a
fair trial that an order to wind up the company is called for,
and the Judge, who is independent of executive control, is
completely free to reach a decision after the Company has
shown cause and there is a right of appeal against the
decision, if adverse to the company. But under the procedure
laid down in S.38 of the Banking Companies Act the banking
company proceeded against has no opportunity to show
cause either before or after the winding up order, the Reserve
Bank records no reasons in writing or communicates them,
there is no access to Court and no hearing before the Court to
determine whether the proposed action is justified, and no
redress if a mistake were made. Under the exercise of that
power, it is said, any banking company can be suppressed by
the Reserve Bank or by the Central Government and the
48
Courts are powerless, since the opinion of the Reserve Bank

and/or the Central Government is not justiciable and there is
no appeal against the decision of the Reserve Bank or of the
Court acting on the application of the Reserve Bank.
7. In PEERLESS GENERAL FINANCE AND INVESTMENT

CO.LTD. AND ANOTHER VS. RESERVE BANK OF INDIA, (AIR 1962 SC
1033), the following passage of the Supreme Court would be apposite.
53. ....... Thus, the R.B.I. occupies place of preeminence to ensure monetary discipline and to regulate the
economy or the credit system of the country as an expert
body. It also advices the Government in public finance and
monetary regulations. The banks or non-banking institutions
shall have to regulate their operations in accordance with, not
only as per the provisions of the Act but also the rules and
directions or instructions issued by the RBI in exercise of the
power thereunder.....
The Reserve Bank of India Act, 1934:8. The Reserve Bank of India came into existence by the introduction
of a pre-Independence enactment viz., Reserve Bank of India Act, 1934.
It was introduced with the avowed object of securing monetary stability and
to operate the relationship and credit system of the country to its
advantage. The objects and reasons enshrined in Amendment Act 54 of
49
1953 would show that it was meant to ensure more effective supervision
and management of monitoring and credit system to give any financial
institution or institutions directions. Thereafter, several amendments have
been made from time to time explaining the jurisdiction of the Reserve
Bank of India. These amendments have been made taking into
consideration of the then prevailing situation and the steady progress that
the country is making in the field of economy. It was also necessitated as
the Indian financial markets have now more products, participants and
better liquidity than before. The necessity to go with any unforeseen
eventualities in future has also been taken note of. Thus, the Reserve Bank
of India is a statutory corporation constituted as monitoring and the
Banking Authority under the Reserve Bank of India Act, 1934.
The Banking Regulation Act, 1949:9. The Banking Regulation Act, 1949 (Act No.10 of 1949) was
enacted to consolidate and amend the laws relating to India. The need for
enacting the Banking Regulation Act was felt owning partly to the abuse of
powers by persons controlling some banks and the absence of measures
for safeguarding the interest of depositors of banking companies in
particular and partly to the economic interest of the country in general. The
collapse of a bank can affect a vast multitude of depositors. In view of
these considerations, banking business has been a highly regulated area
50
all over the world. In view of the various provisions of Banking Regulation
Act and the Reserve Bank of India Act, the Reserve Bank is obliged to see
that the banking business is carried on sound principles. The Banking
Regulation Act is a special law regulating the banking activities of banking
companies in India. Section 2 of Banking Regulation Act provides that, the
provisions of this Act shall be in addition to, and not, save as hereinafter
expressly provided, in derogation of the Companies Act, 1956, (1 of 1956),
and any other law for the time being in force. The primary objective of the
Companies Act is to safeguard the interest of the shareholders, but the
protection of interest of depositors of banks is not dealt with by the
Companies Act. Hence, a separate legislation for regulation of banking
companies in India was enacted by the Parliament with an intention to
protect the interest of depositors, public and banking business. Section
5(ca) of Banking Regulation Act, 1949 defines Banking policy, which
means any policy which is specified from time to time by the Reserve Bank
in the interest of the banking system or in the interest of monetary stability
or sound economic growth, having due regard to the interests of the
depositors, the volume of deposits and other resources of the bank and the
need for equitable allocation and the efficient use of these deposits and
resources. Section 6 of Banking Regulation Act specifies the forms of
business in which banking companies may engage. Section 21 of Banking
Regulation Act states that if the Reserve Bank is satisfied that it is
51
necessary or expedient in public interest or in the interests of depositors or

banking policy so to do, it may determine the policy in relation to advances
to be followed by banking companies generally or by any banking company
in particular and the banking company concerned, as the case may be,
shall be bound to follow the policy as so determined. Section 22 of the
Banking Regulation Act states that no company can carry on banking
business in India, unless, it holds a license in this behalf issued by the
Reserve Bank. Section 22(4) of the Banking Regulation Act empowered
the Reserve Bank to cancel the license of the banking company granted to
carry on banking business, in the facts and circumstances stated therein.
Section 35 of the Banking Regulation Act conferred the powers on the
Reserve Bank to carry on statutory inspection of books of accounts of any
banking company or cause a scrutiny into the affairs of a banking
company. Section 35-A of the Banking Regulation Act confers the powers
on the Reserve Bank to issue directions to banking companies in general
or any banking company in particular in the public interest or in the interest
of the banking policy or to prevent the affairs of the banking company being
conducted in a manner detrimental to the interest of its depositors or in a
manner prejudicial to the banking company etc. The Banking Regulation
Act envisages action to be taken by the Reserve Bank when the Revenue
Bank is satisfied that circumstances warrant such action.
52
10. Thus, a conjoint reading of Section 5(ca), Section 21 and Section

