Ibc Moot Memorial

TEAM CODE – 1930JP
2ND DR. R.U. SINGH MEMORIAL NATIONAL MOOT COURT COMPETITION

22ND- 24TH FEBRUARY, 2019
BEFORE THE HON’BLE SUPREME COURT OF DISSLOCATIA
SPECIAL LEAVE PETITION

UNDER ARTICLE 136 OF THE CONSTITUTION OF DISSLOCATIA
IN THE MATTER OF
CENTRAL BAR ASSOCIATION OF DISSLOCATIA………………….. PETITIONER

AND
MONSTHUG THREAD COMPANY LTD……………………………. PETITIONER
V.
THE UNION OF DISSLOCATIA…………………………..RESPONDENT

AND
SMALL INDUSTRIAL AND DEVELOPMENT BANK OF DISSLOCATIA………RESPONDENT
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

2ND Dr. R. U. SINGH MEMORIAL NATIONAL MOOT COURT COMPETITION
22nd – 24th FEBRUARY, 2019
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TABLE OF CONTENTS
LIST OF ABBREVIATIONS ......................................................................................................... iii
INDEX OF AUTHORITIES .............................................................................................................v
STATEMENT OF JURISDICTION ................................................................................................ vii
STATEMENT OF FACTS ........................................................................................................... viii
STATEMENT OF ISSUES...............................................................................................................x
SUMMARY OF ARGUMENTS ...................................................................................................... xi
ARGUMENTS ADVANCED ............................................................................................................1
[1] WHETHER SECTION 3(12), 5(7), 6,7,12, 14, 29, 62, 231, 238 OF THE INSOLVENCY AND
BANKRUPTCY CODE, 2016 IS CONSTITUTIONAL OR NOT? .....................................................1
[2] WHETHER THE LEGISLATIVE ENACTMENTS BEHIND RECOVERY OF NPA ARE FULL-
FLEDGED AND UNCOMPLICATED OR IS THERE A NEED OF A COMPLETELY NEW MASTER
ACT? .......................................................................................................................................9
[3] WHETHER THE PROCEEDING OF SECURITIZATION ADOPTED BY BANK AGAINST

COMPANY WAS JUST AND FAIR OR NOT? ............................................................................ 16
PRAYER .................................................................................................................................. xiii

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LIST OF ABBREVIATIONS
¶ Paragraph
& And
AC Appeal Cases
AIR All India Reporter
ALT Andhra Law Times
Art. Article
AP Andhra Pradesh
CM Chief Minister
Co. Company
CPC Civil Procedure Code
Cr. Corporation
DRT Debt Recovery Tribunal
ER English Reports
Guj Gujarat
Hon’ble Honourable
IPC Indian Penal Code
Ker Kerela
Ltd. Limited
MLJ Malayan Law Journal
Ministry of Micro, Small and Medium

MSME
Enterprises

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NCLT National Company Law Tribunal
NPA Non-Performing Assets
Ors. Others
RBI Reserve Bank of India
Recovery of Debts Due to Banks and

RDDBFI Act
Financial Institutions Act
Rs. Rupees
SARFAESI Securitisation and Reconstruction of Finncial

Assets and Enforcement of Security Interest
SC Supreme Court
Sr. Senior
V. Versus

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INDEX OF AUTHORITIES
CONSTITUTION REFERRED
1949- The Constitution of India
STATUTES REFERRED
Sr. No. Statute Year

1. Civil Procedure Code 1908
2. Insolvency and Bankruptcy (Adjudicating Authority) Rules 2016
3. Insolvency and Bankruptcy Code 2016
4. Limitation Act 1963
5. The Indian Evidence Act 1872
6. The Recovery of Debts Due to Banks and Financial Institutions Act 1993
7. The Securitisation And Reconstruction of Financial Assets And 2002
Enforcement of Security Interest Act
CASES REFERRED
Sr. No. Case Relevant Citation Pg. No.

1. Ashok Kumar V. Authorized Officer, Punjab WRIT - C No. -
National Bank And Others 14755 of 2013 19
2. Common Cause V. Union of India AIR 1996 SC 929 20

3. Justice K. S. Puttaswamy (Retd.) and Anr. vs Union 2018 SCC OnLine
Of India And Ors. SC 215 7
4. Karnataka State Financial Corporation Vs. 2008(5) SCC 176

N.Narasimahaiah 12
5. M/s. Sri Srinivasa Rice and Floor Mill Vs. State 2007 (4) ALT 317
Bank of India 13

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6. Mansa Synthetic Pvt. Ltd. and others v. Union of AIR 2012 Guj 90
India and another 6 18
7. Misons Leather Ltd. Vs. Canara Bank 2007 (4) MLJ 245 14
8. Rajindra Singh V. Prem Mai 2007 AIR SCW 5529 20
9. Roshan Narayanan.C.S vs The Authorized Officer 2016 SCC OnLine
Ker 5129 18
10. Shayra Bano V. Union of India (2017) 9 SCC 1 5
11. Uttara Foods and Feeds Pvt. Ltd. v. Mona 2017 SCC OnLine
Pharmachem NCLT 9550 6
BOOKS REFERRED
Sr. No. Name of the Book Author
1. Black’s Law Dictionary Henry Campbell Black
2. Law and Practice of Securitisation And Dr. RG Chaturvedi

Reconstruction of Financial Assets And
Enforcement of Security Interest
3. Laws of Insolvency (Bankruptcy) Justice P.S. Narayana
INTERNET SOURCES
Sr. No. Name of the Website
1. www.indiakanoon.org
2. www.manupatra.com
3. www.scconline.com

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STATEMENT OF JURISDICTION
The Petitioner here in submits to the jurisdiction of the Honourable Supreme Court of
Disslocatia under Article 136 of The Constitution of Disslocatia.
Art. 136 of the Constitution of Disslocatia:
Special leave to appeal by the Supreme Court-
(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant
special leave to appeal from any judgment, decree, determination, sentence or order in any cause
or matter passed or made by any court or tribunal in the territory of India.
(2) Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed or
made by any court or tribunal constituted by or under any law relating to the Armed Forces.

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STATEMENT OF FACTS
1. Disslocatia is the world’s largest democracy and Belwa is its capital. It is the second fastest
boosting economy of the world. But on the other hand, its economy is suffering from a major
problem of Non-Performing Assets (NPA) which has been an obstacle in its growth. To fight NPA,
legislations like Recovery of Debts Due to Bank and Financial Institutions, 1993 and SARFAESI
Act, 2002 but in vain.
2. Government of Disslocatia decided to bring in a new legislation on the basis of a 2015 report by
the International Agency of Economy which founded that the value of NPA in the country is very
high. Followed by this, a committee of 9 members under the chairmanship of Miss S. Lezznar,
Governor of the Reserve Bank of Disslocatia was formed to submit its report and recommend on
new law. The committee recommended the enactment of a New Master Act constituting an
independent authority like Reserve Bank of Disslocatia to look into realization of NPA and
eradication of all previous laws. Additionally, it stated that the new act should have absolute power
ranging from recovery of debts, securitization and initiating insolvency resolution of corporate
debtor.
3. The Government of Disslocatia enacted the Insolvency and Bankruptcy Code (IBC),2016 without
considering recommendations. It also denied the Opposition’s demand of referring the bill to the
Standing Committee. The Supreme Court of Disslocatia also reprimanded the government for the
same.
4. Monsthug Thread Company Ltd. (COMPANY) is a private limited company registered under
Companies Act, 1956 and 2013. Company’s Director is Tony Stark. Small Industries Development
Bank of Disslocatia (BANK) is a public financial institution which provides financial services for
Micro, small and medium sector.
5. Company needed nine crores and approached the bank. The bank suggested the company to
purchase more property for mortgage as security against the loan. The bank officials prepared letter
of intent in consideration for the company to purchase a specific property. Company purchased the
property and the pursuant to this letter of intent was granted by bank on 04.02.2015. Both entered
into a loan agreement on 05.03.2015 and security documents including guarantees and other
securities inter alia agreed. 12.25% p.a. was the decided rate of interest in respect of terms loan
account compoundable with monthly rate plus 2% penal interest p.a. for period of default.

