Provisions of Chapter III-B of RBI Act, specifically Section 45(1)(f) cannot apply to Housing Finance Institutes/Companies (HFI’s/HFC’s) established under Section 29A of NHB Act, 1987, for the purposes of interpretation of notifications issued for minimum pecuniary threshold under 2(1)(m)(iv) of SARFAESI Act – Virendra Rathore and Ors. Vs. Tehsildar Distt. Mandsaur and Ors. – Madhya Pradesh High Court

In this important judgment, a two-judge Bench of Hon’ble Madhya Pradesh High Court held that:

(i) The provisions contained under Chapter III-B of the RBI Act, specifically Section 45(1)(f) cannot be treated to be applicable in the context of Housing Finance Institutes/Companies (HFI’s/HFC’s) established under Section 29A of the NHB Act, 1987, for the purposes of interpretation of notifications issued under 2(1)(m)(iv) of the SARFAESI Act.
(ii) HFIs/HFCs will be categorised as FI’s not by virtue of their being NBFC’s, but because of their falling under the phrase ‘any other institution’ as mentioned under Section 2 (1)(m)(iv). The notifications resultantly issued pertaining to NBFC would therefore on the strength of above reasoning will also not apply to HFC’s/HFI’s.
(iii) The notifications relied upon by the petitioner as issued by the Central Government (Ministry of Finance) on applicability of SARFAESI Act on NBFCs shall not be applicable in the context of HFCs / HFIs, but only in the context of NBFCs so defined under Chapter III-B of the RBI Act, 1934, specially Section 45(I)(f).
(iv) The minimum pecuniary threshold of 20 Lakhs shall not apply to HFIs/ HFCs as prescribed in case of the NBFCs.

Provisions of Chapter III-B of RBI Act, specifically Section 45(1)(f) cannot apply to Housing Finance Institutes/Companies (HFI’s/HFC’s) established under Section 29A of NHB Act, 1987, for the purposes of interpretation of notifications issued for minimum pecuniary threshold under 2(1)(m)(iv) of SARFAESI Act – Virendra Rathore and Ors. Vs. Tehsildar Distt. Mandsaur and Ors. – Madhya Pradesh High Court Read Post »