REMANIKA SILKS P LTD Vs. STATE

JUDGEMENT

(1.) The important question that is posed before this Court is whether the constitution of the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'the RDB Act') and the proceedings initiated by the Tribunal for recovering certain debts due to the Federal Bank Ltd. from M/s. Remanika Silks Pvt. Ltd., which company is under liquidation proceedings before this Court stands in the way of the Official Liquidator continuing with sale proceedings; and also whether during the pendency of the proceedings by the Official Liquidator, the sale proceedings initiated by the Debts Recovery Tribunal has to be stayed.

(2.) The Provisional Liquidator appointed by this Court vide order dated 23.1.2001 has filed a report that pursuant to the orders of this Court he issued notice under R.130 of the Companies (Court) Rules, 1959 and thereafter held a meeting on 13.2.2001 in which Ex - Directors, representatives of the creditors and secured creditors and Ex - Managing Director of the Company participated and that in the meeting the representative of the Federal Bank appraised the said Liquidator that pursuant to the orders of the Debts Recovery Tribunal, the two sets of keys of the building in which the assets of the company are kept have been taken over by the Debts Recovery Tribunal and that the said keys cannot be surrendered to the Official Liquidator unless there is specific orders of the Debts Recovery Tribunal. The Official Liquidator therefore approached this Court with the following prayers:

(3.) The Federal Bank Ltd. has filed an objection to the report stating that the entire goods kept in the business premises of the company M/s. Remanika Silks Pvt. Ltd., at Cochin & Tellicherry were hypothecated to the Bank on 6.10.1993 as security for the cash credit account which the company was operating; that the Bank has first charge over the hypotheca; that as the company failed to repay the loan amounts due to the Bank, O. S. No. 751 of 1995 was filed before the Sub Court, Ernakulam, which was transferred to the Debts Recovery Tribunal (for short DRT) on its constitution; that an Advocate - Commissioner deputed by the DRT has prepared an inventory of the articles available in the business premises of the company at Cochin and Tellicherry and that the sale proceeding initiated by the DRT is presently pending. He also alleged that inspite of objections raised, the Liquidator appointed by this Court opened the godown of the company at Tellicherry and took possession of the entire stock and that this is irregular.