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Additional interest of 1% p.a. was also agreed in case of non-creation of security. Company agreed
for repay in 78 monthly instalments.
6. The company also executed an undertaking for non-disposal of shareholding, over run, and non-
withdrawal of the unsecured loans and agreed not to transfer or sale the shares of the company.
The financial assistance was secured by the creation of equitable mortgage by memorandum of
deposits of title deeds. The charges over security were created and registered with ROC and with
Central Registry of Securitization Assets Reconstruction and Security Interest of Disslocatia. All
the 8 guarantors including the director submitted affidavits in their personal capacity.
7. After 6 months of regular payment, the company found that bank officials suggested them the
immovable properties due to their own interest. The property had very low value in the market.
This resulted in defaults on the side of the company. The company had approached bank time and
again to grant concessions by restructuring principal instalments. On 03.07.16 the term loan
account was restructured, and instalments were rescheduled. But the defaults continued. Pursuant
to this the account was classified as NPA on 08.11.16 in terms of guidelines issued by Reserve
Bank of Disslocatia.
8. Bank issued recall notice and also demand notice but the company did not repay the dues within
60 days and hence bank issued possession notice to the company. The bank now reserves the right
to sale under the SARFAESI Act. On 13.06.17 bank filed an original application. Meanwhile CJM
of Belwa issued order directing the company to pay Rs. 25000 to bank and appointed Assistant
Superintendent to be the court commissioner to take possession. On 2nd Feb, 2018, Tony Clark had
flown to United Province to escape his liability. On 5th March, company filed a securitization
application before DRT I, Suplex city challenging the actions taken against them. DRT I, Suplex
city granted stay. Bank invoked writ jurisdiction of High court of Belwa against the stay. In
January, 2019 SIDBD filed application before NCLT, Suplex City bench for initiation of corporate
insolvency resolution process. The Central Bar Association of Disslocatia filed a PIL requesting
the court to look into the legislative framework of country with respect to NPA.
9. Many petitions has flooded the Supreme Court regarding the protection of flat buyers and
questioning the status of flat builders. SC took notice and ordered the Government to present the
concerns. Company filed writ petition before SC contesting constitutionality of IBC, discrepancies
in new act etc. SC clubbed all three petitions and listed all for final hearing.

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STATEMENT OF ISSUES
ISSUE I
WHETHER SECTION 3(12), 5(7), 6,7,12, 14, 29, 62, 231, 238 OF THE INSOLVENCY AND
BANKRUPTCY CODE, 2016 IS CONSTITUTIONAL OR NOT?
ISSUE II
WHETHER THE LEGISLATIVE ENACTMENTS BEHIND RECOVERY OF NPA ARE FULL-FLEDGED
AND UNCOMPLICATED OR IS THERE A NEED OF A COMPLETELY NEW MASTER ACT?
ISSUE III
WHETHER THE PROCEEDING OF SECURITIZATION ADOPTED BY BANK AGAINST COMPANY
WAS JUST AND FAIR OR NOT?

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SUMMARY OF ARGUMENTS
Issue I
WHETHER SECTION 3(12), 5(7), 6,7,12, 14, 29, 62, 231, 238 OF THE INSOLVENCY AND
1. It is submitted before the Honourable Supreme Court that there is no real difference
between financial creditors and operational creditors. Thus, there is no intelligible
differentia between the two types of creditors, regard being had to the object sought to be
achieved by the Code, namely, insolvency resolution.
2. It is humbly submitted before the Honourable Supreme Court that the Section 12 of
Insolvency and Bankruptcy Code, 2016 is unconstitutional. The resolution professional,
having been given powers of adjudication under the Code and Regulations, grant of
adjudicatory power to a non-judicial authority is violative of basic aspects of dispensation
of justice and access to justice
3. Section 29A, in any case, is contrary to the object sought to be achieved by the Code, in
particular, speedy disposal of the resolution process as it will inevitably lead to challenges
before the Adjudicating Authority and Appellate Authority, which will slow down and
delay the insolvency resolution process.
4. Section 62 of the Insolvency and Bankruptcy Code, 2016 appears to be constitutional prima
facie but the other aspects related to this Section are unconstitutional i.e. the sections that
lead the way to the appeal are unconstitutional in themselves as they violate the Art. 14,
19, 21 of the Constitution of Disslocatia.
5. Section 231 is in violation to the right to legal remedy as laid down under the law, if the
other sections of the constitution are unconstitutional there has to be a civil jurisdiction for
the matter that come forward.
6. Section 238 of the Insolvency and Bankruptcy Code, 2016 lays down that the provisions
of this code i.e. of the Insolvency and Bankruptcy Code, 2016 overrides other laws. This
can be established as unconstitutional since the other sections of the Insolvency and
Bankruptcy Code, 2016 are unconstitutional.

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ISSUE II
WHETHER THE LEGISLATIVE ENACTMENTS BEHIND RECOVERY OF NPA ARE FULL-FLEDGED
AND UNCOMPLICATED OR IS THERE A NEED OF A COMPLETELY NEW MASTER ACT?
7. The object of the Insolvency and Bankruptcy Code, 2016 was to clean up the balance sheets
of banks, make the corporate sector pay for its sins, prosecute those who manipulated and
conspired to manipulate the banking system and, above all, transfer non-performing assets
to more responsible corporate successors.
8. The Legislative enactments behind the recovery of NPA are not full-fledged and are
complicated and there is a need of a new master act.
9. The certain Sections of Insolvency and Bankruptcy Code, 2016 stands unconstitutional and
void.
10. The main aim of the recovery of the NPA could not be achieved with the flaws in the
present enactments as well as with such a time taking procedure.
ISSUE III
WHETHER THE PROCEEDING OF SECURITIZATION ADOPTED BY BANK AGAINST COMPANY

11. It is humbly submitted before the Honourable Supreme Court of Disslocatia that the
proceeding of securitization adopted by the bank against the company was not just and fair
but in fact arbitrary in nature causing harm to the company in many ways.
12. It can be established that the fine imposed by the learned Chief Metropolitan Magistrate
was alien and completely irrelevant in the case. Under Securitisation Act, 2002 there is no
such provision for a fine to be imposed on the party.
13. The steps taken by the learned Chief Metropolitan Magistrate were bad in law as there were
many other steps which were available before the court.
14. All the proceedings compelled the company to enter into the multiplicity of legal
proceedings and complicated issues of law. This multiplicity of cases violates the
fundamental right to speedy trial covered under Art. 21 of the Constitution of India.

