TMI Blog2005 (7) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sixth respondent, namely, PNL Nithi Limited, Pondicherry by taking appropriate action under the provisions of law. In this Writ Petition, W.P.M.P. No. 14620 of 2005 has been filed by the Indian Renewable Energy Development Agency Limited (in short, IREDAL ) for getting itself impleaded as one of the party-respondents. A similar petition has been filed in W.P.M.P. No. 23476 of 2005 by Pondicherry Non-Banking Investors Protection Association. 3. W.P. No. 13593 of 2005 has been filed by Pondicherry Branch of Bank of Baroda, praying for the issuance of a Writ of Mandamus, to direct the fourth respondent therein, i.e., the Indian Bank, to safeguard the interests of the petitioner-bank for appropriating its claim in a sum of ₹ 75,73,873 vide its letter dated 8-3-2005 from the sale money deposited or to be deposited by the fifth respondent therein, namely, EID Parry (India) Ltd. 4. W.P. No. 10060 of 2005 has been filed by Puduvai Pradesa Sarkarai Aalai Thozhilalar Sangam, praying for the issuance of a Writ of certiorarified Mandamus, to call for the records relating to Tender Notification issued by the Indian Bank, dated 15-2-2005 published in The Hindu, dated 16-2-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jaya Bank, Pondicherry, Ariyur Sarkarai Alai Thozhilalar Nala Sangam, Pondicherry and Bank of Baroda, Pondicherry in W.P.M.P. Nos. 11926, 14137 and 14553 of 2005. W.P. No. 9834 of 2005 W.P.M.P. No. 10659 of 2005: 8. The case of the petitioner in this Writ Petition is that they have made huge deposits in the sixth respondent, namely, PNL Nithi Limited, that the seventh respondent, namely, New Horizon Sugar Mills Ltd., is a company which controls the sixth respondent, that substantial deposits which were lying with the sixth respondent were diverted to the seventh respondent and that subsequent to April, 2004, the sixth respondent started committing default in the payment of interest and refund of deposits and in the circumstances, the sale resorted to by the fifth respondent, namely, the Indian Bank of the assets of the seventh respondent under the provisions of SARFAESI Act would seriously prejudice the rights of the depositors and therefore, their interests should be protected by issuing appropriate directions to respondents 1 to 4, namely, the Union of India, Reserve Bank of India, Inspector of Police and Superintendent of Police, Pondicherry. 9. The sum and substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank of India Act, 1934 deals with the manner in which the various non-banking financial institutions can carry on their business operations, the maintenance of reserve fund, etc. and also the power of Reserve Bank of India to take steps for the winding up of such non-banking financial companies in the event of such companies acting detrimental to the public interest or to the interest of the depositors as well as the Power of Company Law Board to order repayment of deposit to the depositors. Section 45(MC) empowers the Reserve Bank of India, to take necessary steps for filing application for winding up of non-banking financial companies under the provisions of the Companies Act which operates against the interests of the depositors on being satisfied that continuance of such non-banking financial companies would be detrimental to the public interest or to the interest of depositors of such companies, under section 45(QA)(2), the Company Law Board has been empowered either on its own motion or on an application of the depositors to order for repayment of deposit of any deposit in accordance with the terms and conditions as against such non-banking financial companies. 12. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the Fundamental Rights or of natural justice or the proceedings are without jurisdiction, the High Court under Article 226, on the facts of the particular case, can still dismiss the writ petition on the ground of availability of alternative remedy and ordinarily it should do so if there is an alternative remedy. 13. The abovesaid judgment has also been subsequently followed in S. Thamil Arasan v. R. Narayanan 2005 (1) CTC 399. 14. Further in the judgment of the Hon ble Supreme Court in Mardia Chemicals Ltd. v. Union of India [2004] 51 SCL 513 , the Hon ble Supreme Court, while upholding the validity of SARFAESI Act, in particular section 13, highlighted the need for the speedy recovery of large amounts of debts due to the banks by the borrowers and also pointed out that such recovery measures in exercise of power of sale of assets without intervention of Court was highly needed in the present state of economy prevailing in this country. The Hon ble Supreme Court after referring to the Second Report of Narasimham Committee, has observed as under in para 36 : 36. ...One of the measures recommended in the circumstances was to vest the financial institutions throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises of 6th respondent therein, i.e., New Horizon Sugar Mills Pvt. Ltd., Ariyur, Pondicherry. 17. According to the petitioner, the said order would impinge upon its attempt for the sale of secured assets in respect of the sixth respondent Sugar Mills, called for by it in its sale notice dated 16-2-2005. 18. However, in the course of submissions made before me, the learned Additional Solicitor General appearing for the petitioner as well as the learned Government Pleader, submitted that inasmuch as the ultimate sale notice dated 16-2-2005 has been completed and the sale proceeds of ₹ 50.20 crores have been realized and the further fact that the liability of Sugar Mills to the petitioner is only in the order of around ₹ 30.50 crores, the apprehension of the second respondent expressed in the impugned notice dated 21-3-2005 as regards the recovery of loans granted by the Department of Agriculture, Pondicherry can be duly made good from the balance of the sale proceeds. It was also pointed out that while in the impugned proceedings dated 21-3-2005, the second respondent only restrained the petitioner from selling molasses and the immovable pro-perties pursuant to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w Horizon Sugar Mills Ltd. - Sale tender of properties taken possession - Sale of land and building and plant and machinery, etc. (Item No. 1) Ref.