ERNAKULAM DISTRICT CO OPERATIVE BANK LTD Vs. JOLLY

JUDGEMENT

(1.) This Civil Revision Petition is filed against the order in I.A. No. 93 of 2000 in I.P. No. 1 of 2000 of the Sub Court, Muvattupuzha. Petitioner is the 93rd respondent in I.P. No. 1 of 2000 filed by the respondents herein on the file of the Sub Court, Muvattupuzha. The respondents in the Civil Revision Petition filed the above petition for adjudging as insolvents under the provisions of the Kerala Insolvency Act on the ground that huge debts were incurred in money lending business by the first respondent herein under the name and style National Union Trust at Kothamangalam.

(2.) The petitioner herein is a Banking Society incorporated as per the provisions of the Kerala Cooperative Societies Act, 1969 and Rules framed thereunder and having branches among other places at Kothamangalam in Ernakulam District. The respondents had availed two loans of Rs. 9 lakhs from the petitioner - Bank on 17.11.1995, on the security of the immovable properties belonging to the respondents by creation of an equitable mortgage by deposit of title deeds of the same to the petitioner - Bank. Since the amount was not paid, the petitioner initiated recovery proceedings for recovery of the amount and obtained separate awards in Arbitration Cases, A.R.C. Nos. 84/97, 85/97, and 86/97, against the respondents and another. The Bank has to realise in all Rs. 60 lakhs under the above awards. Execution Petitions, E.P. Nos. 174 and 173 of 1998 were filed against the respondents on 9.9.1998. The properties belonging to the respondents herein were attached by the Sales Officer of the petitioner on 22.7.1999 and put up for public auction on 20.1.2000 after issuing sufficient notice of the auction sale. It is at this stage that the respondents filed Insolvency Petition No. 1 of 2000. They also filed I.A. No. 93 of 2000 for staying all proceedings of the auction sale of the mortgaged properties belonging to the respondent, which was fixed on 20.1.2000 by the Sales Officer. I.A. No. 93 of 2000 was filed only for the purpose of stalling the sale of the mortgaged properties. The petitioner in spite of being a secured creditor having first charge over properties belonging to the respondents is now prevented from recovering the loan amount from the respondents in view of the impugned order of stay by the Court below. The Court below has stayed the sale of the property till the disposal of the Insolvency Petition. It is against that this revision is filed.

(3.) Learned counsel for the revision petitioner submitted that under S.28 of the Kerala Insolvency Act, 1956 the petitioner being a secured creditor was specifically excluded from the insolvency proceedings. The main contention of the petitioner is that under S.28(6) of the Kerala Insolvency Act, the petitioner is entitled to protection and priority of the claims due to a secured creditor of a debtor either before or after adjudication as an insolvent by the Insolvency Court and hence, it was wrong to stay the proceedings. On the other hand, learned counsel for the respondents submitted that as per the Insolvency Act, the Insolvency Court had got jurisdiction to stay the proceedings when it finds just and equitable.