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ARGUMENTS ADVANCED
[1] WHETHER SECTION 3(12), 5(7), 6,7,12, 14, 29, 62, 231, 238 OF THE INSOLVENCY AND
1. It is humbly submitted before the Honourable Supreme Court of Disslocatia that the following
sections of the Insolvency and Bankruptcy Code, 2016 are questioned for their
constitutionality.
a) 3(12)- "default" means non-payment of debt when whole or any part or instalment of the
amount of debt has become due and payable and is not repaid by the debtor or the corporate
debtor, as the case may be;
b) 5(7)- “financial creditor”; means any person to whom a financial debt is owed and includes a
person to whom such debt has been legally assigned or transferred to;
c) 6- Where any corporate debtor commits a default, a financial creditor, an operational creditor
or the corporate debtor itself may initiate corporate insolvency resolution process in respect
of such corporate debtor in the manner as provided under the Chapter 2 i.e. “Corporate
insolvency resolution process”.
d) 7- (1) A financial creditor either by itself or jointly with other financial creditors may file an
application for initiating corporate insolvency resolution process against a corporate debtor
before the Adjudicating Authority when a default has occurred. Explanation. — For the
purposes of this sub-section, a default includes a default in respect of a financial debt owed
not only to the applicant financial creditor but to any other financial creditor of the corporate
debtor.
(2) The financial creditor shall make an application under sub-section (1) in such form and
manner and accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish— (a) record of the default
recorded with the information utility or such other record or evidence of default as may be
specified; (b) the name of the resolution professional proposed to act as an interim resolution
professional; and (c) any other information as may be specified by the Board.
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application
under sub-section (2), ascertain the existence of a default from the records of an information

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utility or on the basis of other evidence furnished by the financial creditor under sub-section
(3).
(5) Where the Adjudicating Authority is satisfied that— (a) a default has occurred and the
application under sub-section (2) is complete, and there is no disciplinary proceedings pending
against the proposed resolution professional, it may, by order, admit such application; or (b)
default has not occurred or the application under sub-section (2) is incomplete or any
disciplinary proceeding is pending against the proposed resolution professional, it may, by
order, reject such application: Provided that the Adjudicating Authority shall, before rejecting
the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the
defect in his application within seven days of receipt of such notice from the Adjudicating
Authority.
(6) The corporate insolvency resolution process shall commence from the date of admission of
the application under sub-section (5).
(7) The Adjudicating Authority shall communicate— (a) the order under clause (a) of sub-
section (5) to the financial creditor and the corporate debtor; (b) the order under clause (b) of
sub-section (5) to the financial creditor, within seven days of admission or rejection of such
application, as the case may be.
e) 12 (1) Subject to sub-section (2), the corporate insolvency resolution process shall be
completed within a period of one hundred and eighty days from the date of admission of the
application to initiate such process.
(2) The resolution professional shall file an application to the Adjudicating Authority to extend
the period of the corporate insolvency resolution process beyond one hundred and eighty days,
if instructed to do so by a resolution passed at a meeting of the committee of creditors by a
vote of seventy-five per cent. Of the voting shares.
(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied
that the subject matter of the case is such that corporate insolvency resolution process cannot
be completed within one hundred and eighty days, it may by order extend the duration of such
process beyond one hundred and eighty days by such further period as it thinks fit, but not
exceeding ninety days: Provided that any extension of the period of corporate insolvency
resolution process under this section shall not be granted more than once.

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f) 14- (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date,
the Adjudicating Authority shall by order declare moratorium for prohibiting all of the
following, namely:—
(a) the institution of suits or continuation of pending suits or proceedings against the corporate
debtor including execution of any judgment, decree or order in any court of law, tribunal,
arbitration panel or other authority;
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its
assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate
debtor in respect of its property including any action under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the
recovery of any property by an owner or lessor where such property is occupied by or in the
possession of the corporate debtor.
(2) The supply of essential goods or services to the corporate debtor as may be specified shall
not be terminated or suspended or interrupted during moratorium period.
(3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by
the Central Government in consultation with any financial sector regulator.
(4) The order of moratorium shall have effect from the date of such order till the completion
of the corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution process period, if
the Adjudicating Authority approves the resolution plan under sub- section (1) of section 31
or passes an order for liquidation of corporate debtor under section 33, the moratorium shall
cease to have effect from the date of such approval or liquidation order, as the case may be.
g) 29 (1) The resolution professional shall prepare an information memorandum in such form
and manner containing such relevant information as may be specified by the Board for
formulating a resolution plan.
(2) The resolution professional shall provide to the resolution applicant access to all relevant
information in physical and electronic form, provided such resolution applicant undertakes—
(a) to comply with provisions of law for the time being in force relating to confidentiality and
insider trading; (b) to protect any intellectual property of the corporate debtor it may have

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access to; and (c) not to share relevant information with third parties unless clauses (a) and
(b) of this sub-section are complied with.
Explanation.— For the purposes of this section, "relevant information" means the information
required by the resolution applicant to make the resolution plan for the corporate debtor,
which shall include the financial position of the corporate debtor, all information related to
disputes by or against the corporate debtor and any other matter pertaining to the corporate
debtor as may be specified.
h) 62 (1) Any person aggrieved by an order of the National Company Law Appellate Tribunal
may file an appeal to the Supreme Court on a question of law arising out of such order under
this Code within forty-five days from the date of receipt of such order.
(2) The Supreme Court may, if it is satisfied that a person was prevented by sufficient cause
from filing an appeal within forty-five days, allow the appeal to be filed within a further period
not exceeding fifteen days.
i) 231 No civil court shall have jurisdiction in respect of any matter in which the Adjudicating
Authority is empowered by, or under, this Code to pass any order and no injunction shall be
granted by any court or other authority in respect of any action taken or to be taken in
pursuance of any order passed by such Adjudicating Authority under this Code.
j) 238 The provisions of this Code shall have effect, notwithstanding anything inconsistent
therewith contained in any other law for the time being in force or any instrument having effect
by virtue of any such law1.
2. It is humbly submitted before the Honourable Supreme Court of Disslocatia that "default"
means non-payment of debt when whole or any part or instalment of the amount of debt has
become due and payable and is not repaid by the debtor or the corporate debtor. Here, there
are two types of creditors acknowledged in the Insolvency and Bankruptcy Code, 2016 i.e. The
Financial Creditor and The Operational Creditors. The financial creditor is defined under
section 5(7) of the code and the powers of financial creditor is also defined under the same
section i.e. Section 7 of Insolvency and Bankruptcy Code, 2016. The Operational Creditor is
defined under Section 8 and Section 9 of the Insolvency and Bankruptcy Code, 2016.
1
The Insolvency And Bankruptcy Code (2016) [31]