35-A would lead us to the necessary conclusion that the Reserve Bank of
India has got ample powers to issue appropriate directions to the Banking
Companies. Considering the scope and ambit of Section 21 and Section
35-A of the Banking Regulation Act, 1949, it has been held by the Supreme
Court in CENTRAL BANK OF INDIA VS. RAVINDRA AND OTHERS,
((2002) 1 SCC 367) as under:
55. ........ (5) The power conferred by Sections 21
and 35A of the Banking Regulation Act, 1935 is coupled
with duty to act. Reserve Bank of India is prime banking
institution of the country entrusted with a supervisory role
over banking and conferred with the authority of issuing
binding directions, having statutory force, in the interest of
public in general and preventing banking affairs from
deterioration and prejudice as also to secure the proper
management of any banking company generally. Reserve
Bank of India is one of the watchdogs of finance and
economy of the nation. It is, and it ought to be, aware of all
relevant factors, including credit conditions as prevailing,
which would invite its policy decisions........
Master Circular:
11. The prudential norms issued by the Reserve Bank of India were
introduced in the year 1992, vide Circular DBOD No.BC.129/21.04.043/92
53
dated April 27, 1992
on 'Income Recognition, Asset Classification,
Provisioning and Other Related Matters. In terms of the said circular, For
the year ending 31 March 1993, a term loan will be treated as NPA if
interest remains past due for a period of four quarters as on that date. For
the year ending 31 March, 1994 and 31 March, 1995 and onwards, a loan
will be treated as "NPA" if interest remains past due for three quarters and
two quarters respectively Similar norms were prescribed for other kinds of
credit facilities. However, in order to align the prudential norms with the
international benchmarks the Reserve Bank had stipulated, vide Circular
DBOD.No.BP.BC.116/21.04.048/2000-2001 dated May 2, 2001 that, with
effect from March 31, 2004, a non-performing asset (NPA) shall be a loan
or an advance interest and/or installment of principal remain overdue for a
period of more than 90 days in respect of a term loan. Further, similar
norms were issued for other types of credit facilities also. Reserve Bank's
norms for asset classification have evolved over a period and 90 days
delinquency norms were brought in through a calibrated manner in an
effort to benchmark the Reserve Bank's prudential regulations to the
international standards. These prudential norms are one of the building
blocks for financial soundness of Indian banks and any deviation would
render the banking system weaker. These guidelines are applicable to all
banks. Further, any delay in recognition of deterioration in asset quality
removes pressure on the banks to deal promptly with the problem.
54
12. These norms have been amended from time to time and
consolidated into a Master Circular once in a year. These Master Circulars
have been issued in exercise of the powers conferred and mandated
under Sections 21 and 35-A of the Banking Regulation Act, 1949. The
latest Master Circular was updated on July 1, 2013. There is no dispute
that these Master Circulars have got statutory flavour as held by the
Supreme Court in ICICI BANK LTD. VS. OFFICIAL LIQUIDATOR OF APS
STAR INDUSTRIES LIMITED AND OTHERS, ((2010) 10 SCC 1).
13. Paras 2 and 4.2.4 of the Circular defines Non Performing Asset
as under:2. DEFINITIONS.
2.1 Non performing Assets
2.1.1 An asset, including a leased asset, becomes non
performing when it ceases to generate income for the bank.
2.1.2 A non performing asset (NPA) is a loan or an
advance where;
i. interest and/or instalment of principal remain overdue
for a period of more than 90 days in respect of a term loan,
ii. the account remains 'out of order' as indicated at
paragraph 2.2 below, in respect of an Overdraft/Cash Credit
(OD/CC),
iii. the bill remains overdue for a period of more than 90
days in the case of bills purchased and discounted,
55
iv. the instalment of principal or interest thereon remains

overdue for two crop seasons for short duration crops,
v. the instalment of principal or interest thereon remains
overdue for one crop season for long duration crops.
vi. the amount of liquidity facility remains outstanding for
more than 90 days, in respect of a securitisation transaction
undertaken in terms of guidelines on securitisation dated
February 1, 2006.
vii. in respective of derivative transactions, the overdue
receivables representing positive mark-to market value of a
derivative contract, if these remain unpaid for a period of 90
days from the specified due date for payment.
2.1.3 In case of interest payments, banks should,
classify an account as NPA only if the interest due and
charged during any quarter is not serviced fully within 90 days
from the end of the quarter.
2.1.4 In addition, an amount may also be classified as
NPA in terms of paragraph 4.2.4 of this Master Circular.
2.2 'Out of Order' status:
An account should be treated as 'out of order' if the
outstanding balance remains continuously in excess of the
sanctioned
limit/drawing
power.
In
cases
where
the
outstanding balance in the principal operating account is less

than the sanctioned limit/drawing power, but there are no
credits continuously for 90 days as on the date of Balance
Sheet or credits are not enough to cover the interest debited
during the same period, these accounts should be treated as
'out of order'.
56
2.3 'Overdue'
Any amount due to the bank under any credit facility is
'overdue' if it is not paid on the due date fixed by the bank.
3. ........
4. ASSET CLASSIFICATION
4.1 ......
4.2. .....
4.2.4 Accounts with temporary deficiencies
The classification of an asset as NPA should be based on the
record of recovery. Bank should not classify an advance
account as NPA merely due to the existence of some
deficiencies which are temporary in nature such as nonavailability of adequate drawing power based on the latest
available stock statement, balance outstanding exceeding the
limit temporarily, non-submission of stock statements and nonrenewal of the limits on the due date, etc., in the matter of
classification of accounts with such deficiencies banks may
follow the following guidelines:
i) Banks should ensure that drawings in the working
capital accounts are covered by the adequacy of current
assets, since current assets are the first appropriated in times
of distress. Drawing power is required to be arrived at based
on the stock statement which is current. However, considering
the difficulties of large borrowers, stock statements relied upon
by the banks for determining drawing power should not be
older than three months. The outstanding in the account
based on drawing power calculated from stock statements
57
older than three months, would be deemed as irregular.

A working capital borrowal account will become NPA if
such irregular drawings are permitted in the account for a
continuous period of 90 days even though the unit may be
working or the borrower's financial positi9on is satisfactory.
ii) Regular and ad hoc credit limits need to be
reviewed/regularised not later than three months from the due
date/date of ad hoc sanction. In case of constrains such as
non-availability of financial statements and other data from the
borrowers, the branch should furnish evidence to show that
renewal/review of credit limits is already on and would be
completed soon in any case, delay beyond six months is not
considered desirable as a general discipline. Hence, an
account where the regular/ ad hoc credit limits have not been
reviewed/renewed within 180 days from the due date/date of
ad hoc sanction will be treated as NPA.
14. Such accounts classified as "Non Performing Assets" would be

upgraded in terms of 4.2.5 of the Master Circular, provided the arrears of
interest and principle are paid by the borrower. In such a case, the
accounts should no longer be treated as Non performing and may be
classified as Standard Accounts.
15. Under the present Master Circular, the impugned Paragraphs

restrict the period to treat the asset or an account as a Non Performing
after the expiry of 90 days. This Circular has been issued by the Reserve
58
Bank of India by taking into consideration of the two reports of the Expert
Committee by name M.Narasimham Committee upon taking note of the
public interest of depositors, transparency, uniformity and stability of the
Banking system as well as the prevailing International practice. Thus, the
Reserve Bank of India has introduced
Circular in exercise of powers
conferred under Banking Regulation Act, 1949.

