2008 (11) TMI 405 - HC - Companies Law

One-time settlement scheme - whether the Securitisation Act will override the SICA in a case of conflict? Held that - The Securitisation Act will override the SICA and mere pendency of a reference will not be a bar to proceedings under the Securitisation Act. We further make it clear that in certain exceptional situations where the scheme is already approved, the issue can be gone into in writ jurisdiction. It is well-settled that even where the power exists, exercise of power must be fair and reasonable. No objection as so far, action under section 13(4) of the Securitisation Act has not been taken and if so taken, the petitioner will be at liberty to take its alternative remedy. W.P. dismissed.

Issues Involved:
1. Quashing of specific letters and notices.
2. Acceptance of payment by way of one-time settlement.
3. Applicability of the Securitisation Act versus the Sick Industrial Companies (Special Provisions) Act (SICA).
4. Classification of the petitioner's account as a Non-Performing Asset (NPA).
5. Legal proceedings and jurisdiction under the Securitisation Act and SICA.

Issue-wise Detailed Analysis:

1. Quashing of Specific Letters and Notices
The petitioner sought the quashing of letter dated September 5, 2006 (Annexure P11), notice dated August 20, 2007 (Annexure P14), and letter dated January 4, 2008 (Annexure P17). The court examined these requests in light of the statutory framework and the actions taken by the respondents.

2. Acceptance of Payment by Way of One-Time Settlement
The petitioner argued for acceptance of payment under a one-time settlement scheme dated March 4, 2004 (Annexure P4). However, the respondents contended that the petitioner failed to comply with the terms of the one-time settlement, specifically the requirement to pay 25% of the settlement amount within 30 days from March 11, 2004. The court noted that the petitioner's earlier writ petition on the same cause of action was dismissed on November 12, 2007.

3. Applicability of the Securitisation Act versus SICA
The main question was whether the Securitisation Act would override the provisions of SICA. The court examined the statutory schemes of both Acts. Section 22 of SICA provides for suspension of legal proceedings against companies during inquiry or appeal, while Section 35 of the Securitisation Act contains a non obstante clause, indicating that its provisions would override any inconsistencies with other statutes, including SICA. The court referred to legislative history and "Heydon's rule" to interpret the law, concluding that the Securitisation Act was intended to facilitate speedy recovery by financial institutions and would override SICA in case of conflict.

4. Classification of the Petitioner's Account as a Non-Performing Asset (NPA)
The petitioner contended that their account was never declared an NPA by PSIDC, which was necessary before taking action under the Securitisation Act. However, the PFC, respondent No. 2, denied this claim and provided a letter dated February 19, 2007, to support their position. The court found no merit in the petitioner's argument regarding the NPA classification.

5. Legal Proceedings and Jurisdiction under the Securitisation Act and SICA
The court reviewed various judgments cited by both parties. It agreed with the view taken in Triveni Yarns Ltd., which held that the Securitisation Act would have an overriding effect over SICA. The court noted that none of the judgments relied upon by the petitioner directly addressed the inconsistency between the Securitisation Act and SICA. Therefore, it held that the Securitisation Act would prevail, and the mere pendency of a reference under SICA would not bar proceedings under the Securitisation Act.

Conclusion
The court dismissed the writ petition, holding that the Securitisation Act would override SICA. It allowed the petitioner to pursue alternative remedies under the Securitisation Act and indicated that any further actions, such as taking physical possession, could be contested by the petitioner through appropriate legal channels.

Final Judgment
The writ petition was dismissed without prejudice to the petitioner's alternative remedies under the Securitisation Act. The court did not issue a restraining order against taking physical possession but allowed the petitioner to present its claims to the concerned authorities and seek remedies if aggrieved by their actions.

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