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3. The above Sections of the Insolvency and Bankruptcy Code, 2016 are in violation with the
Constitution of Disslocatia as it breeches the Art. 14 of the Constitution which talks about
“Right to Equality”. If any Section of the Insolvency and Bankruptcy Code, 2016 is in contrary
with the Constitution of Disslocatia and is violating any of the Fundamental Rights then that
section is unconstitutional.
4. It is submitted before the Honourable Supreme Court that there is no real difference between
financial creditors and operational creditors. Both types of creditors would give either money
in terms of loans or money’s worth in terms of goods and services. Thus, there is no intelligible
achieved by the Code, namely, insolvency resolution, and if that is not possible, then
ultimately, liquidation.
5. Relying upon Shayra Bano V. Union of India2 such classification will not only be
discriminatory, but also manifestly arbitrary, as under Sections 8 and 9 of the Code, an
operational debtor is not only given notice of default, but is entitled to dispute the genuineness
of the claim.
6. In the case of a financial debtor, on the other hand, no notice is given and the financial debtor
is not entitled to dispute the claim of the financial creditor. It is enough that a default as defined
occurs, after which, even if the claim is disputed and even if there be a set-off and counterclaim,
yet, the Code gets triggered at the behest of a financial creditor, without the corporate debtor
being able to justify the fact that a genuine dispute is raised, which ought to be left for
adjudication before ordinary courts and/or tribunals.
7. It is submitted before this Honourable Supreme Court that even assuming that a valid
distinction exists between financial and operational creditors, there is hostile discrimination
against operational creditors. Hence, it can be established that this section of the Insolvency
and Bankruptcy Code, 2016 is unconstitutional.
8. Section 6 of The Insolvency and Bankruptcy Code, 2016 says that “Where any corporate debtor
commits a default, a financial creditor, an operational creditor or the corporate debtor itself
may initiate corporate insolvency resolution process in respect of such corporate debtor”. The
resolution process as in Chapter II of Insolvency and Bankruptcy Code, 2016 is arbitrary in
nature and is in clear violation with the article 14 i.e. Right to Equality.
2
Shayra Bano V. Union of India [2017] 9 SCC 1
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9. It is humbly submitted before the Honourable Supreme Court that the Section 12 of Insolvency
and Bankruptcy Code, 2016 is unconstitutional. Section 12A of the Code is contrary to the
directions of this Court in its order in Uttara Foods and Feeds Pvt. Ltd. v. Mona
Pharmachem3. Unbridled and uncanalized power is given to the committee of creditors to
reject legitimate settlements entered into between creditors and the corporate debtors
10. The resolution professional, having been given powers of adjudication under the Code and
Regulations, grant of adjudicatory power to a non-judicial authority is violative of basic aspects
of dispensation of justice and access to justice.
11. The moratorium imposed by the Section 14 of the Insolvency and Bankruptcy Code, 2016 is
unconstitutional in nature. The provisions of section 14(1) (a) of the Code are very wide and
appear to be a complete bar against the institution or continuation of suits or any legal
proceedings against a corporate debtor on the declaration of moratorium by the adjudicating
authority. Section 14(2) sets out the time limit for which the moratorium can be in
effect, i.e. until the completion of the corporate insolvency resolution process or on the
approval of a resolution plan by the adjudicating authority or on a resolution of the committee
of creditors to liquidate the corporate debtor, whichever is earlier.
12. It is humbly submitted before the Honourable Supreme Court that the provisions under the
section 14 of the Insolvency and Bankruptcy Code, 2016 is in violation to the Article 19(g)
which talks about the protection of rights to practice any profession, or to carry on any
occupation trade or business.
13. It is humbly submitted before the Honourable Supreme Court that the vested rights of erstwhile
promoters to participate in the recovery process of a corporate debtor have been impaired by
retrospective application of Section 29A.
14. Section 29A, in any case, is contrary to the object sought to be achieved by the Code, in
particular, speedy disposal of the resolution process as it will inevitably lead to challenges
before the Adjudicating Authority and Appellate Authority, which will slow down and delay
the insolvency resolution process.
15. In particular, so far as Section 29A(c) is concerned, a blanket ban on participation of all
promoters of corporate debtors, without any mechanism to weed out those who are
unscrupulous and have brought the company to the ground, as against persons who are efficient
3
Uttara Foods and Feeds Pvt. Ltd. v. Mona Pharmachem [2017]
Page |7
managers, but who have not been able to pay their debts due to various other reasons, would
not only be manifestly arbitrary, but also be treating unequals as equals
16. It is humbly submitted before the Honourable Supreme Court that the maximization of value
of assets is an important goal to be achieved in the resolution process. Section 29A is contrary
to such goal as an erstwhile promoter, who may outbid all other applicants and may have the
best resolution plan, would be kept out at the threshold, thereby impairing the object of
maximization of value of assets.
17. It is humbly submitted before the Honourable Supreme Court that under Section 29A(c), a
person‘s account may be classified as a non performing asset [NPA] in accordance with the
guidelines of the Reserve Bank of Disslocatia [RBD], despite him not being a wilful defaulter.
Also, the period of one year referred to in clause (c) is again wholly arbitrary and without any
basis either in rationality or in law. Under section 29A(j) persons who may be related parties
in the sense that they may be relatives of the erstwhile promoters are also debarred, despite the
fact that they may have no business connection with the erstwhile promoters who have been
rendered ineligible by Section 29A.
18. Also the involvement of a resolution professional breeches the Right to Privacy of the
Company as the Resolution Professional is not a judicial officer and will get to know about all
the trade and commerce information of the company as well as there is a danger of the person
getting to know about the trade secrets of the company which could eventually lead to the
downfall of the company. So it can be established that Right to Privacy laid down by the
Honourable Supreme Court in the case of Justice K. S. Puttaswamy (Retd.) and Anr. vs Union
Of India And Ors.4 That the Right to Privacy is protected as a fundamental right under Art.
14, 19, 21 of the Constitution of Disslocatia.
19. It is humbly submitted before the Honourable Supreme Court that the Section 62(1) of
Insolvency and Bankruptcy Code, 2016 lays down the appeal against the order of NCLAT in
the Supreme Court if the person is aggrieved by that order, whereas Section 62(2) of the
Insolvency and Bankruptcy Code, 2016 lays down the time period within which the appeal
could be filed in the Supreme Court.
20. The question of appeal arises out of the aggrieved order of the NCLAT, in order to give a
verdict NCLAT depends upon the Insolvency and Bankruptcy Code, 2016 to get its validity.
4
Justice K. S. Puttaswamy (Retd.) and Anr. vs Union Of India And Ors [2012]
Page |8
But it has been established that the Sections which lead to this appeal are unconstitutional in
themselves.
21. It is humbly submitted before the honourable Supreme Court that though the Section 62 of the
Insolvency and Bankruptcy Code, 2016 appears to be constitutional prima facie but the other
aspects related to this Section are unconstitutional i.e. the sections that lead the way to the
appeal are unconstitutional in themselves as they violate the Art. 14, 19, 21 of the Constitution
of India hence are unconstitutional and subsequently makes the section 62 of the Insolvency
and Bankruptcy Code, 2016 unconstitutional.
22. Section 231 of Insolvency and Bankruptcy Code, 2016 lays down the Bar of Jurisdiction, It
has been established that the previous sections of the Insolvency and Bankruptcy Code, 2016
are unconstitutional, so this bar on the jurisdiction on the Civil Court is invalid and
unconstitutional as if the whole of the Insolvency and Bankruptcy Code, 2016 is void there has
to be a civil jurisdiction that should serve the interest of the public in such matters.
23. Section 231 is in violation to the right to legal remedy as laid down under the law, if the other
sections of the constitution are unconstitutional there has to be a civil jurisdiction for the matter
that come forward. The Section 62, 231, 238 of the Insolvency and Bankruptcy Code, 2016
appears to be constitutional prima facie but when clubbed together in pursuance of the whole
code they are unconstitutional.
24. Section 238 of the Insolvency and Bankruptcy Code, 2016 lays down that the provisions of
this code i.e. of the Insolvency and Bankruptcy Code, 2016 overrides other laws. This can be
established as unconstitutional since the other sections of the Insolvency and Bankruptcy Code,
2016 are unconstitutional so the provisions laid down under the rule cannot stand and hence it
does not override other laws.
25. It is humbly submitted before the Honourable Supreme Court that it would be rather
unconstitutional if the provisions under the Insolvency and Bankruptcy Code, 2016 overrides
other laws since the code in itself is unconstitutional in nature.