16. The Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002:The Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, (Act No.54 of 2002), (in short,
SARFAESI Act), as it is called in the abbreviated form, has been has
been introduced by taking note of the slow process of recovery of
defaulting loans and mounting levels of Non Performing Assets of Banks
and Financial Institutions. It has also taken into consideration of two reports
of the Narasimham Committee as well as that of Andhyarujina Committee
constituted by Central Bank of India for the purpose of examining Banking
Sector Reforms. The enactment is a novel mechanism addressing the
need of the ever in making timely recovery. Section 2(1)(ha), which is a
provision containing definition of debt borrows the meaning assigned to it
in Clause (g) of section 2 of the Recovery of Debts due to Banks and
Financial Institutions Act, 1993 (Act No.51 of 1933). Section 2(1)(o) defines
59
"Non Performing Asset" in the following manner:

non-performing asset means an asset or account of a
borrower, which has been classified by a bank or financial
institution as sub-standard. Doubtful or loss asset.
17. Under Section 2(1)(o), which is once again a definition clause, a
classification of a "Non Performing Asset" will have to be done in
accordance
with
the
directions
or
guidelines
relating
to
Assets
Classification issued by the Reserve Bank of India from time to time. When
once asset is treated as a Non-performing Asset, in accordance with the
guidelines issued by the Supreme Court of India by the respective Banks
pertaining to borrowers, then the rigour of the recovery machinery in
Chapter III, which deals with Enforcement of Security Interest would be
put into action. It is this provision, which adopts the directions/guidelines
relating to assets Classification issued by the Reserve Bank of India, has
been put to challenge before us as unconstitutional.
Other Enactments:18. Much prior to Act No.54 of 2002, the Recovery of Debts due to
Banks and Financial Institutions Act, 1993 (Act No.51 of 1993) came into
being. Even though the object of this enactment is akin to the object as
enshrined in Act No.54 of 2002, the mode of recovery is different. Under
this Act, in order to recover a debt, a Bank or a Financial Institution will
60
have to have its recourse through a Tribunal constituted. Section 2(g) of

Act No.51 of 1993 defines debt and the definition of the word debt
therein is rather exhaustive. It encompasses any liability, inclusive of
interest and such a debt will have to be a liability on the part of the
borrower, which is required to be a legally recoverable one on the date of
the application. This definition of 'debt' as envisaged under Act 51 of 1993
has been borrowed and adopted by Act No.54 of 2002. There are other
enactments like Sick Industrial Companies (Special Provisions) Act, 1985,
The Competition Act, 2002, The Companies Act, 1956, etc., The objects
and reasoning of these enactments are totally different. The objects of
these enactments is not with respect of the recovery. Therefore, they have
their own internal mechanism to deal with the object sought to be achieved
such as helping a Company from being sick, regulate the competition and
proper administration of the companies.
Relevant Judicial Pronouncements:19. The Supreme Court in Mardia Chemicals Limited and others
Vs. Union of India and others, ((2004) 4 SCC 311) upheld the challenge
made to the validity of Act No.54 of 2002. One of the contentions raised
was as to whether on the whims and fancies of the financial institutions,
classification of assets as Non-Performing Assets can be made. While
61
dealing with the said issue, the Supreme Court took note of the Reserve
Bank
of India's
prudential
norms
of Income
Recognition,
Asset
Classification and Provisioning pertaining to advances to the Circular

dated 30.8.2001 and said that in view of the said guidelines it cannot be
said that there are no parameters for treating the 'debt' as a "Non
Performing Asset". Accordingly, we believe that the challenge made to
these enactments will have to be seen in the light of the ratio laid down by
the Supreme Court. Further, the very same provision, which is sought to
be declared as unconstitutional before us Section 2(1)(o) of Act No.54 of
2002 has been challenged by the borrowers before the Delhi as well as the
Gujarat High Courts. Both these High Courts have upheld this provision in
HOLYSTAR NATURAL RESOURCES PVT.LTD. AND ANOTHER VS.
UNION OF INDIA AND ANOTHER,
(MANU/DE/0130/2014 = AIR 2014
DELHI 60) (W.P (C) No.7505/2013) of Delhi High Court dated 17.01.2014
and IONIK METALLICS AND OTHERS VS. UNION OF INDIA in
SCA.No.14908 of 2012 etc., batch dated 24.4.2014 of High Court of
Gujarat at Ahmedabad.
20. Submissions of the petitioners:Learned counsels appearing for the petitioners submitted that
issuing directions or guidelines relating to Asset Classification is essential
62
legislative function and therefore it cannot be delegated. A delegate cannot

formulate a policy. A delegated legislation, if exercised, is liable to be
struck down as unconstitutional. The decisions rendered in Mardia
Chemicals Limited and others Vs. Union of India and others, ((2004) 4
SCC 311) does not cover the issues raised in these writ petitions. The said
decision cannot be termed as a binding precedent. The issues, which have
not been decided on conscious consideration, cannot be termed as binding
precedents. The observations made by the Supreme Court are obiter.
Therefore, the said decision cannot be termed as a ratio decidendi. The
guidelines issued by the Reserve Bank of India cannot be used for defining
a "Non Performing Asset" under the SARFAESI Act. There has to be a
separate legislation, as provided under Section 38 of the SARFAESI Act.
Considering the rigour of Act No.54 of 2002, the definition of "Non
Performing Asset" as mentioned in the guidelines of Reserve Bank of India
cannot be imported. The High Court of Delhi has misconstrued itself on the
scope and the decision rendered by the Supreme Court. The question of
excessive delegation has not been considered by the Gujarat High Court. If
there is no delegated legislation, then the doctrine of legislation by
reference or incorporation would apply. Even in such a case, the
subsequent decision made by way of Circular by the Reserve Bank of India
cannot be made applicable. The word legally recoverable debt has not
63
been defined in both Act No.54 of 2002 and Act No.51 of 1993. A mere
liability cannot be termed as a 'debt'. Interest component cannot be added
into a 'debt'.
21. It is further contended on behalf of the petitioners that the

