TaxTMI 
TaxTMI 
2014 (12) TMI 486
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....uilt up area of 1586.24 Square Metres, was admittedly mortgaged by the respondent in favour of the petitioners to secure the various credit facilities made available to the respondent. 2. The respondent has hence sought that this court direct the petitioner - banks or its representative not to take physical possession of the said property. The application being listed for "Orders" before this court on 18.11.2013, the following order was passed : "Call on 6.12.2013 along with Co.P No.214/2012." This application was however, not listed before the court today, though it ought to have been posted along with a batch of petitions, involving the respondent, which were on the board of the court. However, at the instance of counsel for both the parties, the same was directed to be placed before the Court and the matter was heard at length. 3. The learned Senior Advocate Shri K.G.Raghavan, appearing for the Counsel for the respondent - applicant, contends that by invoking the jurisdiction of this court, the petitioner - banks are deemed to have relinquished and surrendered all security interest held by the petitioner - banks over such assets of the respondent. Therefore, the petitio....
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....les, 2002 (Hereinafter referred to as the "Enforcement Rules', for brevity) in respect of the " Kingfisher House" building, which was duly published in a daily news paper on 10.8.2013. It is stated that by an Order dated 14.8.2013, the Tax Recovery Officer (TDS) is said to have attached the very same "Kingfisher House". It is thereafter, on 19.8.2013 that the petitioner - banks had filed the above company petition under Section 433(e) and (f) of the Companies Act, 1956. The petitioner - banks had also filed a writ petition before this court in its writ jurisdiction, on 29.8.2013, in WP 38870-/2013 and connected cases, seeking a direction to the Debts Recovery Tribunal (DRT) to consider certain pending applications. There was an order passed in the said writ proceedings restraining the respondent herein from alienating its assets. While reiterating the above sequence of events, the learned Senior Advocate Shri Raghavan, would contend that the petitioners being secured creditors, would have the option of enforcing their security, while choosing to stand outside the winding up proceedings, but if once the petitioners have invited themselves before this court and have soug....
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....position to realize all of their outstanding dues and hence have filed the Company Petition and that this is unequivocally stated in the Petition itself. It is contended that such dual or multiple proceedings are not barred. It is contended that the Authorized Officer of SBICAP having rejected the replies by the respondent - company to the notices issued under Section 13(2) of the SARFAESI Act, is said to have taken "symbolic" possession of "Kingfisher House" on behalf of the petitioners on 10.8.2013. It is thereafter that an application is filed before the Court of the Chief Metropolitan Magistrate, Esplanade, Mumbai. It is hence contended that the petitioners have acted in accordance with law. It is also stated that the reference to the attachment by the Office of the Tax Recovery Officer (TDS) or the Assistant Commissioner of Service Tax in respect of the same property, are irrelevant to the present application. In any event, it is stated that the rights created in favour of the secured creditors over the secured asset in question, has a precedence over charges, if any, of the Taxation Authorities. Reliance is placed on several authorities to support the contentions of ....
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....at would normally prevail. The apex court had occasion to consider such a situation in Allahabad Bank v. Canara Bank ,(2000) 4 SCC 406 - and it is stated thus :- "39. There can be a situation in law where the same statute is treated as a special statute vis-a-vis one legislation and again as a general statute vis-a-vis yet another legislation. Such situations do arise as held in Life Insurance Corporation of India vs. D.J.Bahadur, (1981)1 SCC 315. It was there observed: "....for certain cases, an Act may be general and for certain other purposes, it may be special and the Court cannot blur a distinction when dealing with the finer points of law". For example, a Rent Control Act may be a special statute as compared to the Code of Civil Procedure. But vis-a-vis an Act permitting eviction from public premises or some special class of buildings, the Rent Control Act may be a general statute. In fact in Damji Valji Shah Vs. Life Insurance Corporation of India, AIR 1966 SC 135, this Court has observed that vis-a-vis the LIC Act, 1956, the Companies Act, 1956 can be treated as a general statute. This is clear from para 1....
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....l institutions to take possession of the securities and sell them without the intervention of the court, that the SARFAESI Act had come into being. Hence, any intervention by any court or authority in respect of proceedings under the said Act would defeat the object of that Act. Hence it is clear that this court would not have jurisdiction to interfere in the present circumstances of the case with the impugned action. This would also be the answer to point (d) framed for consideration above and the respondent - company would necessarily have to take recourse to an appeal under the Act, in respect of any irregularity in those proceedings. In so far as the points for consideration at (b) and (c) above, are concerned, the following authorities may usefully be referred to : The options open to a secured creditor has been considered by the Supreme Court in the case of M.K.Ranganathan v. Government of Madras, (1955) 2 SCR 374, under the Indian Companies Act, 1913, as amended by Act VII of 1936. The question involved was whether a sale effected by a respondent without leave of the winding up court was liable to be set aside on that count. The apex court has pronounced thus : ....
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....of the SFC Act was intended to place the SFCs on a better footing. But, in our view, this better footing is available only so long as the debtor is not a company or is a going company. The moment a winding up order is made in respect of a debtor company, the provisions of Section 529 and 529A come into play and whatever superior rights had been ensured to SFCs under the provision of the SFC Act are now subjected to and operate only in conjunction with the special rights given to the workmen, who as pari passu charge-holders are represented by the official liquidator. We are, therefore, of the view that the unhindered right hitherto available to the SFCs to realise their security, without recourse to the Court, no longer holds true as the right vested in the official liquidator is a statutory impediment to such exercise and has to be reckoned with. And since the official liquidator can do nothing without the leave or concurrence of the Court, all necessary applications must, therefore, come to the Company Court." The following observation of the Apex court in Allahabad Bank v. Canara bank, (2000) 4 SCC 406, is relevant : "62. Secured creditors fall under two....
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....r give an estimate of the value of the security...." xxx "......Section 529(1) of the 'Act' attracts the rules of insolvency to winding-up in relation to "the respective rights of secured and unsecured creditors" and confines these Rules so attracted to matters that arise between these two classes of creditors. Sections 528 and 529 of the 'Act' are in the chapter "Proof and Ranking of Claims" and deal with the question of proof of debts and the rights of secured and unsecured creditors. Section 529(2) itself, in so far it expressly envisages, and provides for, the contingency that if a secured-creditor proceeds to realise his security he should pay the expenses incurred by the Liquidator, by implication, rules out the construction contended for by Sri Shetty. The words "in winding-up of insolvent company" in Section 529(1) of the 'Act' has obvious reference to a post winding-up stage. The point to note is that this rule of insolvency is attracted to winding-up in the matter of proof of debts. That is after the stage of the winding-up order. A secured creditor is, under Section 439(2) of the 'Act' as much a creditor entitle....
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....ng it to winding up. Learned Master of the Rolls observed ; "..... That is quite true in bankruptcy to obtain adjudication, but there is no such Rules in winding-up ........No such rule apply at all ; but the winding up is equally good whether it is obtained by a secured creditor or an unsecured creditor............" In the case of Canfin Homes Ltd. v. Lloyds Steel Industries Ltd.,Vol. 106 (2001) Company Cases 52, a learned single judge of the Bombay High Court has held as follows: "A secured creditor who seeks to prove the whole of his debt in the course of the winding up proceedings is necessarily required to relinquish the security. That however, cannot be construed to mean that when he files a petition for winding up, a secured creditor must relinquish his security. In the present case, the petitioner has filed a suit in this Court and made it clear, therefore, that he seeks to enforce the security. When the stage for proving its of debt does arise, the petitioner would necessarily have to prove for the balance of the debt which is due and owing to it after the security in respect of which the petitioner is a secured creditor is....