TMI Blog2010 (6) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... same is liable to be set aside. Thus the writ petition is allowed and the impugned order passed by the first respondent AAIFR is set aside - WRIT PETITION NO.459 OF 2008 AND M.P. NO.1 OF 2008 - - - Dated:- 9-6-2010 - R. SUBBIAH, J. A.L. Somayaji and S. Lakshmanan for the Petitioner. Vijay Narayan, K. Sivakumar Kennedy and K. Ramu for the Respondent. JUDGMENT 1. The petitioner has come forward with the present writ petition to quash the order passed by the first respondent dated September 25, 2007, in Appeal No. 53 of 2007, whereby the order passed by the second respondent dated December 19, 2006, in Case No. 77 of 2004 was set aside. 2. The facts, which are necessary to decide the issue involved in the writ petition, are as follows : The petitioner-bank, on behalf of the third respondent-company, issued a Deferred Payment Guarantee (DPG) in favour of a foreign bank, Raiffeisen Zentral Bank, Oesterrich, Vienna, Austria, to finance them to install the entire spinning mill with all the infrastructure, such as factory building plant and machinery to produce quality yarn and to export cotton yarn manufactured by them to the other countries. The DPG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,96,955.18 with interest under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. In the said O. A., an application for appointment of an advocate commissioner to take inventory of the plant and machinery stored in the factory premises of the third respondent and also an application in I. A. No. 318 of 2005 for appointment of a receiver to take possession of the unit by the petitioner were filed. The Tribunal has also appointed an advocate commissioner for taking inventory and directed the third respondent to provide security worth about Rs. 9 crores within 30 days of its order, but the third respondent did not comply with the same. While so, the third respondent-company again filed I. A. No. 538 of 2005 for stay of further proceedings pursuant to the issuance of the notice under section 13(4) of the SARFAESI Act by the petitioner. But the Tribunal declined to grant stay in favour of the third respondent. 4. In the meantime, the petitioner-bank decided to take actual possession of the secured assets and recover their dues by sale and after completing the formalities as required under the provisions of the SARFAESI Act, the petitioner took pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistance to the bank authorities in securing possession of the properties in question. Accordingly, the petitioner filed an application under section 14 of the SARFAESI Act before the District Collector for taking possession of the movable assets of the third respondent-company. In the meantime, before the DRT, the third respondent made an unconditional offer of consent to deposit any amount as may be ordered by the Tribunal as a pre-condition for the grant of stay of further proceedings under the SARFAESI Act and accordingly, the Tribunal granted stay on condition that the third respondent should deposit Rs. 2.60 crores on or before September 6, 2006; but the third respondent, having not complied with the said order, filed another application for extension of time in I. A. No. 599 of 2006, which was dismissed by the Tribunal since the order dated August 30, 2006, was a consent order and hence, no time could be extended. Aggrieved over the same, the third respondent filed an appeal before the Debts Recovery Appellate Tribunal (DRAT), Chennai vide M. A. No. 56 of 2006, wherein the DRAT granted an ex parte interim stay of the order of the DRT and diluted the order by reducing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he District Collector to provide assistance for taking possession. Therefore, from these facts, it is clear that the petitioner had already invoked section 13(4) of the SARFAESI Act. The third proviso to section 15 of the SICA says that if any measures under section 13(4) had been taken to recover the secured debt by the secured creditor representing not less than three-fourths in value of the amount outstanding against the financial assistance disbursed to the borrower, that is sufficient to abate the reference made by the borrower before the BIFR. But, in the instant case, having considered these facts, the BIFR has come to the correct conclusion that the reference filed by the third respondent had abated, whereas, the AAIFR has erred in holding that there could be a stay on the statutory abatement pursuant to any interim stay or other order by any court or Tribunal. Learned senior counsel further submitted that the stay granted by the DRAT was only in reference to further future proceedings and not with regard to bringing up the property for sale and that stay would not invalidate the action already taken by the bank under section 13(4) of the SARFAESI Act. Under such circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he SARFAESI Act. But the first respondent has set aside the order mainly on the ground that there had been an order of stay by the DRAT in M. A. 56 of 2006 filed by the third respondent-company. The said stay was in respect of all further proceedings only and not for bringing the property for sale by the bank till the disposal of the appeal and that stay will not nullify or invalidate the action already taken by the bank under section 13(4) of the SARFAESI Act. Therefore, in my considered opinion, the reasoning assigned by the AA1FR for setting aside the order is not correct. 11. A perusal of the order of the AAIFR, I find that the order of the BIFR was set aside on the following reasonings : "11. In our view the time when certain actions are taken is of importance for that will determine what information is available to any authority. If a hearing takes place just after action under section 13(4) of the SARFAESI Act is taken then an abatement order would be justified. If that very action has been stayed when the hearing takes place should the same order be passed on the ground that action under section 13(4) was taken before a stay was obtained. In our opinion not so. 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