Page |9
[2] WHETHER THE LEGISLATIVE ENACTMENTS BEHIND RECOVERY OF NPA ARE FULL-
FLEDGED AND UNCOMPLICATED OR IS THERE A NEED OF A COMPLETELY NEW MASTER
ACT?
26. It is humbly submitted before the Honourable Supreme Court that the Legislative enactments
behind the recovery of NPA are not full-fledged and are complicated at the same time, all these
complications within the provisions of the different acts for the recovery of NPA lead to the
need of a completely new master act which should be sufficient to recover the NPAs as well
as at the same time should be uncomplicated in nature so that the basic essence behind the
enactment of the act i.e. speedy and fair disposal of cases or recovery of NPAs is secured.
27. The economy of our country, is beset by problems of non-recovery and non-recoverability of
loans extended by the banking system of the country, which has led to question marks on the
credibility of the management of and credit analysis processes of banking system in the
country. These loans, called Non-Performing Assets in banking parlance, require addressing
through prompt corrective action.
28. The problem of high gross NPAs is simply one of inheritance. Historically, Indian public sector
banks have been poor on credit recovery, mainly because of very little legal provision
governing foreclosure and bankruptcy, lengthy legal battles, sticky loans made to government
public sector undertakings, loan waivers and priority sector lending. According to the RBI, to
improve the organizational efficiency of banks, reduction of NPAs has been identified as the
most critical area.
29. The object of the Insolvency and Bankruptcy Code, 2016 was to clean up the balance sheets
of banks, make the corporate sector pay for its sins, prosecute those who manipulated and
conspired to manipulate the banking system and, above all, transfer non-performing assets to
more responsible corporate successors.
30. It is humbly submitted before the honourable Supreme Court that Article 323B in The
Constitution Of India 1949 deals with the legislation to form tribunals for certain matters. It
says-
(1) The appropriate Legislature may, by law, provide for the adjudication or trial by tribunals
of any disputes, complaints, or offences with respect to all or any of the matters specified in
clause (2) with respect to which such Legislature has power to make laws
(2) The matters referred to in clause (1) are the following, namely:

P a g e | 10
(a) levy, assessment, collection and enforcement of any tax;

(b) foreign exchange, import and export across customs frontiers;
(c) industrial and labour disputes;
(d) land reforms by way of acquisition by the State of any estate as defined in Article 31A or
of any rights therein or the extinguishment or modification of any such rights or by way of
ceiling on agricultural land or in any other way;
(e) ceiling on urban property;
(f) elections to either House of Parliament or the House or either House of the Legislature of a
State, but excluding the matters referred to in Article 329 and Article 329A;
(g) production, procurement, supply and distribution of foodstuffs (including edible oilseeds
and oils) and such other goods as the President may, by public notification, declare to be
essential goods for the purpose of this article and control of prices of such goods;
(h) offences against laws with respect to any of the matters specified in sub clause (a) to (g)
and fees in respect of any of those matters;
(i) any matter incidental to any of the matters specified in sub clause (a) to (h)
31. It is humbly submitted before the honourable Supreme Court that there is no clause mentioned
in above stated article of Indian constitution which authorize the parliament to form a tribunal
for insolvency and liquidation of the company, therefore making the parliament incompetent
to create a tribunal in such matters. Which also question the existence of Debt Recovery
Tribunal(DRT) in the present case.
32. It is humbly submitted before the Honourable Supreme Court that the various sections of the
Insolvency and Bankruptcy Code, 2016 are in contrary with the Constitution i.e. they violate
the fundamental rights.
33. It has been established in the previous issue that the difference between the Financial Creditor
and the Operational Creditor is in violation with the article 14 of the Constitution as well as
there is a hostile discrimination between the two type of creditors i.e. the financial creditor and
the operational creditor. In the case of a financial debtor, on the other hand, no notice is given
and the financial debtor is not entitled to dispute the claim of the financial creditor.
34. It is humbly submitted before the Honourable Supreme Court that there is no intelligible
achieved by the Code, namely, insolvency resolution.

P a g e | 11
35. It is humbly submitted before the Honourable Supreme Court that the maximization of value
of assets is an important goal to be achieved in the resolution process. Section 29A is contrary
to such goal as an erstwhile promoter, who may outbid all other applicants and may have the
best resolution plan, would be kept out at the threshold, thereby impairing the object of
maximization of value of assets.
36. Keeping in mind the previous sections being unconstitutional Sections 62, 231, 238 of the
Insolvency and Bankruptcy Code, 2016 stand unconstitutional.
37. The last one decade has seen vigorous attempts on the part of the legislature to enact a law
which could effectively curb the menace of ever growing Non Performing Assets, which today
stand at more than Rs 1,00,000 Crores. The Civil Courts were not found effective, hence came
the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act). The
desired results did not come from this Act, hence came The Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act). Then
came the insolvency and bankruptcy code, 2016. The big question is Whether the insolvency
code will be able to curb the menace of NPA?
38. Why are the net NPAs comparatively better on a global basis? It's because of the stringent
provisioning norms that have been followed by banks ever since the Naraslmham Committee
recommendations on this matter were prescribed for banks in 1991. In India, owing to the time
lag involved in the recovery, banks tend to hold on to advances considered irrecoverable in
their books. In a normal scenario these should be completely written off from the books. This
gives birth to what are termed gross NPAs.
CIVIL COURT ERA – CAUSES OF FAILURE
39. Prior to 1993, the Banks had to approach Civil Courts for recovery of dues. The process of law
guided by the Code of Civil Procedure, 1908 was time consuming and did not adapt to the
changing demands of the economy. There was a total disconnect between the law and
Economics. The result of which was pendency of about 15 lakhs cases filed by the Banks and
Financial Institutions till 30th September 1990. The fund blocked in the litigation was about
Rs.5,622 crores of Public Sector Banks and about Rs 391 crores of Financial Institutions' .
Civil Courts failed to deliver both in ascertainment of dues & execution of decree. The cause
of failure was time-consuming proceedings up till the stage of grant of decree and old and
ineffective laws of execution as defined in Order XXI of Code of Civil Procedure, 1908.

