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TMI Blog2011 (3) TMI 1451X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 13(4) of SARFAESI Act were more than 75 per cent of the total secured debt of the company and relying on Sheel International's case of the AAIFR and an order passed by the High Courts of Delhi, Chennai and Bombay, it was held that the reference under section 15(1) of SICA has abated. 2. While holding that the reference had abated under section 15(1) of the SICA, the BIFR had also noted that the first reference No. 58/1999 filed by the petitioner was dismissed as not maintainable as the petitioner company had manipulated the accounts and in the appeal filed by the petitioner against the order dated 20-7-1999, dismissing the reference, the Appellate Authority had also dismissed the appeal by order dated 7-4-2000 holding that the beneficial provisions of SICA are not meant for companies/managements who resort to frauds and falsification of accounts for the personal benefit of promoters and run to take shelter under umbrella of SICA to protect themselves from proceedings for recovery/winding up initiated by creditors. 3. While holding by Order dated 30-8-2010 that the reference has abated under section 15(1) of SICA, it was also noticed by the AAIFR that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of BIFR under section 22(1) of SICA before taking coercive action under section 13(4) of SARFAESI Act was necessary. 7. The order was also challenged on the ground that even if one of the manufacturing unit of the petitioner company was taken over, two industrial units will remain under the ownership of the company and therefore, instead of abating the reference of the appellant company, the BIFR ought to have considered the rehabilitation of the company on the basis of the two surviving units of the petitioner company. 8. Before the AAIFR reliance was placed by the petitioner on a judgment of Bombay High Court in the case of Nouveaw Exports (P.) Ltd. v. AAIFR Co. [W.P. (C) No. 1106 of 2011, dated 13-1-2010], which was distinguished by AAIFR on the ground that the observations made by the High Court of Bombay were tentative and prima facie . Reliance had rather been placed on Kandhari Rubber Ltd. [Appeal No. 37 of 2007] and Sheel International Ltd. [Appeal No. 229 of 2008] holding that BIFR/AAIFR is not entitled to go into the legality or the merits of any action under section 13(4) of the SARFAESI Act by the secured creditors. 9. AAIFR has held that thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e" means the date agreed upon by the secured creditors representing not less than three-fourth in value of the amount outstanding on such date; ( b )"amount outstanding" shall include principal, interest and any other dues payable by the borrower to the secured creditor in respect of secured asset as per the books of account of the secured creditor." 10. The AAIFR has also held that once the action under section 13(4) is taken, it is to be presumed by BIFR/AAIFR that the action has been taken in accordance with law and the BIFR/AAIFR will not go into the correctness/legality of any action under section 13(4) as the power to challenge an order under section 13(4) of SARFAESI Act will not be with BIFR/AAIFR. The Tribunal also repelled the plea of the petitioner that the jurisdiction of BIFR and DRT is concurrent on the ground that this will lead to jurisdiction chaos. Reliance was also placed on NGF Ltd. v. Chandra Developers (P.) Ltd. [2005] 64 SCL 1 (SC) where it was held by the Supreme Court that the Company Court and BIFR do not exercise the concurrent jurisdiction and had repelled the plea that despite BIFR having jurisdiction to get the assets of the sick company sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abate if the secured creditors, representing three fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under sub-section (4) of section 13 of that Act. (2) " 13. This Court has heard the learned counsel for the petitioner company and other counsel in detail and have also perused the orders of AAIFR and BIFR and the precedent relied on and distinguished by the learned counsel. In Punjab National Bank, a division Bench of this Court had held that it was not disputed that the Punjab National Bank, the Oriental Bank of Commerce and the State Bank of Bikaner and Jaipur, admittedly represented the secured creditors of more than 3/4th of the value. What was considered was whether decision taken will amount to a measure taken to recover the secured debt under section 13(4) of the SARFAESI Act, 2002. It was held that a mere decision in the meeting of the secured creditors representing three fourth in value of the amount outstanding may not amount to a measure taken to recover a secured debt under section 13(4) of the Securitization Act and something more conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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