WA No. 2349 of 2016 in WP(C) 26290/2014. Case: Rojer Mathew Vs South Indian Bank Limited and Ors.. High Court of Kerala (India)

Case NumberWA No. 2349 of 2016 in WP(C) 26290/2014
CounselFor Appellant: P. Chandrasekhar, Ashwin Sethumadhavan, A. Jayasankar, Manu Govind and S. Sabarinadh, Advs. and For Respondents: K.K. Chandran Pillai, Sr. Adv., K.S. Dilip, S. Ambily and K. Paul Kuriakose, Advs.
JudgesMohan M. Shantanagoudar and Sathish Ninan, JJ.
IssueCode of Civil Procedure, 1908 (CPC) - Order XXI Rules 72, 72A; Constitution Of India - Articles 21, 300A; Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 - Sections 13, 13(4), 13(5A), 17
Citation2017 (1) KLT 572
Judgement DateJanuary 20, 2017
CourtHigh Court of Kerala (India)


Sathish Ninan, J., (At Ernakulam)

  1. In Mardia Chemicals v. Union of India ( [2004] 4 SCC 311), the constitutional validity of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the Act") was upheld by the Apex Court. As per Act 1 of 2013, Section 13(5A) was incorporated into the Act with effect from 15.01.2013, permitting the secured creditor to bid for the secured assets. The vires of Section 13(5A) is under challenge in this writ proceedings on the ground that it is violative of Articles 300A and 21 of the Constitution of India.

  2. Heard Shri P. Chandrasekhar, learned counsel for the appellant and Shri K.K. Chandran Pillai, learned Senior Counsel for the respondents.

  3. The question to be considered is as to whether the power given to the secured creditor under Section 13(5A) of the Act is arbitrary, irrational and without any nexus to the object.

  4. Section 13(5A) of the Act is as under:

    135A. Where the sale of an immovable property, for which a reserve price has been specified, has been postponed for want of a bid of an amount not less than such reserve price, it shall be lawful for any officer of the secured creditor, if so authorised by the secured creditor in this behalf, to bid for the immovable property on behalf of the secured creditor at any subsequent sale.

    The Section postulates the following:

    (a) a secured asset is brought for sale;

    (b) reserve price for the property has been fixed;

    (c) there are no bidders for reserve price or above;

    (d) sale is adjourned for want of bidders at or above the reserve price;

    (e) at the postponed sale, any officer of the secured creditor, so authorised, can bid for the immovable property on behalf of the secured creditor.

    The above provision is challenged as unconstitutional since it interferes with the fundamental rights of a citizen.

  5. Article 300A of the Constitution of India is canvassed by the learned counsel for the appellant to contend that the constitutional right guaranteed under the said Article is violated by Section 13(5A) of the Act in so far as it is left to the whims and fancies of the secured creditor to purchase for itself the property that is mortgaged to secure a financial assistance availed from the bank. It would be relevant to refer to Article 300A:

    300A. Persons not to be deprived of property save by authority of law.-No person shall be deprived of his property save by authority of law.

    A citizen could be deprived of his property only under authority of law. It is beyond cavil that an involuntary sale of the property of a citizen by a mode...

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