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TMI Blog2010 (2) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... Since it is now brought to our notice that during the pendency of the writ petitions, SASF acting on behalf of IDBI agreed to sell the assets of the petitioner to Global Profiles Limited and certain amounts have been deposited which have to be distributed between the secured creditors or adjusted as per the books of account between the first respondent, SASF and IFCI, the matter requires to be remitted to the Tribunal to pass appropriate orders in the securitisation appeal after taking note of the same. Writ petitions are accordingly allowed and the matter is remitted to the Tribunal. - WRIT PETTION NO. 6831 AND 6832 OF 2005 - - - Dated:- 19-2-2010 - A. GOPAL REDDY AND NOUSHAD ALI, JJ. S. Ravi and L. Venkateswara Rao for the Petitioner. S. Niranjan Reddy and K.V. Simhadri for the Respondent. JUDGMENT A. Gopal Reddy, J. Since the issue involved in both the writ petitions is one and the same, they are being disposed of by this common order. 2. In these petitions, the petitioner has obtained a rule from this court calling upon the respondents to show cause as to why a writ in the nature of certiorari (wrongly prayed as mandamus) should not be is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain objections through its letter dated December 29, 2004 and the same was replied by the first respondent on January 5, 2005 overruling the objections stating that it secured the consent of more than 75 per cent. of the secured creditors including Stressed Assets Stabilisation Fund (SASF) which acquired the rights of IDBI by way of assignment of debt and IFCI vide their letters dated January 10, 2005 and January 17, 2005 for initiating action under section 13(4) of the SARFAESI Act and thereafter, they approached the District Magistrate and Collector, Nalgonda under section 14 of the SARFAESI Act for taking over possession of the plant belonging to the petitioner-company. The District Magistrate and Collector passed orders on January 20, 2005 directing for taking over possession by the Mandal Executive Magistrate and Revenue Officer, Chityal and for handing over the same to the Authorised Officer of the first respondent. The Mandal Revenue Officer accordingly conducted panchanama and handed over the possession to the first respondent, ARCIL. The authorised officer of the first respondent tendered possession notice as per rule 8(1) of the Security Interest (Enforcement) Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are filed by the petitioner on December 29, 2004 to the notice under section 13(2) of the SARFAESI Act, that since the creditors representing not less than threefourths in the value of the amount outstanding have not taken any measures to recover their secured debt under sub-section (4) of section 13, the consent obtained by the first respondent under section 13(9) of the SARFAESI Act is not a measure taken for recovery of the amounts due. Therefore, the finding recorded by the Appellate Tribunal that the proceedings before the BIFR gets abated on the consent having been obtained by the first respondent under section 13(9) is erroneous and liable to be set aside. The consent, if any, obtained by the first respondent under section 13(9) from the other secured creditors is not sufficient when only one of the secured creditors initiated action under the SARFAESI Act since one of the secured creditors cannot take any action unless the proceedings are abated. The consent obtained from the other secured creditors will not enure to the benefit of the first respondent. Once section 22 of the SICA prohibits initiation of the proceedings without the consent of the BIFR, issuance of notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quate insurance cover over the secured assets. 10. The facts which are admitted disclose that the ICICI made an assignment in favour of the first respondent on March 31, 2004, under section 5 of the SARFAESI Act. On such acquisition, the proceedings, viz. , suit, appeal or other proceeding of whatever nature relating to the said financial asset is pending by or against the bank or financial institution, shall not abate, or be discontinued or be, in any way, prejudicially affected by reason of the acquisition of financial assets by the securitisation company or reconstruction company, as the case may be, but the suit, appeal or other proceeding may be prosecuted and enforced by or against the securitisation company or reconstruction company, as the case may be (save as provided in the third proviso to sub-section (1) of section 15 of the SICA). The SICA specified in the schedule has been amended by adding second and third provisos to section 15(1) of the SICA. The second proviso added to section 15(1) of the SICA prohibits making of a reference to the BIFR after the commencement of the SARFAESI Act on acquisition of financial assets by the securitisation company or reconstructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 13. Such is not the case on hand. 13. The third proviso to section 15 of the SICA as amended by Schedule I of the SARFAESI Act and sub-section (9) of section 13 have to be harmoniously construed to give a meaningful interpretation to the provisions of the SARFAESI Act. Section 22 of the SICA prohibits initiation of proceedings for recovery of money or for enforcement of any security against the industrial company or of any guarantee in respect of loans or advances granted to the industrial company except with the consent of the BIFR or as the case may be, appellate authority. Take an example, if in a given case, the secured creditor, bank obtains consent of the BIFR to proceed against the industrial company and obtains a recovery certificate from the Debts Recovery Tribunal for the amounts due from the borrower and wants to enforce the provisions of section 13 of the SARFAESI Act, it has to necessarily take the consent of the secured creditors not less than three-fourths in value of the amount outstanding to take measures under clauses ( a ) to ( d ) of sub-section (4) of section 13. The consent, if any, obtained by the secured creditor under section 13(9) of the SARFAESI Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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