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2016 (5) TMI 909 - HC - Companies LawRecovery of Debts Due - provision for the recovery of debts - sale of property - Held that - The present application are not at all the workmen of the company-in-liquidation. They are the legal representatives of one Sri N.B. Rukmangada, who was the director of the company-in-liquidation, who furnished guarantee to the financial institution when the company borrowed the loan from the said financial institution. After the demise of the said Sri N.B. Rukmangada, the guarantor, the present applicants claiming to be his legal representatives have filed the present application. The official liquidator had also appeared before the recovery officer in the case on hand, and he had also filed his statement while arguing on these applications. The official liquidator also made submission that in the above referred reported decisions, the interest of the workmen was involved but here in the case on hand, it is not so, because the applicants claiming to be the legal representatives of the said Sri. N.B. Rukmangada have no concern with the company in liquidation. So this goes to show that notice has been already given by the DRT to the official liquidator and he has been heard in the matter. Even according to the decision relied upon by the learned counsel for the applicants the relevant paragraphs are referred above. There is no bar for the DRT to proceed with the sale of the property. But before conducting such sale of the property, the official liquidator has to be heard in the matter. As I have already observed above, official liquidator has already appeared before the DRT and he has been heard. As the applicants has not availed the statutory remedies available to them under Recovery of Debts Due to Banks and Financial Institutions Act, 1993 there are no reasons forthcoming in the applications also as to why they have not availed such statutory remedy before the filing the present applications. As I have already observed above that official Liquidator was notified about the proceedings he appeared in the matter before the DRT and the applications herein are also not from the Workmen/Employees of the Company in Liquidation and there is no allegation from the Official Liquidator that the recovery officer is conducting the sale of the property without his consultation and without hearing him. Therefore, looking to the facts and circumstances of the case on hand, and the facts and circumstances in the reported decisions relied upon by the learned counsel for the applicants, which are referred above they will not come to the aid and assistance of the applicants case in getting the orders to set-aside the judgment passed by the Debt Recovery Tribunal and to set-aside the orders passed by respondent No.2 and also to stay the execution/recovery proceedings pending before respondent No.2
Issues Involved:
1. Setting aside the judgment dated 22.12.2003 passed by the Debts Recovery Tribunal (DRT) in O.A.872/1999. 2. Setting aside the orders dated 27.05.2015 and 24.06.2015 passed by respondent No.2 in DCP No.3096 of O.A.No.872/1999. 3. Staying the execution/recovery proceedings in DCP No.3096 of O.A.No.872/1999 pending before respondent No.2. Issue-Wise Detailed Analysis: 1. Setting aside the judgment dated 22.12.2003 passed by the Debts Recovery Tribunal (DRT) in O.A.872/1999: The applicants sought to set aside the judgment dated 22.12.2003 passed by the DRT in O.A.872/1999 on the grounds that the proceedings were initiated without obtaining the leave of the Court as required under Section 446 of the Companies Act, 1956, and Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The respondent-company was declared a Sick Industrial Company by the BIFR on 26.10.1988, and the winding-up order was passed by the High Court on 09.03.2000. The DRT continued with the proceedings and passed the judgment without adhering to the mandatory provisions requiring leave of the Court. The applicants argued that the judgment and decree passed by the DRT were non-est in the eye of law and liable to be set aside. 2. Setting aside the orders dated 27.05.2015 and 24.06.2015 passed by respondent No.2 in DCP No.3096 of O.A.No.872/1999: The applicants contended that the orders dated 27.05.2015 and 24.06.2015 passed by respondent No.2 were illegal and arbitrary. The order dated 27.05.2015 allowed the application of respondent No.3-IARC to furnish security and attach equity shares in Cauvery Hydro Energy Limited, which were in the name of the deceased judgment debtor No.2. The order dated 24.06.2015 allowed the application to bring the legal representatives of the deceased judgment debtor No.2 on record without issuing notice to the applicants, violating Rule 60 of the Income Tax (Certificate Proceedings) Rules, 1962. The applicants argued that since the respondent company was represented by the Official Liquidator, respondent No.3-IARC could not recover amounts from the applicants as legal representatives of the deceased judgment debtor No.2. 3. Staying the execution/recovery proceedings in DCP No.3096 of O.A.No.872/1999 pending before respondent No.2: The applicants sought to stay the execution/recovery proceedings in DCP No.3096 of O.A.No.872/1999 on the grounds that the proceedings were initiated without obtaining the leave of the Court as required under Section 446 of the Companies Act, 1956. The applicants argued that the execution proceedings were in violation of the mandatory provisions of the Companies Act and SICA, and hence, liable to be stayed. Judgment: The Court, after hearing the arguments of the learned counsel for the applicants and respondents, and perusing the materials on record, including the relevant provisions of the Companies Act, 1956, and SICA, 1985, observed that the DRT had jurisdiction to entertain and decide applications for recovery of debts due to banks and financial institutions. The Court noted that the Official Liquidator had appeared before the DRT and filed his statement. The Court further observed that the applicants, who were the legal representatives of the deceased director and guarantor, had not challenged the judgment and decree passed by the DRT by preferring an appeal to the appellate tribunal. The Court referred to the decisions of the Hon'ble Supreme Court, which emphasized the importance of exhausting statutory remedies before invoking the jurisdiction of the High Court. The Court concluded that the applicants had not availed the statutory remedies available to them under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and there were no reasons forthcoming in the applications for not availing such remedies. Consequently, the Court dismissed the applications, finding no merit in the applicants' case. Conclusion: The applications C.A.Nos.54/2016 and 55/2016 in C.O.P.No.67/1997 were dismissed, and the judgment dated 22.12.2003 passed by the DRT in O.A.872/1999, and the orders dated 27.05.2015 and 24.06.2015 passed by respondent No.2 in DCP No.3096 of O.A.No.872/1999, were upheld. The execution/recovery proceedings in DCP No.3096 of O.A.No.872/1999 were allowed to continue.
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