TaxTMI 
TaxTMI 
2015 (3) TMI 90
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....ON (OJ) NO. 262 of 2007 TO CIVIL APPLICATION (OJ) NO. 292 of 2007 with CIVIL APPLICATION (OJ) NO. 240 of 2012 SINGHI & CO, ADVOCATE FOR THE APPELLANT MR BHAGYODAYA MISHRA, ADVOCATE, MR INDRAVADAN PARMAR, ADVOCATE, MR RAJESH P MANKAD, ADVOCATE, MR RD DAVE, ADVOCATE, MR YOGESH G DEV, ADVOCATE, MS AMEE YAJNIK, ADVOCATE, FOR THE RESPONDENT ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. The appellants had filed applications seeking substitution of appellants in place of respondent no. 20 (ICICI Bank Limited) in view of the fact that the applicants had taken over the debts of ICICI Bank Limited. The said applications were heard by learned Single Judge sitting as Company Judge and vide common judgement and order dated 05-06- 09/07/2007 the applications came to be dismissed. This judgement was challenged by filing the present appeals which were decided on 12.01.2009. Against the said judgement passed by the Division Bench of this High Court, the matter was carried to the Apex Court by filing Civil Appeals No. 8393 of 2010 and allied matters. The Apex Court by order dated 30.09.2010 (reported as ICICI Bank Limited vs. Official Liquidator of APS Star Industries Limi....
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.... to be substituted for and in place of the ICICI Bank Limited as the secured creditor of the Company in Liquidation; - - 4. 52 OJA/161/2007 in COMA No. 620 of 2006 With OJCA/265/2007 Kotak Mahindra Bank vs. OL of Stanrose Steels Limited (formerly Volvo Steels Limited) & anr. A) That this Hon'ble Court may be pleased to permit the applicant to be substituted for and in place of the State Bank of India and State Bank of Saurashtra as the secured creditor of the Company in Liquidation; - 10.7.2014 5. 53 OJA/162/2007 in COMA No. 490 of 2006 With OJCA/266/2007 Kotak Mahindra Bank vs. Star Industrial & Textile Enterprise & ors. A) That this Hon'ble Court may be pleased to allow the name of the applicant to be substituted in place of the ICICI Bank Limited; - - 6. 54 OJA/163/2007 in COMA No. 458 of 2006 With OJCA/267/2007 Kotak Mahindra Bank vs. OL of Arti Agro Industries Limited & ors. A) That this Hon'ble Court may be please to direct the Official Liquidator to hand over possession of the assets of the Company in liquidation more particularly described in Annexure-I to the affidavit in support of this application within a period of t....
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.... of in DRT Date of Decree passed in DRT 14 48 OJA/157/2007 in COMA/539/2006 With OJCA/261/2007 Standard Chartered Bank vs. OL of A'bad Mfg. & Calico Prtg. Co. Limited. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Official Liquidator Report No. 9 of 2002 in Company Petition No. 157 of 1995; 25.4.2006 31.1.2007 15 62 OJA/173/2007 in COMA/540/2006 With OJCA/275/2007 Standard Chartered Bank vs. OL of A'bad Mfg. & Calico Prtg. Co. Limited. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 63 of 2004 in Company Petition No. 157 of 1995; 25.4.2006 31.1.2007 16 63 OJA/174/2007 in COMA/541/2006 With OJCA/276/2007 Standard Chartered Bank vs. OL of A'bad Mfg. & Calico Prtg. Co. Limited. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 303 of 2004 in Company Petition No. 157 of 1995; 25.4.2006 31.1.2007 17 64 OJA/175/2007 in COMA/542/2006 With OJCA/....
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....; 11.8.2006 30.1.2009 24 71 OJA/182/2007 in COMA 549 of 2006 With OJCA/284/2007 Standard Chartered Bank vs. OL of Ambica Mills Ltd. & ors. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 4 of 2002 in Company Petition No. 66 of 1988; 11.8.2006 30.1.2009 25 72 OJA/183/2007 in COMA 550 of 2006 With OJCA/285/2007 Standard Chartered Bank vs. OL of Ambica Mills Ltd. & ors. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 220 of 2002 in Company Petition No. 66 of 1988; 11.8.2006 30.1.2009 26 73 OJA/184/2007 in COMA 551 of 2006 With OJCA/286/2007 Standard Chartered Bank vs. OL of Ambica Mills Ltd. & ors. (a) That this Hon'ble Court may be pleased to permit the applicant to be substitute its name in place of ICICI Bank Limited in Company Application No. 224 of 2002 in Company Petition No. 66 of 1988; 11.8.2006 30.1.2009 27 74 OJA/185/2007 in COMA 552/2006 With OJCA/287/2007 Standard Chartered Bank vs. OL of Vallabh Glass ....
