TMI Blog2016 (2) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, issued the notice on 7.9.2005 to the company in liquidation and called upon the borrower to make the payment. However, the borrower-company in liquidation has not made the payment as per the notice. Thereafter, the SBI assigned its debts in favour of the applicant-bank by Deed of Assignment dated 23.3.2006. Thereafter, the applicant-bank has issued the notice under SARFAESI Act on 15.11.2006. Thus, there is no delay in initiation of the proceedings nor it can be said that SBI had waived its right to initiate action against the company in liquidation. It is further required to be noted that the Official Liquidator filed Appeal No.27 of 2007 before the DRT against the applicant-bank. However, learned advocate Mr. Pahwa has placed on record the order dated 17.7.2014 passed by DRT below Exh.23 whereby the said appeal was disposed off as dismissed for default due to want of prosecution. The Official Liquidator or the intervenor has not placed any other material on record to show that the said appeal has been restored. Thus, the fact remains that the Liquidator did file an appeal before the DRT. It is clarified that if the said appeal is restored on file of DRT, it is open fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; for the sake of convenience). The said credit facilities were renewed from time to time. Against the said credit facilities, the company had mortgaged the properties being land and building bearing survey no.489, 502, 502/1/A, 502/1/B, 502/1/C, 502/2-P and consolidated survey no.489 situated at village Mokhsi, Taluka Savli, District Vadodara admeasuring 30,451 sq.mtrs. The Company had also hypothecated all its movables being raw materials, stock in progress, finished goods, packing materials, plant and machinery etc., except plant and machinery, other movables from 3.4.DCNB unit and 3.4 DCA project. The plant and machinery and other movables of the aforesaid unit and project have been hypothecated to Technology Information, Forecasting and Assessment Council (hereinafter referred to as 'TIFAC' for the sake of convenience). 3.1 Learned advocate Mr. Pahwa further submitted that the Company had initially created mortgage in favour of ICICI Bank Limited, IDBI Bank Limited, IFCI Limited and SBI by way of joint mortgage by deposit of title deeds dated 24.4.1991 in respect of the aforesaid immovable property. However, thereafter, credit facilities available by the Company fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the secured assets, the representatives of the company prevented the authorized officer from taking physical possession. In the meantime, the company also filed application under Section 17 of the SARFAESI Act before Debts Recovery Tribunal, Ahmedabad (hereinafter referred to as 'DRT' for short) wherein demand notice dated 15.11.2006 as well as possession notice dated 12.12.2007 were challenged. At this stage, learned advocate Mr. Pahwa pointed out that the company was before Board for Industrial and Financial Reconstruction. (hereinafter referred to as 'BIFR' for short). Therefore, the applicant informed the BIFR about the measures taken by the applicant under Section 13(4) of the SARFAESI Act. BIFR, therefore, by an order dated 17.12.2007 abated the reference. The company, therefore, preferred an appeal before Appellate Authority for Industrial and Financial Reconstruction. (hereinafter referred to as 'AAIFR' for short). However, the said appeal was also came to be dismissed by the appellate authority by an order dated 4.2.2009. It is pointed out by learned advocate that the aforesaid orders were challenged by the company by filing Special Civil Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e secured assets is already taken by the applicant. In spite of the aforesaid communication, the grievance is made by learned advocate that the Official Liquidator proceeded with taking over the possession of the assets of the company including the secured assets. The physical possession of the assets of the company was taken over on 18.3.2011. 3.6 In the aforesaid background of the facts of the present case, learned advocate Mr. Pahwa would submit that the applicant is secured creditor of the company and is standing outside the liquidation proceedings. The applicant has already initiated measures under the provisions of SARFAESI Act, also filed an Original Application before the DRT which is pending. The symbolic possession of the assets has been taken over on 29.1.2010. Therefore, the applicant is entitled to proceed with the enforcement of the securities under the SARFAESI Act. He further contended that once the secured creditor has chosen to stand outside the liquidation proceedings, the role of the Official Liquidator is restricted to taking care of the interest of workmen of the company. 