New Delhi, Oct. 4: The Supreme Court today transferred to itself all petitions in various high courts challenging the Securitisation Reconstruction Ordinance.
Banks and financial institutions have bad debts totalling a staggering Rs 1,50,000 crore on their books, which are clubbed as non-performing assets (NPAs). The Ordinance, which empowers banks and financial institutions to attach, take over the management and/or sell the mortgaged properties of defaulters, has been challenged in different high courts. To avoid conflicting verdicts, all petitions have been clubbed together by the apex court.
A three-judge bench of Justices V. N. Khare, Ashok Bhan and Arun Kumar said in a brief order that no high court should entertain any petition in the matter.
The Ordinance, promulgated since the government could not move a Bill in Parliament, empowers even a bank chief manager to attach the property of a borrower, manage the unit or sell it to a third party.
Former Union law minister Arun Jaitley, who had actually introduced this law, today appeared for ICICI Bank and told the court that the “mind boggling” sums of arrears by several industrialists could not be recovered at all, but for the Ordinance.
The case is being argued by leading legal and financial brains of the country, who include former Union finance minister P. Chidambaram (for Amulet International), Congress Rajya Sabha member and senior counsel Kapil Sibal (for Mardia Chemicals) besides Jaitley and additional solicitor general Mukul Rohtagi (for the Union government).
Advocate on record for IDBI, Bharat Sangal, said Rs 1,50,000 crore was being blocked as “NPAs” and the Gujarat-based Mardia Chemicals alone owed about Rs 1,400 crore.
Under Section 13(2) of the Ordinance, a 60 days notice is given to a defaulter, after which under Section 13(4) the bank or FI either takes over the management or sells it off to a third party.