TMI Blog2018 (7) TMI 2055X X X X Extracts X X X X X X X X Extracts X X X X ..... he power of the banks to recover from the debtors by securitisation company or acquisition company. However, there is no explicit power given to such delegated securitisation company or asset recovery company to further assign the same to another company or enter upon Assignment Agreement with another company to recover the secured debts of the bank. The petitioner company cannot blow hot and cold, on the one hand, by entering into an Assignment Agreement with the third party and on the other hand, when the said agreement did not fructify, now reverting back to the original position and trying to step into the shoes of the 15th and 16th respondents and the same cannot be permitted. There are no merit in the Writ Petition - petition dismissed. - Writ Petition No.5121 of 2017 and WMP.Nos.5417 and 8850 of 2017 - - - Dated:- 9-7-2018 - Asset Reconstruction Company India Ltd., (Arcil) Versus Debts Recovery Appellate Tribunal, Debts Recovery Tribunal, Dena Bank, UCO Bank, Union Bank of India, M/s.Boss Profiles Limited, S.Ghosh, Mrs.Rujutu Ghosh, K.Umapathy Rao, Mrs.D.Sharada, Mr.R.K.Venkatesha, Shaik Akthar Ali, M/s.Nissan Developers Properties P. Ltd., Shameem, Bank o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner had executed another Assignment Agreement dated 17.03.2008 registered on 19.03.2008 with 16th respondent i.e., Indian Overseas Bank and by virtue of that Assignment Agreement, the said bank, has unconditionally and irrevocably assigned, transferred and released in favour of the petitioner company, in their capacity as trustee of ARCIL, all the financial assets granted to the sixth respondent with all the underlying securities, interest, guarantees etc., and the mortgagor's right, interest and title thereto as per Section 5 of the SARFAESI Act. Thus, by virtue of Assignment Agreement with respondents 15 and 16, namely, Bank of India and Indian Overseas Bank, the petitioner holds 38.15% of the total outstanding debt pertaining to the sixth respondent. 5. The petitioner further claims that pursuant to the acquisition of financial assets by the petitioner company, the sixth respondent had approached the petitioner company for One Time Settlement and the petitioner company had sanctioned all settlement package to the sixth respondent and the sixth respondent did not honour the same, inspite of repeated reminders for payment. 6. It is stated by the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of M/s.PPL, the earlier contract of assignment has been discharged and once the said contract is over, they are entitled to claim and can be substituted in the place of 15th and 16th respondents. 10. Section 62 of the Indian Contract Act, 1872 reads as follows:- 62. Effect of novation, rescission, and alteration of contract.- If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. -If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed. Illustrations: (a) A owes money to B under a contract. It is agreed between A, B and C, that B shall thenceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted. (a) A owes money to B under a contract. It is agreed between A, B and C, that B shall thenceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted. (b) A owes B 10,000 rupees. A enters into an agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents 3 and 4, had issued a demand notice under Section 13(2) of SARFAESI Act to the sixth respondent, as the same copy was marked to the petitioner company, which action, the petitioner company states that the respondents 3, 4 and 5 without taking permission from the petitioner company, which holds 38.15% of total debts of the sixth respondent, had proceeded to issue possession notice also and later, issued a sale notice dated 14.01.2012 fixing the auction sale of the properties on 22.02.2012. 14. Mean while, challenging the sale notice, one R.K.Venkatesh, in his capacity, as a guarantor for repayment of credit facilities availed by the sixth respondent, filed Securitisation Appeal bearing S.A.No.73 of 2010 before the Debt Recovery Tribunal I and the Debt Recovery Tribunal I dismissed the same and aggrieved by the order of the Debt Recovery Tribunal I, an Appeal was preferred by the said third party. The mortgagor has also challenged the sale notice under a separate S.A.No.26 of 2012. Further, the Debt Recovery Tribunal I has permitted the respondents 3, 4 and 5 to proceed with the sale of assets of the sixth respondent in S.A.No.26 of 2012. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen from the Minutes of the meeting of the secured lenders of Boss Profiles Limited (Boss Profiles), which is enclosed at page 27 of the typed set of papers filed by the respondents 3, 4 and 5 and the relevant portion at page 28 of the typed set of papers reads as follows:- ARCIL had further informed that the consent given to the Union Bank of India for taking action under Securitisation Act automatically stands withdrawn pursuant to the provisions of Securitisation Act upon entering into any settlement scheme with promoters of the borrower company. By the said act of the petitioner, who had opted out of the consortium, the petitioner company has no right to be substituted in the O.A filed by the respondents 3, 4 and 5. As such, the consortium of banks was reconstituted with only three banks as its members and the Union Bank of India as its lead bank. 19. The fifth respondent also submitted that the claim of the petitioner company that the Agreement of Assignment does not in any way preclude the rights of the petitioner as secured creditor cannot be accepted. The petitioner cannot have two simultaneous recoveries, one from M/s.PPL and another, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by Bank of India, Dena Bank, Indian Overseas Bank, UCO Bank and Union Bank of India, as applicants have filed O.A.No.243 of 2007 against the sixth respondent herein, claiming to recover a huge sum of money, which was sanctioned to the sixth respondent company to an extent of ₹ 3,673 lakhs, in which, ₹ 3,040 lakhs constituted Term Loan and ₹ 633 lakhs being the EPCG Guarantee. The above said term loan was sanctioned initially to the sixth respondent, who had agreed to repay the said loan along with interest in half yearly instalments. It could be seen that ever since 2002, when the loan was sanctioned and till today in 2018, not even a single paisa is recovered from the sixth respondent, who are the borrowers. 23. While that being so, the petitioner company seems to have filed M.A.No.142 of 2012 seeking a prayer to substitute the petitioner company as a proposed applicant in the place of applicants 1 and 3, namely, Bank of India and Indian Overseas Bank. 24. On perusal of the affidavit filed in support of the M.A., it could be seen that the petitioner has claimed that the Deed of Assignment dated 31.03.2008 and 19.03.2008 from the Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereto or as if they had been issued in favour of the securitisation company or reconstruction company, as the case may be. (4) If, on the date of acquisition of financial asset under sub-section (1), any suit, appeal or other proceeding of whatever nature relating to the said financial asset is pending by or against the bank or financial institution, save as provided in the third proviso to subsection (1) of section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) the same shall not abate, or be discontinued or be, in any way, prejudicially affected by reason of the acquisition of financial asset by the securitisation company or reconstruction company, as the case may be, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the securitisation company or reconstruction company, as the case may be. 26. On a plain reading of the said Section and the clause, it could be seen that sub clause (1) allows any securitisation company or reconstruction company to acquire the financial assets of any bank or financial institution by issue of debentures or bonds or any other security in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Limited (Boss Profiles) as follows:- It was further informed to the participants that Arcil has now entered into an arrangement with PPL for restructuring of the dues pertaining to Boss Profiles on the following terms and conditions:- Total dues payable by Boss Profiles to Arcil for loans availed by them from Bank of India Indian Overseas Bank would be crystallized at 6.85 crore. The total upfront payment shall be ₹ 0.60 crore to be paid on or before July 15, 2009. Balance payment of ₹ 6.25 crore will be paid in 36 monthly instalments. Arcil shall enter into an agreement with PPL for assignment of debt. The total dues of Boss Profiles shall be assigned to PPL upon payment of entire settlement amount. ARCIL further informed participants that the consent given to the Union Bank of India (UBI) for taking action under Securitisation Act automatically stands withdrawn pursuant to the provisions of Securitisation Act upon entering into any settlement scheme with promoters of the borrower company. The learned counsel for the petitioner would also claim that the other consortium banks raised n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the 15th and 16th respondents and the same cannot be permitted. Under these circumstances, We do not find any merit in the Writ Petition and the Writ Petition has to be dismissed. 33. It would be pertinent to make this observation that the banks which had issued the loan as early as in the year 2002 to an extent of ₹ 3673 lakhs had fought among themselves with the petitioner herein and had not proceeded to recover the amount due, which is a huge amount from the sixth respondent company. The banks are run only with the public money and such amount of money has not been recovered due to the lethargic acts of the banks, which are highly condemnable. Hence, a direction is issued to the Debt Recovery Tribunal to complete all the proceedings pending before it pertaining to the recovery of dues from the sixth respondent, within a period of three months from the date of receipt of copy of this order. The petitioner company is directed to deposit a sum of ₹ 10,000/- (Rupees ten thousand only) to the account of Juvenile Justice Fund, Office of the Director of Social Defence, Government Girls Home, Purasawalkam High Road, Kellys, Chennai for protracting the proce ..... 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