M/S. DECCAN CHRONICLES HOLDINGS LIMITED REP. BY ITS VICE CHAIRMAN AND OTHERS Vs. THE UNION OF INDIA REP. BY ITS JOINT SECRETARY AND OTHERS

JUDGEMENT

(1.) THIS writ petition raises several questions of general importance, that arise in the course of implementation of different enactments, such as Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the Sarfaesi Act"), the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act"), and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short the D.R.T. Act"). The 1st petitioner is a public limited company, involved in the activity of running newspapers and petitioners 2 to 5 are associated with the management and administration thereof. The petitioners obtained two separate loans: One loan of Rs. 50 crores on 08 -12 -2011, and another of Rs. 50 crores on 05 -01 -2012 from M/s. India Bulls Financial Services Limited (for short "IBFSL"), after necessary documentation. On 08 -09 -2012, IBFSL issued a notice to the petitioners, requiring them to pay the outstanding amount within seven days from the date of receipt of the notice. The petitioners got issued a reply. Thereafter, IBFSL filed O.P. No. 377 of 2013 against the petitioners in the Court of II Additional Chief Judge, City Civil Court, Hyderabad, under Section 9 of the Arbitration Act, for the relief of injunction, to restrain the petitioners from alienating, encumbering, transferring or creating third party rights, vis   -vis the properties that were offered as security and for a direction to the petitioners to jointly and severally furnish security for a sum of Rs. 48,60,77,778/ -. Similarly O.P. No. 378 of 2013 was filed for similar relief in relation to another loan. Clause 25 of the Loan Agreement, which provides for arbitration was invoked in both the OPs.

(2.) ACCORDING to the petitioners, about 10 crores was paid towards principal of the borrowed amount by June 2012. IBFSL was merged with its sister concern, M/s. India Bulls Housing Finance Limited, the 4th respondent, on the basis of an order dated 12 -12 -2012 in Company Petition No. 457 of 2012, passed by the Delhi High Court under the provisions of the Companies Act, 1956. The merger is said to have been effective from 08 -03 -2013.

(3.) THE petitioners contend that IBFSL, from which they obtained loan; was not registered as a 'Financial Company', under Section 3 of the Sarfaesi Act, and the mere fact that the said agency has merged with its sister concern, the 4th respondent; does not bring about any change in the relations between themselves and the IBFSL They submit that even if the 4th respondent has stepped into the shoes of the IBFSL, it can, at the most, take only those steps, that could have been taken by IBFSL, and not any more.