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

Citation: [2015] 2 S.C.R. 51 · Decided: 28-01-2015 · Supreme Court of India · Bench: JASTI CHELAMESWAR

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2015] 2 S.C.R. 51 
KESHAVLAL KHEMCHANDAND SONS PVT. LTD. 
&OTHERS 
v. 
UNION OF INDIA & OTHERS 
(Writ Petition (Civil) No. 901 of2014) 
JANUARY 28, 2015 
[J. CHELAMESWAR AND S.A. BOBDE, JJ.] 
Securitisation and Reconstruction of Financial Assets 
and Enforcement of Security Interest Act, 2002: 
A 
B 
c 
s. 2(1 }(o) (as amended by Act 30 of 2004)- Constitutional 
validity of- Prior to amendment of s.2(1)(o) of the Act, NPA 
was defined as 'an account of a borrower which has been 
classified' by a creditor either 'as a sub-standard asset or a 
doubtful asset or a loss asset' of the creditor and such a D 
classification is required to be made in accordance with the 
directions or guidelines relating to assets classification issued 
by the Reserve Bank - But, under the amended definition, 
such a classification of the account of a borrower by the 
creditor is required to be made in accordance with the E 
directions or guidelines issued by an "authority or body either 
established or constituted or appointed by any Jaw for the 
time being in force", in all those cases where the creditor is 
either administered or regulated by such an authority -
F 
Whether the amended s.2(1)(o) amounts to class legislation 
- Held: Authorizing different regulators to prescribe different 
norms for the identification of a NPA with reference to different 
creditors do not amount to unreasonable classification for 
the reason that all the creditors do not form a uniform! G 
homogenous class - There are innumerable differences 
among the creditors based on the legal structure of the 
creditors' organization, nature of the Joan advanced by them, 
51 
H 
52 
SUPREME COURT REPORTS 
(2015] 2 S.C.R. 
A and the terms and conditions subject to which such loans or 
advances are made by each of those creditors, etc. -
Enabling them to follow different norms would not be violative 
of Article 14 -
Therefore, amended definition of the 
expression "NPA" u/s.2(1)(o) of the Act is constitutionally 
B valid. 
s.2(1)(o) (as amended by Act 30 of 2004) -
Under 
s.2(1 )(o), the Parliament left it to the RBI and other Regulators 
to prescribe guidelines for classifying a borrower's account 
C as a NPA - Whether in making such a prescription, the 
Parliament has delegated any essential legislative function 
- Held: The laying down of such norms requires a constant 
and close monitoring of the financial system demanding 
considerable amount of expertise in the areas of public 
D finance, banking etc. -All that activity involves too much of 
detail and promptitude of action - The stipulation under the 
Act of classifying the account of the borrower as NPA as a 
condition precedent for enforcing the security interest is an 
additional obligation imposed by the Act on the creditor -
E The borrower cannot complain that defining of the conditions 
subject to which the creditor could classify the account as 
NPA, is part of the essential legislative function - If the 
Parliament chose to define a particular expression by 
F providing that the expression shall have the same meaning 
as is assigned to such an expression by a body which is an 
expert in the field covered by the statute and more familiar 
with the subject matter of the legislation, the same does not 
amount to any delegation of the legislative powers -
G Parliament is only stipulating that the expression "NPA" must 
be understood by all the creditors in the same sense in which 
such expression is understood by the expert body i.e., the 
RBI or other regulators which are in turn subject to the 
supervision of the RBI - Legislation - Delegated legislative 
H function. 
KESHAVLAL KHEMCHANDAND SONS PVT. LTD. 
53 
v. UNION OF INDIA 
Interpretation of statutes: Expression not defined in a A 
statute- Held: If a statute does not contain the definition of a 
particular expression employed in it, it becomes the duty of 
the courts to expound the meaning of the undefined 
expressions in accordance with the well established rules of 
statutory interpretation. 
B 
Disposing of the appeals and writ petition, the Court 
HELD: 1. Prior to amendment of Section 2(1)(o) of 
the Securitisation and Reconstruction of Financial C 
Assets and Enforcement of Security Interest Act, 2002 
by Act 30 of 2004, NPA is defined as 'an account of a 
borrower which has been classified' by a creditor either 
'as a sub-standard asset or a doubtful asset or a loss 
asset' of the creditor and such a classification is required D 
to be made in 

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