1.1 Hon’ble Supreme Court in U.P. Avas Evam Vikas Parishad & Anr. Vs. Friends Coop. Housing Society Ltd. & Anr. (AIR 1996 SC 114; Date of Judgment 24/04/1995) held that “Right to shelter is a fundamental right, which springs from the right to residence assured in Art.19(1) (e) and right to life under Art. 21 of the Constitution.”
1.2 Further, Supreme Court in State Of
1.3 In Chameli Singh & Ors. v. State of
1.4 In Shantistar Builders v. Narayan Khimalal Toame [(1990) 1 SSC 520], another bench of three judges of Supreme Court had held that basic needs of man have traditionally been accepted to be three food, clothing and shelter. The right to life is guaranteed in any civilised society. That would take within it sweep the right to food, the right to clothing, the right to decent environment and a reasonable accommodation to live.
1.5 In Olga Tellis v. Municipal Corporation of Greater Bombay [(1965) 3 SCC 545] a five judge Constitution Bench of Supreme Court had considered the right to dwell on pavements or in slums by the indigent and the same was accepted as a part of right to life enshrined under Article 21; their ejectment from the place nearer to their work would be deprivation of their right to livelihood. They will be deprived of their livelihood if they are evicted from their slum and pavement dwellings. Their eviction tantamount to deprivation of their life. The right to livelihood is a traditional right to live, the easiest way of depriving a person of his right to life would be to deprive him of his means of livelihood to the point of abrogation. Such deprivation would not only denudes the life of its effective content and meaningfulness but it would make life impossible to live. The deprivation of right to life, therefore, must be consistent with the procedure established by law.
1.6 In P.G. Gupta v. State of Gujarat [(1995) Supp. 2 SCC 182], another bench of three Judges of Supreme Court had considered the mandate of human right to shelter and read it into Article 19(1)(e) and Article 21 of the Constitution.
1.7After discussing aforesaid cases, Hon’ble Supreme Court in Ahmedabad Municipal Corporation Vs. Nawab Khan Gulab Khan & Ors (AIR 1997 SC 152; Date of Judgment:11/10/1996) held that “The right to life enshrined under Article 21 has been interpreted by this Court to include meaningful right to life and not merely animal existence as elaborated in several judgments of this Court including Hawkers case, Olga Tellies case and the latest Chameli Singh's case and host of other decisions which need no reiteration. Suffice it to state that right to life would include right to live with human dignity. As held earlier, right to residence is one of the minimal human rights as fundamental right.”
2.1 Sub-section (1)(f) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the Securitisation Act”) has defined the term "borrower" as follows:
"borrower" means any person who has been granted financial assistance by any bank or financial institution or who has given any guarantee or created any mortgage or pledge as security for the financial assistance granted by any bank or financial institution and includes a person who becomes borrower of a securitisation company or reconstruction company consequent upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance; (italics supplied)
2.2 Sub-section (1)(zc) of Section 2 of the Securitisation Act has defined the term "secured asset" as follows:
"secured asset" means the property on which security interest is created;
2.3 Sub-section (1)(zf) of Section 2 of the Securitisation Act has defined the term "security interest" as follows:
"security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31;
2.4 Sub-section (4) of Section 13 of the Securitisation Act has, inter alia, provided as follows:
Section 13. Enforcement of security interest.-
(4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-
(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;
(b)(c)(d)……..x x x
2.5 Usually the primary security taken by the Bank / secured creditor from the borrower to secure the debt are as follows:
CC (Hypothecation): First charge over all the current assets of the borrower company.
Term Loan: Hypothecation / pledge of machinery / fixed assets created out of Bank Finance.
Collateral (Movable / Immovable Property) for total fund based limit:
Equitable mortgage of a plot of land and/or a self occupied residential house owned by a Director or a Guarantor of the borrower company.
2.6 All the aforesaid assets fall within the term "secured asset" as defined in sub-section (1)(zc) of Section 2 of the Securitisation Act. Therefore, as provided in clause (a) of sub-section (4) of Section 13 the secured creditor may take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured assets. It is pertinent to note here that the secured creditor may realise the secured assets, including a self occupied residential house, by way of lease, assignment or sale. In view of that, all the secured assets of the borrower may be realised by a common course of action and there is no special procedure established by the Securitisation Act to take possession and sale of a self occupied residential house.
3.1 Article 21 of the Constitution of India, 1949 has provided as follows.
“Protection of life and personal liberty. - No person shall be deprived of his life or personal liberty except according to procedure established by law.”
