Writ-C Nos. 48250 and 6853 of 2013. Case: Uniword Telecom Ltd. Vs State of U.P.. High Court of Allahabad (India)
| Case Number | Writ-C Nos. 48250 and 6853 of 2013 |
| Counsel | For Appellant: Komal Khare, Somesh Khare and R.K. Mishra,Advs. and For Respondents: C.S.C. and Rakesh Mishra |
| Judges | Ashok Bhushan and Vipin Sinha, JJ. |
| Issue | Companies Act, 1956 - Sections 529, 529A; Constitution Of India - Article 226; Income Tax Act, 1961 - Section 34; Recovery Of Debts Due To Banks And Financial Institutions Act, 1993 - Section 34; Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 - Sections 13, 13(2), 13(4), 13(9), 14, 16, 17, 1... |
| Citation | 2014 (3) ADJ 405, AIR 2014 All 77, 2014 (3) ALJ 700, 2014 (III) BC 1 (All) |
| Judgement Date | January 08, 2014 |
| Court | High Court of Allahabad (India) |
Judgment:
Ashok Bhushan, J.
1. These two writ petitions filed by the same petitioners have been heard together and are being decided by this common judgment. Counter and rejoinder affidavits have been exchanged in Writ Petition No. 48250/2013, which is being treated as leading writ petition. Brief facts giving rise to both the writ petitions are: The petitioner No. 1 is a registered company under the Companies Act, 1956, and has been carrying out its activities since 1995. The petitioners' company suffered heavy losses in the financial year 2008-09 and 2009-2010. A reference under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter called the "Act, 1985") was made by the petitioners Company before the Board for Industrial and Financial Reconstruction (hereinafter called the "BIFR") in the Month of October, 2010. The reference was registered as BIFR Case No. 53/2010. The Board proceeded with the reference and called for certain informations and in its proceedings dated 12/12/2011 recorded that the company has become a sick industrial company under Section 3(1)(o) of the Act, 1985. A direction was issued for preparation of Draft Rehabilitation Scheme for the company. The State Bank of Bikaner and Jaipur was appointed as Operating Agency under Section 17(3) of the Act, 1985 who were to prepare a Draft Rehabilitation Scheme. Draft Rehabilitation scheme claims to have been prepared in the month of December, 2012. The petitioners' company was granted various credit facilities by way of financial assistance by consortium of banks. The consortium of banks appointed the State Bank of Bikaner and Jaipur as their Lead Bank for all legal proceedings. The consortium of banks issued a notice dated 01/8/2012, under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter called the "Act, 2002") to the petitioners to discharge in full all liabilities to the consortium of banks within 60 days. The liability owing to the consortium of banks as on 31/5/2012 was mentioned in the notice as Rs. 201,90,00,254.45/- (Rupees Two Hundred One Crores Ninety Lakhs Two Hundred Fifty Four and Paisa Forty Five Only). The petitioners having failed to discharge their liabilities within 60 days from the receipt of the aforesaid notice issued under Section 13(2) of the Act, 2002, the Bank invoked power under Section 13(4) of the Act, 2002 and issued a possession notice dated 12/10/2012. The petitioners filed Writ Petition No. 6853/2013 on 05/2/2013 praying for following reliefs:
i) Issue, a writ, order or direction in the nature of certiorari quashing the impugned consortium notice dated 1.8.2012 under section 13(2), SARFAESI Act send by respondent No. 2 and consequential recovery proceedings against the petitioner (Annexure No. 3) of the writ petition.
ii) Issue, a writ, order or direction in the nature of mandamus staying recovery proceedings in pursuance to the impugned notice dated 1.8.2012 during pendency of present writ petition before this Hon'ble Court.
iii) issue any other writ, order or direction which this Hon'ble Court may deem fit and proper under the facts and circumstances of the case.
2. On a request made by the learned counsel for the petitioners the above case was directed to be listed in the next cause list and no other orders were passed in the said writ petition. An application dated 26/12/2012 was filed by the Bank before the BIFR which was registered as Misc. Application No. 103/2012 praying that a direction be issued by the BIFR that proceedings before the BIFR has abated in view of the third proviso to Section 15 of the Act, 1985. An objection dated 18/3/2013 was filed by the petitioners before the BIFR objecting to the Application No. M.A. 103/2012 praying that the said application be kept in abeyance till the writ petition No. 6853/2013, filed by the petitioners in this Court is considered. The respondent Bank filed, an application under Section 14 of the Act, 2002 before the District Magistrate Gautam Budh Nagar for taking physical possession of the mortgaged assets situate in District Gautam Budh Nagar. Another application was also filed by the Bank under Section 14 of the 2002, before the District Magistrate, Jaipur on 09/4/2013 praying for handing over the physical possession of the mortgaged assets. The Bank claims to have taken symbolic possession of the secured assets i.e. residential plot at Jaipur as well as secured assets at District Gautambudh Nagar. At this juncture, petitioners filed Writ Petition No. 48250/2013 on 06/9/2013 in this Court praying for following reliefs:
i) Issue, a writ, order or direction in the nature of certiorari quashing the impugned proceedings/communication dated 11.3.2013 and 9.4.2013 (Annexure Nos. 7 and 8 to the Writ Petition) under Section 14 of the SARFAESI Act, 2002.
