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TMI Blog2007 (8) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Company, as aforesaid, shall also be published in one daily regional language news papers having circulation in the State of Maharashtra, Tamil Nadu and Gujarat; 3) The intending tenderers, who have already collected the tender forms pursuant to the advertisement already issued vide Annexure A/4 will be allowed to submit the tenders on or before the date to be published in the Advertisement as per Clauses 1 and 2 above of this Court order; 4) The A. R. C. (India) Ltd. i.e. intervener/applicant of I. A. No. 4446/07 will also get one more valuation done of all properties of the Company in question which is subject-matter of sale from any well-known and reputed Government Valuer by maintaining absolute secrecy of all the matters in the larger interest of all creditors, so as to have one more opinion of independent Govt. Valuer; 5) Needless to say, the applicant/intervener shall ensure full safety and preservation of all assets of the Company in question and shall further ensure that no theft, pilferage or any loss/damage is caused to any assets (whether movable or immovable) of Company's properties till it is sold; 6) In order to enable the intervener to fetch best maximum m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 to seek intervention and on the representation of the present appellant (Intervenor) the abovesaid directions have been issued in modification of the restraint contained in the order dated 16-4-2007. 4. Learned Counsel for the appellant submits that appellant Company is a duly registered Securitisation Company under the provisions of Section 3 in respect whereof our attention has been invited to the certificate issued by the Reserve Bank of India in favour of the Company to the effect that the Company can carry on the business of securitisation or assets re-construction under Section 3 of the Sarfaesi Act. Attention has also been invited to the provisions of Section 2(2)(a) defining the Securitisation Company to mean any Company formed and registered under the Companies Act, 1956 for the purpose of Securitisation. Reference has also been made to Section 2(zd) which defines secured creditors to mean any Bank or Financial Institution or any consortium or group of Banks or Financial Institution, including Securitisation Company or Re-Construction Company. It was in view of the provisions of the Securitisation Act that the learned Company Judge was apprised by the appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise power or any of the rights under Sub-section (4). Sub-section (4) enumerates the rights created in favour of the secured creditor on failure of the borrower to discharge his liability as required under Sub-section (2) of Section 13. Since the main thrust of the learned Counsel is on the construction of Sub-section (4) of Section 13 in particular and Sub-section (9) of Section 13 in general, Sub-section (4) of Section 13 is reproduced hereunder: (4) In case the borrower fails to discharge his liability in full within the period specified in Sub-section (2), the secured creditors may take recourse to one or more of the following measures to recover his secured debt, namely: (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for releasing the secured asset; (b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt; (c) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds of his secured assets under depositing the workmen's dues with the liquidator in accordance with the provisions of Section 529A of that Act: Provided also that liquidator referred to in the second proviso shall intimate the secured creditor the workmen's dues in accordance with the provisions of Section 529A of the Companies Act, 1956 (1 of 1956) and in case such workmen's dues cannot be ascertained, the liquidator shall intimate the estimated amount of workmen's dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositing the amount of such estimated dues with the liquidator: Provided also that in case the secured creditor deposits the estimated amount of workmen's dues, such creditor shall be liable to pay the balance of the workmen's dues or entitled to receive the excess amount, if any, deposited by the secured creditor with the liquidator: 7. Learned Counsel for the appellant submits that firstly Section 529A becomes operative when the Company is in liquidation and not merely upon initiation of the proceedings and even assuming that entitlement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were rendered otiose. However, since Sarfaesi Act contemplates making payment to other secured creditors to the extent provided in Sub-section (9) of Section 13 thereof as also Section 529A, we are, therefore, of the considered view that the directions issued by the learned Company Judge, being not in consonance with the provisions of Sarfaesi Act, deserve to be set aside. At the same time, however to safeguard the interest of persons covered by Section 529A of the Companies Act, we are of the view that directions be issued to the appellant in the following terms: 1) The appellant shall endeavour to obtain/realise maximum price from the assets which can be alienated under the provisions of Sub-section (4) of Section 13 like a prudent man in respect of his own property. 2) The appellant shall on realising the amount, apply to the Company Court to inform the appellant as to the dues of the workmen of the Industry concerned. 3) The appellant shall also place before the learned Company Judge a list of the other secured creditors and the amount due to them. 4) The appellant Company shall file an undertaking before the Company Court to the effect that the appellant shall abide by the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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