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TMI Blog2015 (3) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors unanimously consented to the abatement of the proceedings. In these circumstances, the submission of the borrower that the petitioner did not represent the views of the 3/4th or more of such secured creditors has no force. In the absence of any special form or proceeding to record such consent, it has to be held that if such consent is expressed in the course of proceedings, especially before the BIFR or any other authority under the SICA, such consent is deemed valid. As far as the main contention – which apparently found favour with the AAIFR – with respect to the status quo order which operated in respect of Section 13(4) notice is concerned, this Court is of the opinion that the reasoning is meritless. The validity of Section 13(4) or for that matter any statutory matter cannot be judged on the basis of what an interim order states or purports to state. An interim order is only an aid or an arrangement which entitles the parties to the main proceedings, to work-out the modalities till final adjudication. Till the measures themselves are set-aside under Section 13(4), it cannot be said to be invalid or illegal. It goes without saying that a statutory order, till dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irecting status quo with respect to the said property which is a subject matter of this case. The DRT modified the said order of stay on 18.02.2010 and clarified that all action under Section 13(4) of the SARFAESI were stayed. 5. In the meanwhile, the petitioner bank moved an application before the BIFR, contending that the proceedings before it had abated. After hearing the parties, which included the creditor banks and other third parties interested, such as the Employees Provident Fund Organization (EPFO) and other statutory creditors, the BIFR held that the proceedings had abated. Its observations inter alia are to the following effect: 16. Having considered the facts on record and the submissions made in today s hearing, the Bench observed that Dena Bank, representing not less than three-fourth of the secured loan outstanding against the company, had taken possession of the company s assets u/s 13(4) of the SARFAESI Act, 2002 on 12.9.2009. All the secured and unsecured creditors present in the hearing supported the action taken by Dena Bank u/s 13(4) of the SARFAESI Act, 2002. DRT, Mumbai vide its order dated 17.9.2009 directed for maintenance of status quo in the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RT held as follows: Therefore, I am of the view that the order passed by this Tribunal dated 11.01.2010 is required to be modified to the extent that the order dated 11.01.2010 means and includes that all action under Section 13(4) of the SARFAESI Act are stayed until final disposal of S.A. No. 12/2009 including valuing the secured assets under the said Act. 9. Clearly, by the above order, the DRT has stayed until final disposal of S.A. No. 12/2009 all actions u/s 13(4) of the SARFAESI Act. Section 13(4) of the SARFAESI Act envisages that in case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the measures enumerated in the Section to recover his secured debt. The measures are enumerated at 13(4)(a), (b), (c) and (d) which include taking possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset. Since the DRT has stayed all actions under Section 13(4), it means that the action taken by Dena Bank u/s 13(4) in terms of taking possession of the charged assets of the appellant co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember 2009. Those proceedings have not concluded. In these circumstances, when the validity of conditions under Section 13(4) is itself doubtful, the question whether proceedings by the bank under SICA have abated, cannot arise. Learned counsel also relied upon the recent ruling of this Court in M/s. Global Infrastructure v. Kotak Mahindra Bank Ltd. and Ors. in W.P.(C) 4862/2013 (decided on 16.04.2014), to state that the conditions of Section 15(1) have to be satisfied before an abatement can be inferred. In the present case, the borrower appears to have approached the BIFR just before the proceedings under SARFAESI were initiated by the petitioner bank. In fact, the registration of this application under SICA took place on 09.04.2009. The notice under Section 13(2), demanding the outstanding amounts was issued on 02.07.2009; much close on its heels, the bank issued notice under Section 13(4). No doubt, the DRT, upon being approached by the borrower, directed a status quo. However, in the opinion of this Court, mere direction to maintain status quo vis-a-vis a particular property would not mean that the legal effect of the notice has been effaced - at least that is the essential ..... X X X X Extracts X X X X X X X X Extracts X X X X
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