3.7 Learned advocate thereafter would contend that provisions of SARFAESI Act and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ICICI Bank Ltd. v/s. Official Liquidator of APS Star Industries Ltd. reported in (2010)10 SCC 1. The Hon'ble the Supreme Court remanded the matter back to the Hon'ble Division Bench of this Court for considering the other issues with regard to registrations, stamp duty etc. The Hon'ble the Division Bench passed an order in O.J. Appeal No.156 of 2007 whereby the matter was remanded back to the learned Company Judge. The learned Company Judge, thereafter, passed an order in Company Application No.489 of 2006 on 28.1.2015. 3.11 Learned advocate Mr. Pahwa thereafter has placed reliance upon the decision rendered by this Court in the case of Bank of India V/s. O.L. of Phar East Laboratories Ltd.reported in 2006 JX (Guj.) 146 which is produced at page 53 of the compilation. Learned counsel has mainly relied upon the observation made by this Court in paragraphs 23, 25 to 29. 3.12 Thereafter, he placed reliance upon the decision rendered by the High Court of Delhi in the case of Kotak Mahindra Bank Ltd. V/s. Megnostar Telecommunications (P.) Ltd., reported in (2013) (36) Taxmann.com 87 (Delhi). He mainly relied upon the observations made in paragraphs 22 to 26, 30 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r mainly submitted that the intervenor is the creditor of the company in liquidation for an amount of ₹ 1,34,929/- by way of unsecured loan/deposit advanced to the company. He submitted that there are other creditors/deposit holders having claim against the company and they are also supporting the case of the intervenor. He further pointed out that the intervenor is a shareholder (contributory) of the company and holding 85,100 equity shares of the company. The intervenor is also alleged to be a guarantor to the SBI for the loans/credit facilities granted by the SBI to the company. 4.1 Learned advocate Mr. Shah contended that the applicant-bank has filed this application on the basis that it is a secured creditor of the company on the basis of the Deed of Assignment executed by SBI with the applicant on 23.3.2006. The applicant is not a creditor of the company much less a secured creditor of the company. He pointed out that initially the bank had not produced the Deed of Assignment on the basis of which it is claiming to have acquired the rights from SBI. However, thereafter, such document was produced on record. He contended that from the Deed of Assignment received by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competent authority, such document cannot be relied as evidence. Hence, the applicant has not acquired any security interest in the properties of the company. 4.3 Learned advocate Mr. Shah would contend that the applicant was not entitled to issue notice under Section 13(2) of the SARFAESI Act. The applicant is not lender of the company. The applicant has not classified the account of the company as Non-performing Asset (for short 'NPA' for the sake of convenience) at all. He submitted that the entire credit facilities were restructured by SBI on 28.10.2003 pursuant to which fresh loan agreement was entered into between SBI and company on 29.1.2004. On the restructuring, old arrangement was replaced by the new arrangement. Thus, any default under the old arrangement was given a go-by on the restructuring of the credit facilities by entering into new agreement on 29.1.2004. On the new financial arrangement under the restructuring, replacing the old financial arrangement, there was a novatio and old rights and obligations were replaced and substituted by new rights and new obligations. Thus, classification of the company's account as NPA under the old arrangement stoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editor i.e. SBI alone can issue a notice under Section 13(2) of the SARFAESI Act. The applicant shall not be entitled to issue such notice and, therefore, on this ground also the applicant is not entitled to initiate any action under Section 13(4) of the said Act. 4.6 Learned advocate Mr. Shah further submitted that the applicant is not at all the creditor of the company much less a secured creditor. The applicant is not entitled to initiate any action under the SARFAESI Act. The applicant has not lent any money to the company. The company has not borrowed any money from the applicant. The provisions of SARFAESI Act do not apply to the applicant which is neither a securitization company nor a reconstruction company. At this stage, learned advocate Mr. Shah referred to the statement of objects and reasons of SARFAESI Act. He referred to the definition of 'Asset reconstruction' defined under Section 2(1) (b) of SARFAESI Act. It provides that: 2(1)(b) asset reconstruction means acquisition by any securitisation company or reconstruction company of any right or interest of any bank or financial institution in any financial assistance for the purpose of realisation of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.10 Then, he referred to Section 20(1) of SIC Act which provides as under: 20(1) Where the Board, after making inquiry under section 16 and after consideration of all the relevant facts and circumstances and after giving an opportunity of being heard to all concerned parties, is of opinion that the sick industrial company is not likely to make its net worth exceed the accumulated losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof is not likely to become viable in future and that it is just and equitable that the company should be wound up, it may record and forward its opinion to the concerned High Court. 