Circular, which defines "Non Performing Asset" is very vague. There is
ambiguity between the different classifications of the circular. "Non
Performing Asset" has been defined first and thereafter the classifications
have been made. There is no necessity to challenge Sections 21 and
Section 35-A of the Banking Regulation Act, 1949. Even otherwise, they do
not empower the Reserve Bank of India to issue the impugned Circular.
Even assuming that an enactment was constitutional at an earlier point of
time there is no bar to challenge its constitutionality based upon
subsequent facts. There is no basis for the classification made. The
international market alone cannot be a criteria to fix "Non Performing
Asset" without considering the local conditions. In support of the said
contentions, learned counsels have made reliance upon the following
judgments:
(1) HAMDARD DAWAKHANA VS. UNION OF INDIA, (AIR 1960 SC
554),
(2) VASANTLAL MAGANBHAI VS. STATE OF BOMBAY, (AIR 1961
SC 4),
(3) B.SHARMA RAO VS. U.T. OF PONDICHERRY, (AIR 1967 SC
64
1480),
(4) DEVI DASS GOPAL KRISHNAN VS. STATE OF PUNJAB, (AIR
1967 SC 1895),
(5) HARAK CHAND RATANCHAND VS. UNION OF INDIA, ((1969) 2
SCC 166 = AIR 1970 SC 1453),
(6) GULABCHAND BAPLAL VS. MUNICIPAL CORPORATION OF
AHMEDABAD, ((1971) 1 SCC 823),
(7) GWALIOR RAYON VS. ASST.COMMISSIONER OF SALES TAX,
((1974) 4 SCC 98),
(8) M.K.PAPIAH VS. THE EXCISE COMMISSIONER, (1975) 1 SCC
492),
(9) MAHE BEACH TRADING CO. VS. U.T. OF PONDICHERRY,
((1996) 3 SCC 741),
(10) HOLYSTAR NATURAL RESOURCES VS. UNION OF INDIA,
(AIR 2014 DELHI 60),
(11) AIR INDIA VS. NARGESH MEERZA ((1981) 4 SCC 335),
(12) KRISHNA MOHAN VS. MUNICIPAL CORPORATION OF DELHI,
((2003) 7 SCC 151),
(13) UNION OF INDIA VS. BHANA MAL ((1960) 2 SCR 627),
(14) MARDIA CHEMICALS VS. UNION OF INDIA, ((2004) 4 SCC
311),
(15) SANJEEVANI DYEING MILLS VS. UNION OF INDIA (Spl.Leave
to Appeal (c) No.26889 of 2013), dated 8.7.2013 of Supreme
Court, in S.C.A.No.10494 of 2013 of High Court of Gujarat at
Ahmedabad.),
(16) ZEE TELEFILMS LTD. AND ANOTHER VS. UNION OF INDIA
AND OTHERS, ((2005) 4 SCC 649),
(17) PURBANCHAL CABLES AND CONDUCTORS PVT.LTD VS.
ASSAM STATE ELECTRICITY BOARD AND ANOTHER, ((2012) 7
SCC 462),
65
(18) MUNICIPAL CORPORATION OF DELHI VS. GURNAM KAUR,
((1989) 1 SCC 101),
(19) ARNIT DAS VS. STATE OF BIHAR, ((2000) 5 SCC 488),
(20) TIKA RAM VS. STATE OF U.P. AND OTHERS, ((2009) 10 SCC
689),
(21) LANCASTER MOTOR COMPANY LIMITED VS. BREMITH
LIMITED, ((1941) 1 K.B. 675),
(22) VISHNU TRADERS VS. STATE OF HARYANA AND OTHERS,
((1995) SUPP (1) SCC 461) and
(23) STATE OF U.P. VS. STATE OF HARYANA AND OTHERS,
((2011) 5 SCC 305).
Submissions of Respondents:
22. The Writ Petitions are not maintainable either on facts and law.
The issues raised are no longer res integra and they are already covered
by the decision rendered by the Supreme Court in Mardia Chemicals
Limited and others Vs. Union of India and others, ((2004) 4 SCC 311)
and therefore it is not open to the petitioners to re-agitate the same. The
constitutionality of an Act once upheld by the Supreme Court would bring
about finality and hence the same is not open to be challenged on new
grounds. Once an Act as a whole is upheld, its provisions cannot be
independently challenged. The Supreme Court has recognised rule making
powers of the Reserve Bank of India giving statutory flavour. There is no
delegated legislation, reference legislation or legislation by incorporation
66
involved. The enactment merely borrows a definition clause from the

Circular. Declaring a "Non Performing Asset" is an accounting concept. It
includes both secured and unsecured assets. There is a presumption
towards the constitutionality of the enactments. Therefore, both Act No.54
of 2002 and Act No.10 of 1949 are constitutionally valid. The petitioners
indirectly seek to challenge Sections 21 and 35A of Act 10 of 1949, which
is impermissible in law. If Section 2(1)(o) is a legislation by reference, even
then, there is no unconstitutionality. The legislation has got power to create
an authority with the legislating powers. It has not been demonstrated as to
how the constitutional provisions have been violated. A delegated
legislation cannot be set aside only on the ground of uncontrolled and
vague powers on the delegate. It cannot also be set aside as excessive
delegation without considering the attending factors. When it comes to
economic matters, a greater latitude is required and the Court of law shall
not venture into the specialised field by acting as superior authority. In
support of the said contentions, the following decisions have been relied
upon.
(1) JOSEPH KURUVILLA VELLUKUNNEL VS. RESERVE
BANK OF INDIA, (AIR 1962 SC 1371(1)),
(2) PEERLESS
GENERAL
FINANCE
AND
INVESTMENT
CO.LTD. AND ANOTHER VS. RESERVE BANK OF INDIA,

(AIR 1962 SC 1033),
67
(3) THE REGISTRAR OF COOPERATIVE SOCIETIES AND

ANOTHER VS. K.KUNJAMBU AND OTHERS, (AIR 1980
SC 350),
(4) THE CONSUMER ACTION GROUP VS. STATE OF TAMIL
NADU, ((2000) 7 SCC 425),
(5) KISHAN PRAKASH SHARMA AND OTHERS VS. UNION
OF INDIA AND OTHERS, ((2001) 5 SCC 212),
(6) UNION OF INDIA VS. AZADI BACHOO ANDOLAN AND
ANOTHER, ((2004) 10 SCC 1),
(7) GOVERNMENT OF A.P. AND OTHERS VS. P.LAXMI
DEWVI (SMT), ((2008) 4 SCC 720),
(8) BANGALORE
AIRCRAFT
DEVELOPMENT
EMPLOYEES
AUTHORITY
COOPERATIVE
VS.
SOCIETY
LIMITED AND OTHERS, ((2012) 3 SCC 442),

(9) R.K.GARG VS. UNION OF INDIA, ((1981) 4 SCC 675),
(10) MARDIA CHEMICALS LTD. AND OTHERS VS. UNION OF
INDIA AND OTHERS, ((2004) 4 SCC 311);
(11)DELHI
CLOTH
AND
GENERAL
MILLS
LTD.
VS.
SHAMBUNATH MUKHERJI AND OTHERS ( 1977) 4 SCC

415);
(12) BANK OF BARODA VS. REDNAM NAGACHAYA DEVI,
((1989) 4 SCC 470),
(13) DIRECTOR OF SETTLEMENTS A.P. AND OTHERS VS.
M.R.APPARAO AND ANOTHER, ((2002) 4 SCC 638),
(14) K.RAKKIANNA GOUNDER VS. THE STATE OF TAMIL
NADU,
SOCIAL
WELFARE
ANOTHER, (CDJ 2009 MHC 1919),
DEPARTMENT
AND
68
(15) K.R.CHANDRASEKARAN AND OTHERS VS. UNION OF

INDIA, (CDJ 2012 MHC 2078),
(16) CENTRAL BANK OF INDIA VS. RAVINDRA AND
OTHERS, ((2002) 1 SCC 367),
(17) ICICI BANK LTD. VS. OFFICIAL LIQUIDATOR OF APS
STAR INDUSTRIES LIMITED AND OTHERS, ((2010) 10
SCC 1);
(18) SUDHIR SHANTILAL MEHTA VS. CENTRAL BUREAU OF
INVESTIGATION ((2009) 8 SCC 1),
(19) RAKESH VIJ VS. RAMINDER PAL SINGH SETHI AND
OTHERS, ((2005) 8 SCC 504),
(20)
SNEH
ENTERPRISES
VS.
COMMISSIONER
OF
CUSTOMS ((2006) 7 SCC 714),

(21) SINGHAI RAKESH KUMAR VS. UNION OF INDIA AND
OTHERS, ((2001) 1 SCC 364),
(22) B.KRISHNA BHAT VS. STATE OF KARNATAKA, ((2001) 4
SCC 227),
(23)
ST.JOHNS
REGIONAL
TEACHER
DIRECTOR,
TRAINING
INSTITUTE
VS.
NATIONAL
COUNCIL
FOR
TEACHER EDUCATION AND OTHERS, ((2003) 3 SCC

