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TMI Blog2015 (3) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... creditor to enforce a security interest under the SARFAESI Act, 2002. Mr. Joy Saha, learned Counsel for the petitioner, submits that, the District Magistrate did not take into account the parameters laid down under Section 14 of the SARFAESI Act, 2002 in deciding the issue and passing the order impugned. Consequently, the order impugned is invalid according to him. His next limb of submission is that, secured creditors of requisite percentage have not invoked the provisions of the SARFAESI Act, 2002. The respondent no.3 has a reference pending before the Board for Industrial and Financial Reconstruction (BIFR) established under the provision of the Sick Industries Companies (Special Provisions) Act, 1985 (SICA). The respondent no.3 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARFAESI Act, 2002 or not. On the first issue, I have perused the order of the District Magistrate which is at page 51 of the writ petition. The order is dated September 24, 2014. The District Magistrate records perusal of the papers and documents submitted by the respondent nos. 1 and 2. The District Magistrate in his finding observed that reasonable opportunity was afforded to the borrower in accordance with the provisions of the SARFAESI Act, 2002 and that the borrower had failed to repay the loan amount with interest. Considering such aspect, the District Magistrate was of the view that police assistance as required by the respondent nos. 1 and 2 were required to be provided and as such allowed such prayer. No material was placed befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARFAESI Act, 2002. SARFAESI Act, 2002 defines as secured creditors. Such definition is Act, Section 2(zd) the definition is as follows:- (zd) "Secured Creditor" means any bank or financial institution or any consortium or group of banks or financial institutions and includes - i] debenture trustee appointed by any bank or financial institutions; or ii] securitisation company or reconstruction company, whether acting as such or managing a trust set up by such securitisation company or reconstruction company for the securitisation or reconstruction, as the case may be; or] iii] any other trustee holding securities on behalf of a bank or financial institution, in who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or within the meaning of SARFAESI Act, 2002 itself. A borrower who is a legal entity other than a legal entity incorporated or existing under the Companies Act, 1956 may have creditors who may be termed as secured creditors in relation to such borrower. In such scenario also all of such creditors may not come within the definition of "secured creditors" under the SARFAESI Act, 2002. In the facts of the instant case, five creditors of the respondent no. 3 are secured creditors within the meaning of Companies Act, 1956. In respect of the respondent no.3, four secured creditors are "secured creditors" within the meaning of the SARFAESI Act, 2002 also. Three of the four secured creditors within the meaning of the SARFAESI Act, 2002 have proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epting one, have taken measures under Section 13 of the SARFAESI Act, 2002. The collective value of the amount outstanding against the respondent no.3 in respect of three secured creditors, governed by the SARFAESI Act, 2002, is in excess of three-fourth of the value of the amount outstanding against the respondent no.3. The reference before the BIFR, therefore, has abated. All and any order of the abatement passed by the BIFR in such reference is a nullity. Mr. Saha contends that, West Bengal Industrial Development Corporation is a secured creditor and its exposure to the respondent no.3 is in excess of Rs. 25 crores. The sole exposure of West Bengal Industrial Development Corporation will prevent the threshold of three-fourth value as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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