AKOLA OIL INDUSTRIES Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) Board of Industrial and Financial Restructuring recommended winging up of Akola Oil Mills and accordingly on 8-6-2001 present Company Petition No. 5 of 2001 Akola Oil Mills Ltd. came to be filed and it is already admitted by this Court on 24th August, 2001. On 6-6-2003 official Liquidator came to be appointed as provisional Liquidator for it. The official Liquidator states that in pursuance of this appointment, he has taken over possession of all properties and assets of the company at Akola which consist of land, building, plant and machinery stores, vehicles, furniture and fixtures on 11-6-2003. So far as properties located at Mumbai, Poona and nashik are concerned, possession thereof is taken by Official Liquidator between 22-7-2003 to 24-7-2003. He states that thereafter two valuers were appointed and their report in relation to valuation of above properties is also received. On 17-10-2003 this Court directed its office to renew fixed deposit receipt (FDR) which had matured for another period of 90 days and directed the matter to be listed after the courts reopened after the Diwali Vacation of 2003. On same day, State Bank of India, one of the secured creditors obtained orders permitting them to proceed against the company under the securitisation and Reconstruction of Financial Assets and Enforcement of security Interest Act, 2002. (Referred to as Securitisation Act hereafter). Grievance of Official Liquidator is that said orders have been obtained behind his back and thereafter said bank i. e. State Bank of India also published advertisements for sale of immovable and immovable properties for recovery of its loan. Official Liquidator filed OLR No. 62 of 2003 for sale of properties as per valuation report. Winding up order in this case has been passed on 23-4-2004 and Provisional Liquidator was appointed as Official Liquidator. It appears that in the meanwhile bank was prosecuting its remedy against Akola oil Mills before Debt Recovery Tribunal (referred as DRT) and on 4-10-2004 drt permitted recovery. In pursuance thereof bank wanted to disposed of the property and therefore published advertisements and invited bidders. Company application 97/2004 is filed by Official Liquidator for recalling the order dated 17th October, 2003, while Company Application No. 11/2004 is filed by workmen/intervenors for same purpose. Company Application No. 83 of 2004 is filed by Official Liquidator for staying the advertisement dated 12-10-2004 while Company Application No. 91/2004 is again filed by Official Liquidator for staying subsequent advertisement dated 11-11-2004. Company Application no. 57/2001 is filed by bank for staying outside the winding up proceedings. All these applications are being considered in this background. The bank has been prohibited from taking any decision in pursuance of impugned advertisements by this Court by appropriate interim orders.

(2.) Advocate Shriniwas Deshpande, for the Official Liquidator contends that orders have been obtained from DRT without intimating the pendency of recovery proceedings to this Court and without obtaining its leave. He contends that section 446 (1) of the Companies Act specifically requires leave of this Court and while granting leave this Court can impose appropriate terms and conditions in that respect. He states that even Official Liquidator was not communicated about pendency of matter before DRT. It is the argument that the decision of DRT dated 4th October, 2004, is therefore illegal and not binding on Official Liquidator or Company Court. He states that in this Court alone have got jurisdiction to decide priorities amongst creditors in view of section 446 (2) and proceedings before DRT ought to have been transferred to this Court in view of requirement of section 446 (3) of Companies Act. It is the contention of Official Liquidator that on this account both advertisements i. e. dated 12-10-2004, 11-11-2004 therefore are ineffective and need to be quashed. It is his contention that order dated 17-10-2003 was in operation when Provisional liquidator was functioning but the order lost its efficacy moment Provisional liquidator was appointed as Regular Liquidator and Akola Oil Mills was finally directed to be wound up. The Liquidator has taken up charge of all properties and assets of Akola Oil Mills and that includes property allegedly mortgaged with bank. Learned Advocate argues that possession has been taken with the consent of bank and as such bank had no authority to issue the advertisements. He further states that when possession of property was with Liquidator, bank could bot have the taken it without the leave of the court and bank could not have proceeded to sale that property. In support of his contention, he has placed reliance upon provisions of Companies Act and also decided cases. Reference to the same will be made at appropriate places in the body of the judgment. He farther argues that Securitisation Act has come into force the recently while the defaults committed by Akola Oil Mills are old and hence provisions of Securitisation Act cannot be made applicable retrospectively in case of such defaults. He has also contended that the bank is acting mala fide in the matter inasmuch as it has to charge over the entire area of land which it has put to auction and its charge as registered is only for 11 acres. He further states that the bank cannot proceed to auction movables by taking recourse to Securitisation Act. He states that the bank has tried to mislead this Court and the purchasers and therefore appropriate action for contempt must be initiated against the bank. He has further stated that the steps taken by State Bank are also beyond period of limitation and hence, void. He further argues that the charges by way of mortgage in favour of said bank is not registered with Registrar of Companies as contemplated by section 125 of Companies Act and therefore is void as against Official Liquidator. He invites attention to 2 advertisements on record to contend that State Bank is trying to sell valuable movables and thus it is acting mala fide. Advocate ghare, has adopted these arguments in support of his application.

(3.) As against this, Advocate Anil Kumar who appears for bank states that as on 31-12-2003. State Bank had to recover Rs. Fortyfour crores Twelve lakhs Forthfour Thousand Seven Hundred Eighty-six and Sixty Seven nayapaisa only (44,12,44, 786.67) from company. He argues that leave of court was not necessary at all and the bank had filed Application No. 57/2001 for remaining outside the winding up proceedings in accordance with law. He states that application tendered on 17-10-2003 was in furtherance of the prayer made in Application 57/2001. He makes reference to various provisions of companies Act and also to various decided cases and submits that the bank was not required to obtain any leave from this Court to prosecute its remedy before DRT. He contends that RDB Act (Recovery of Debts Due to banks and Financial Institutions Act, 1993) and Securitisation Act are special enactments and they prevail over the provisions of Companies Act. He states that application moved on 17-10-2003 was formal one and as such its copy was not given to Official Liquidator, because the Official Liquidator has to role to play in the matter. He further states that Securitisation Act is applicable prospectively even in case of past liabilities if requirement thereof are fulfilled. He therefore contends that there is no question of retrospective operation of securitisation Act. He further states that registration of charge is the internal work of the office of Registrar of companies but the bank has intimated complete charge over 18 acres and therefore bank is justified in proceeding against entire land. He argues that there is no scope for initiation of any contempt of Court action or action of similar nature against the bank in this respect. He further states that on 8-1-2004 the bank issued notice under section 13 (2) of Securitisation Act and on 8-4-2004 obtained the possession under section 13 (4) thereof. He states that notice to this effect was published in newspapers on 22-4-2004 and the Akola Oil Mills was ordered to be wound up by this Court on 23-4-2004. He further states that though official Liquidator, after appointment as a Provisional Liquidator took the possession, he handed over the possession to the bank as caretaker. He therefore contends that Official Liquidator was not in possession at all insofar as mortgaged property is concerned. The advertisements in dispute are published by state Bank in furtherance of notice under section 13 (4) of Securitisation Act.