P a g e | 12
RDDBFI ACT 1993- AN INCOMPLETE LAW

40. Failure of Civil Courts led to promulgation of Recovery of Debts Due to Banks and Financial
Institutions Act (RDDBFI Act) w.e.f. 27th August 1993. The RDDBFI Act envisaged summary
procedure for ascertainment of dues and certainly brought down the time span for adjudication
of dues. It, however, failed to execute the Decree/Certificate in an effective way. This is evident
from the fact that till about 30th September, 2001,22 Debt Recovery Tribunals (DRTs) of the
country had adjudicated 9814 cases, thereby issuing the Certificate/Decree for Rs.6265 crores,
however, actual recoveries could be made only of Rs.1864 crores. More important is the fact
that Banks despite a special legislation failed to recover about Rs.4104 crores. Of the two ills
of the Civil Courts, the first ill, that is non ascertainment of dues in an expeditious manner was
cured by the RDDBFI Act, but failed to cure the other ill, i.e. effectively executing the decree.
41. The DRTs employed Second & Third Schedule of Income Tax Act, 1961 and Income Tax
Certificate Proceedings/Rules 1962 to recover the decreed amount. Second & Third Schedules
of Income Tax Rules are pari materia same as Order XXI of Code of Civil Procedure. The
legislature while enacting the RDDBFI Act did not realize, when Order XXI had failed to
deliver for the Civil Courts, how could its miniature version do wonder for Banks under the
RDDBFI Act? The legislature needed to frame new laws for executing the Certificate/Decree,
peculiar to the requirement of Banks and Financial institutions.
42. The Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002’. It is all appreciable as the Banks deal with the public money and public
interest is obviously involved in reducing the Banks’ NPA Accounts. However, no one in this
country should be denied of an effective remedy and the criticism is that the provisions of
SARFAESI Act, 2002 are being misused by the Banks at times and it is draconian.
43. We cannot simply brush aside the concerns of the borrowers and the interest of the borrowers
in the property mortgaged with the Bank. Though right to property is not a fundamental right,
the Supreme Court has highlighted the significance of right to property as it is a Constitutional
Right and the relevant observation of the Supreme Court in Karnataka State Financial
Corporation Vs. N.Narasimahaiah5 (2008 (5) SCC 176), is as follows:-
44. "40. Right to property, although no longer a fundamental right, is still a constitutional right. It
is also human right. In the absence of any provision either expressly or by necessary
5
Karnataka State Financial Corporation Vs. N.Narasimahaiah [2008]
P a g e | 13
implication, depriving a person therefrom, the Court shall not construe a provision leaning in
favour of such deprivation."
45. "In a case where a Court has to weigh between a right of recovery and protection of a right, it
would also lean in favour of the person who is going to be deprived therefrom. It would not be
the other way round."
46. Many borrowers feel that they are being harassed by the Bank officials unreasonably and using
the provisions of SARFAESI Act, 2002. They claim that they are not ‘willful defaulters’ and
even if there is some kind of default, they are willing to correct the same and honour the
commitments agreed upon. While in some cases, the Bank Officials rightly show some kind
of interest in helping the borrowers within the legal frame-work, in some cases, the Bank
Officials act unreasonably and invoke the provisions of SARFAESI Act, 2002 by classifying
the account as ‘Non-performing Asset’ even if there is a possibility of regularizing the loan
account. Obviously, the Bank should follow the guidelines issued by the Reserve Bank of India
in classifying any loan account as ‘Non-performing Asset’. But, it is a question of
interpretation largely and as to how the Bank Officials want to use the guidelines. Normally,
the issue of classification of account as ‘Non-performing Asset’ is not dealt with by the
Tribunal or the Courts and they tend to support the classification of any loan account as NPA
if there is a default in payments as agreed. But, the guidelines issued by the Reserve Bank of
India with regard to Asset Classification are not one-sided and it all depends upon
interpretation of those guidelines in respect of a particular ‘loan account’ or borrower.
47. Dealing with the subject, the High Court of Andhra Pradesh in M/s. Sri Srinivasa Rice and
Floor Mill Vs. State Bank of India6 (2007 (4) ALT 317: 2007 (4) ALD 649: 2007 AIR(AP)
252) was pleased to observe as follows: “There is, as considered earlier in the judgment, no
statutory format, express or by necessary implication, that requires the respondent bank to
follow a particular or formal procedure or requires a formal declaration as a condition
precedent to classification of debt as NPA. From the scheme of the Act in general and the
provisions of Sec.13 (2) in particular the conclusion is compelling that the legislature has
consecrated the power, authority and discretion (to classify a debt as a NPA) to the secured
creditor within the generic guidelines to be ascertained from the definition of a non performing
asset [Sec.2(o)].
6
Andhra Pradesh in M/s. Sri Srinivasa Rice and Floor Mill Vs. State Bank of India [2007]
P a g e | 14
48. A wide margin of discretion is available to the respondent bank as the secured creditor, within
the legislative presents of the Act, to assess and classify a debt but within the legislative
framework. This Court is not constituted an appellate authority over the bank’s exercise of
discretion in this area. The respondent bank, as legislatively recognized is an institution having
the requisite expertise to form a commercial judgment on known principles of banking
practices and procedures fertilized by R.B.I directions and guidelines to assess and classify a
debt as NPA. From the wealth of material pleaded in the counter-affidavit the bank had
assessed the debt as non-performing asset. On facts, the petitioners have miserably failed to
establish that such assessment by the bank is perverse or irrational to a degree warranting
oversight and correction in judicial review.”
49. While the rights of the borrowers or the persons aggrieved to prefer an appeal under section 17
of SARFAESI Act, 2002 is almost settled, the issue of powers of Debt Recovery Tribunal
under section 17 of the Act are still debated. From the stage of maintaining that ‘the DRT is
supposed to only look into the procedural issues’, with the interpretation of Courts, the scope
of powers of DRT under section 17 of SARFAESI Act, 2002 is significantly expanded though
certain issues still requires consideration.
50. Emphasizing that the Debt Recovery Tribunal is empowered to set-aside a sale conducted
under the provisions of the SARFAESI Act, 2002, the Hon’ble Supreme Court of India in
CIVIL APPEAL NO. 4429 OF 2009 (2009 (8) SCC 366, 2009 (8) MLJ 897; 2009 (8) SCJ
979) was pleased to observe as follows:
51. The consequences of the authority vested in DRT under Sub-Section (3) of Section 17
necessarily implies that the DRT is entitled to question the action taken by the secured creditor
and the transactions entered into by virtue of Section 13(4) of the Act.
52. Madras High Court in Misons Leather Ltd. Vs. Canara Bank7 (2007 (4) MLJ 245), was
pleased to observe as follows: Needless to say that all such grounds, which render the action
of the Bank/Financial Institutions illegal can be raised in the proceedings under Section 17 of
the Act before the Debt Recovery Tribunal.” Though the Debt Recovery Tribunal is
empowered to deal with the issues of quantum of debt and the related claims under section 17
of SARFAESI Act, 2002, there is a criticism that the Debt Recovery Tribunal avoids
adjudication on certain issues and helps the Bank by allowing the Appeal filed by the borrowers
7
Madras High Court in Misons Leather Ltd. Vs. Canara Bank [2007] (4) MLJ 245
P a g e | 15
under section 17 on technical grounds and enabling the Banks to further deal with the borrower.
If this is the case, the borrower is forced to approach Tribunal many times and he is made to
run from pillar to post. Logically, the borrower can insist the Debt Recovery Tribunal to deal
with the issues raised by him in his appeal and if there is an observation in the order against
the Bank and for the borrower, then, that is like a decree unless reversed and the observations
do matter and have binding nature on Banks. This is what is supposed to happen if the borrower
has a really good case with regard to the quantum of amount demanded by the Bank, but, it is
very rare to see issues proceeding this way as many allege. If the DRT is hesitant or not
effective in addressing all the issues raised by the borrower in his appeal under section 17,
then, the borrower will be left with no remedy and he cannot also approach the Civil Court in
view of section 34 and even if he approaches the Civil Court, it is very difficult to convince
and maintain a Civil Suit in respect of a loan transaction where the Bank has initiated
SARFAESI proceedings.
53. Sale of Assets by the Bank under the provisions of SARFAESI Act, 2002 is often criticized
by the borrowers. In some cases, the auction process is hurriedly completed and it would be
extremely difficult for the borrowers to get the transaction set-aside though the DRT is
empowered to do so under section 17. It is the responsibility of the Bank to ensure that they
get the maximum possible price for the property in Public Auction as they are the trustees of
the property and as the balance sale consideration, after adjustments, goes to the borrower.
There is lot of complication in this process and it is very difficult for the borrowers at times to
fight with the Banks and it has something to do with the issue of lack of proper understanding
of procedures and law under SARFAESI Act, 2002.
54. There is a clear Bar under section 34 of SARFAESI Act, 2002 on Civil Courts in dealing with
SARFAESI related issues. It is also very difficult to convince a particular Civil Court that it
has jurisdiction to entertain a particular suit against the Bank irrespective of Bank referring to
the provisions of SARFAESI Act. Civil Court’s jurisdiction is not completely barred and in
fact cannot be barred even in cases where the Bank has invoked the provisions of SARFAESI
Act, 2002. But, when a borrower is entitled to approach the Civil Court depending upon the
facts of that particular case, then, it is certain that it is not easy to convince a Civil Court that
it has jurisdiction to entertain a particular suit against the Bank when the Bank has invoked the
provisions of SARFAESI Act, 2002.

