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TMI Blog2012 (4) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity, the SARFAESI Act ) override the provisions of the Companies Act because the former is a special and specific legislation. He further submits that the role of the liquidator arises only when the claims of workmen are pending adjudication before the Official Liquidator. In this connection, he places reliance on Sub-section (9) of Section 13 of the SARFAESI Act. He further states that in the present case, the Secured Creditor M/s. Kotak Mahindra Bank Ltd. had not only appointed a valuer but had also published the auction notice in national dailies. 3. Mr. Shahzad Khan, learned counsel appearing for M/s. Kotak Mahindra Bank Ltd. adopts the arguments of Mr. Chetan Sharma. 4. On the other hand, Mr. Sanjay Katyal, learned counsel for the Official Liquidator submits that Punjab and Haryana High Court in Haryana State Industrial Infrastructure Development Corporation vs. Haryana Concast Limited, Hisar and another, (2010) ILR 2 P H 284 has held that a Secured Creditor is entitled to conduct an auction under the SARFAESI Act only after associating the Official Liquidator at all stages. He states that as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal position of the Company Court vis- -vis the State Financial Corporation and Debt Recovery Tribunal is clear then by virtue of the same logic if the securitisation company seeks to sell or transfer the assets of a borrower company in liquidation opting the course under Section 13(4) of the SARFAESI Act then it follows that such a power could be exercised by a securitisation company only after obtaining permission from the Company Court and acting in terms of the directions issued by that Court. The aforesaid view has been followed and applied by Hon'ble the Supreme Court in para 40 of the judgment in the case of Bakemans Industries Pvt. Ltd. (supra) by following the reasoning given in the case of Rajasthan State Financial Corporation (supra) which has already been extracted in the preceding para. xxx xxx xxx 34. Once the aforesaid legal position is clear then it has to be concluded that the Company Court enjoys the jurisdiction to issue directions to a securitisation company or a secured creditor who might have opted to stay outside the winding up and has invoked its power under Section 13(4) of the SARFAESI Act. Therefore, we find that the learned Company Judge has correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SFC Act, can only be with the association of the Official Liquidator and under the supervision of the Company Court. The right of a financial institution or of the Recovery Tribunal or that of a financial corporation or the Court which has been approached under Section 31 of the SFC Act to sell the assets may not be taken away, but the same stands restricted by the requirement of the Official Liquidator being associated with it, giving the company Court the right to ensure that the distribution of the assets in terms of Section 529-A of the Companies Act takes place. In the case on hand, admittedly, the appellants have not set in motion, any proceeding under the SFC Act. What we have is only a liquidation proceeding pending and the secured creditors, the financial corporations approaching the company court for permission to stand outside the winding up and to sell the properties of the company- in-liquidation. The company court has rightly directed that the sale be held in association with the Official Liquidator representing the workmen and that the proceeds will be held by the Official Liquidator until they are distributed in terms of Section 529-A of the Companies Act under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he properties of the debtor, even if a company-in-liquidation, through its Recovery Officer but only after notice to the Official Liquidator or the liquidator appointed by the Company Court and after hearing him. (ii) A District Court entertaining an application under Section 31 of the SFC Act will have the power to order sale of the assets of a borrower company-in- liquidation, but only after notice to the Official Liquidator or the liquidator appointed by the Company Court and after hearing him. (iii) If a financial corporation acting under Section 29 of the SFC Act seeks to sell or otherwise transfer the assets of a debtor company-in-liquidation, the said power could be exercised by it only after obtaining the appropriate permission from the company court and acting in terms of the directions issued by that court as regards associating the Official Liquidator with the sale, the fixing of the upset price or the reserve price, confirmation of the sale, holding of the sale proceeds and the distribution thereof among the creditors in terms of Section 529A and Section 529 of the Companies Act. (iv) In a case where proceedings under the Recovery of Debts Due to Banks and Financial Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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