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....s pleaded before the learned Company Judge is set out as under: 3.1 ICICI Bank Limited had entered into a Deed of Assignment with the applicants on 31.03.2006, pursuant to which, ICICI Bank Limited assigned all its rights, title, interests and benefit in respect of the debt due from APS Star Industries LTD (hereinafter referred to as the 'Company') along with the underlying securities in favour of the applicants who had agreed to take over the claim against the company. Pursuant to the said Deed, ICICI Bank Limited confirmed that the applicants shall be entitled to initiate/adopt appropriate legal action and/or continue to pursue any existing legal action in its own name against the defendants for recovery of the dues under the said facilities. 3.2 It is the case of the applicants that apropos the assignment agreement, the applicants had become lender and all the rights of ICICI Bank Limited in relation to the loan and the underlying security interests vested in the applicants and therefore the applicants vide Board Resolution authorized concerned personnel to represent the applicants in any Court of Law, Consumer Court, Tribunal or any other judicial and quasi judicial autho....
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.... securitisation companies/ reconstruction companies). 2. A financial asset, including assets under multiple/consortium banking arrangements, would be eligible for purchase/sale in terms of these guidelines if it is a non-performing asset/non performing investment in the books of the selling bank. 3. The reference to `bank' in the guidelines would include financial institutions and NBFCs." The above analysis of the various provisions of the 1949 Act shows that RBI is empowered to regulate the business of the banking companies. That, RBI is empowered to control management of banking companies in certain situations. It is empowered to lay down conditions on which the banking companies will operate. It is empowered to regulate paidup capital, reserve fund, cash fund and above all to lay down policies in the matter of advances to be made by the banking companies, allocation of resources etc. While laying down such policies under the said Act, RBI can lay down parameters enabling banking companies to expand its business. For example, RBI's permission is required to be obtained if a banking company seeks to deal in "derivatives". It is a business which will not fall in cl....
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....)(n). Therefore, it cannot be said that assignment of debts/NPAs is not an activity permissible under the BR Act, 1949. Thus, accepting deposits and lending by itself is not enough to constitute the "business of banking". The dependence of commerce on banking is so great that in modern money economy the cessation even for a day of the banking activities would completely paralyse the economic life of the nation. Thus, the BR Act, 1949 mandates a statutory comprehensive and formal structure of banking regulation and supervision in India. 39. The test to be applied is - whether trading in NPAs has the characteristics of a bona fide banking business. That test is satisfied in this case. The guidelines issued by RBI dated 13.7.2005 itself authorizes banks to deal inter se in NPAs. These guidelines have been issued by the Regulator in exercise of the powers conferred by Sections 21 and 35A of the Act. They have a statutory force of law. They have allowed banks to engage in trading in NPAs with the purpose of cleaning the balance sheets so that they could raise the capital adequacy ratio. All this comes within the ambit of Section 21 which enables RBI to frame the policy in relation....
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....has never purchased the debt(s). It has advanced loans against security as part of its banking business. The account of a client in the books of the bank becomes Non Performing Asset when the client fails to repay. In assigning the debts with underlying security, the bank is only transferring its asset and is not acquiring any rights of its client(s). The bank transfers its asset for a particular agreed price and is no longer entitled to recover anything from the borrower(s). The moment ICICI Bank Ltd. transfers the debt with underlying security, the borrower(s) ceases to be the borrower(s) of the ICICI Bank Ltd. and becomes the borrower(s) of Kotak Mahindra Bank Ltd. (assignee). " Emphasis Supplied 4.1 In light of the above observations made by the Apex Court, Mr. Mihir Joshi, learned Senior Counsel submitted that the issue regarding substitution has already been concluded by the Apex Court. Mr. Ashok Shah, learned Senior Counsel has tried to contest this contention by submitting that the issue of substitution is not concluded by the Apex Court. We cannot accept this submission of Mr. Shah. A bare reading of the observations of the Apex Court in para 46 as extracted hereinab....