4.11 Learned advocate Mr. Shah thereafter contended that even if the provisions of the SARFAESI Act are applicable, even then the assignment made by SBI in favour of the applicant is bad in view of the guidelines issued by RBI. Learned advocate produced on record the guidelines dated 13.7.2005 issued by RBI. Clause 5(viii) provides that:- A non-performing asset in the books of a bank shall be eligible for sale to other banks only if it has remained a non-performing asset for at least two years in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er SARFAESI Act was initiated after a period of limitation. If no limitation is prescribed for initiation of action even then, the same is required to be initiated within a reasonable time. In support of this contention, learned advocate Mr. Shah has placed reliance upon the order dated 20.9.2007 passed by this Court in Special Civil Application No.13426 of 2007. Then, he placed reliance upon another order dated 20.10.2008 passed by this Court in Special Civil Application No.9945 of 2008. Learned advocate then placed reliance upon the order dated 2.4.2009 passed by Division bench of this Court in LPA No.1266 of 2008 and more particularly, relied upon observation made in paragraph 9 of the said order. 4.14 Thus, learned advocate Mr. Shah submitted that after declaring the account of the company as NPA in the year 2001, SBI had not initiated any action under SARFAESI Act till March, 2006, when the Deed of Assignment was executed with applicant. It can be presumed that SBI has waived the statutory right to initiate action under the SARFAESI Act and, therefore, once the said right is waived, it cannot be assigned by executing deed with the applicant. 4.15 Learned advocate Mr. Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(1)(zd) of SARFAESI Act. He referred to the definition given in the said section and submitted that no security interest is created in favour of the applicant. 4.19 Learned advocate Mr. Shah then submitted that the applicant has wrongly relied upon the decision rendered by the Hon'ble the Supreme Court in the case of ICICI Bank Ltd. (supra). The issue before the Hon'ble Court was in a narrow compass i.e. the question whether the bank can assign NPA or not. In paragraph 9 of the decision, the Hon'ble Supreme Court observed with regard to the issue before the company court and thereafter in paragraph 51 in last three lines, the Hon'ble Supreme Court observed as under: That, an account receivable becomes an NPA only because of the default committed by the borrower(s) who fails to repay. Lastly, it may be mentioned that the said SARFAESI Act, 2002 was enacted enabling specified SPVs to but NPAs from the banks. However, from that it does not follow that the banks inter se cannot transfer their own assets. Hence the said SARFAESI Act, 2002 has no relevance in this case. However, from that it does not follow that the banks interse cannot transfer their own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ravention of the provisions of clause (a) shall be deemed to be null and void. 4.21 Thereafter, learned advocate has placed reliance upon the decision rendered by the Madras High Court in the case of Veena Textiles Ltd. v. Authorised Officer [writ Petition No. 8761 of 2014, dated 1-8-2014]. Learned advocate has placed reliance upon paragraphs 13 and 14 of the said decision. 13. It is not in dispute that the above properties thus assigned under the deed of assignment dated 25.05.2011, are admittedly situated in Tamil Nadu and not within the jurisdiction of the Registering Authority at Calcutta. Therefore, it is very clear that the said assignment deed made at Calcutta in respect of property situated in Tamil Nadu and got registered before the Registering Authority, Calcutta was against Section 28 of the Registration Act as amended by the Tamil Nadu Act 19 of 1997 with effect from 29.03.1997, which reads as follows:- 28. Place for registering documents relating to land:- Save as in this part otherwise provided:- (a) Every document mentioned in clauses (a),(b),(c),(d) and (e) of sub-section (1) and sub-section (2) of Section 17 in so far as such document affects immovable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 before BIFR, the advocate for TIFAC admitted that the applicant represents more than 75% for secured debts. However, she submitted that no confirmation of the aforesaid statement is available from the other secured creditors like ICICI Bank Limited, IFCI Bank Limited and IDBI Limited. What is the claim of TIFAC is also not stated. Thus, in view of absence of details, this Court may not consider the averments of the applicant. 