ii) Issue, a writ, order or direction in the nature of mandamus restraining the Respondent No. 2 and its agents and Respondent Nos. 3 and 4 and their agents from taking forcible physical possession of properties of the Petitioners i.e. (i) Plot No. D-149, Sector 63 Phase III Noida, District Gautam Budh Nagar and (ii) 13, Lal Niwas, Sawai Ram Singh Road, Jaipur Rajasthan.
iii) issue any other writ, order or direction which this Hon'ble Court may deem fit and proper under the facts ad circumstances of the case.
iv) award the cost of the petition in favour of the petitioners.
3. From the facts as noted above, it is clear that after issuing the notice dated 01/8/2012, under Section 13(2) of the Act, 2002 the consortium of banks has invoked Section 13(4) of the Act, 2002 by issuing notice to take physical possession of the mortgaged assets as well by filing an application under Section 14 of the Act, 2002. The petitioners aggrieved by the notice dated 01/8/2012 issued under Section 13(2) of the Act, 2002 has filed the first writ petition and aggrieved by the action taken by the Bank under Section 13(4) of the Act, 2002 has filed the second writ petition.
4. We have heard Shri R. Venkatramani, learned Senior Advocate, assisted by Shri Somesh Khare for the petitioners, Shri Rakesh Mishra has appeared for the respondent No. 2 and the learned Standing Counsel for the State respondents.
5. Shri R. Venkatramani, learned Senior Advocate, appearing for the petitioners questioning the action of the Bank under Sections 13(2) and 13(4) of the Act, 2002 contended that the Bank cannot invoke the provisions of the Act, 2002 in view of the prohibition as contained under Section 22 of the Act, 1985. It is submitted that the third proviso to Section 15 of the Act, 1985 cannot be availed by the Bank since the reference which was made by the petitioners under Section 15 of the Act, 1985 can no longer be treated to be pending within the meaning of third proviso to Section 15 of the Act, 1985, since the reference has been registered and a decision has been taken by the Board on 12/12/2011 declaring the petitioners company as a sick company and the matter is pending at the stage of Section 17 of the Act, 1985 and it has crossed the stage of reference. It is submitted that once a reference is registered and proceedings have commenced under Sections 16, 17, 18 and 19 of the Act, 2002, reference cannot be treated to be pending within the meaning of third proviso to Section 15 of the Act, 1985. It is submitted that putting any other interpretation to the third proviso to section 15 of the Act, 1985 shall defeat the very object and purpose of the Act, 1985. It is submitted that the BIFR before whom the matter is pending has all powers which can be exercised under the Act, 2002 hence no power under the Act, 2002 can be exercised by the Bank by virtue of section 22 of the Act, 1985. It is further submitted that the proceedings under the Act, 2002 if any, can be initiated by the respondent bank only after seeking permission from the BIFR. It is submitted that the Bank having already filed M.A. No. 103/2012, seeking an order from the BIFR as to whether the proceedings before the BIFR shall abate or not the Bank has to press the said application and when no decision of the BIFR has come on the said application, the Bank ought not to have proceeded under section 13(4) of the Act, 2002. It is submitted that the Act, 1985 is a special Act enacted with an object and purpose and the Act, 2002 shall have no overriding effect on the provisions of the Act, 1985. He further submits that the action of the Bank including the issuance of notice under Sections 13(2) and 13(4) of the Act, 2002 are liable to be struck down relegating the Bank before the BIFR to seek its remedy in accordance with the Act, 1985.
6. Shri Rakesh Mishra, learned counsel appearing for the respondent Bank refuting the submission of the learned counsel for the petitioners raised a preliminary objection and submitted that the Bank having already invoked power under section 13(4) of the Act, 2002 the petitioners have a statutory remedy of filing an appeal under Section 17 of the Act, 2002 where all issues which are sought to be raised in the present writ petitions can be raised. On merits he submits that the reference made by the petitioners before the BIFR is still pending and it having yet not been finally decided, the third proviso to section 15 of the Act, 1985 is fully applicable and after taking measures by the respondent Bank under section 13(4) of the Act, 2002, the reference has automatically abated. He submits that neither any adjudication regarding abatement is required nor any order is required to be passed by the BIFR for abatement. He submits that the abatement is automatic by taking measures under section 13(4) of the Act, 2002. He submits that the reference under section 15 of the Act, 1985 shall be treated to be pending even though the proceedings under Sections 16, 17, 18 and 19 of the Act, 1985 are going on. He submits that the proceedings...
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