-Our notice of intended sale dated 15-2-2005 and paper publication dated 16-2-2005/17-2-2005. Your tender document dated. Your letter dated 24-3-2005. The cheque No. 068590 dated 24-3-2005 for ₹ 13.00 crores on ICICI, Santhome Branch is drawn by a third party and not from the bidder and hence not acceptable. There is no provision for making alternative arrangements for payment of the amount. The alternate arrangement proposed by you is also from a third party and hence not acceptable. As the payment has not been made by you (the offerer) at the venue of the tender opening and at the time of closing of the tender process, your tender is not acceptable and hence rejected. 21. Mr. S.A. Rajan, learned counsel appearing for the petitioner would contend that under Clause 31 of the Tender Notification falling under the head of Acceptance of Tender , it is stipulated that after the finalisation of tender process, the successful tenderer would be informed before 5.00 p.m. on the same date and that a letter of acceptance of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment) Rules, in the event of non-deposit of 25 per cent by the highest bidder, the bank is entitled to sell the property forthwith to some other party. The learned Additional Solicitor General also pointed out that the Writ Petition is liable to be rejected on the ground of latches since while the impugned order was passed as early as on 24-3-2005, the petitioner has moved the present Writ Petition only in the month of May, 2005 and therefore, the grievances now expressed by the petitioner is purely an after-thought and have been made after taking note of the pendency of the other Writ Petitions filed by certain other parties. 23. Having heard the respective counsel, I find force in the submission of the Learned Additional Solicitor General. In the Definitions of the Tender Schedule, Clause 6 defines the term Tenderer , it also mentions that the word Tenderer would also mean and include Offerer , Bidder or similar terms which convey the same meaning. It also stipulates that it may be an individual , HUF , Partnership firm , private or public limited company or a statutory corporation . Clause 31 under the caption Acceptance of Tender stipulates that a letter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crores offered by the petitioner. Therefore, there is no merit in this writ Petition. Accordingly, the Writ Petition fails and the same is liable to be dismissed. W.P. No. 13593 of 2005: 24. This Writ Petition has been filed by Pondicherry Branch of Bank of Baroda. The prayer of the petitioner is for a direction to the Indian Bank, to safeguard the interest of the petitioner-bank for appropriating its claim in a sum of ₹ 75,73,873 vide its letter dated 8-3-2005 from the sale money deposited or to be deposited by the fifth respondent therein, namely, EID Parry (India) Ltd. According to the petitioner, it had advanced funds to the third respondent sugar Mills up to the year 2003-04 to an extent of ₹ 55,79,873 that the accrued interest was of the order of ₹ 19,94,000, and that a total sum of ₹ 75,73,873 is liable to be paid by the third respondent, it is contended that the fourth respondent-Indian Bank, as a secured creditor and as a lead bank having initiated action under the provisions of SARFAESI Act for realization of their dues to an extent of only about 27 Crores and since 50.20 crores have been realized in the said auction, appropriate directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebts Recovery Tribunal to consider the points raised in such application in exercise of its power under section 17(3), and pass such orders as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13. Therefore, the petitioner having got an efficacious alternate remedy under SARFAESI Act will have to move the Debts Recovery Tribunal under section 17 of that Act. The present Writ Petition is therefore, not maintainable. Therefore, applying the dictum of the Division Bench of this Court in Indian Additives Ltd. v. Indian Additives Employees Union 2005 (1) CTC 1, as well as the Division Bench judgment dated 7-7-2005 in W.P. No. 37061 of 2002, etc. in Digivision Electronics Ltd. v. Indian Bank 2005 (3) CTC 513 (Mad.) this Writ Petition is liable to be rejected. W.P. No. 11715 of 2005: 27. This Writ Petition has been filed by the Pondicherry State Co-operative Bank as against New Horizon Sugar Mills Pvt. Ltd. and the Indian Bank. The prayer is for the issuance of a Writ of Mandamus, to direct the second respondent-Indian Bank to set apart a sum of ₹ 1,88,56,704 as due and payable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of its outstanding amounts as against the debtor, it should give a go-bye to all other measures which could have been availed of before resorting to such sale. In other words, according to the learned counsel, even as per the Judgment of the Hon ble Supreme Court in Mardia Chemicals Ltd. v. Union of India [2004] 51 SCL 513 , every secured creditor, while invoking its power under section 13(4) of the SARFAESI Act, should explore the possibility of rehabilitation of the sick industry either by way of lease, assignment or through its own management before resorting to the extreme measure of selling the industry for the purpose of recovering its dues. In this context, the learned counsel relied upon paragraphs 39, 45 and 79 of the Judgment cited supra and submitted that the Hon ble Supreme Court has left it open for the Courts to decide appropriately as and when any such situation arises and therefore, in the present situation this Court should direct the secured creditor, namely, the Indian Bank to work out the alternate measures before resorting to sale of the mills to the fourth respondent. In support of this submission, reliance was also placed upon the Judgment of the Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured creditor owed a duty to act fairly and in good faith by fulfilling their part of the obligations under the contract, it should be its endeavour to exercise its drastic powers for speedier recovery of non-performing assets. The learned Addl. Solicitor General also submitted that in the light of the remedy available to the borrower or any other person aggrieved under section 17 of SARFAESI Act, the action of the bank as a secured creditor in selling the secured assets cannot be faulted. 