5.1 Learned advocate Ms. Yajnik further contended that the sale of assets of the company in winding up and distribution of sale proceedings of assets of the company can only be under Sections 529, 529A and 530 of the Companies Act, 1956 in association with the liquidator under the supervision of the company Court. Sale of assets of the company in liquidation and realized security can be exercised only after obtaining permission from the company Court. Learned counsel has placed reliance upon the decision rendered by the Hon'ble the Supreme Court in the case of Rajasthan State Financial Corporation and Another V/s Official Liquidator and Another, reported in 2005(8) SCC 190. 5.2 Learned counsel thereafter submitted that without prejudice to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers and therefore their prayer for substitution cannot be rejected. 6.1 Learned advocate Mr. Pahwa thereafter referred to the order dated 28.1.2015 passed by the learned Company Judge in Company Application No.489 of 2006 and allied matters and relied upon the observations made in paragraphs 2,10,11,12 to 14 and 15. 6.2 He, therefore, contended that the learned advocates for the opponents had not made any submissions with regard to registration or stamp duty as observed in the said order and, therefore, it is not open for them to challenge at this stage in these proceedings about the said issues. 6.3 Without prejudice to the aforesaid contention, learned advocate Mr. Pahwa would submit that Deed of Assignment is already registered by the competent authority and no objection is taken by the said authority while registering the said document. Similarly, stamp duty authority adjudicated the stamp duty which is duly paid by the applicant on the Deed of Assignment. Therefore, in this application which is filed by the applicant, it is not open for the present respondents to take objection about the registration as well as stamp duty before this Court. He once again submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iption of which is given in the schedule at Annexure 'A' of the compilation. (b) The company had initially created mortgage in favour of three other banks also by way of joint mortgage by deposit of title deeds. Credit facilities available by the company from three other companies were settled and only SBI remained as the exclusive first charge holder. (c) On 30.9.2001, account of the company became NPA. On the basis of the request of the company, SBI restructured the credit facilities on 28.10.2003. On 29.1.2004, fresh loan agreement was entered into between SBI and the company. However, as per the said new arrangement also, the company had not made payment and defaulted. Therefore, on 7.9.2005, SBI called upon the company to make the outstanding payment. (d) The Deed of Assignment was executed between SBI and the applicant-bank on 23.3.2006 whereby SBI assigned its debts due and payable by the company and assigned all the credit facilities in favour of the applicant. (e) On 15.11.2006, the applicant issued notice under Section 13(2) of the SARFAESI Act and on 3.1.2007, the company replied to the said notice. The objection of the company was considered and reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be a secured creditor within the meaning of provision of SARFAESI Act. The said secured creditor has a security interest within the meaning of Section 2(1)(zf) of the said Act. 12. The applicant-bank has already initiated the measures under the provisions of the SARFAESI Act in November, 2006. The symbolic possession of the assets of the company in liquidation has been taken over on 29.1.2010. On the basis of the opinion of BIFR, this Court admitted Company Petition No.50 of 2010 by an order dated 8.2.2011 and thereafter pursuant to the order passed by this Court, the Official Liquidator has taken over the physical possession of the assets of the company on 18.3.2011. From the record, it appears that the applicant-bank is the sole secured creditor in respect of the secured assets. Thus, as observed above, the applicant who is a secured creditor having security interest in the property of the company in liquidation has preferred this application for the reliefs prayed for in the Judges' summons. 13. In the case of ICICI Bank Ltd. (supra), the Hon'ble Supreme Court has held as under:- 51. In view of the above exposition of law, we find that under the impugned deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in [2013] 4 SCC 381, considered the question whether the Company Judge under the Companies Act of 1956 has jurisdiction at the instance of the Official Liquidator to set aside the auction or sale held by the Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act of 1993 (hereinafter referred to as 'RDB Act' for short) or whether the Official Liquidator is required to follow route as engrafted under the RDB Act by filing an appeal assailing the auction and resultant confirmation of sale. The Hon'ble Supreme Court, after considering the provisions of the Companies Act of 1956 and the provision of RDB Act, held that in view of Section 34 of the RDB