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TMI Blog2008 (1) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporation for taking over the management or possession or both of industrial concerns with a right to transfer by way of lease or sale and realize the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as well those industrial concerns against which action has been taken under Section 29 of the Act, but no attempt for transfer of such assets of the industrial unit has been made by the Corporation are classified as one Class and (ii) those industrial unit against whom action under Section 29 of the Act has been taken and an abortive attempt has been made to transfer the assets of such unit, in the control and management of the Corporation, as distinct class for more onerous treatment. 3. As per the Scheme originally framed the former class of promoters were only entertained under the scheme for One Time Settlement but the latter was totally kept out. However, the scheme was modified and the latter class was also entertained in the scheme but on condition that in addition to amount payable by defaulter promoter under terms and condition of the OTS Scheme, the latter class of defaulter promoters also pay the retention money as per the aborted at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime Settlement under this scheme: a) All Original Promoters/Guarantors of NPA units categorized in the Doubtful and Loss categories as per records or BSFC as on 31-3-2005. b) All promoters of the units who applied for BSFC OTS Scheme 2004 but could not liquidate the dues. Such units are at liberty to apply for BSFC OTS Scheme 2006 as a new case and their settlement amount shall be as for category 1(a). Normally those who opted for OTS 2004 whether defaulted or not and whether withdrawn or not are at liberty to apply afresh OTS 2006. If they so apply on that date they would be deemed to have withdrawn from OTS 2004 if not already withdrawn. In such cases all payment made previously under OTS 2004 including the forfeited amount will be adjusted towards normal repayment and their POS will be calculated as on date of applying for OTS 2006 and new settlement worked out accordingly. However OTS 2004 concerns who have not defaulted and are continuing and who do not opt for OTS 2006 can also opt for special concessions as given Para 14. (c) All such purchasers who have purchased assets on or above or below Balance Outstanding Amount and have subsequently become NPAs in the Doubtful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Financial Corporation, in exercise of its powers under Sub-section (1), shall vest in the transferee all rights in or to the property transferred (as if the transfer) had been made by the owner of the property. (3) The Financial Corporation shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods. (4) (Where any action has been taken against an industrial concern) under the provisions of Sub-section (1), all costs, (charges and expenses which in the opinion of the Financial Corporation have been properly incurred) by it (as incidental thereto) shall be recoverable from the industrial concern and the money which is received by it shall, in the absence of any contract to the contrary, be held by it in trust to be applied firstly, in payment of such costs, charges and expenses and, secondly, in discharge of the debt due to the Financial Corporation, and the residue of the money so received shall be paid to the person entitled thereto.) (5) (Where the Financial Corporation has taken any action against an industrial concern) under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortance inasmuch as it provides that all the expenses incurred for taking steps for transfer of the property are the liability of the owner of the assets and to be deducted from the recovery made from such assets. It is only after deducting or adjusting the expenses or cost of expenses of transfers, the remainder is adjusted against the outstanding dues to Corporation. After outstanding of Corporation Is satisfied the balance is to be applied to satisfy the other debts of the loanee. Residue if any, goes to the promoters or its successors. Under the statutory scheme the Corporation while transferring the assets of debtor, acts only as a person authorized by law to deal with assets of debtor and acts only as such in applying the proceeds of transfer for discharging the liabilities of owner of assets so transferred. This provision conclusively establishes the statutory scheme of continued ownership of debtor promoters until assets vest in transferee as transferees from the owners. 15. It is therefore to be seen whether a promoter's position is altered or becomes different if no transaction of transfer is attempted or an attempt to transfer does not fructify. 16. To us, it appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not concluded for any reason, the owner's title in the property continues to be the same as before, be it for the failure on the part of the prospective buyer to appear and pay the purchased price or for any reason the auctioneer does not proceed further in the matter. 20. The position is very obvious from the scheme also. From Paragraph (c) of Clause (1), it is clear that it is only such purchaser in whom the property has been vested as a result of conclusion of transfer has been made eligible to participate in OTS Scheme. This position has been further clarified when the following clause has been inserted as explanatory clause in respect of defaulter buyers. In cases where, after issue of the sale order and on failure of the promoter to retain the assets, purchasers have deposited the initial consideration amount and after execution of the agreement, assets have been handed over to the purchaser in such cases only purchaser is to pay the dues in terms of sale order and they may settle their dues under eligibility category 1 (c) and plans C or D of the Scheme. For the promoters in such cases settlement is available only under eligibility category 1 (d)--Plan E for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchaser paid the money of initial deposit, the promoter would have lost his right. It reads- (a) Sale order was issued in past from 1995 onwards when option of retention by promoter was given. In number of cases promoter did not retain the unit in terms of the sale order but the purchaser also failed to deposit initial consideration price, failed to execute agreement and take over the assets and thus failed to purchase the assets. The assets continued to remain with the promoters, and it has not been sold so far. In this situation when further sale offer has not been received and the Corporation is to recover its dues, promoters of such unit can be allowed to avail the benefit of OTS scheme. (b) Arising out of above, one situation can be visualized where, after issue of the sale order and on failure of the promoter to retain the assets, purchaser may have deposited the initial consideration amount and after execution of the agreement assets might have been handed over to the purchaser. In such cases rights of the promoters have extinguished on the assets and only purchaser is to pay the dues in terms of sale order and on failure to pay Corporation can take further action for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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