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TMI Blog2005 (1) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... cution of the recovery certificate issued by the DRT. 2. This question of law arises on the facts which are briefly enumerated as under : 3. All these three companies are in liquidation and the banks and financial institutions as secured creditors have remained outside the winding up and have prosecuted their recovery proceedings before the DRT under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the DRT Act'). Ultimately, the company has been wound up and the DRT has issued a recovery certificate in favour of the banks and financial institutions for recoveries of their dues by disposing of their securities in respect of the loan amount lent and advanced by them. 4. At the hearing of the three reports in respect of each of the companies placed before me by the Official Liquidator, seeks directions to dispose of the immovable assets of the company which are secured in favour of the banks and financial institutions and/or subject-matter of recovery certificate issued by the DRT. The Official Liquidator has sought my permission to inviting bid and/or wherever bids are already invited to open the same and confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of adjudication of the liability of the defendant to the appellant-bank is concerned. (ii) Execution of certificate by Recovery Officer : Is his jurisdiction exclusive : Even in regard to 'execution', the jurisdiction of the Recovery Officer is exclusive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by sections 25 to 30. It is not the intendment of the Act that while the basic liability of the defendant is to be decided by the Tribunal under section 17, the banks/financial institutions should go to the civil court or the Company Court or some other authority outside the Act for the actual realisation of the amount. The certificate granted under section 19(22) has, in our opinion, to be executed only by the Recovery Officer. No dual jurisdictions at different stages are contemplated. Further, section 34 of the Act gives overriding effect to the provisions of the RDB Act. That section reads as follows : 'Section 34Act to have overriding effect.-(1) Save as otherwise provided in sub-section (2), the provisions of this Act shall have effect n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r be transferred to the company court and adjudicated in that court. It was held that the said proceedings could not be transferred. Section 15 of the Life Insurance Corporation Act, 1956-which we may say, roughly corresponds to section 17 of the RDB Act-enabled the Life Insurance Corporation of India to file a case before a special Tribunal and recover various amounts from the erstwhile life insurance companies in certain respects. Section 41 of the Life Insurance Corporation Act conferred exclusive jurisdiction on the said Tribunal just like section 18 of the RDB Act, 1993. There the company was ordered to be wound up by an order of the Company Court passed under section 446(1) on January 9, 1959. The claim was filed by the Life Insurance Corporation against the company before the Tribunal and its directors in 1962. The respondents before the Tribunal contended that the claim could not have been filed in the Tribunal without the leave of the Company Court under section 446(1). This Court rejected the said contention and held that though the purpose of section 446 was to enable the Company Court to transfer proceedings to itself and to dispose of the suit or proceedings so transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e RDB Act, 1993, are to the above extent inconsistent with the provisions of the Companies Act, 1956, and the latter Act has to yield to the provisions of the former. This position holds good during the pendency of the winding up petition against the debtor company and also after a winding up order is passed. No leave of the Company Court is necessary for initiating or continuing the proceedings under the RDB Act, 1993. Point Nos. 2 and 3 are decided accordingly in favour of the appellant and against the respondents. Points 4 and 5 : We have already held that the adjudication, execution and distribution of the sale proceeds and working out priorities as between banking and financial institutions and other creditors of the defendant-company-so far as the monies realised under the RDB Act are concerned-has to be done only by the Tribunal and not by the company court. The next question is as to the manner of distribution of these monies between the banks or financial institutions on the one hand and the other creditors, secured or unsecured of the company under winding up. This question depends upon the effect of section 19(19) of the RDB Act as introduced by Ordinance No. 1 of 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has contested the present proceedings and has contended that the jurisdiction of the Official Liquidator in the winding up proceedings cannot be treated as ousted and that he has full right and power to dispose of the assets even though the same are secured in favour of the banks and financial institutions and in respect of which the Recovery Certificate has been issued by the DRT. In support of the aforesaid contention he has relied upon the judgment of the Apex Court in the case of International Coach Builders Ltd. v. Karnataka State Financial Corpn. [2003] 114 Comp. Cas. 6141 particularly the following observation (headnote): "...The Official Liquidator is the representative of the workmen entitled to enforce such pari passu charge. He would be in the position of a co-mortgagee. The statutory right of the corporation to sell the property under section 29 of the 1951 Act has now to be exercised in tandem with the rights of the pari passu charge in favour of the workmen created by the proviso to section 529 of the Companies Act. The realisation of the security can therefore be done by the secured creditor either by satisfaction of the pari passu charge or by a suit in which the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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