P a g e | 16
[3] WHETHER THE PROCEEDING OF SECURITIZATION ADOPTED BY BANK AGAINST COMPANY

55. It is humbly submitted before the Honourable Supreme Court of Disslocatia that the proceeding
of securitization adopted by the bank against the company was not just and fair but in fact
arbitrary in nature causing harm to the company in many ways.
56. The Monsthug Thread Company Ltd. Is a private limited company registered under Companies
Act, 1956 now under Companies Act, 2018 doing the business of manufacture and sale of art,
silk, brocaded work border, lace etc. in Suplex City. The present director of the company Mr.
Tony Stark is a well renowned business tycoon and has earned a good repute8.
57. Company approached Bank for availing financial assistance of Rs. 9,00,00,000 (Nine Crore
Only) under Secured Business Loan to MSME’s manufacturing sector/ financial assistance for
their business through its Director/ Guarantors9.
58. The Bank suggested that the company need to purchase more property to mortgage them as
security for availing financial benefits. The officials of the Bank pressed the company to
purchase specific properties for granting letter of intent immediately. The Company was in
need of loan and putting faith and trust upon the representatives of the Bank, the Company
purchased those specific properties10.
59. On 19.01.2017 the bank issued recall notice to company, having failed to regularize its term
loan account. On 05.02.2018 the Bank issued demand notice under section 13(2) of
Securitisation Act, 2002 which states that “Notwithstanding anything contained in section 69
or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created
in favour of any secured creditor may be enforced, without the intervention of court or tribunal,
by such creditor in accordance with the provisions of this Act”11. The Bank issued possession
notice on 12.04.2017. The Bank also stated that it reserves the right to sale under the provisions
of the Securitisation Act, 2002 to realize its dues.
8
Moot Problem, Para 6
9
10
11
SARFESAI ACT, [2002] 54
P a g e | 17
60. On 13.06.2017, Bank filed an Original Application no. 645 of 2017 under section 19 of
Recovery of Debts due to bank and Bankruptcy Act, 1993 in DRT II, Suplex City to recover
its dues.
61. It is humbly submitted before the Honourable Supreme Court that the application filed by the
bank u/s 19 of Recovery of Debts due to bank and Bankruptcy Act, 1993 is pending before the
tribunal for adjudication. Meanwhile on 30.01.2018, Chief Metropolitan Magistrate, Belwa
issued order u/s 14 of Securitisation Act, 2002.
62. The Learned Chief Metropolitan Magistrate directed the company to make payment of Rs.
25,000 to Bank and appointed Assistant Superintendent to be the Court Commissioner to take
possession of the secured assets in favour of SIDBD.
63. It is humbly submitted before the Honourable Supreme Court that the order passed by the Chief
Metropolitan Magistrate is illegal and bad in law. Section 17(3) of Securitisation Act, 2002
states that- “If the application is not disposed of by the Debts Recovery Tribunal within the
period of four months as specified in sub-section (5), any part to the application may make an
application, in such form as may be prescribed, to the Appellate Tribunal for directing the
Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts
Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for
expeditious disposal of the pending application by the Debts Recovery Tribunal”12.
64. In the instant case the application was pending before the DRT II for a period longer than four
months, and as per Section 17(3) the Bank should have gone for the appellate tribunal for
further proceedings in the case as it was not disposed within period of four months but the
Bank approached the Chief Metropolitan Magistrate directly despite having the knowledge
that the application was pending before DRT II the learned Chief Metropolitan Magistrate
passed an order which was illegal and bad in nature.
65. It is humbly submitted before the Honourable Supreme Court that the bank approaching the
Chief Metropolitan Magistrate was illegal as the Section 17(3) specifies that the appeal against
the tribunal lies before appellate tribunal not before the Chief Metropolitan Magistrate. It is
also bought to the notice of the Honourable Supreme Court that the company tried many times
to negotiate with the bank but the bank did not respond to it.
12
P a g e | 18
66. It can be established that the fine imposed by the learned Chief Metropolitan Magistrate was
alien and completely irrelevant in the case. Under Securitisation Act, 2002 there is no such
provision for a fine to be imposed on the party. Even if the Chief Metropolitan Magistrate
thinks it is relevant to impose a fine on the party, it cannot be imposed as the powers of Chief
Metropolitan Magistrate is limited and he does not enjoy any judicial authority under section
14 of the Securitisation Act.
67. The Gujarat High Court while talking about the constitutional validity of Section 14 of the
SARFAESI Act in the matter of Mansa Synthetic Pvt. Ltd. and others v. Union of India and
another13 has held that taking possession of secured assets, District Magistrate/Chief
Metropolitan Magistrate has a ministerial role in form of rendering assistance to secured
creditor in taking possession and he is not vested with any adjudicatory powers and further not
empowered to decide the question of legality and propriety of any actions taken by secured
creditor under Section 13 (4) of the SARFAESI Act.
68. In the instant case the Chief Metropolitan Magistrate imposed the fine of Rs. 25,000 on the
Company and it can be established that the fine was illegal.
69. In the case of Roshan Narayanan.C.S vs The Authorized Officer 14 the Honourable High
Court of Kerela stated that taking possession of the secured asset is only one of the measures
that can be taken by the secured creditor. Depending upon the nature of the secured asset and
the terms and conditions of the security agreement, measures other than taking the possession
of the secured asset are possible under Section 13(4) Alienating the asset either by lease or
sale, etc. and appointing a person to manage the secured asset are some of those possible
measures. On the other hand, Section 14 authorizes the Magistrate only to take possession of
the property and forward the asset along with the connected documents to the borrower.
70. It is humbly submitted before the Honourable Supreme Court that the steps taken by the learned
Chief Metropolitan Magistrate were bad in law as there were many other steps which were
available before the court, firstly the company was deceived by the employees of the bank who
in bad faith and for their own selfish motive compelled the company to buy those lands which
was of a very low value in the market and took advantage of their position and the need and
13
Mansa Synthetic Pvt. Ltd. and others v. Union of India and another [2013]
14
Roshan Narayanan.C.S vs The Authorized Officer [2017]
P a g e | 19
demands of the company. Even after there were defaults the company tried to contact the bank
but all in vain.
71. It is humbly submitted before the Honourable Supreme Court that it can be established that the
proceeding of securitization adopted by the bank against the company was not just and fair.
Firstly, the property that was bought by the bank was a sheer outcome of the personal greed of
the employees of the bank on whom the company relied for the purchase of the land then after
the company came to know about the real value of the lands that it was of very much low value
as compared to the value upon which the company bought it. Because of this the company has
suffered unwarranted loss.
72. On 02.03.2018, Company filed a Securitization Application no. 13 of 2018, before the DRT I,
Suplex City challenging the actions taken against them under section 14 of the Securitization
Act, 2002. Since the Section 14 of the Securitization Act, 2002 was amended, the bank is not
governed by the guidelines of the Reserve Bank of Disslocatia as per their Act, thus NPA
classification is bad in law.
73. Upon hearing both the sides, the DRT I, Suplex City granted stay against Securitization Act,
2002, establishing the very fact that the proceeding of securitization adopted by the bank
against the company was not just and fair.
74. Hence it can be established that since no notice was given to the company by the bank, the
whole process of securitization carried out was wrong and illegal and bad in law. The order of
Chief Metropolitan Magistrate holds no ground.
75. It is humbly submitted before the Honourable Supreme Court that the Bank initiated the
Securitization proceedings against the company without due notice.
76. In the case of Ashok Kumar V. Authorized Officer, Punjab National Bank And Others15 the
Honourable Allahabad High Court held that unless and until a clear 30 days notice is given to
the borrower, no sale or transfer can be resorted to by a SECURED CREDITOR. In the event
of any such sale properly notified after giving 30 days clear notice to the borrower did not take
place as scheduled for reasons which cannot be solely attributable to the borrower, the
SECURED CREDITOR cannot effect the sale or transfer of the SECURED ASSET on any
subsequent date by relying upon the notification issued earlier. In other words, once the sale
15
Ashok Kumar V. Authorized Officer, Punjab National Bank And Others [2013]
P a g e | 20
does not take place pursuant to a notice issued under Rules 8 and 9, read along with Section
13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for
effecting the sale, the procedure prescribed above will have to be followed afresh, as the notice
issued earlier would lapse.
77. In the instant case the bank did not issue any notice to the company against the initiation of the
proceedings under section 14 of the Securitisation Act, 2002. Hence it can be established that
since the bank failed to notify the company about the same the proceeding is illegal and the
possession of the land given to the bank is illegal.
78. It is also bought to the notice of the Honourable Supreme Court that all these proceedings
compelled the company to enter into the multiplicity of legal proceedings and complicated
issues of law. The Special Civil Suit no. 943 of 2018 filed by the company on 29.11.2018
before the Civil Court of Suplex City for recovery on account of damages against the Bank is
still pending for adjudication.
79. This multiplicity of cases violates the fundamental right to speedy trial covered under Art. 21
of the Constitution of India, as said in the case of Common Cause V. Union of India16. The
Supreme Court expressed its anguish at the delay in disposal of cases in law courts in the case
of Rajindra Singh V. Prem Mai17 and stated that “the authorities concerned are requested to
do the needful in the matter urgently to ensure speedy disposal of cases if the people’s faith in
judiciary is to remain”
16
Common Cause V. Union of India [1996] SC 946
17
Rajindra Singh V. Prem Mai [2007]
P a g e | xiii
PRAYER
Therefore, in the light of the issues raised, arguments advanced, reasons given and
authorities cited, it is humbly prayed before the Hon’ble court to adjudge and declare:
1. That the Section 3(12), 5(7), 6, 7, 12, 14, 29, 62, 231, 238 of the Insolvency and Bankruptcy
Code, 2016 is unconstitutional
2. That the legislative enactments behind the recovery of NPA are not full-fledged and are
complicated, and there is a need of a completely new master Act
3. That the proceeding of Securitization adopted by the Bank against Company was unjust and
unfair.
And/or
The Hon’ble Supreme Court may also be pleased to pass any other order, which it may
deem fit in light of justice, equity and good conscience.
SD/-
Counsel for Petitioner