32. Mr. A.L. Somayaji, learned Senior Counsel appearing for the fourth respondent pointed out that after the amendment to section 13(4) of the SARFAESI Act, a clear cut distinction has been made as between secured asset and the management of business of the borrower and when in the case on hand, admittedly the manufacturing operations of the third respondent Sugar Mills, came to a halt as early as in the year 2003, there would be no scope for exploring the possibility of resorting to other measures as contended on behalf of the petitioner as such a course was never in the contemplation of the Act as it stands today. The learned Senior Counsel, while referring to section 13(6) of the Act, conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to section 15(1) of the SICA Act. By virtue of the above referred to two Provisos added on to existing proviso of section 15(1), the scope of approaching BIFR under the SICA Act is taken away. Further if any application for rehabilitation was pending before BIFR, that would also stand abated when once action is taken under section 13(4) of the SARFAESI Act. Even in the light of the abovesaid provision, when section 13(4) is examined, the power of the secured creditor to take possession of the secured assets of the borrower inclusive of the right to transfer by way of lease, assignment or sale for the purpose of realizing the secured assets is absolute, when once the borrower failed to discharge his liability in full within the periods specified in section 13(2). Significantly, while under section 13(4)(a ), secured creditor has been vested with such a power to take possession inclusive of the right of lease, assignment or sale under sub-section (4)(b) of section 13, when it comes to the question of taking over management of the business of the borrower, again, along with the right to transfer by way of lease, assignment or sale, the provisos to the said sub-clause (b), specifical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is to be accepted, that would run contrary to the very object of the SARFAESI Act and defeat all its purposes. That would virtually nullify the whole effort of the secured creditor in its attempt for the speedy recovery of its dues which would run contrary to the ratio laid down by the Hon ble Supreme Court in Mardia Chemicals Ltd. s case (supra) while upholding the validity of section 13(4). In this context, it will be worthwhile to refer to the recent Division Bench Judgment of our High Court to which I am also a party where the Division Bench has noted the liability due to the Banks have been stated to be in the order of about 1,50,000 crores. That Judgment has been made in a Batch of Writ Petitions, commencing with W.P. No. 37061/2002 by order dated 7-7-2005 in Digivision Electronics Ltd. v. Indian Bank 2005 (3) CTC 513. 37. However, if the above submission of the learned counsel for the petitioner is considered, with reference to section 13(4)(b), it may have some relevance and inasmuch as we are not concerned with taking over of possession of management of business, I do not propose to delve deep into the question as to how the said provision would operate upon when a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by reason of the transfer, if- (a) the service of the workman has not been interrupted by such transfer; (b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and (c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer. 40. Therefore, either in the event of the proviso to the said section not being operated upon whatever benefits conferred on the workmen under the substantive provision would be available to the workmen and thereby they can also reap the benefits which they earned by virtue of the service put in by them under the erstwhile management, namely, the third respondent herein. Reliance placed upon by the learned counsel for the petitioner on the Judgment in Olga Tellis v. Bombay Municipal Corpn. [1985] 3 SCC 545 only states that any deprivation of one s right to livelihood can only take place according to just and fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 10077 of 2005 is disposed of in the light of what is stated in paragraphs 16 to 18 of this Judgment. W.P.M.P. Nos. 11926, 14137, 14533 and 23511 of 2005 filed by M/s. Vijaya Bank, Pondicherry, Ariyur Sarkarai Alai Thozhilalar Nala Sangam, Pondicherry, Bank of Baroda, Pondicherry and the Commissioner of Central Excise, Pondicherry Commissionerate respectively stand dismissed as their interests are not germane to the main prayer in the Writ Petition and inasmuch as the Writ Petition itself stands disposed of on the terms mentioned above. (c) In the light of the discussions made in paragraphs 20 to 23 of this Judgment, Writ Petition No. 15303 of 2005 lacks merits and the same is dismissed. (d) Writ Petition No. 13593 of 2005 stands dismissed on the ground of alternate remedy available to the petitioner under section 17 of SARFAESI Act and following the Division Bench Judgment of this Court in Indian Additives Ltd. v. Indian Additives Employees Union 2005 (1) CTC 1, as well as the unreported Judgment of the Division Bench in W.P.No. 37061 of 2002, etc. dated 7-7-2005, Digivision Electronics Ltd. v. Indian Bank 2005 (3) CTC 513. (e) Writ Petition No. 11715 is also d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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