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TMI Blog2020 (8) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... me being barred by limitation, is required to be made by way of a proceeding under Section 17 of the SARFAESI Act and before the DRT and the jurisdiction of this Court would be barred by Section 34 of the SARFAESI Act - the SARFAESI Act came into force only in the year 2002 and going by Article 63(a) of the schedule to the Limitation Act, it cannot be said that the limitation of 30 years, even if counted from 31st December, 1991 has not expired or had expired, for that matter, even by 20th July, 2015 when the notice under Section 13(2) of the SARFAESI Act was issued. Since the possession of the secured assets was with the respondent no.1 OL pursuant to the recommendation of the BIFR and the order of liquidation, respondent no.2 RIICO Ltd., for the purpose of proceedings under the SARFAESI Act, was in any case required to apply to the Company Court for direction to the respondent no.1 OL to handover possession of the property for sale under the SARFAESI Act - We have not been able to decipher any clear reply from the counsel for the appellant to our aforesaid queries, qua jurisdiction of the Company Court or of this Court in appeal against the order of the Company Court, to go in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent no.3 SBI and respondent no.4 RFCL is not relevant for the purpose of the appeal, we have proceeded to hear the counsel for the appellant at length. 5. The counsel for the appellant has contended, that (i) the company in liquidation Nirmal Steel Tubes (I) Ltd., on 31st December, 1991 filed a reference under Section 15 of the Sick Industrial Companies Act, 1985 (SICA) before the Board for Industrial and Financial Reconstruction (BIFR); (ii) the company in liquidation Nirmal Steel Tubes (I) Ltd. had availed of financial facility from respondent no.2 RIICO Ltd., by securing the assets of the company being plant, machinery and premises of the company at A353A, RIICO Industrial Area, Bhiwadi District, Alwar, Rajasthan; (iii) since the company in liquidation filed a reference before the BIFR, the account of the company with respondent no.2 RIICO Ltd. is deemed to have become NPA as on 31st December, 1991; (iv) BIFR, vide order dated 23rd May, 1994 recommended the company Nirmal Steel Tubes (I) Ltd. for liquidation and Company Petition No.112/1994 was registered in this Court; (v) vide order dated 11th February, 2002 of the Company Court of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken in reply to Company Application No.3550/2016 as well as by way of CA No.835/2017 which is still pending but the Company Judge, in the impugned order has not dealt with the same at all and hurriedly passed the impugned order allowing Company Application No.3550/2016, accepting the undertaking of respondent no.2 RIICO Ltd. to distribute the sale proceeds of the secured assets in accordance with Sections 529 and 529A of the Companies Act. 7. On enquiry, as to the Article of the Schedule to the Limitation Act, 1963 applicable, the counsel for the appellant states that Article 62 would apply and which provides limitation of 12 years commencing from the date when the monies sued for becomes due. It is contended that the money became due to respondent no.2 RIICO Ltd. on 31st December, 1991 and 12 years therefrom lapsed much prior to 20th July, 2015 when notice under Section 13(2) of the SARFAESI Act was issued first by respondent no.2 RIICO Ltd. and that too to the OL only. 8. We have enquired from the counsel for the appellant, whether not the respondent no.2 RIICO Ltd., on reference under BIFR being made and on liquidation being ordered, could not possibly have initiated any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, it cannot be said that the limitation of 30 years, even if counted from 31st December, 1991 has not expired or had expired, for that matter, even by 20th July, 2015 when the notice under Section 13(2) of the SARFAESI Act was issued. In this context it is worthwhile to also mention that respondent no.2 RIICO Ltd., being admittedly a secured creditor, was / is entitled to stay outside the winding up process and was required to approach the Company Court only to take possession from the Official Liquidator, of the secured assets, for the purposes of sale and in accordance with Sections 529 and 529A of the Companies Act. As far back as in M.K. Ranganathan Vs. Government of Madras AIR 1955 SC 604 it was held, (i) that the mortgagee of a company in liquidation is in a position to say the mortgaged property is to the extent of the mortgage my property. It is immaterial to me whether my mortgage is in winding up or not. I remain outside the winding up and shall enforce my rights as mortgagee ; (ii) this is to be contrasted with the case in which such a creditor prefers to assert his right, not as mortgagee, but as a creditor saying I will prove in respect of my debt , in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficial Liquidator, as the representative of the workmen to enforce such pari passu charge, would have the right of representing the workmen equally with the rights of the secured creditor and therefore State Financial Corporation cannot act independently or by ignoring the Official Liquidator, for enforcing their security and the realization of the security can only be done by both the charge holders joining. In Rajasthan State Financial Corpn. Vs Official Liquidator (2005) 8 SCC 190 it was further clarified that though the right of the State Financial Corporation to sell the secured assets has not been taken away, notwithstanding the winding up, but the same stands restricted by the requirement of the Official Liquidator being associated with it, giving the Company Court the right to ensure the distribution of the assets in terms of Section 529A of the Companies Act. In Laxmi Fibres Ltd. Vs. A.P. Industrial Development Corpn. Ltd. (2015) 16 SCC 464 it was yet further clarified that after ensuring that the social purpose of Sections 529 and 529A is achieved or ensured, the State Financial Corporation can continue to enjoy their statutory rights as secured creditors and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... later to the Companies Act and creates a special machinery for speedy recovery of dues of banks and financial institutions and which by an amendment of 2004 includes a registered securitization or reconstruction company envisaged under SARFAESI Act and Section 18 thereof bars the jurisdiction of ordinary Courts or authority in respect of matters falling within the jurisdiction of Debt Recovery Tribunal as specified in Section 17 thereof; (ii) an Appellate Tribunal is provided under Section 20; (iii) the power of such Tribunals extends to determining the debt due as well as its realization; (iv) Section 34 confers overriding effect upon this Act over any other law in force; (v) SARFAESI Act was enacted in 2002 to regulate securitization and reconstruction of financial assets and enforcement of security interest, to clothe the banks and financial institutions with power to take possession of securities and sell them; (vi) a reading of Sections 9 and 13 of the SARFAESI Act leaves no manner of doubt that for enforcements of its security interest, a secured creditor has been not only vested with the power to do so without the intervention of the Court or Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 17 thereof. 21. The counsel for the respondent no.1 OL at this stage also contends that if the appeal has been filed by Mr. R.K. Aggarwal in his capacity as ex-management, as stated by him in the affidavit accompanying the appeal, the appeal is not maintainable on this ground alone. Reference in this regard is made to order dated 16th November, 2018 of a Division Bench of this Court in Co. App. 24/2018 titled V.K. Sharma Vs. Official Liquidator. It is stated that though a erstwhile shareholder of a company in liquidation is entitled to appeal but not the ex-Director and since the appellant in the affidavit has described himself as ex-Director, even though the appeal contains an averment that he holds 75% of the shares of the company in liquidation, the appeal is not maintainable. 22. We may add that the Supreme Court also in Innoventive Industries Ltd. Vs. ICICI Bank (2018) 1 SCC 407 has held that the appeal at the behest of erstwhile Directors of a company in insolvency is not maintainable. 23. Mr. Pushpender Aggarwal, Manager (Law) of respondent no.2 RIICO Ltd. only states that he needs time to engage an advocate. However since no merit has been found in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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