2008 (11) TMI 405 - HC - Companies Law

Writ petition dismissed as Securitisation Act prevails. Petitioner can challenge actions through legal channels

Nabha Industries Ltd. Versus Punjab State Industrial Development Corporation

Nabha Industries Ltd. Versus Punjab State Industrial Development Corporation - [2010] 154 COMP. CAS. 646 (PUNJ. & HAR.) Issues Involved:1. Quashing of specific letters and notices.2. Acceptance of payment by way of one-time settlement.3. Applicability of the Securitisation Act versus the Sick Industrial Companies (Special Provisions) Act (SICA).4. Classification of the petitioner's account as a Non-Performing Asset (NPA).5. Legal proceedings and jurisdiction under the Securitisation Act and SICA.Issue-wise Detailed Analysis:1. Quashing of Specific Letters and NoticesThe petitioner sought the quashing of letter dated September 5, 2006 (Annexure P11), notice dated August 20, 2007 (Annexure P14), and letter dated January 4, 2008 (Annexure P17). The court examined these requests in light of the statutory framework and the actions taken by the respondents.2. Acceptance of Payment by Way of One-Time SettlementThe petitioner argued for acceptance of payment under a one-time settlement scheme dated March 4, 2004 (Annexure P4). However, the respondents contended that the petitioner failed to comply with the terms of the one-time settlement, specifically the requirement to pay 25% of the settlement amount within 30 days from March 11, 2004. The court noted that the petitioner's earlier writ petition on the same cause of action was dismissed on November 12, 2007.3. Applicability of the Securitisation Act versus SICAThe main question was whether the Securitisation Act would override the provisions of SICA. The court examined the statutory schemes of both Acts. Section 22 of SICA provides for suspension of legal proceedings against companies during inquiry or appeal, while Section 35 of the Securitisation Act contains a non obstante clause, indicating that its provisions would override any inconsistencies with other statutes, including SICA. The court referred to legislative history and 'Heydon's rule' to interpret the law, concluding that the Securitisation Act was intended to facilitate speedy recovery by financial institutions and would override SICA in case of conflict.4. Classification of the Petitioner's Account as a Non-Performing Asset (NPA)The petitioner contended that their account was never declared an NPA by PSIDC, which was necessary before taking action under the Securitisation Act. However, the PFC, respondent No. 2, denied this claim and provided a letter dated February 19, 2007, to support their position. The court found no merit in the petitioner's argument regarding the NPA classification.5. Legal Proceedings and Jurisdiction under the Securitisation Act and SICAThe court reviewed various judgments cited by both parties. It agreed with the view taken in Triveni Yarns Ltd., which held that the Securitisation Act would have an overriding effect over SICA. The court noted that none of the judgments relied upon by the petitioner directly addressed the inconsistency between the Securitisation Act and SICA. Therefore, it held that the Securitisation Act would prevail, and the mere pendency of a reference under SICA would not bar proceedings under the Securitisation Act.ConclusionThe court dismissed the writ petition, holding that the Securitisation Act would override SICA. It allowed the petitioner to pursue alternative remedies under the Securitisation Act and indicated that any further actions, such as taking physical possession, could be contested by the petitioner through appropriate legal channels.Final JudgmentThe writ petition was dismissed without prejudice to the petitioner's alternative remedies under the Securitisation Act. The court did not issue a restraining order against taking physical possession but allowed the petitioner to present its claims to the concerned authorities and seek remedies if aggrieved by their actions.