321),
(24) STATE OF M.P. AND ANOTHER VS. BHOLA ALIAS
BHAIRON PRASAD (RAGHUVANSHI ((2003) 3 SCC 1),
(25) T.VELAYUDHAN ACHARI AND ANOTHER VS. UNION OF
INDIA, ((1993) 2 SCC 582),
(26) K.T.PLANTATION PRIVATE LIMITD AND ANOTHER VS.
STATE OF KARNATAKA, ((2011) 9 SCC 1),
69
(27)
BANGALORE
DEVELOPMENT
AUTHORITY
VS.
AIRCRAFT EMPLOYEES CO-OPERATIVE SOCIETY AND

OTHERS, ((2012) 3 SCC 442),
(28) CANARA BANK VS. P.R.N.UPADHYAYA AND OTHERS,
((1998) 6 SCC 526),
(29) SARDAR ASSOCIATES AND OTHERS VS. PUNJAB &
SIND BANK AND OTHERS, ((2009) 8 SCC 257),
(30)
SIGNAL APPARELS PVT.LTD. VS. CANARA BANK,
((2010) 5 SCC 337),

(31) COMMON CAUSE VS. UNION OF INDIA, ((2010) 11 SCC
528),
(32)
HOLYSTAR NATURAL RESOURCES VS. UNION OF
INDIA, (AIR 2014 DELHI 60),

(33) TIKA RAM VS. STATE OF U.P. AND OTHERS, ((2009) 10
SCC 689),
(34) JYOTI PERSHAD VS. THE ADMINISTRATOR FOR THE
UNION TERRITORY OF DELHI, (AIR 1961 SC 1602),
(35) TATA IRON AND STEEL CO.LTD. VS. THE WORKMEN
AND OTHERS, (AIR 1972 SC 1917),
(36)
SRI
SRINIVASA RICE
AND FLOOR
MILL
VS.
AUTHORIZED OFFICER, STATE BANK OF INDIA AND

ANOTHER, (AIR 2007 AP 252),
(37)
SHRI
MULRAJ
JAYANTILAL
SHETH
VS.
THE
GOVERNOR, RESERVE BANK OF INDIA AND ANOHTER,

(AIR 2003 BOMBAY 318),
(38) TRANSCORE VS. UNION OF INDIA, (AIR 2007 Supreme
Court 712),
(39) A.KASINATHAN VS. THE BRANCH MANAGER, CANARA
70
BANK, (2012 WRIT LR 640),
(MADURAI BENCH OF
MADRAS HIGH COURT),

(40) DEVI ISPAT LIMITED AND ANOTHER VS. STATE BANK
OF INDIA AND OTHERS, (SLP (C) NO.19466 OF 2013)
and,
(41)
RAJAN
AGARWAL
AND
ANOTHER
VS.
THE
AUTHORISED OFFICER FOR ING VYSYA BANK LTD. AND

OTHERS
(W.P.NO.1066
OF
2012,
DT.10.4.2012
OF
KARNATAKA HIGH COURT AT BANGALORE.
Discussion:
(a) Ratio decidendi:23. The Supreme Court in Mardia Chemicals Limited and others
Vs. Union of India and others, ((2004) 4 SCC 311)
dealt with the
submissions made on the lack of guidelines in declaring asset

classifications. Taking note of the Circular dated 30.8.2001 issued by he
Reserve Bank of India, the Supreme Court came to the conclusion that the
financial institutions are not fixing their own norms in view of the specific
directions issued by Reserve Bank of India. From the said observation, it is
therefore clear that the guidelines of Reserve Bank of India, which are also
sought to be impugned before us, have been taken into consideration.
Similarly, the scope and ambit of Act No.54 of 2002 has also been
discussed and approved by the Supreme Court. Therefore, on these two
issues, the decisions referred supra would govern the cases. However, we
71
note that there was no challenge to the constitutionality of Section 2(1)(o)

pertaining to the power of the external agency vis-a-vis the adoption by the
Legislature. We are also of the view that the High Courts of Delhi and
Gujarat after holding that the decision in Mardia Chemcials, ((2004) 4
SCC 311) would hold the field, none the less went into the merits. In the
same way, as we propose to go into the contentions raised on merits, we
do not venture into the submissions made on the binding nature of the
decision rendered by the Supreme Court referred supra. We only observe
that atleast to the extent of the availability of guidelines, the object of the
enactment and the rigour of recovery mechanism would be binding on us,
while deciding the issues raised. In such view of the matter, we are also not
willing to go into the submission made that the constitutionality of the Act
upheld earlier can be challenged subsequently based upon new facts.
(b) The SARFAESI Act, 2002 and The Banking Regulation Act,
1949:24. Admittedly, Reserve Bank of India is the only body, which can
formulate the Banking policies. Definition of Banking Policy under Section
5(ca) of the Banking Regulation Act is rather wide and extensive. Such a
policy is to be evolved by Reserve Bank of India in the interest of Banking
System or monetary stability or sound economic growth, having due regard
to the interests of the depositors, the volume of deposits, other resources
72
of the Bank, the need for equitable allocation and the efficient use of
deposits and resources. It only means that the control of the Reserve Bank
of India is all pervasive. Any other interpretation would defeat the very
object of Act No.10 of 1949. The Reserve Bank of India Act is made in
public interest and with a mandatory duty to formulate a statutory,
comprehensive
and
formal
structure
of
banking
regulations
and
supervisions.
25. We have already discussed the scope and ambit of Section 21
read with Section 35A of the Act No.10 of 1949. Admittedly, the said
provisions have not been challenged as unconstitutional or ultra vires the
Constitution. The SARFAESI Act, 2002 as well as the Banking Regulation
Act, 1949 act on different fields. The objects and reasons, as discussed
above, enshrined in both the enactments, are totally different. When it
comes to issuing direction to the Banks as well as the Financial Institutions,
the power is vested only with the Reserve Bank of India alone. Such a
power has already been in existence much prior to the existence of
SARFAESI Act, 2002. The subsequent enactment has taken into
consideration of the earlier enactment. As seen from the preamble of the
enactment, two of the Narasimhan Committee reports have been taken into
consideration. Therefore, it is a conscious decision by the Legislature to
adopt the definition of "Non Performing Asset" as decided by the Reserve
73
Bank of India into the subsequent enactment. The subsequent enactment

