Case Law Details
Kumaresh K Vs Union Of India and Other (Karnataka High Court)
It is evident that Section 14(1)(v) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) provides that an application which may be submitted by the secured creditor shall be accompanied by an affidavit duly affirmed by authorized officer of the secured creditor declaring that consequent upon default of repayment of the financial assistance the account of the borrower has been classified as a Non-Performing Asset. Section 2(1)(o) of the Act defines the expression ‘Non-Performing Asset’. Section 14 (1)(v) apparently is not in conflict with Section 2(1)(o) of the Act. Therefore, the contention of the petitioner that Section 14(1)(v) of the Act has to be struck down as it is violative of Section 2(1)(o) of the Act is sans substance. Even otherwise, it is well settled in law that in case, there is a conflict between two provisions of a statute, the principle of harmonious construction has to be applied. Therefore, on this ground also the contention of the petitioner cannot be accepted. So far as submission that Section 14(1)(v) of the Act does not make a distinction between the principal borrower and the guarantor in case the primary securities are lost as stated supra is concerned, Section 14(1)(v) of the Act only provides for requirement of a declaration by the secured creditor that the account of borrower has been classified as a Non-Performing Asset. The aforesaid submission in no way makes Section 14(1)(v) of the Act ultra vires the Constitution.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Heard on the question of admission.
In this writ petition, petitioner inter alia has assailed the validity of proviso (v) to Section 14(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (here in after referred to as ‘the Act’ for short). The petitioner has also sought declaration of the aforesaid provision as violative of Article 14 of the Constitution of India in the absence of providing safeguards for protecting guarantor’s rights under Section 139 and 141 of the Contract Act, 1872.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
