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Samtel Color Ltd. Versus State Bank of India

E-auction and sale of immovable properties of a defaulting debtor - Held that:- The petitioner company has an alternative remedy under Section 17 of the Act of 2002 as amended effective 1-9-2016. The petitioner shall be free to file an application before the Debt Recovery Tribunal challenging the public notice dated 11-7-2016 or any other order/ notice issued by the respondent bank. The application under Section 17 of the Act of 2002 if filed by the petitioner company within three weeks from tod .....

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der interim or otherwise to be passed by the Debt Recovery Tribunal in the application under Section 17 of the Act of 2002 against the impugned public notice dated 11-7-2016. All orders both interim and final be passed by the Debt Recovery Tribunal in its wisdom only on merits of the case with reference to facts and law applicable. - S.B. Civil Writ Petition No. 11302/2016 - Dated:- 17-10-2016 - Alok Sharma, J. For the Petitioner : Kamlakar Sharma, Madhusudan Rajpurohit For the Respondents : G. .....

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(Enforcement) Rules, 2002 (hereinafter the Rules of 2002 ). The case of the petitioner company Samtel Color Limited (SCL) is that albeit it is a group of company of SGL, yet an independent juristic personality having been separately registered under the Companies Act, 1956 (hereinafter the Act of 1956 ). It has been stated that the petitioner company in its own right is a sublesee of SGL in respect of 6.20 hectare land in khasra No.67, 68 and 71 situate in village Naya Nohara Tehsil Ladpura Dist .....

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trary, in violation of the petitioner company s rights under Article 300A of the Constitution of India and therefore liable to be quashed and set aside. The necessary factual background is that 27.79 hectares (69.19 acres) of land in Khasra No.66, 60, 93, 66/229, 69/301, 67, 68, 70 73, 307/73, 71 and 72 in village Naya Nohara Tehsil Ladpura District Kota were allotted to SGL and a lease deed in respect thereof executed under the Rajasthan Land Revenue (Allotment for Industrial Purposes) Rules, 1 .....

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er company states to have made huge investments on the sub-leased land, raised building and installed plant and machinery for the purpose of manufacturing colour tubes for colour television, colour electron guns and defraction unit aside of also manufacturing a range of technology product system and equipment and developing its own display technology. Technological changes in the petitioner company s business and resultant dumping of products by competitors worldwide are stated to have entailed .....

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of the petitioner company s unit as a sick industry. The said reference came to be dismissed as having abated vide order dated 8- 6-2016 on an application by ICICI Bank, one of the lenders of the petitioner company. BIFR s order dated 8-6-2016 was challenged in appeal No.30/2016 before the AAIFR., which is stated to be still pending. The case of the petitioner company is that its financial condition and its appeal before the AAIFR against the dismissal of reference by BIFR as having abated, not .....

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ative remedy under Section 17 of the Act of 2002 for reason of which it should be thereto relegated and not allowed to invoke the equitable extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. It has been submitted that in any event the petitioner company is not even in legal possession of the land admeasuring 6.20 hectare in khasra No.67, 68 and 71 in village Naya Nohara Tehsil Ladpura District Kota, inasmuch as despite the District Magistrate Kota s letter d .....

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y has no manner of legal right over the 6.20 Hectares in issue as claimed. It has been clarified that plant and machinery of the petitioner company will not be auctioned under the impugned public notice dated 11-7-2016. It was submitted that the petitioner company in the circumstances cannot have any case or one better than that of SGL the purported lessor, which is in any event already before the Debt Recovery Tribunal against the public notice dated 11-7-2016 by way of proceedings Section 17 o .....

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12 under Section 13(2) of the Act of 2002 was therefore issued to it. No objections having emanated from SGL possession notice qua the whole of the mortgaged land i.e. 27.79 hectares was issued on 16- 5-2013 and published as required by law in newspapers on 19-5- 2013. It has been submitted that even otherwise it is the case of SGL from its correspondence with the respondent bank that the purported sub-lease dated 29-9-2005 was cancelled and possession of the land was taken from the petitioner c .....

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ernative statutory remedy available with the petitioner company under Section 17 of the Act of 2002 to challenge the public notice dated 11-7-2016. Heard. Considered. This writ petition was filed on 11-8-2016. Section 17 of the Act of 2002 which at the relevant time provided for a right to appeal was amended on 1-9-2016. In its amended form the misnomer of "Right to Appeal" under Section 17 of the Act of 2002 was corrected as that of a right to an application against measures to recove .....

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atutes. Section 17(4A) of the Act of 2002 also inserted effective 1-9-2016 inter alia provides that where any person in an application under sub-section (1) claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal after examining the facts of the case and evidences produced by the parties in relation to such claim shall for the purpose of enforcement of security interest have the jurisdiction to examine subsistency of the lease or tenancy including the question a .....