does not deal with the definition of "Non Performing Asset", which is not its
object and intent. On the contrary, it merely provides for a mechanism to
recover the debt. The Legislature has taken into consideration of serious
prevailing situation of ever mounting debts. Admittedly, it has a chain
reaction on the economy of the country affecting millions of people. Unless
a recovery is made, a loan cannot be given for a needy project.
26. The SARFAESI Act, 2002 merely recognises the powers of
Reserve Bank of India. Therefore, once a validly exercised power is
recognised, which has been given to an expert body constituted for that
purpose, then the consequence would follow. The consequence would not
trickle upon the mechanism provided under the earlier Act, but the
subsequent one as well. There is no bar in law that the subsequent
enactment cannot borrow a classification, which is available in exercise of
the power conferred under the earlier Act. The Legislature has deliberately
thought fit to avoid repugnancy. The Legislature has also in its wisdom has
thought that having constituted a specialised body, it cannot take its role in
a different form for the implementation of a different purpose. After all,
there is little room for any arbitrariness on the policy of the Reserve Bank of
India, which is based upon empirical data and materials. When under law
both the enactments are presumed to be valid, then they have to be
74
allowed to operate in their own fields. The formulation of a policy regarding

classification of an asset does not do anything with the SARFAESI Act,
2002. The subsequent enactment merely borrows the definition. Therefore,
there is no necessity for the Legislature to classify an asset as "Non
Performing Asset" in view of the specific provision contained in the other
enactment.
27. Section 2(1)(o) of the SARFAESI Act, 2002 merely deals with the
definition of "Non Performing Asset". This definition will have to be
construed only for the purpose of recovery. Even though an attempt has
been made to compare Chapter II and Chapter III of Act No.54 of 2002, it is
apparently very clear that they operate in their own spheres. The
determination of asset classification is required only for the purpose of
recovery. There cannot be two definitions of non-performing asset
applicable to the same banks. Similarly, the argument made that there is a
discrepancy between the definition of "Non Performing Asset" under the
enactment as against the Asset Classification made under the Master
Circular with respect to sub-standard asset, doubtful asset or loss asset
cannot be countenanced, as the same cannot be the basis for declaring
the enactment as unconstitutional. It is no doubt that a sub-standard,
doubtful or loss asset would become a "Non Performing Asset". Therefore,
the definition of "Non Performing Asset" under the Master Circular and the
75
subsequent categorisation of a sub-standard, doubtful or loss asset would

not make the provision ultra vires nor it would make the norms as
unconstitutional.
(c) Delegated Legislation,
Legislation by Incorporation:-
Legislation
by
reference
and
28. Much arguments have been made by the petitioners' counsels

that there cannot be any delegated legislation and if it is permissible, it
would be excessive, as the essential legislative functions cannot be
delegated. Law on this subject has been crystallised for quite some time.
We do not like to reiterate the said position of law by once again
undertaking the exercise already done through various pronouncements of
the Supreme Court as well as the High Courts of Delhi and Gujarat. We
just take note of the settled position of law that a delegated legislation is
constitutionally permissible. A delegated legislation permits utilisation of
experience and consultation of interest effected by the practical operation
of statutes. An excessive delegation will have to be decided having regard
to the subject matter, scheme, provisions of the statute including its
preamble and the facts and circumstances of the background of which the
statute is enacted. The authority to whom it is delegated is also an
important factor to be noted. It is not possible for the Legislature to enact
laws with minute details to deal with increasing complexity of governance in
76
a political democracy, that too, in economic matters. Useful reference can

be made to the following decisions:
1. B.KRISHNA BHAT VS. STATE OF KARNATAKA, ((2001) 4
SCC 227),
2. ST.JOHNS
REGIONAL
TEACHER
DIRECTOR,
TRAINING
NATIONAL
INSTITUTE
VS.
COUNCIL
FOR
TEACHER EDUCATION AND OTHERS, ((2003) 3 SCC 321),

3. K.T.PLANTATION PRIVATE LIMITD AND ANOTHER VS.
STATE OF KARNATAKA, ((2011) 9 SCC 1) and
4. BANGALORE
DEVELOPMENT
AUTHORITY
VS.
AIRCRAFT EMPLOYEES CO-OPERATIVE SOCIETY AND

OTHERS, ((2012) 3 SCC 442).
29. However, the question for consideration before us is, as to

whether there is indeed any delegated legislation or not. We are of the view
that there is no delegated legislation involved in the case on hand. As
discussed above, the power exercised by the Reserve Bank of India in a
separate enactment has been taken note of by the Legislature in the
subsequent one. It is only a definition clause, which has been adopted by
the Legislature. This has been done to put its machinery into use towards
its avowed object of activity appropriate recovery. Therefore, we do not
find any delegated legislation involved and therefore contentions raised on
the power of delegation and thereafter it is excessive, has no force. We
only observe for the sake of completion, that even assuming that there is a
delegated legislation involved, the same is not excessive as there are
77
sufficient guidelines available in the earlier enactment and based upon

which the Circular has been issued by the Reserve Bank of India, being a
specialised body.
30. Coming to the question of legislation by reference, or

incorporation, we are of the view that there is no express reference of any
statute under section 2(1)(o). While the discussion made earlier would
apply to this issue as well, there is no difficulty in appreciating the fact that
the Legislature has taken note of the earlier enactment. A reference can
also be by way of adoption. When an adoption is made, the mechanism
available under the earlier enactment would ipso facto apply to subsequent
one with its future changes. A legislation by incorporation would involve
uplifting the words from one statute applying to the second and that is not
the situation before us. As we observed earlier, the power available under
the earlier enactments has been taken note of in the subsequent
enactment. We do not find how it becomes unconstitutional as a definition
is merely made by the Legislature when the job of doing the same is
already conferred to an authority in the other enactment. The question of
using or introducing a definition is one of convenience. In other words,
there is no law which mandates that an enactment should have the
definition on its own. An attempt will have to be made always by the Courts
to reconcile the enactments.
78
31. The determination, whether a Legislation is one of incorporation

or reference is more a matter of construction. A Court of law will have to
see whether a law made by the Legislature is meant for a public purpose.
In this connection, useful reference can be made to the decision rendered
by the Supreme Court in RAKESH VIJ VS. RAMINDER PAL SINGH
SETHI AND OTHERS, ((2005) 8 SCC 504), wherein it was held as under:
28. Adopting or applying an earlier or existing Act by
competent Legislature to a later Act is an accepted device of
Legislation. If the adopting Act refers to certain provisions of
an earlier existing Act, it is known as legislation by reference.
Whereas if the provisions of another Act are bodily lifted and
incorporated in the Act, then it is known as legislation by
incorporation. The determination whether a legislation was by
way of incorporation or reference is more a matter of
construction by the courts keeping in view the language
employed by the Act, the purpose of referring or incorporating
provisions of an existing Act and the effect of it on the day-today working. Reason for it is the courts prime duty to assume
that any law made by the Legislature is enacted to serve
public purpose.
32. The question was considered by a Three Judge Bench of the

