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TMI Blog2008 (1) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent. JUDGMENT Rakesh Kumar Garg, J. The petitioner, herein is a body corporate, having been incorporated under the Companies Act, 1956, as per the certificate of incorporation No. 16-10719 of 1990 issued by the Registrar of Companies, Jalandhar. During the year 1993, the promoters of the petitioner-company had set up a unit for the manufacture of woollen yarn at its works situated at village Jugiana, District Ludhiana. Both the respondents, i.e ., Punjab Financial Corporation (for short "the PFC") and Punjab State Industrial Development Corporation (for short "the PSIDC") granted term loan, viz. , PFC had sanctioned loan of Rs. 67 lakhs on March 5, 1993 and PSIDC had sanctioned term loan of Rs. 33 lakhs on March 19, 1993. The said loans were disbursed to the petitioner and further vide the deed of mortgage/memorandum of entry, the petitioner had created the security of the loan as mentioned hereinafter : "Factory building built on land measuring 0B-18B-4B (2723-1/3 sq. yards) comprised in Khata No. 175/330, Khasra No. 397, Khata No. 254/478, 479, Khasra No. 396, Khata No. 251/473, Khasra No. 109, situated in village Jugiana, Tehsil and District Ludhiana t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-time settlement proposal was not acceptable. It is further the case of the petitioner that the unit set up by the petitioner had suffered losses and had become sick and, therefore, a reference was filed by the petitioner-company with the BIFR under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "the SICA") which was registered with the Board for Industrial and Financial Reconstruction (hereinafter referred to as "the BIFR"), New Delhi vide case No. 25 of 2003 M/s. Triveni Yarns Ltd., and, thereafter, vide order dated November 28, 2005 (annexure P10) the petitioner-company was declared as the sick industrial company and, therefore, in order to explore the viability of its rehabilitation the BIFR had appointed respondent No. 1-PFC as the opera ting agency and the matter before the BIFR is still pending. The petitioner has also placed on record a copy of the letter dated September 12, 2006, annexure P7, whereby it had requested respondent No. 1 for rehabilitation of the unit. Vide annexure P9 dated December 27, 2006, the petitioner also requested respondent No. 1 to accept the one-time settlement proposal. The petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to the provisions contained in the Act and since the petitioner had defaulted in the repayment of the loan amount, therefore, notice under section 13(2) of the Act was issued to the petitioner to secure its dues. 6. Counsel for the petitioner has argued that in view of the unit of the petitioner having been declared sick by the BIFR and that the proceedings are pending before the BIFR therefore, no action can be taken by the respondent-Corporation under the provisions of the Securitisation Act. All the recoveries of dues are to remain stayed in pursuance of section 22 of the SICA. Learned counsel has further argued that the permission of the BIFR before proceedings against the petitioner would be necessary once the reference is pending before it. He has further stated that the respondents have failed to communicate the reasons for non-acceptance of the objections filed by the petitioner within a period of one week on the receipt of objection and, therefore, the respondents are further precluded from taking any action against the petitioner under section 13(4) of the Securitisation Act. 7. In support of his contention, learned counsel for the petitioner has relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board for determination of the measures which shall be adopted with respect to the company : Provided that if the board of directors had sufficient reasons even before such finalisation to form the opinion that the company had become a sick industrial company, the board of directors shall, within sixty days after it has formed such opinion, make a reference to the Board for the determination of the measures which shall be adopted with respect to the company : Provided further that no reference shall be made to the Board for Industrial and Financial Reconstruction after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where financial assets have been acquired by any securitisation company or reconstruction company under sub-section (1) of section 5 of that Act : Provided also that on or after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where a reference is pending before the Board for Industrial and Financial Reconstruction, such reference shall abate if the secured creditors, representing not less than three-fourths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taken over or changed in pursuance of any scheme sanctioned under section 18, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or in the memorandum and articles of association of such company or any instrument having effect under the said Act or other law ( a )it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company; ( b )no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the Board. (3) Where an inquiry under section 16 is pending or any scheme referred to in section 17 is under preparation or during the period of consideration of any scheme under section 18 or where any such scheme is sanctioned thereunder, for due implementation of the scheme, the Board may by order declare with respect to the sick industrial company concerned that the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force, to which such sick industrial company is a party or which may be applicable to such sick industria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 15 of the SICA and a proviso has been added to the effect that any reference pending before the BIFR shall abate if the secured creditors representing not less than three-fourths in value of the amount outstanding against the financial assistance disbursed to the borrower of such secured creditors have taken any measure to recover their secured debt. Moreover, section 35 of the Securitisation Act has an overriding effect over other laws. 12. Sections 35 and 41 of the Securitisation Act are reproduced hereinafter below for the ready reference : "35. The provisions of this Act to override other laws. The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 41. Amendments to certain enactments. -The enactments specified in the Schedule shall be amended in the manner specified therein." 13. In view of the amendment carried out in section 15 of the SICA and the overriding effect of the provisions of the Securitisation Act, the contention of counsel for the petitioner to the effect that all the proceedings of recover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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