3.2 As discussed earlier, right to life would include right to live with human dignity and right to residence is one of the minimal human rights as fundamental right. The deprivation of right to life, therefore, must be consistent with the procedure established by law. It is pertinent to note here the maxim Nemo de Domo sua extrahi potest means ‘No one may be dragged from his own house’ and another maxim Nemo potest esse simul actor et judex means ‘No one can be at once suitor and judge’. However, as provided in clause (a) of sub-section (4) of Section 13 of the Securitisation Act the secured creditor may realise the secured assets, including a self occupied residential house, by way of lease, assignment or sale by a common course of action and there is no special procedure established by the Securitisation Act to take possession and sale of a self occupied residential house. This is in gross violation of right to residence as fundamental right of the individual Director/Partner/Proprietor and/or Guarantor of the borrower company/firm.
3.3 The approach in the interpretation of fundamental rights has been highlighted in M. Nagaraj & Ors. Vs.
“20……..After three decades, the Supreme Court overruled its previous decision in A.K. Gopalan v. State of Madras (AIR 1950 SC 27) and held in its landmark judgment in Maneka Gandhi v. Union of India (1978) 1 SCC 248 that the procedure contemplated by Article 21 must answer the test of reasonableness. The Court further held that the procedure should also be in conformity with the principles of natural justice. This example is given to demonstrate an instance of expansive interpretation of a fundamental right. The expression 'life' in Article 21 does not connote merely physical or animal existence. The right to life includes right to live with human dignity. This Court has in numerous cases deduced fundamental features which are not specifically mentioned in Part-III on the principle that certain unarticulated rights are implicit in the enumerated guarantees."
3.4(a) Recently in State Of
“64. Thus, the opinion of this Court in A.K. Gopalan (supra) to the effect that a person could be deprived of his liberty by `any' procedure established by law and it was not for the Court to go into the fairness of that procedure was perceived in Maneka Gandhi (supra) as a serious curtailment of liberty of an individual and it was held that the law which restricted an individual's freedom must also be right, just and fair and not arbitrary, fanciful or oppressive. This judgment was a significant step towards the development of law with respect to Article 21 of the Constitution, followed in a series of subsequent decisions. This Court went on to explore the true meaning of the word "Life" in Article 21 and finally opined that all those aspects of life, which make a person live with human dignity are included within the meaning of the word "Life".
3.4(b) Thus, having examined the rival contentions in the context of the Constitutional Scheme, Supreme Court concluded as follows: (SCC pp. 600, para 68)
“68(i).The fundamental rights, enshrined in Part III of the Constitution, are inherent and cannot be extinguished by any Constitutional or Statutory provision. Any law that abrogates or abridges such rights would be violative of the basic structure doctrine. The actual effect and impact of the law on the rights guaranteed under Part III has to be taken into account in determining whether or not it destroys the basic structure.”
3.4(c) Supreme Court further observed as under: (SCC pp. 602, para 69)
“69…….Being the protectors of civil liberties of the citizens, this Court and the High Courts have not only the power and jurisdiction but also an obligation to protect the fundamental rights, guaranteed by Part III in general and under Article 21 of the Constitution in particular, zealously and vigilantly.”
Conclusion
4.1 However, on the contrary, as provided in clause (a) of sub-section (4) of Section 13 of the Securitisation Act the secured creditor may realise the secured assets, including a self occupied residential house, by way of lease, assignment or sale by a common course of action and there is no special procedure established by the Securitisation Act to take possession and sale of a self occupied residential house. This is clearly in gross violation of right to residence as fundamental right of the individual Director/Partner/ Proprietor and/or Guarantor of the borrower company/firm. The fundamental rights, enshrined in Part III of the Constitution, are inherent and cannot be extinguished by any Constitutional or Statutory provision. Any law that abrogates or abridges such rights would be violative of the basic structure doctrine. Consequently, the Securitisation Act is violative of the right to residence as fundamental right as well as the basic structure doctrine. As discussed above, being the protectors of civil liberties of the citizens, the Supreme Court and the High Courts have not only the power and jurisdiction but also an obligation to protect the fundamental rights, guaranteed by Part III in general and under Article 21 of the Constitution in particular, zealously and vigilantly. (END)
Note: the views expressed are my personal and a view point only.
Author:
Narendra Sharma, Consultant (Legal)
E-mail: nkdewas@yahoo.co.in
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