Supreme Court in Nagpur Improvement Trust etc. vs. Vasantrao & Ors.
[(2002) 7 SCC 657], and observed as under:-
79
"...... The law on the subject is well settled. When an

earlier Act or certain of its provisions are incorporated by
reference into a later Act, the provisions so incorporated
become part and parcel of the later Act as if they had been
bodily transposed into it. The incorporation of an earlier Act
into a later Act is a legislative device adopted for the sake of
convenience in order to avoid verbatim reproduction of the
provisions of the earlier Act into the later. But this must be
distinguished from a referential legislation which merely
contains a reference or the citation of the provisions of an
earlier statute. In a case where a statute is incorporated, by
reference, into a second statute, the repeal of the first statute
by a third does not affect the second. The later Act along with
the incorporated provisions of the earlier Act constitutes an
independent legislation which is not modified or repealed by a
modification or repeal of the earlier Act. However, where in a
later Act there is a mere reference to an earlier Act, the
modification, repeal or amendment of the statute that is
referred, will also have an effect on the statute in which it is
referred. It is equally well settled that the question whether a
former statute is merely referred to or cited in a later statute, or
whether it is wholly or partially incorporated therein, is a
question of construction."
The said decision was followed by the Supreme Court in Kanak
(SMT) & Anr. vs. U.P. Avas Evam Vikas Parishad & Ors. [(2003) 7 SCC
693] and Sneh Enterprises Vs. Commissioner of Customs, New Delhi,
[(2006) 7 SCC 714].
80
33. The Supreme Court in Bajaya v. Gopikabai, (1978) 2 SCC

542), held as follows:
"Broadly speaking, legislation by referential incorporation
falls in two categories. First, where a statute by specific
reference incorporates the provisions of another statute as of
the time of adoption. Second, where a statute incorporates by
general reference the law concerning a particular subject, as
a genus. In the case of the former, the subsequent
amendments
made
in
the
referred
statute
cannot
automatically be read into the adopting statute. In the case of

latter category, it may be presumed that the legislative intent
was to include all the subsequent amendments also made
from time to time in the generic law on the subject adopted by
general reference. This principle of construction of a
reference statute has been neatly summed up by Sutherland,
thus :
A statute which refers to the law of a subject generally
adopts the law on the subject as of the time the law is
invoked.
This
will
include
all
the
amendments
and
modifications of the law subsequent to the time the reference

statute was enacted.
Corpus Juris Secundum also enunciates the same
principle in these terms :
....Where the reference in an adopting statute is to the
law generally which governs the particular subject, and not to
any specific statute or part thereof, ... the reference will be
81
held to include the law as it stands at the time it is sought to

be applied, with all the changes made from time to time, at
least as far as the changes are consistent with the purpose of
the adopting statute."
The said decision was followed by the Supreme Court in Singhai
Rakesh Kumar Vs. Union of India and others, ((2001) 1 SCC 364).
34. What is required to be seen is the intention of the Legislature at

the time of enactment. In this case, the Legislature has left the job of
defining non-performing asset' in the hands of Reserve Bank of India.
Therefore, when once the Legislature has approved the power of Reserve
Bank of India on the classification of assets, the resultant consequence
would be that a subsequent amendment pertaining to such a classification
would apply with its vigour and force to the new Act as well.
35. in the light of the discussions made above, we are of the view
that it is a case of an adoption involved in the present case. Therefore it
can only be termed as legislation by reference and hence the impugned
Circular is valid in law.
(d) SARFAESI Act, 2002 (Act N0.54 of 2002) and Recovery of
Debts due to Banks and Financial Institutions Act, 1993 (Act No.51 of
1993):36. A submission has been made that both the enactments do not
82
refer to legally recoverable debt. We are afraid that neither the definition of
'debt' under the Act No.54 of 2002 nor under Act No.51 of 1993 is put into
challenge. Act No.54 of 20012 merely borrows definition from Act No.51 of
1993. Even in the said Act, under the definition of debt under Section 2(g)
is very exhaustive as discussed above. The provision treats a liability
inclusive of interest as a debt. We do not find any unconstitutionality in the
same. There is no necessity for defining a legally recoverable debt. If the
contention of the learned counsel for the petitioner is accepted, then it
amounts to a striking down Part III of Act No.54 of 2002, which has been
upheld already. A legally recoverable debt is a one, which is permissible
under law.
Therefore, there is no necessity to define the same.
Furthermore, if a recovery is sought to be made de hors the definition of a

'debt' as mentioned in Act No.51 of 1993, then a forum is available to the
borrower in such a case. Therefore, the said submission is rejected.
(e) Validity of the Master Circular:37. In the light of the discussion made above, we do not find any
merit in the challenge made to the impugned Master Circular. The Master
Circulation has been made by taking into consideration of the global
economy, the prevailing situation, the intention to create transparency and
uniformity with the Banking system, to provide stability and to protect the
interests of depositors. When such a decision has been made based upon
analysis of material factors, the same cannot be set aside as arbitrary. We
83
do not also find any force in the submissions that Section 21 read with
Section 35A of the Act No.10 of 1949 do not authorise the introduction of
the impugned Master Circular. The said policy has been in vogue for quote
some time. We do not wish to reiterate the scope and extent of power that
is available to the Reserve Bank of India under the provisions. As observed
by the Supreme Court, the said provisions impose a duty upon the Reserve
Bank of India, which is public in nature. Similarly, in the impugned Master
Circular, we do not find any vagueness contained in paragraph No.2.1.1,
which deals with an asset, when it ceases to generate income for the
Bank. 2.1.2 deals with a loan or an advance. 2.1.3 deals with interest
payments. Similarly, 4.2.4 only deals with Accounts with temporary
deficiencies. Therefore, they are all various classifications. Accordingly,
we do not find any vagueness or confusion involved.
38. We also find no force in the submission made that the objects of
two enactments being same, the definition made in the earlier Act cannot
be imported into the subsequent one, since the subsequent one merely
deals with recovery. Therefore, we do not find any reason to strike out the
impugned Master Circular. Accordingly, its validity is upheld.
(f) Judicial Review:
39. While dealing with a legislation pertaining to a specialised field,
that too, a one like economy, the Court should adopt a dignified
84
reluctance. While exercising its power of judicial review, a good deal of

latitude is permissible in case of economic statutes. The Court should be
aware of the fact that the Legislature is dealing with complex problems.
The economic mechanism is highly sensitive and therefore we should
constantly remind ourselves of our own limit. We do not like to take the
role of a higher authority to review a decision made by an expert body on
the materials placed before it. The said attempt is to be avoided, as neither
the counsels nor the Court can claim a better expertise. Such an attempt
would be akin to a search by a visually impaired person to find a black cat
during night time in a dark room when the cat itself is not there. In this
connection, we only quote the settled position of law as held by the
Honourable Apex Court in T.VELAYUDHAN ACHARI AND ANOTHER VS.
UNION OF INDIA, ((1993) 2 SCC 582), which reads as under:
28. In examining the various submissions addressed on
behalf of the appellants and the petitioners we propose to
examine the same in the following background since it is a law
relating to regulation of economic activities.
29. In R.K. Garg case, (1981) 4 SCC 675), it is held:
(SCC pp. 690-91, para 8)
"Another rule of equal importance is that laws relating to
economic activities should be viewed with greater latitude than
laws touching civil rights such as freedom of speech, religion
etc. It has been said by no less a person than Holmes, J. that
the legislature should be allowed some play in the joints,
85
because it has to deal with complex problems which do not

