Securitisation Application No. 13 of 2005. Case: Eupharma Laboratories Ltd. and Anr. Vs State Bank of India and Ors.. Kolkatta Debt Recovery Tribunals

Case NumberSecuritisation Application No. 13 of 2005
CounselFor Appellant: N.G. Thakkar, Sr. Adv. and Sanjay Jain, Adv., i/b., Lalit S. Jain, Adv. and For Respondents: D.P. Desai, Adv., i/b., M. Dhruv and Co. for Respondent Nos. 1 and 2, Sanjeev Punalekar, Adv., i/b., Rajeev Kumar Pandey, Adv. for Respondent No. 3 and Ismail Nasikwala, Adv., i/b., P.G. Desai, Adv. for Respondent No. 4
JudgesK.J. Paratwar, Presiding Officer
IssueSecuritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(2), 13(4), 17, 19 and 35; Recovery of Debts Due to Banks and Financial Institutions Act; Sick Industrial Companies Act, 1985 - Section 22 and 22(1); Security Interest (Enforcement) Rules, 2002 - Rules 8, 9 and 9(3)
CitationI (2006) BC 25
Judgement DateApril 05, 2005
CourtKolkatta Debt Recovery Tribunals


K.J. Paratwar, Presiding Officer

  1. The applicant No. 1 company's following 2 properties are involved in this application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SRFAESI Act'):

    (i) Land and Factory Buildings at Eupharma House, Sahakar Marg, Vile Parle (E), Mumbai 400057 (for short 'Mumbai property') and,

    (ii) Land and Factory Buildings, plant and machineries at Indrad (Formulation Plant) at Indrad Village, Ahmedabad Mehsana Highway, Kalol Taluka: Kadi, Dist. Mehsana, Gujarat (for short 'Gujrat property').

  2. Briefly stated, the facts leading to this application are thus. The applicant No. 1 is respondent No. 1's constituent since for more than 37 years. It is enjoying certain Loan/Credit Facilities not only from respondent No. 1 but also from respondent Nos. 2 and 3, the respondent No. 4 being (purchaser of the property sold by other respondents under provisions of the SRFAESI Act) formal party. The applicants have in several paragraphs running in number of pages set out facts about growth of applicant No. 1 company; about its business; about its strength and the circumstances why it landed in the financial crisis and became sick. None of these facts however have any bearing on the lis in the matter.

  3. It is then contended that the respondent Nos. 1 and 2 filed O.A. No. 366 of 2001 and respondent No. 3 filed O.A. No. 879 of 2001 for recovery of their outstandings in D.R.T.-III, Mumbai. The ground is that since the respondent Nos. 1 to 3 have availed of remedy under recovery of the Recovery of Debts Due to Banks and Financial Institutions Act (for short 'R.D.D.B. Act'), they could not have resorted to the provisions of the SRFAESI Act during the pendency of the O.As. The second ground seems to be that the reference No. 190 of 2003 made by applicant No. 1 is registered by B.I.F.R. which is by the hearing of the O. As. is adjourned sine die. The applicant No. 1 therefore is entitled to protection under Section 22(1) of the Sick Industrial Companies Act, 1985 (for short 'SICA') notwithstanding amendments to the Security Interest Act and the R.D.D.B. Act which have come into force w.e.f. 11.11.2004.

  4. The next ground is that the respondent Nos. 1 to 3 have wrongly debited various amounts aggregating to Rs. 5 crores in the account of the company. This fact was pointed out by the company to the respondent Nos. 1 to 3 in reply to notices dated 12th and 19th August, 2002 and 18.9.2002 under Section 13(2) of the SRFAESI Act. The respondent Nos. 1 to 3 however did not pay any heed. Ultimately, they took over possession of Mumbai property on 4.6.2003 and of Gujrat property on 15.11.2003. The applicant No. 1 had in the meanwhile filed Writ Petitions No. 792 of 2003 and No. 2301 of 2003 in Hon'ble High Court of Judicature at Bombay challenging virus of the SRFAESI Act. They were disposed of in accordance with judgment of the Apex Court in Mardia Chemical's case. The Hon'ble High Court of Judicature at Bombay had by order dated 26.9.2003 allowed respondent No. 1 to retain formal possession of Mumbai property. Since, however, settlement talks were going on, said order was not executed by the company. The Hon'ble Court had appointed Receiver over the Gujrat property and the Receiver has appointed the company as its agent.

  5. The furthermore contention is that pursuant to the settlement talks, the respondent No. 1 vide letter dated 26.10.2004 had informed the company to deposit 5% up front amount (i.e. Rs. 67.50 lacs) for considering offer of Rs. 13.50 crores in respect of Mumbai property. Yet, the respondent Nos. 1 to 3 proceeded to sale said property by issuing public notice in Indian Express dated 25.11.2004 inviting offers for sale to be held on 27.12.2004. However, it appears that respondent Nos. 1 to 3 did not receive any offer. They again issued corrigendum and invited tenders re-fixing the date of auction of said property on 27.1.2005. The company had vide letter dated 5.1.2005 objected to the public notice and requested to the respondent Nos. 1 to 3 consider the settlement proposal. Instead of replying said letter, respondent Nos. 1 to 3 again on 26.2.2005 published corrigendum re-fixing the date of auction to 5.3.2005. The company again lodged protest by letter dated 4.3.2005. The respondent Nos. 1 to 3 agreed to Sell the Mumbai property to respondent No. 4 for Rs. 16.50 crores without following procedure prescribed by the SRFAESI Act and rules framed thereunder. Apart from aforesaid narration, the applicants have separately set out grounds (a) to (zz) taking numerous contentions without bothering whether the grounds have any relevance considering scope of this matter or not. Fortunately, at the time of hearing, the challenge is restricted to 4/5 grounds broadly stated earlier.

  6. The respondent Nos. 1 and 2 by their common reply in the nature of affidavit of Mr. V.R. Sawadkar (Exh. 12) has refuted the material contentions. At the outset, the question of limitation is raised. There is said to be no reason muchless...

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