New Delhi, Nov. 7: The Supreme Court today directed the counsel for several industrialist groups to file their suggestions by November 11 with the Attorney-General Soli J. Sorabjee, detailing the grounds for assailing the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Act, popularly known as the Securitisation Act.
The three-judge bench of Chief Justice V. . Khare, Justices Brijesh Kumar and Arun Kumar also ordered the counsel to file copies of the suggestions with the court while posting the matter to November 17 for further hearing.
The securitisation ordinance was initially brought by the government last year to recover Rs 91,000 crore that hundreds of corporate houses in the country owe banks and financial institutions.
According to the attorney-general, this is public money that is at stake as banks and financial institutions have classified them as non-performing assets (NPAs), a euphemism for loans not recovered.
The ordinance was subsequently brought as a legislation in Parliament, enabling banks and FIs to attach, foreclose and take over properties and management of errant firms.
But an important lacuna in the law has arisen over the creation of third-party interest in the property acquired by lenders. After the banks sell the property or asset to a third party, the original promoter cannot reclaim it even if they pay back their loans. This drove firms facing foreclosure action to courts to stymie the creation of third-party interest in the bank-acquired assets.
Another aspect is that the law provides for even attaching and selling personal properties of the owners of business houses, like residential premises and farm houses. This aspect was challenged by the counsel for the Amulet International B. Deva Sekhar. Last month, the apex court stayed the attachment of the residential premises of the owner of Amulet, Bhupinder Singh.