TaxTMI 
TaxTMI 
2008 (1) TMI 616
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....It is engaged in the business of manufacturing sponge iron. The respondent engaged LPL for production of equipment and machinery for construction of sponge iron plant and ancillary buildings at Chityal and issued 'two work orders, dated 14-5-1991 and 4-3-1992. The total value of work is Rs. 4,07,00,000. The bills for the executed works are not paid. The matter was referred to an arbitrator - Retired High Court Judge, who passed awards for total amount of Rs. 5,35,17,380. The respondent moved applications under section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act, for brevity) being O.P. Nos. 700 and 702 of 2003 on the file of the Court of the XIV Additional Chief Judge, City Civil Court, Hyderabad, to set aside awards. They were allowed in part to the extent of interest. Aggrieved by the same, respondent filed C.M.A. Nos. 291 and 581 of 2006 before this Court. By order, dated 13-4-2006, this Court directed respondent to deposit a sum of Rs. 32,00,000 within a period of eight weeks from the date of order. Subsequently, by another order, dated 27-7-2006 in C.M.A. No. 581 of 2006, this Court directed respondent to deposit half of the decretal amount within six wee....
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.... to LPL is denied. The award passed by arbitrator and the efforts of respondent to get it set aside, however, not denied. The action taken by ARCIL under SARFAESI Act is also not denied. It is further stated that on 20-1-2005, the District Magistrate passed an order under section 14 of the SARFAESI Act authorizing Mandal Executive Magistrate (MRO), Chityal to take possession of the mortgaged properties and handover them to authorized agent of ARCIL. Thereafter, copies of possession notice that assets of respondent company have been taken over possession by ARCIL were reported in the newspapers, dated 24-1-2005. It is further stated that though this Court passed orders directing respondent to deposit amounts, it could not deposit the amounts due to the action taken by ARCIL. 6. The matter is listed before this Court for directions as to whether the petition should be advertised under Rule 99 of Companies (Court) Rules, 1959 (Rules, for brevity) in the manner provided by Rule 24 thereof. Therefore, at this stage, Court has to look to prima facie case as to whether creditor who alleges that respondent company owes certain amounts has prima facie proved allegation that respondent comp....
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....OL) as provisional liquidator of Disco Electronics (DISCO, for brevity) on 29-9-1992. DISCO had availed loans from Delhi Financial Corporation (DFC). As there was default, action was initiated under section 29 of SFC Act. DISCO then brought M/s. Shivalik Traders for purchase of properties. It was agreed to. But the purchaser failed to pay amount to DFC. DFC took possession of the industrial unit along with its machinery on 23-12-1992. Nevertheless DISCO was allowed to continue to be in possession as custodian. DFC again conducted sale. A bid for Rs. 18 lakhs was obtained, but bidder withdrew. An offer of Rs. 8.5 lakhs was ultimately accepted by DFC. In the meanwhile, as noticed supra, provisional liquidator was directed to take over assets of DISCO. There was also an order of injunction with regard to possession of said property and restraint order from removing finished and semi-finished items and raw material from the premises. DFC proceeded to deliver possession to successful bidder. This action was assailed before the Company Judge by OL. The defence of DFC was that the provisions of SFC Act would override the provisions of Companies Act and that under section 32E of the SFC Ac....
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....agement on day to day basis and thus take over of the management is synonymous of taking over possession. This submission was countenanced by Division Bench with the following reasoning : "It has to be appreciated that present concern was not even a running concern and at the time when the possession was taken over and handed over to the appellant there could be no question of taking over the management of the company. Thus, the expression 'management' and 'possession' would be synonymous, at least for the purposes of the present case inasmuch as Disco was not a running concern at the relevant date. The Act is a special Act providing security to the Financial Corporation for purposes of recovery of its dues and the rights of a financial Corporation thus must be protected. It is an undisputed position that amounts were owed to the DFC and after notices DFC did take over the possession of the land and assets of the company. Complete procedure was followed and it is only after that the sale was confirmed in favour of the appellant company. The Financial Corporation thus become owner of the assets in view of section 29(5) of the Act prior to its sale." (p. 12) 13. Learned counsel for....
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.... securitisation company or reconstruction company under clause (a) of section 9; and (ii) secured creditor under section 13(4)(b). It is done either by appointing directors or by appointment of an administrator of the business of the borrower. To understand this, it is necessary to refer to definition of 'securitization', 'securitization company', 'reconstruction company' and 'secured creditor' as defined in SARFAESI Act's dictionary clause. "2(z) 'securitization' means acquisition of financial assets by any securitization company or reconstruction company from any originator, whether by raising of funds by such securitization company or reconstruction company from qualified institutional buyers by issue of security receipts representing undivided interest in such financial assets or otherwise; 2(za) 'securitization company' means any company formed and registered under the Companies Act, 1956 (1 of 1956) for the purpose of securitization; 2(v) 'reconstruction company' means a company formed and registered under the Companies Act, 1956 (1 of 1956) for the purpose of asset reconstruction; 2(zd) 'secured creditor' means any bank or financial institution or any consortium or group....
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....ured debt, namely:- (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset; (b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset : Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt : Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt. (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d)require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the ....