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TEAM CODE – 1930JP

2ND DR. R.U. SINGH MEMORIAL NATIONAL MOOT COURT COMPETITION

BEFORE THE HON’BLE SUPREME COURT OF DISSLOCATIA

SPECIAL LEAVE PETITION

CENTRAL BAR ASSOCIATION OF DISSLOCATIA………………….. PETITIONER

THE UNION OF DISSLOCATIA…………………………..RESPONDENT

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

LIST OF ABBREVIATIONS ......................................................................................................... iii

INDEX OF AUTHORITIES .............................................................................................................v

STATEMENT OF JURISDICTION ................................................................................................ vii

STATEMENT OF FACTS ........................................................................................................... viii

SUMMARY OF ARGUMENTS ...................................................................................................... xi

ARGUMENTS ADVANCED ............................................................................................................1

[3] WHETHER THE PROCEEDING OF SECURITIZATION ADOPTED BY BANK AGAINST

PRAYER .................................................................................................................................. xiii

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AIR All India Reporter

ALT Andhra Law Times

CPC Civil Procedure Code

DRT Debt Recovery Tribunal

IPC Indian Penal Code

MLJ Malayan Law Journal

Ministry of Micro, Small and Medium

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NCLT National Company Law Tribunal

NPA Non-Performing Assets

RBI Reserve Bank of India

Recovery of Debts Due to Banks and

SARFAESI Securitisation and Reconstruction of Finncial

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Sr. No. Statute Year

Sr. No. Case Relevant Citation Pg. No.

2. Common Cause V. Union of India AIR 1996 SC 929 20

4. Karnataka State Financial Corporation Vs. 2008(5) SCC 176

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10. Shayra Bano V. Union of India (2017) 9 SCC 1 5

Sr. No. Name of the Book Author

1. Black’s Law Dictionary Henry Campbell Black

2. Law and Practice of Securitisation And Dr. RG Chaturvedi

Sr. No. Name of the Website

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Art. 136 of the Constitution of Disslocatia:

Special leave to appeal by the Supreme Court-

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WHETHER THE PROCEEDING OF SECURITIZATION ADOPTED BY BANK AGAINST COMPANY

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(a) levy, assessment, collection and enforcement of any tax;

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RDDBFI ACT 1993- AN INCOMPLETE LAW

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[3] WHETHER THE PROCEEDING OF SECURITIZATION ADOPTED BY BANK AGAINST COMPANY

deem fit in light of justice, equity and good conscience.