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Sunday, March 23, 2014

Company Act - the Recovery of Debts Due to Banks SARFAESI Act. and Financial Institutions Act, 1993 and also under the State Financial Corporations Act, 1951 - Official Liquidator - it is settled law that while exercising Banks rights under SARFAESI Act is under obligation to associate with the Official Liquidator in respect of dues under recovery of debts in bringing the properties for sale = Syndicate Bank...Applicant Vasuda Pharma Chem Ltd., and another ... Respondents = 2014 (March. Part ) judis.nic.in/judis_andhra/filename=11031

Company Act - the Recovery of Debts Due to Banks SARFAESI Act. and Financial Institutions Act, 1993 and also under the State Financial Corporations Act, 1951 - Official Liquidator - it is settled law that while exercising Banks rights under SARFAESI Act is under obligation to associate with the Official Liquidator in respect of dues under recovery of debts in bringing the properties for sale =

whether the secured creditor while
exercising its right under the SARFAESI Act is under obligation to associate
with the Official Liquidator in respect of the dues under the Recovery of Debts=
whether the ratio
laid down in Rajasthan Financial Corporation and another v. The Official
Liquidator and another1 applies to the sales to be held by the secured creditor
under the SARFAESI Act.  =
In Rajasthan Financial Corporation (supra), the Apex Court held that in respect
of the dues recoverable under the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 and also under the State Financial Corporations Act, 1951
the Official Liquidator is bound to be associated by the secured creditor as he
represents the workmen dues for which a pari pasu charge is held by him.=
Due to Banks and Financial Institutions Act, 1993 and also under the State
Financial Corporations Act, 1951 and the Supreme Court being in sisin of this
issue in the above noted SLPs, his client would not like to get entangled in
this controversy and that the applicant-bank is prepared to follow the same
directions as were issued in Rajasthan Financial Corporation (1 supra).
Accordingly, the applicant is permitted to sell the properties of the company in
liquidation by scrupulously following the directions issued in Rajasthan
Financial Corporation (1 supra).
The valuation report, dated 19.11.2013, of Mr.Pradeep Kapaarthi, Chartered
Engineer & Valuer, filed by the applicant bank is not disputed by the Official
Liquidator.  
Hence, the said report is taken on record.
The applicant-bank is permitted to sell the properties by issuing advertisement
in English and Telugu, daily newspapers, as required under Rules 272 and 273 of
the Companies (Court) Rules, 1959 while associating with the Official
Liquidator.
The company applications accordingly stand disposed of.

2014 (March. Part ) judis.nic.in/judis_andhra/filename=11031

THE HON'BLE MR JUSTICE C.V.NAGARJUNA REDDY          

Comp.A.Nos.366 of 2012 and bathch  

03-03-2014

Syndicate Bank...Applicant

Vasuda Pharma Chem Ltd., and another ... Respondents  

^Counsel for the applicant:Sri A.Krishnam Raju                        
                       
!Counsel for respondent No.2: Sri M.Anil Kumar

<Gist:

>Head note:

?Cases referred:

1.(2005) 8 SCC 190
2.Co.App.No.58 of 2012, dated 17.09.2012
3.(2010) ILR 2 P&H 284
4.AIR 2008 Mad 108
5.1 (2013) BC 700
2014 (March. Part ) judis.nic.in/judis_andhra/filename=11031
THE HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY          

Company Application Nos.366 & 367 of 2012
in
Company Petition No.197 of 2010


COMMON ORDER:    
Company Application No.366 of 2012 is filed to permit the authorised officer of
the applicant-Bank to continue in possession of respondent No.2's movable and
immovable properties till they are sold.  Company Application No.367 of 2012 is
filed by the same applicant for permitting its authorised officer to conduct
sale of respondent No.2's movable and immovable properties by following the
procedure under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (for short 'SARFAESI Act').
During the hearing of the cases, an issue has arisen as to whether the ratio
laid down in Rajasthan Financial Corporation and another v. The Official
Liquidator and another1 applies to the sales to be held by the secured creditor
under the SARFAESI Act.  
In Rajasthan Financial Corporation (supra), the Apex Court held that in respect
of the dues recoverable under the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 and also under the State Financial Corporations Act, 1951
the Official Liquidator is bound to be associated by the secured creditor as he
represents the workmen dues for which a pari pasu charge is held by him.
This question, however, was considered by a Division Bench of the Delhi High
Court in Kotak Mahindra Bank Ltd., v. Megnostar Telecommunications2.  By its
judgment, dated 17.09.2012, the Division Bench held that the ratio in Rajasthan
Financial Corporation (1 supra) has no application to the dues recoverable under
the SARFAESI Act.  In the process, the Division Bench disagreed with the
judgment of the Division Bench of the Punjab and Haryana High Court in Haryana
State Industrial & Infrastructure Development Corporation (HSIIDC) v. Haryana
Concast Limited, Hisar3 and also with the judgment of the Madras High Court in
K.Chidambara Manickam v. Shakeena and others4.  I also find that the learned
Single Judge of Karnataka High Court has concurred with the judgment of the
Punjab & Haryana in Prime Industries, Balangalore v. Official Liquidator of
B.S.Refrigerators Ltd., Bangalore and another5.
At the hearing, Sri M.Anil Kumar, learned counsel for the Official Liquidator,
placed before the Court order, dated 17.02.2014, of the Supreme Court in SLP
(Civil) Nos.36254 and 36255 of 2012 filed against the judgment in Kotak Mahindra
Bank Ltd., (2 supra), wherein the following order is passed:
"There is some inconsistency in the view taken by the Delhi High Court in the
impugned judgment and the decision of the Punjab and Haryana High Court in
Haryana State Industrial & Infrastructure Development Corporation Vs. Haryana
Concast Ltd., 2010 (2) PLR 295.
Having regard to the above, let this special leave petition be listed for final
disposal on a non-miscellaneous day within three months from today.
Prayer for interim relief is rejected."

Sri A.Krishnam Raju, learned counsel for the applicant, stated that in view of
the conflicting opinions on the issue as to whether the secured creditor while
exercising its right under the SARFAESI Act is under obligation to associate
with the Official Liquidator in respect of the dues under the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 and also under the State
Financial Corporations Act, 1951 and the Supreme Court being in sisin of this
issue in the above noted SLPs, his client would not like to get entangled in
this controversy and that the applicant-bank is prepared to follow the same
directions as were issued in Rajasthan Financial Corporation (1 supra).
Accordingly, the applicant is permitted to sell the properties of the company in
liquidation by scrupulously following the directions issued in Rajasthan
Financial Corporation (1 supra).
The valuation report, dated 19.11.2013, of Mr.Pradeep Kapaarthi, Chartered
Engineer & Valuer, filed by the applicant bank is not disputed by the Official
Liquidator.  Hence, the said report is taken on record.
The applicant-bank is permitted to sell the properties by issuing advertisement
in English and Telugu, daily newspapers, as required under Rules 272 and 273 of
the Companies (Court) Rules, 1959 while associating with the Official
Liquidator.
The company applications accordingly stand disposed of.

C.V.NAGARJUNA REDDY, J    
03rd March, 2014

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