admit of solution through any doctrinaire or strait-jacket
formula and this is particularly true in case of legislation
dealing with economic matters, where, having regard to the
nature of the problems required to be dealt with, greater play
in the joints has to be allowed to the legislature. The court
should feel more inclined to give judicial deference to
legislative judgment in the field of economic regulation than in
other areas where fundamental human rights are involved.
Nowhere has this admonition been more felicitously expressed
than in Morey v. Doud, (354 US 457= 1 L Ed 2d 1485 (1957),
where Frankfurter, J. said in his inimitable style:
'In the utilities, tax and economic regulation cases, there
are good reasons for judicial self-restraint if not judicial
deference to legislative judgment. The legislature after all has
the affirmative responsibility. The courts have only the power
to destroy, not to reconstruct. When these are added to the
complexity of economic regulation, the uncertainty, the liability
to error, the bewildering conflict of the experts, and the number
of times the judges have been overruled by events selflimitation can be seen to be the path to judicial wisdom and
institutional prestige and stability.'
The court must always remember that legislation is
directed to practical problems, that the economic mechanism
is highly sensitive and complex, that many problems are
singular and contingent, that laws are not abstract propositions
and do not relate to abstract units and are not to be measured
by abstract symmetry; that exact wisdom and nice adaptation
of remedy are not always possible and that judgment is largely
86
a prophecy based on meagre and uninterpreted experience.

Every legislation particularly in economic matters is essentially
empiric and it is based on experimentation or what one may
call trial and error method and therefore it cannot provide for
all possible situations or anticipate all possible abuses. There
may be crudities and inequities in complicated experimental
economic legislation but on that account alone it cannot be
struck down as invalid."
At page 706, para 19 it is held:
"...That would depend upon diverse fiscal and economic
consideration based on practical necessity and administrative
expediency and would also involve a certain amount of
experimentation on which the court would be least fitted to
pronounce. The court would not have the necessary
competence and expertise to adjudicate upon such an
economic issue. The court cannot possibly assess or evaluate
what would be the impact of a particular immunity or
exemption and whether it would serve the purpose in view or
not. There are so many imponderables that would hazard an
opinion where even economists may differ. The court must
while examining the constitutional validity of a legislation of
this kind , be resilient, not rigid forward looking not static,
liberal, not verbal and the court must always bear in mind the
constitutional proposition enunciated by the Supreme court of
the United States in Munn v. Illinois, (94 US 113 = 24 L Ed 77
(1875) namely, that courts do not substitute their social and
economic beliefs for the judgement of legislative bodies. The
court must defer to legislative judgement in matters relating to
social and economic policies and must not interfere, unless
87
the exercise of legislative judgement appears to be palpably

arbitrary. The court should constantly remind itself of what the
supreme court of the United State said in Metropolis theater
Co. v. City of chicago, (228 US 61 = 57 L Ed 730 (1912)):
The problems of government are practical ones and
may justify, if they do not require, rough accommodations,
illogical it may and unscientific. But even such criticism should
not be hastily expressed. What is best is not always
discernible, the wisdom of any choice may be disputed or
condemned. Mere errors of government are not subject to our
judicial review."
Conclusion:40. In the light of the discussion made, we do not find any merit in
these writ petitions. Accordingly, the writ petitions are dismissed. However,
there is no order as to costs. Consequently, the connected miscellaneous
petitions are also dismissed.
Index:Yes/No
Internet:Yes/No
Note to Office:
Issue order copy today
usk
To
1. The Secretary to Government
(N.P.V.,J.) (M.M.S.,J.)
08.05.2014
88

(Banking Division), Union of India,
North Block, New Delhi.
2. The Joint Secretary,
Union of India,
Room No.34-C,
New Delhi 110 001 (India)
3. The Governor,
4. The Chief General Manager,
Mumbai 400 001.
5. The Board of Directors,
No.6, Parliament Street,
New Delhi 110 001.
89
N.PAUL VASANTHAKUMAR,J.
AND
M.M.SUNDRESH,J.
usk
PRE-DELIVERY COMMON
ORDER IN W.P.NO.5897 OF
2014 ETC., BATCH
90
08.05.2014

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1

IN THE HIGH COURT OF JUDICATURE AT MADRAS

through its Authorised Officer,

W.P.Nos.7296 and 7297 of 2014:

W.P.Nos.7298 and 7299 of 2014:

4. State Bank of Patiala,

3. The Authorised Officer,

W.P.Nos.7653 and 7654 of 2014:

3. State Bank of India,

W.P.Nos.8090 and 8091 of 2014:

rep.by its Director,

W.P.Nos.8594 and 8595 of 2014:

2. The Reserve Bank of India,

1. The Union of India,

rep. by the Secretary to Government,

Kottivakkam, Chennai-600 041

2.The Authorised Officer,

2.The Authorised Officer,

2.The Authorised Officer,

1. The Union of India,

Economic Affairs, Room No.34-c

No.41, Mount Road, Chennai 600 002.

M/s Mangai Interiors,

Sakthi Towers, Ground Floor,

Rep. By its Chairman A.Thinagar,

1. The Union of India,

3. The Authorised Officer/

No.7, Rue Mahe De Labourdonnais,

3. The Authorised Officer,

W.P.Nos.11471 to 11474 of 2014:

Represented by its Proprietor Mr.T.R.Pandian,

M/s Sapthagiri Enterprises,

M/s Shri Lanco Enterprises,

3. Reserve Bank of India,

LVB Platinum Jubilee Building,

4. Chairman and Managing Director,

Prayer: Writ Petition in W.P.Nos.5897 and 7654 of 2014 are filed

No.DBOD.No.BP.BC.9/ 21.04.048/2012-13 issued by the Reserve Bank of

Reconstruction of Financial Assets and Enforcement of Security Interest

Act, 2002 and Clause 2.1 of prudential norms on income Recognition,

and provisioning pertaining to Advances issued by the 2nd respondent as

proceedings initiated under the provisions of Securitization and

Writ Petition in W.P.No.10007 of 2014 is filed under Article 226 of

the Constitution of India seeking for the relief of issuance of writ of

Writ Petition in W.P.No.10665 of 2014 is filed under Article 226 of

declaration declaring that Section 2(o) of the Securitization and

of Security Interest Act, 2002 and Clause 2.1 of prudential norms on

from continuing the proceedings initiated under the provisions of

the Constitution of India seeking for the relief of issuance of Writ of

For Petitioner in W.P.Nos.7296: Mr.K.Gowtham Kumar

For Petitioner in W.P.No.8746 : Mr.S.Seshadri

For Petitioner in W.P.No.10656 : Mr.S.Regu

For Petitioner in W.P.No.11317 : Ms.Anuradha Balaji

For 1st Respondent in W.P.Nos : Mr.G.Masilamani,

5897 and 5898 of 2014 and 2nd

: Mr.N.V.Srinivasan, S.C., for

For 3rd respondent in