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2015 (10) TMI 827 - PUNJAB AND HARYANA HIGH COURT

2015 (10) TMI 827 - PUNJAB AND HARYANA HIGH COURT - TMI - Challenge to Notice inviting bids for sale of Secured assets under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act Secured creditor - Petitioner claims the amount outstanding to be ₹ 267.76 lacs which differs from the amount claimed by the Respondent of ₹ 105.65 crores Petitioner contends that notice under Section 13(4) for assignment of debts is not permissible as the sam .....

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h are independent of each other Found no merits in the present writ as such dismissed Decided in favour of the Respondent. - CWP No.15890 of 2015 (O&M) - Dated:- 4-8-2015 - MR. JUSTICE HEMANT GUPTA AND MRS. JUSTICE LISA GILL For The Mr. V.K.Sachdeva, Advocate, for the petitioner. For The Mr. Sunil Kalra, Advocate, for the caveator-respondents. HEMANT GUPTA, J. Challenge in the present writ petition is to a public notice dated 14.07.2015 (Annexure P-1), whereby respondent No.1 - IFCI Ltd., .....

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t of the fact that with a view to finance its Hotel Project, the petitioner-company approached the Financial Institutions including respondent No.1- IFCI Ltd. and a term loan worth ₹ 815 lacs was sanctioned in the year 1991. The hotel became operational and came into business on 27.12.1999. The hotel, having 117 well furnished rooms and various restaurants and other luxurious amenities, is being run as a Five Star Hotel in the name and style of Hotel Majestic Plaza in the heart of Ludhiana .....

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te the hotel and to meet the cost of renovation, a term loan of ₹ 5.22 crores was obtained from respondent No.3 - Punjab National Bank. In April, 2008 and May, 2010, credit facilities of ₹ 4.50 crores and ₹ 5 crores were obtained from IDBI Bank Limited and Reliance Capital Ltd. respectively. Still further, another credit facility of ₹ 2.25 crores was obtained from Axis Bank Ltd. on 26.04.2011. It was vide letter dated 01.07.2011, Punjab & Sind Bank taken over loan fro .....

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he petitioner-company submitted its reply on 15.10.2012. However, the request of the petitioner for restructuring of the loan and for additional funds was rejected on 23.10.2012. It was on 02.11.2012, the symbolic possession of the secured assets of the petitioner-company was taken over by respondent No.1 after a notice under Section 13(4) of the Act was issued. The petitioner-company is said to have paid an amount of ₹ 302 lacs on 29.11.2012 and 30.11.2012, thus, making a total payment of .....

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s per the petitioner is ₹ 267.76 lacs. Respondent No.1 issued another sale notice dated 27.06.2014 (Annexure P-19). However, respondent No.3 - Punjab National Bank challenged the said sale notice before the Debt Recovery Tribunal by filing a Securitization Application bearing No.363 of 2014 on 25.07.2014. In the said application, as per the petitioner, the respondent No.1 has not filed a detailed reply explaining highly and illegal exaggerated amount. Even though the matter was pending bef .....

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tioner-company filed an application i.e. SA No.118 of 2015 under Section 17 of the Act before the Debt Recovery Tribunal. When the matter was pending and no interim relief was granted, respondent No.1 issued another sale notice dated 10.04.2015. The said application was withdrawn after a fresh sale notice dated 25.06.2015 was published. Thereafter, SA No.372 of 2015 has been filed by the petitioner-company challenging the sale notice dated 25.06.2015, but the same was adjourned to 30.07.2015. It .....

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nal are pending, but after exercising the right to sale the property through e-auction vide sale notice dated 25.06.2015, the secured creditor has issued a second auction notice dated 14.07.2015 inviting bids on 10.08.2015 for assignment of debt, which is not permissible. The argument is that law permits availing of alternative remedies, but does not permit simultaneous availment of the remedies. It is contended that under Section 13(4) of the Act, the Bank has proceeded to take possession of th .....

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argument on behalf of the petitioner-company is that the secured creditor may take recourse to one or more measures as delineated under Section 13(4) of the Act, which includes to take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset, but the assignment of a debt is a separate right, which is governed by Section 5 of the Act. Therefore, the action of respondent No.1 to assign debt is mala fide, m .....

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derlying securities. The relevant extract from the notice dated 14.07.2015 reads as under: 5. Parties who are interested in purchasing/assignment one or both the accounts identified for sale have to submit their bid for individual accounts in writing to Shri Sudhir Garg, Executive Director, IFCI Ltd. IFCI Tower, 61, Nehru Place, New Delhi 110019 so as to reach him on or before 10.08.2015 by 11.00 a.m. or alternatively may be dropped in the Tender Box, kept at the Reception of IFCI Tower. Bids re .....

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pants to the top three bidders, for the purpose of Inter se bidding, if so decided in any account individually, which would be decided by the competent authority of IFCI after opening of the bid. The participant who quotes the highest price in the inter se bidding, if adopted will be the successful bidder subject to: • Bid price being above reserve price. • Approval by the Competent Authority of IFCI. • The bid being rejected for other indices viz., management fee/cash + SR ratio/ .....

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believe that there is a likely impairment or would be prejudicial to the recovery steps/redemption of SRs. xx xx 11. The sale will be on the following terms and conditions: a. The 2 NPA accounts offered for sale/assignment on individual basis, details of which are given in the Annexure II, are available for due diligence / verification to the ARCs/ Banks/FIs/NBFs at the IFCI s Offices, the addresses being enumerated in the Annexure-III between 10.00 AM to 6.00 PM only as per the schedule for Du .....

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the arguments raised. Section 13 of the Act empowers the secured creditor to take recourse to one or more measures as delineated under sub-section (4) to recover the secured debt. Clause (a) itself contemplates the right to take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset. The relevant Section 13(4) of the Act reads as under: 13. Enforcement of security interest - xx xx (4) In case the borrow .....

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or realizing the secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt; Provided further that where the management of whole, of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security or the debt; (c) appoint any person (hereafter refer .....

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notice for sale of the secured assets on 25.06.2015, the legality and validity of which is being examined by the Debt Recovery Tribunal. Clause (a) also permits assignment of secured asset. Such assignment of the secured asset is a transaction independent of sale of the secured asset of the borrower. It is a transaction between a person, who is holding a debt to any asset reconstruction company or a financial institution. Section 5 of the Act permits any securitization company or reconstruction .....

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s but the amount claimed from the Company exceeds ₹ 143 crores i.e. ₹ 133 crores from IFCI and ₹ 10.77 Crores from IDBI, is again not tenable. The transaction between the secured creditors of the Company and that of the assignee is an independent transaction. It is not in the nature of One Time Settlement arrived at by a secured creditor with a debtor. The assignee has stepped into the shoes of the secured creditors on the basis of the assignment deed and thus all the rights an .....

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urt, the assignment of debt was found to be permissible in terms of Section 130 of the Transfer of Property Act, 1882. The Bench observed as under: The assignment of debt is permissible in terms of Section 130 of the Transfer of Property Act, 1882. Learned counsel for the petitioner could not point out any prohibition in the documents of loan prohibiting assignment of debt in favour of another Banking company. It is not disputed that respondent No. 1 is a Banking Company registered under the Ban .....

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tries Limited, (2010) 10 SCC 1. The view as reproduced above, was set aside by the Supreme Court. We find that reliance on the judgment of Gujarat High Court in view of the Supreme Court order is rather unfortunate. The Supreme Court was examining the question as to Whether the Gujarat High Court was right in holding that assignment of debts by the banks inter se is not an activity permissible under the BR Act, 1949 and consequently all executed contracts of assignment of debts were illegal? &he .....

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