Act, the Tribunal has exclusive jurisdiction and, hence, the Company Court cannot use its powers under Section 442 of Companies Act,1956 against the Tribunal/Recovery Officer. The special provisions made under the RDB Act have to be applied. In view of Section 34 of RDB Act, it overrides the Companies Act, 1956 to the extent there is anything inconsistent between the Acts. The DRT has exclusive jurisdiction to sell the properties in a proceeding instituted by the banks or financial institutions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The fourth proviso to section 13(9) makes the secured creditor liable to pay the balance if any of the workmen's dues if the deposit earlier with the official liquidator is on an estimate. The sixth proviso to section 13(9) also requires the secured creditor to furnish an undertaking to the liquidator to pay the balance of the workmen's dues if any. We are of the opinion that were the official liquidator intended to be associated with the sale (making the same possible only with the intervention of the company court and which would be contra to the purpose of the SARFAESI Act) the sale proceeds would have been received by the official liquidator and the need for the provisos aforesaid would not have arisen. The provisos aforesaid are indicative of the secured creditor, while on the one hand being entitled to exercise the right to sell without intervention even of the official liquidator/company court and on the other hand being made liable for the dues of the workmen. The language of section 13(9) and provisos thereto is thus clearly suggestive of the role of the official liquidator being confined only to determination of the workmen's dues and receiving payment thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the workmen and other creditors of such debtor/borrower/mortgagor, does not arise. Significantly, the Legislature in enumerating in section 31 the cases/situations in which the provisions of the SARFAESI Act are not to apply, did not choose to list the case/situation where the debtor/borrower/mortgagor is a company in liquidation. 25. Though the language of section 17 of the SARFAESI Act suggests that the right to appeal thereunder is only against the measures under section 13(4) of the Act but the Supreme Court in Authorized Officer, Indian Overseas Bank v. Ashok Saw Mill [2009]94 SCL 73 has held that the remedy under section 17 is not confined to the stage contemplated under section 13(4) but is available qua action taken by the secured creditor after the stage contemplated under section 13(4) also. The scrutiny by the DRT under section 17 is thus not confined only to whether the measures under section 13(4) are in accordance with the SARFAESI Act and the Rules framed thereunder but also extends to the actions of the secured creditor under section 13(5) to (13). It is thus not as if the debtor/borrower/mortgagor or for that matter, in the case of such a debtor/borrower/mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an establishment and to be paid in priority to all other debts while distributing the sale proceeds. 16. The High Court Andhra Pradesh in the case of Indian Bank (supra) has observed and held in paragraphs 25 to 31, 36 and 37 as under:- 25. Again the Apex Court in case of Jagdish Singh v. Heeralal (2014)1 SCC 479, observed in paragraph 24 of the report as proposition of law as follows: Any person aggrieved by any of the measures referred to in sub-section (4) of Section 13 has got a statutory right of appeal to the DRT under Section 17. The opening portion of Section 34 clearly states that no civil court shall have the jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression in respect of any matter referred to in Section 34 would take in the measures provided under sub-section (4) of Section 13 of the Securitisation Act. Consequently, if any aggrieved person has not any grievance against any measures taken by the borrower under sub-section (4) of Section 13, the remedy open to him is to approach the DRT or the Appellate Tribunal and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Court or Tribunal action can be taken for sale of securities, whereas the provisions of Section 537 of Companies Act requires leave of Company Court. We, accordingly, hold this is apparent inconsistency in two competing provisions in two different Acts on the same subject. Similar view is expressed by the Division Bench of the Bombay High Court in case of The Akola Oil Industries (under liquidation) through Official Liquidator v. State Bank of India 2006(1) Bom.CR.362. Therefore, the provisions of SARFAESI Act will prevail over the provisions of Section 537 of the Companies Act to the extent of inconsistency. We, accepting contention of Mr. S. Ravi, hold that no leave is required under Section 537 of the Companies Act, moreover jurisdiction of the Company Court is also ousted as discussed above. 