2007 (6) TMI 288 - HC - Companies Law

Summary

Issues:
- Jurisdiction of the company court under the Companies Act regarding the enforcement of security interest under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
- Maintainability of the application before the company court as objected to by the respondent-bank.

Jurisdiction of the Company Court:
The judgment revolves around the jurisdiction of the company court under the Companies Act concerning the enforcement of security interest under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. The respondent-bank, a secured creditor, initiated proceedings under the SARFAESI Act and took possession of the immovable properties of the applicant-company. The applicant sought to stay the public auction, arguing that the reserve price set by the bank was undervalued compared to the independent valuation of the property. The respondent-bank contended that actions under the SARFAESI Act cannot be questioned before the company court as it is a special enactment. The court analyzed the provisions of the SARFAESI Act, emphasizing that it is a self-contained code for enforcement of security interest, providing for appeals to the Debts Recovery Tribunal and Appellate Tribunal. Citing relevant Supreme Court judgments, the court concluded that the SARFAESI Act prevails over the Companies Act in matters of security interest enforcement, dismissing the application on the grounds of jurisdiction.

Maintainability of the Application:
The court delved into the maintainability of the application before the company court, as contested by the respondent-bank. It acknowledged that the SARFAESI Act is a special enactment regulating the enforcement of security interest, with specific provisions for appeals to specialized tribunals. The court highlighted that the SARFAESI Act's provisions, along with relevant Supreme Court decisions, establish the Act's supremacy over general laws like the Companies Act in matters of security interest enforcement. Consequently, the court upheld the respondent-bank's objections on the maintainability of the application before the company court, ultimately dismissing the application.