KESHAVLAL KHEMCHANDAND SONS PVT. LTD. & OTHERS versus UNION OF INDIA & OTHERS

KESHAVLAL KHEMCHANDAND SONS PVT. LTD. & OTHERS versus UNION OF INDIA & OTHERS

The amended definition of 'NPA' under Section 2(1)(o) is constitutionally valid; Parliament did not delegate essential legislative function but relied on expert bodies to prescribe norms, and allowing different regulators to apply different classification for NPA does not violate Article 14 as creditors are not a homogenous class.

Parties
Petitioner: Keshavlal Khemchand and Sons Pvt. Ltd. & Others; Respondent: Union of India & Others
Jurisdiction
India
Judgment Date
28 January 2015
Procedural Posture
Writ Petition (civil) / Final Judgment
Outcome
Appeals and writ petitions dismissed; appeals of creditors allowed.
Legal Topics
Delegation of Legislative Powers, Classification Under Article 14, Securitisation Act Definition, NPA Guidelines
Constitutional Law Banking Law Delegation of Legislative Powers Classification Under Article 14 Securitisation Act Definition NPA Guidelines

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Parties

Keshavlal Khemchand and Sons Pvt. Ltd. & Others

Petitioner

Union of India & Others

Respondent

Procedural Posture

Writ Petition (civil) / Final Judgment

Legal Issues

  1. 1 Whether the amended Section 2(1)(o) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is constitutionally valid.
  2. 2 Whether Parliament delegated essential legislative function by allowing regulators to define NPA.
  3. 3 Whether authorising different regulators to prescribe different norms for identification of NPA amounts to class legislation in violation of Article 14.

Ratio Decidendi

The amended definition of 'NPA' under Section 2(1)(o) is constitutionally valid; Parliament did not delegate essential legislative function but relied on expert bodies to prescribe norms, and allowing different regulators to apply different classification for NPA does not violate Article 14 as creditors are not a homogenous class.

Court Disposition

Appeals and writ petitions dismissed; appeals of creditors allowed.

Orders

  • All writ petitioners/borrowers are directed to pay costs to the respective creditors calculated at 1% of the amount outstanding on the date of notice under Section 13(2) of the Act in each case.