29. Next, the question appears to us whether the provisions of Section 531 531A of the Companies Act will be applied or not in this case. 30. We have already held to the extent of inconsistency provision of the Companies Act are to be overlooked. For this, we have to examine the provisions of sub-sections (4) (6) of Section 13 of the SARFAESI Act to find element of inconsis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding sale is effected in violation thereof the same is invalid and void. Thus it appears that there has been glaring inconsistency naturally, we are constrained to hold that the provisions of Section 531 531A have no manner of application and the same do not apply in case of valid sale undertaken under the SARFAESI Act and the Rules framed thereunder. Besides we fail to comprehend how Section 531A is applicable carefully reading the same on fact in this case. In order to apply this section, three factual conditions must be satisfied viz., (i) transfer must be by the company (ii) it must be voluntary (iii) such transfer must be within one year before presentation of winding up petition. In this case admittedly transfer is not made by company not even on behalf of the company, but by secured creditor, appellant herein, by virtue of power coupled with right under sub-section (4) of Section 13 of the SARFAESI Act. This could have been decided by the Debts Recovery Tribunal itself since writ court has decided on the admitted fact. Thus the decision of the Hon'ble trial judge while applying the aforesaid provisions in the instant sale without examining the implications of subsect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty. The assignments of debts by SBI to Kotak Mahindra Bank is a novatio and it is not binding to the borrowers. Kotak Mahindra Bank is not a securitization company or a reconstruction company and either original lender or a securitization company to which the debt is assigned by the original lender only can take measure under the SARFAESI Act. The said petitioner is not a borrower of Kotak Mahindra Bank within the meaning of Section 2(f) of SARFAESI Act read with Section 5(2) of the said Act. However, learned Single Judge of this Court dismissed the said petition on the ground that the petitioners can prefer an appeal before the DRT under Section 17 of SARFAESI Act and on the ground of alternative remedy, the said petition was dismissed. The said petitioners challenged the order passed by the learned Single Judge by filing LPA No.1951 of 2009. The Hon'ble Division bench also dismissed the said appeal. In paragraph 3 of the said order, the Hon'ble Division Bench has observed as under: 3. In view of the aforesaid assignment, the respondent-Bank filed Company Application No.318 of 2007 and 100 of 2008 seeking permission to proceed with sale of the assets of the company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SBI and the present applicant-bank on various grounds including the ground of stamp duty as well as other grounds which are recorded by learned Single Judge in the said order, this Court has not entertained the said petition by observing that the petitioners can prefer appeal before the DRT. The said order is confirmed by the Hon'ble Division Bench against which SLP No.7887 of 2010 filed by the aggrieved party was dismissed by the Hon'ble Supreme Court and, therefore, I am of the opinion that in the present proceedings which is filed by the Kotak Mahindra Bank i.e. the applicant-the intervenor cannot raise such type of contentions before this Court. If they have any grievance, they can approach before the appropriate authority/forum/Tribunal but the said issues cannot be agitated in the proceedings filed by the applicant. 19. The contention of the intervenor that the Deed of Assignment does not bear proper stamp duty and same is not properly registered before the concerned registering authority, such contention is also not required to be accepted in view of the fact that the said issues were kept open by the Hon'ble Supreme Court while remanding the matter back to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel for the respective parties, it is apparent that the common refrain of the learned counsel is that these applications are limited to the prayer for substitution, which stand allowed by the Supreme Court as well as by the Division Bench by holding that such substitution is permissible in law and hence, the matters come to an end. The other issues as to whether the individual deeds of assignment meet with the requirements of other enactments, like the Registration Act, the Stamp Act, etc., do not arise in the present applications and that as and when such issues are raised at an appropriate stage before the appropriate forum, the same would be decided by the concerned forum. 