Case Law Details
The third proviso under section 15(1) of the SICA relieves the specified strength of secured creditors from shackle of taking consent of the BIFR and permits them to pursue their remedy under the provisions of Securitisation Act, which have been introduced as a special enactment, to further the cause of financial sector and the financial institutions to which the same is applicable.
CASE LAWS DETAILS
DECIDED BY: HIGH COURT OF BOMBAY, IN THE CASE OF: Nouveaw Exports Pvt. Ltd. Vs. AAIFR, APPEAL NO: WP No. 2079 of 2010, DECIDED ON May 19, 2010
FACTS
The question that arises for our consideration is in the context of the fact that the Respondent No.5-bank claims to be the sole secured creditor of the Respondent No.3-borrower. The Reference was pending before the BIFR for revival of the Respondent No.3-company. During the pendency of the said proceedings, the Respondent No.5-bank invoked remedy under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “Securitisation Act”) and proceeded with the sale of properties of Respondent No.3. Consequent thereto, the movable and immovable properties in Respondent No.3-company were sold in public auction as back as in July, 2008. That sale has been confirmed by the DRT and possession of the said property has also been made over to the Respondent No.7. These facts are not disputed. However, the Petitioner, claiming to have business conducting agreement executed by the Respondent No.3-company in its favour and also in the capacity of one of the unsecured creditor, moved the BIFR for a direction against the Respondent No.5-bank not to proceed with the further steps under the Securitisation Act; and stay the implementation of the proposed actions to be taken by the bank. Further, it was prayed that the Respondent No.5-bank and the Respondent No.3-company should allow the representatives of the Petitioner to enter the Vashi Plant and remove their stock, equipments and machinery etc. Further relief is claimed in the said application against Respondent No.3-company to disclose to BIFR and the Petitioner, the details and the status of the securitisation application that was filed by the Respondent No.3-company in the DRT, whereby the action initiated by the Respondent No.5-bank was subject matter of challenge. This application preferred by the Petitioner was rejected by the BIFR on 7th January, 2009. Even though this order is relevant, has not been annexed to the Petition. But, copy of the said order has been handed over to us across the bar. The BIFR has taken the view that since the sale has already been completed and action under Section 13(4) of the Act of 2002 has been taken to its logical end and also upheld by the DRT, the Board has lost its jurisdiction over the company’s case. It is this decision of the BIFR which has been challenged in Appeal before the AIFR. During the pendency of the said Appeal, interim relief was prayed to direct the Respondents to maintain status quo with regard to the company’s property till the disposal of the Appeal. This prayer has been considered by the Appellate Authority in the impugned judgment. The Appellate Authority has declined to grant any interim protection to the Petitioner for the reasons recorded in paragraphs 10 and 11 of the impugned decision. The substance of the reason is that the sale in favour of the Respondent No.7 has been concluded long back and because the action under section 13(4) has been taken to its logical end, it was not open to interdict that process and moreso because the BIFR proceedings have abated.
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