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in law de hors the rights of the secured creditor qua the mortgaged property in issue. Faced with the aforesaid amendment, Mr. Kamlakar Sharma Senior Advocate appearing with Mr. Madhusudan Rajpurohit has emphatically submitted that the amendment to Section 17 of the Act of 2002 effective 1-9-2016 is only prospective in nature and cannot attract to "non-suit" the petitioner who approached this court by way of a writ petition under Article 226 of the Constitution of India on or about 11 .....

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Videocon International Limited Vs. Securities and Exchange Board of India [(2015)4 SCC 33], Daya Ram Vs. Sudhir Batham [(2012)1 SCC 333], Thirumalai Chemicals Ltd. Vs. Union of India [(2011)6 SCC 739], Raj Kumar Shivkare Vs. Asstt. Director Directorate Enforcement [(2010)4 SCC 772], Ashok Leyland Vs. State of TN [(2004)3 SCC 1], Hitendra Vishnu Thakur Vs. State of Maharashtra [(1994)4 SCC 602] Jose Da Costa Vs. Bascora Sadasiva Sinai Narcornim [(1976)2 SCC 976] and Mukund Deo Vs. Mahadu [AIR 196 .....

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the petitioner were to be relegated to the said remedy for a cause of action obtaining prior thereto under the public notice dated 11-7-2016 for e- auction of immovable property including parts of which the petitioner is a sub lessee. Mr. K.K. Sharma further submitted that the petitioner company having invoked the equitable extraordinary jurisdiction of this court against the public notice dated 11-7-2016 prior to coming into force of the amendment to Section 17 of the Act of 2002 effective 1-9- .....

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der its equitable extraordinary jurisdiction under Article 226 of the Constitution of India cannot be equated with a right to appeal. In the aforesaid context, the mere laying of writ petition against public notice dated 11-7-2016, does not entitle the petitioner to claim that the subsequent amendment to Section 17 of the Act of 2002 effective 1-9-2016 if operated against it would entail denial of a vested legal right. In the instant case in the event the petitioner company is required to avail .....

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remedy removing a lacunae. Under Section 17 of the Act of 2002 as existing prior to 1- 9-2016 which even while the petitioner company aggrieved of the public notice dated 11-7-2016 could have taken proceedings under the then extant law as an aggrieved person, it could not have been granted the relief of being put back in possession even if the Dent Recovery Tribunal had theoretically found its rights unlawfully contravened by the secured creditors in dispossessing it from the land on sub lease .....

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to over come the said jurisdictional limitation of the Debt Recovery Tribunal. It is thus plainly curative in nature as would appear from the background facts hereinbelow detailed. Section 17(1) of the Act 2002 at all times including prior to the amendments effective 1-9-2016 provided that any person including a borrower aggrieved by any of the measures referred to in sub-section 4 of Section 13 taken by the secured creditor or his authorised officer or representative could apply to the Debt Rec .....

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it found illegality in its/ his dispossession. The view of the then extant state of law taken by the Apex court in the case of Harshad Govardhan Sondagar (supra) was quite apparently for the reason that a Tribunal created by the statute only had limited jurisdiction as conferred on it without any plenary/ inherent jurisdiction to grant relief not specifically it was empowered to under the statute. That state of affairs appears to have attracted the attention of the Parliament, consequent to whi .....

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h the intent to deal with mischief of non-exclusivity of Debt Recovery Tribunal in inter alia adjudicating the claims of sub-lessee of the secured assets. Clause 14 of the Bill proposed amendments of Section 17 of the SARFAESI. Consequently, Sub-section 3 of the Act of 2002 was amended by the Parliament and approved by the Hon ble President empowering the Debt Recovery Tribunal, in the event of coming to conclusion that any of the measures referred to sub-section 4 of Section 13 taken by the sec .....

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at where an amendment to an existing law is curative in nature it would per force be retrospective. A similar view has been taken by the Apex Court in the case of ITW Signode India Ltd. Vs. Collector of Central Excise [(2004)3 SCC 48] as also in the case of Vijay Vs. State of Maharashtra [(2006)6 SCC 289] wherein it has been held that general presumption of statutes and amendment thereto being prospective in nature is overturned where the amendment to an existing statute is curative or clarifica .....

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a 45 day period for approaching the Debt Recovery Tribunal against any of the measures under Section 13(4) of the Act of 2002 taken by a secured creditor. But that should not be an obstruction in the facts of the case where the right to move an application for effective relief including that of possession was conferred on all aggrieved person only on 1-9-2016. And even prior thereto the petitioner had approached this Court on 11-8- 2016 aggrieved of the measures taken by the secured creditor un .....

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