15. In the light of the fact that it is common ground between the respective parties that the applications being limited to substitution, which relief stands granted in terms of the above decisions of the Supreme Court and the Division Bench and that though the matters have been remanded to the Company Court by permitting the parties to raise issues other than the issue of substitution, none of the parties deem it fit to raise any other issues before this court on the ground that such issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies with the ROC. Thereafter, it is observed as under:- As noted above, it is the admitted case that the provisions of Section 125 of the Act have been complied with by the banks in whose favour, the charge of the assets of the respondent-Company was created. However, it does not appear that the applicant, in whose favour the charge of assets of the respondent-Company is assigned, has sent the particulars of the assignment of the ROC and got the same registered. On a close reading of Section 135 of the Act, I am unable to accept the submission of the learned Counsel for the petitioner and the Official Liquidator that a deed of assignment falls within the provisions of Section 135 of the Act. The said provision takes within its sweep the modification pertaining to terms or conditions of the charge or the extent or operation of any charge. It is no one's case that any of the terms or conditions of the charge or extent or operation of charge are modified. All that is done is that the banks, which held the charges and which are registered, have transferred their interests to the applicant. If the parliament intended that such transfer or assignment is required to be registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Rules by the communication dated 20th February, 2009, impugned in the appeals, is on the basis that the charge is registered. The Official Liquidator himself has produced the copies of the certificates of registration of the charges on record. Hence, the registration of charges by the Registrar of Companies is not disputed. 45. What has to be seen is the non- compliance of Sub-section (1) of Section 125 of the said Act. The Debts Recovery Tribunal, in exercise of its jurisdiction under Section 17 of the RDB Act, has delivered its judgment and order on 31st August, 1995 recording the finding that the charges of out standings have been secured by the deeds of hypothecation and the mortgage of the property. It has also decided the question as to what extent the secured creditors are entitled to recover the out standings. It has been held that the Official Liquidator's liability shall be restricted to the extent of available estate, workmen's dues and claims of other secured creditors. The ICICI Bank Ltd. (Kotak Mahindra Bank Ltd.), IDBI and IFCI Ltd. are held to be first charge holders, whereas the Bank of Maharashtra and the Bank of India have been held to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e attracted, there must be a charge to which section 125(1) applies. That must be sofar as any security on the company's property or undertaking, that charge is void against liquidator and any creditor of the company. Unless the prescribed particulars of the charge together with instruments, if any, by which the charge is created or evidenced or a copy thereof verified in prescribed manner are filed with the Registrar for registration, in the manner required by the Act within 30 days from its creation, sub-section 2 of section 125 of Companies Act, at once clarifies that nothing in sub-section 1 shall prejudice any contract or obligation for repayment of money secured by the charge. The charges to which the section applies are enlisted then in sub-section 4. Therefore, firstly it must be proved that charge created by a company to which the section applies, has been so created. That the instant arrangement with respondent No.2 is in the nature of a charge to which section 125(1) applies has not been clarified at all. Further, it is the argument of the applicant that the charge is void as against the liquidator or creditor unless registered. Therefore, that is for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated the proceedings under SARFAESI Act and therefore waived its right and hence the applicant-bank cannot now initiate the proceedings under the SARFAESI Act against the company in liquidation after a period of five years. 27. In my opinion, the aforesaid contention is misconceived. It is true that the account of the company in liquidation was declared NPA in the year 2001. However, at the request of the company in liquidation, the SBI has restructured the credit facilities. However, so far as that facility is concerned, also, the company in liquidation has not complied with the terms. SBI has, therefore, issued the notice on 7.9.2005 to the company in liquidation and called upon the borrower to make the payment. However, the borrower-company in liquidation has not made the payment as per the notice. Thereafter, the SBI assigned its debts in favour of the applicant-bank by Deed of Assignment dated 23.3.2006. Thereafter, the applicant-bank has issued the notice under SARFAESI Act on 15.11.2006. Thus, in my view, there is no delay in initiation of the proceedings nor it can be said that SBI had waived its right to initiate action against the company in liquidation. 28. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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