(Per : HONOURABLE MR.JUSTICE RAVI R.TRIPATHI) 1. The present OJ Appeal No.53 of 2009 is filed by the Panchsheel Mercantile Co-op. Bank Ltd. being aggrieved by the impugned Order dated 20.07.2009 passed by the learned Company Judge whereby the prayer for recalling of the Order is not granted at that stage, but it is observed that the provisional liquidator shall take over the possession of the properties of the company, except the properties over which the action is taken by the applicant Bank and the possession is also taken over by the applicant Bank in capacity as the secured creditor for realization of their security interest as per the provisions of the Securitisation Act.
2. The present OJ Appeal No.54 of 2009 is filed by the same appellant - Panchsheel Mercantile Co-op. Bank Ltd. being aggrieved by the impugned Order dated 20.07.2009 passed by the learned Company Judge whereby the learned Company Judge is pleased to reject the prayer for return of FDR as the learned Company Judge has passed the Order aforesaid in Company Application No.34 of 2008. The learned Company Judge was pleased to observe that, “So far as the return of the FDR is concerned, the same also does not deserve to be granted at this stage, since the question of sale confirmation may be by the applicant in capacity as the secured creditor under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the Securitisation Act') is yet to be finalized under the leave of this Court. Same situation will arise in respect of the amount of FDR, which is invested”.
3. Heard learned Advocate Mr. Ravindra Shah for the appellant and learned Advocate Mr. Ashok L. Shah for the respondent no.2 and learned Advocate Mr. Hiren M. Modi for provisional liquidator for respondent no.1.
4. The learned Advocate Mr. Ravindra Shah for the appellant invited attention of this Court to 3rd proviso to Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985. The 3rd proviso is as under, “Provided also that on or after the commencement of the Securitisation Act where a reference is pending before the Board for Industrial and Financial Reconstruction (BIFR), such reference shall abate if the secured creditors, representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under sub-section (4) of section 13 of that Act”. (Emphasis Supplied)
5. The learned Advocate for the appellant invited attention of this Court to the facts of the case that, the appellant – Bank had advanced a loan to the respondent no.2 – Company in the year 1998. It is, thereafter, that the management of the company at the relevant time got a reference made to BIFR being Reference No.6 of 1998. It is during the pendency of this reference that, the appellant – Bank took an action under sub-section (4) of Section 13 of the Securitisation and Reconstruction of Financial Assistance and Enforcement (SARFAESI) Act, 2002 on 06.11.2004.
But, unfortunately, neither the appellant – Bank nor the changed management of the respondent no.2 – company were informed about the pending reference to the BIFR.
6. The Learned Advocate for the appellant and the respondent no.2 – company stated before this Court that, they came to know for the first time about the reference no.6 of 1998 made before the BIFR only when the BIFR gave its opinion for winding-up by a communication dated 29.03.2007 and the High Court, acting on the said opinion passed an Order of appointing a provisional liquidator and the said Order of the High Court was advertised in the newspaper on which the respondent no.2 – company and the appellant came to know about the proceedings pending before the High Court.
7. Taking into consideration, the contents of the 3rd proviso to Section 15 of the SICA Act, it is clear that, a reference pending before the BIFR, will stand automatically abated, the moment the secured creditor representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under sub-section (4) of section 13 of SARFAESI Act”. (Emphasis Supplied)
8. The learned Advocate Mr. Ravindra Shah for the appellant made a categorical statement before the Court that, the appellant – Bank is the only secured creditor of respondent no.2 – Company and the learned Advocate Mr. Ashok L. Shah for the respondent no.2 – Company not contest the statement. In view of that, an action taken by the appellant – Bank under sub- section (4) of Section 13 of the SARFAESI Act will result into abatement of Reference No.6 of 1998 pending before the BIFR.
9. The learned Advocate Mr. Ravindra Shah for the appellant relied upon a decision of the Bombay High Court in the matter of Ravi Spinning Ltd., Akola and others V/s. Union of India and another reported in 2006(2) Maharashtra Law Journal at page 145 and also on a Judgment of High Court of Allahabad in the matter of Shamken Spinners Ltd. V/s. State of U.P. and another reported in AIR 2011 Allahabad 56.
10. As the law is clear on the point and on a plain reading of 3rd proviso to Section 15 of the SICA Act, there is no scope for any further discussion. The aforesaid two decisions do reiterate the same position. In the result the present appeals are allowed.
11. At this juncture, learned Advocate Mr. Hiren M. Modi for the Official Liquidator submitted that, the official liquidator, after the Order of the High Court of appointing him as provisional official liquidator has incurred certain expenses be ordered to be reimbursed by the appellant – Bank. The request is found reasonable. The same is granted.
12. The Official Liquidator shall furnish, the details of the expenses incurred to the appellant – Bank within three weeks from today and on receipt of such details, the appellant – Bank shall reimburse the same to the Official Liquidator for the respondent no.2 – Company.
13. The appeals are allowed and the Order of appointing the official liquidator is quashed and set- aside.
14. In view of the aforesaid discussion and the Order, the Company Petition No.204 of 2007 will not survive and the same is disposed of, accordingly.
(Ravi R. Tripathi, J.) Sunil W. Wagh (N. V. Anjaria, J.)